Let us estimate the ROIIC for #Pix transmissions. See screener.in page for details on the capex that is ongoing.
To be more precise, ill estimate the ROCE for incremental capital deployed
1. 60 cr capex happening. 50% capacity expansion.
2. EBIT of 96cr in FY21. So incremental EBIT of 48cr assuming no margin expansion.
3. 150cr Working capital for FY21. 75cr for incremental sales assuming no change in WC position.
4. 48/(60+75) = 35.5%
FY21 ROCE is 28%.
2. EBIT of 96cr in FY21. So incremental EBIT of 48cr assuming no margin expansion.
3. 150cr Working capital for FY21. 75cr for incremental sales assuming no change in WC position.
4. 48/(60+75) = 35.5%
FY21 ROCE is 28%.
35 > 28
So the incremental capital deployment is going to improve the return ratios, if things pan out as per expectations (no cost overruns, no margin degradation, no WC degradation).
Can be better if margin expands (operating leverage, better product mix) or WC improves
<EOM>
So the incremental capital deployment is going to improve the return ratios, if things pan out as per expectations (no cost overruns, no margin degradation, no WC degradation).
Can be better if margin expands (operating leverage, better product mix) or WC improves
<EOM>
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