Intrinsic Value per Share (DCF-based): Rs. 1,561.93 Current Market Price (CMP): Rs. 295 Undervaluation: CMP is 81% below intrinsic value!
📊 Key Strengths and Growth Potential
🟢 Strong Profitability & Cash Flow
- Net Profit Margin: 23.58% (higher than industry average)
- Free Cash Flow Yield: 52.13% (indicates strong cash generation)
- Earnings Yield: 24% (suggests high return potential)
🟢 Exceptional Financial Health
- Debt-to-Equity: 0.00% (No debt burden, reducing financial risk)
- Current Ratio: 7.49 (indicating strong short-term liquidity)
- Cash per Share: Rs. 29.72 (high cash reserves provide safety)
🟢 Attractive Valuation Metrics
- Price-to-Earnings (P/E) Ratio: 4.4 (well below the market average)
- Price-to-Book (P/B) Ratio: 0.78 (trading below book value)
- PEG Ratio: 0.37 (suggests strong earnings growth at a cheap price)
🟢 Robust Growth and Shareholder Returns
- Compounded NAVPS Growth (10 years): 19.94% (23.03% if dividends reinvested)
- Sustainable Growth Rate: 11% (supports long-term expansion)
- Dividend Yield: 9.1% (solid passive income potential)
- Dividend Payout Ratio: 42% (balanced between growth & shareholder returns)
📈 DCF-Based Valuation Breakdown
- Base FCF: Rs. 2,258.66 Mn (strong cash flow foundation)
- Discount Rate: 12% (reflecting conservative risk assumptions)
- Terminal Growth Rate: 2% (aligned with economic conditions)
- Projected FCF Growth: CAGR 11.49% (consistent growth trajectory)
🌟 Final Verdict: STRONG BUY Intrinsic Value (Rs. 1,561.93) is over 5x the CMP (Rs. 295), making this stock a deep value opportunity. With strong profitability, zero debt, high dividends, and a rock-solid balance sheet, this is an undervalued compounder in the making.
🚀 Action Plan 🗳️ Accumulate Aggressively – Current price is a massive discount to intrinsic value 📈 Hold for Long-Term – Strong NAVPS growth and solid dividends 📊 Monitor Continued Profitability – EPS stability ensures sustained returns
📅 Key Metrics to Watch
- Sustained High ROE (Above 20%)
- Consistent FCF Growth & Dividend Payouts
- Continued Market Share Expansion
📈 Conclusion This stock is a hidden gem for value investors. The market is severely undervaluing its strong fundamentals, presenting a rare opportunity to buy quality at a discount. Accumulate while it remains cheap!
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Disclaimer
The user kalindu has a position in COSE:TAFL.N0000. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.