India Is The Most Promising Emerging Market | Angus Shillington
Forward Guidance
Cash Flow Over Capitalization
Mature companies like those in the Magnificent Seven rely on significant earnings to self-fund, while many companies in India exhibit a different financing approach. Unlike firms that heavily lean on debt or equity, a considerable number of Indian businesses, particularly in the industrial sector, operate successfully through cash flow. These companies, often involved in basic manufacturing like pipes and adhesives, achieve operating margins of around 10–11% and consistently generate cash flows yielding 10–15% surplus annually. This efficient cash generation allows them to gradually expand capacity by purchasing land and machinery over time without incurring significant risks or financial strain.
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