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Truee, he spilled the tea , smart people will understand 🚀

The Ken

If I'm not wrong it's macrotech developers

Or sobha

@@lambert-op4yx thanks. and power equipment export company whose margin is expanding by 4%..

@@lambert-op4yx its sobha

​@@aj0408aj no its wrong?its neither marcrotech nor sobha . you should listen again and do your research , you will get the name easily , he has already given hints like pre sales number and a solid history in other businesses of the group etc.its easy do some hard work. :)

Sometimes, we also fail to understand :) Part of investing!

whether a company has already "priced in" its future growth potential can be tricky, especially when you observe high growth rates alongside high valuations (e.g., a P/E ratio of 100+). The market can sometimes be overly optimistic about a company's future potential, leading to a stock price that seems disconnected from its current financials. Here are some ways to assess whether a company's future growth is priced in: 1. Valuation Metrics (P/E, P/S, etc.) High P/E Ratio: A very high P/E ratio (like 100+) often suggests that the market is expecting significant future growth. However, it can also indicate that the stock is overpriced, assuming the growth doesn't materialize as expected. Compare the company's P/E ratio to: Historical averages: If the P/E is much higher than its historical average, it might indicate that investors are overly optimistic. Industry P/E ratios: Compare it with similar companies in the same sector. If the P/E is significantly higher than competitors, it may suggest that the stock has already factored in future growth. Other Metrics: Along with the P/E ratio, consider using other metrics like: Price-to-Sales (P/S) Ratio: This helps if the company isn't yet profitable. A very high P/S ratio could also indicate overvaluation. EV/EBITDA: This can give insight into the company's operational profitability and value. 2. Growth Expectations and Projections Earnings Growth: Look at analysts' projections for earnings growth over the next few years. If the company is expected to grow rapidly, the high P/E may be justified, but if growth slows significantly after a few years, the stock could be overvalued. Discounted Cash Flow (DCF) Model: You can calculate the intrinsic value of the company using a DCF model, which takes into account future cash flows and discounts them back to the present. This will give you a sense of whether the stock is priced too high relative to its expected future performance. 3. Market Sentiment and Speculation Investor Sentiment: Stocks of high-growth sectors like data centers, transmission, or hotel companies can sometimes trade at inflated valuations due to strong market sentiment or speculative investing. The market may be buying into the story of future growth rather than the current fundamentals. Momentum: Sometimes, stocks can become "momentum" plays, where the price keeps rising simply because of momentum, and the market assumes it will continue. This can lead to inflated prices not backed by fundamentals. 4. Competitive Advantage (Moat) and Market Position Strong Competitive Position: Assess whether the company has a sustainable competitive advantage (or "moat") that will allow it to capture and maintain its projected growth. If the company's market position is weak, future growth may not materialize as expected. Industry Dynamics: For industries like data centers, power companies, and hotels, consider how the industry is expected to evolve. Are there potential disruptions on the horizon (e.g., new technologies, regulatory changes, competition) that could affect growth? 5. Risk vs. Reward Risk of Overvaluation: Even if the company shows strong growth, there is always the risk that the market has priced it in too aggressively. A high P/E ratio could mean that much of the future growth has already been factored into the stock price. In this case, the risk of disappointment is higher. Margin of Safety: Consider whether the stock offers a margin of safety. If the company’s growth prospects are already priced in, any small misstep or slower-than-expected growth could lead to a significant price drop. 6. Technical Indicators Price and Volume Trends: Technical analysis can sometimes help identify whether a stock is becoming overheated. If the price is rising rapidly on high volume, it could signal speculative buying. Overbought Conditions: Indicators like the Relative Strength Index (RSI) can show whether a stock is overbought. An RSI above 70 often indicates that the stock is overbought and could be at risk of a correction. 7. Long-Term Investment Horizon If you're a long-term investor, consider whether the company's future growth is sustainable over the long term, even if the stock is priced high in the short term. In some cases, a high-growth company with a strong future potential (like in transmission, data centers, or emerging industries) might still justify a high valuation.

Indeed, as SOIC pointed out, market sentiment often drives stock prices, leading them to rise despite high P/E ratios. However, if the results do not meet expectations, the stock can experience a significant decline. Therefore, it is crucial to consistently track quarterly results, as the market tends to punish stocks that underperform relative to expectations.

​@@SOICfinance Indeed, as SOIC pointed out, market sentiment often drives stock prices, leading them to rise despite high P/E ratios. However, if the results do not meet expectations, the stock can experience a significant decline. Therefore, it is crucial to consistently track quarterly results, as the market tends to punish stocks that underperform relative to expectations.

Such multiple is an outcome of either the high growth rate or improving terminal value. So first thing is to figure out if such growth rate will sustain or not; for the most part if growth tapers off then valuations will take a hit. The extent of hit will depend on how confident is market on terminal value and steady state growth rate.

There are always hits & misses in investing. On corporate governance and inventory issue, that only time will tell. For naysayers this inventory correction has clearly been a chest thumping & "mena bola tha" moment. But a Rs60 crore inventory correction on a revenue base of ~1800 crores is very small. If they would have really pushed inventory for the purpose of IPO, it would have not been this small. They took their 1st step into offline channel around the time of IPO, they have learned their lesson on how offline is way different than online and are now course correcting.