Few points :
- Specific to online book business - 2 years back from 0 turnover to few quarters forward , company making losses, to few quarters forward , company making ebitda level breakeven to few quarts forward company making almost PBT level break even n 150 cr topline run rate. That has been story so far. It’s an execution story where things will not be drawn on a static board n will move . So, one must keep valuation n execution risks side by side and keep analyzing by connecting all the dots .
- Also, have highlighted earlier if it’s such a great business then, why Amazon n Ingram not taking stake. Reality mostly lies in between extremes but human behavior make us think in extremes .
- Regarding Washington, Washington made same day buy n sales twice in last 6 months. Also, they sold in another education company. Now , I do not know how to tag it to this specific event . Manytimes, we estabilish things as causality n there are N reasons why they could do this. Anyway, investment is a personal research process n the less we rely reading what others are doing the better
- I think we must take the talk of market size opportunity n the asset light jazz with pinch of salt . Consultants , mgmt gives oppportunity size but we must find our margin of safety . The way I see it , old business generates 30 cr cash profit without getting into any risk after ensuring they get limited clients with letter of credit n all . With 0 growth , this business can fetch 10-15x valuation which comes on tge average arpumd 400 cr. Remaining is the money we are paying for online book business. Leave it one to decide how much one wants to pay for it .
- On managements, these are qualitative aspect and one may have different view from other n the view also may change but j would like to form a view based on 5-10 years of history of what he told, what he executed , how he treated minority share holders , how he performed when things went against him rather than one point even where there could be N points of arguments from both sides and only future could reveal which way it would go.
However, @Kuldeepjadeja has a fair point. It would be prudent to ask management why they did not have this break up earlier and why they felt that it is necessary to make this disclosure now. What was their earlier plan on these 2 business streams n does anything changes in terms of their analysis of possible topline n bottomline opportunity n were they right or wrong on any hypothesis ? What is the real addressable profitable market size opportunity for them keeping the big number aside n considering the latest stand ? It prudent to keep eyes and ears open without falling in love with stock n adjust our views with changing facts and analysis, but at the same time ignoring noise n catching right signals n balancing it with prudent margin of safety n portfolio allocation
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