WACC
WESTAMERICA CORP
stock OTC

Their guidance is for >15% and reaching 10k revenue in 4-5 years. On a CAGR basis, 18% looks good to me since their trailing CAGR growth is anyways higher than this. We anyways cannot predict exactly what growth rate will be in what year so better off taking CAGR.
WACC of 15% is a bit high but I like to keep it high to get a conservative estimate and freely take growth assumptions to my liking. It's a margin of safety especially since it's a small cap company. For an established large cap company, 9-12% discount rate (or whatever WACC you arrive at using CAPM) can be used.

Recently came across this small cap company Sandhar Technologies Limited (NSE: SANDHAR) and it seems interesting especially from a valuation standpoint.
I have tried to do a DCF valuation of the company along with a superficial overview of their business.
It is an auto ancillary company fairly diversified across multiple products and OEM clientele although majority of their revenue comes from the 2W segment.
90% of their revenue is domestic while the rest 10% is from overseas subsidiaries (primarily Europe)
\[Check the revenue mix snapshot below\]
The company is also building up an EV business vertical although the revenues from that are still minimal for now. They are also expanding into multiple newer products like advanced electrical components and vehicle telematics via JVs and/or ToT agreements.
Remains to be seen how that plays out since EV components and electronics have higher margins than usual auto components.
Promoter holdings have stayed constant around 70% over almost a decade now which I see as positive. Institutional holding on the other side has increased in the past quarter.
Key risks/concerns:
\- Commodity and fuel price headwinds--> High fuel/natural gas prices, high metal prices (aluminium, zinc, steel) due to global supply chain disruptions, labor unavailability etc. Going ahead, most of these headwinds will likely cool down supporting the bullish outlook.
\- Historically lower ROCE and lower capacity utilization despite heavy capex in past.
\- Highly levered business; D/E stands at 0.86
\- Corporate management red flags--> Frequent resignation of KMPs recently as well as in past.
Future guidance from the management
\- ≥15% topline growth going ahead
\- incremental improvement in EBITDA margins
\- ROCE improvement is their key goal going ahead.
\- In the next 4–5-year period, they are guiding for 10k Cr revenue and 400-450 Cr in PAT; PAT growth to overtake revenue growth.
Taking in account these numbers + assigning a WACC = 15% + a conservative exit multiple of 10x EV/EBITDA to get the terminal value, the DCF value/share comes around 900-950 implying the company could be undervalued now even with fairly conservative estimates and high WACC.
If Sandhar is able to expand and scale up their business in high value components like EV components/telematics etc then ofc it would rerate to even more premium valuations. The biggest clients of Sandhar are 2W companies like Hero (which also owns Ather Energy) and TVS, so if this sector performs well, Sandhar will be a beneficiary as well.
The trailing PE ratio is 21x on account of other income (likely due to sale of assets) which is close to roughly 28x if you correct for this. The forward PE is roughly 18x. P/S ratio is 0.88x and PEG ratio is \~0.5x.
Overall, it looks decent from relative pricing POV as most peers trade at much higher valuations.
*Disclaimer: The above data is not intended as financial advice or a buy/sell recommendation. It is shared only for educational purposes and general discussion. I am not a SEBI registered analyst. Do your own due diligence and consult a SEBI registered analyst/investment advisor before making any investment or trading decision.*

What I would do is do a reverse valuation to see how long the market is pricing those companies to earn excess returns and if it’s reasonable.
Assuming the current market price is a given, you back into the implied growth rate, margins and most importantly the Competitive Advantage Period (CAP), or the amount of time the market expects the company to earn returns above its cost of capital (ROIC > WACC).

**What I did:** Ran it through comitatus.io's abnormal return on equity model and audited every auto-calibrated input against the last two years of actual filings. The auto-model spat out an intrinsic value of **$120.59 (+213% upside)**.
1. **Sales growth 13.6%/yr** \- anchored to the 2023–24 recovery (+17%, +10%). Actual 2025 growth: +5%. Q1 2026: +2.7%. I cut it to **4%**.
2. **Terminal growth 5.0% vs 8.6% WACC** \- a 3.6pt terminal spread on a cyclical is a terminal-value explosion machine. I set g to **0.6%** and WACC to **10.1%**.
3. **39% "return on investment assets"** the model was earning 39% forever on the cash pile (19% of sales). That figure was polluted by 2025's one-time tax benefit, which inflated net income +140% (EPS spiked to $1.76 in a single quarter). Normalized to **2.5%**.
4. **Debt/capital 55.9%** book-value artifact. Real structure: $500M notes vs \~$3.8B market cap. Set to **33.5%**.
Only one input went *up*: NOPAT margin from 4.8% → **5.5%** (the auto value was dragged down by the 2021–22 trough years; management's own 2026 guidance of $178–203M net income implies \~6.5%).
**Result: intrinsic value ≈ $20.50/share vs. $39 market price → roughly 47% overvalued on my base case.** For reference, Wall Street's consensus target is $33–35 with Hold ratings.
My terminal inputs are deliberately conservative. Not financial advice. No position. Happy to discuss your own views on the assumptions.