Name of the company Type of company Valuation Methodology Price as per Valuation Methodology used Market Price as on 21-10-2016 NSE Comparison result Remarks Container Corporation of India Limited Profit making Logistics service provider Free Cash Flow to Equity discounted at the cost of equity Rs.320.93 Rs.1347.00 Overvalued 1.Year 2022 calculation represents the Terminal Value calculation. 2. The cost of equity has been calculated by arriving at the USD cost of equity and the infation differential between USD and India. ICICI Bank Limited Financial services conglomerate Free Cash Flow to Equity discounted at the cost of equity Rs. 124.77 Rs.277.95 Overvalued 1. The FCFE for the group calculation is based on the average profit after tax calculated for each company in the group. 2. The cost of equity has been calculated by arriving at the USD cost of equity and the infation differential between USD and India. LIC Housing Finance Limited Housing Finance company Free Cash Flow to Equity discounted at the cost of equity Rs.409.86 Rs.599.50 Overvalued 1.The FCFE has been calculated based on the forecasted growth in its assets and the equity capital required to generate that growth. 2.The cost of equity has been calculated by arriving at the USD cost of equity and the infation differential between USD and India. Balmer Lawrie and Company Limited Diversified company with interests in Industrial Packaging, Travel and Vacation, Greases and Lubricants, and Logistics. Relative Valuation using the Enterprise Value to Sales Ratio Rs.2985.33 Rs.697.00 Undervalued. 1. For each of the 4 businesses, a list of comparable firms was taken and relationship between EV/ Sales on one hand and the Operating Profit Margin (proxy for return)and Debt- Equity Ratio (proxy for risk) was obtained using multiple regression analysis. 2. The debt equity ratio for each business is obtained using the median debt equity ratio for the sector and the segmental information provided in the Annual Report of the company. 3. The reasons for the low valuation of the stock can be seen from a comparison between the business-wise OPM for Balmer Lawrie and the average OPM for the companies in each of the business that it is operating in Free Cash Flow to the Firm discounted at the cost of capital. Negative N A 1. Calculation of FCFF is based on the Asset Turnover Ratio and growth forecasts for its domestic sales and foreign sales . 2. The cost of debt used for the cost of capital calculation is based by applying a spread based on its credit rating. 2. The analysis is based on the optimistic assumption that the company will grow out of its debt overhang , maintaining a heathy market share in the domestic market and regaining its overseas market share. 3. Calculation of FCFF also considers the option overhang in the capital structure and uses the Black Scholes option valuation model to value the sam. Equity as an Option Rs.5.49 Overvalued 1. The Firm Value needed to calculate the value of equity as an option is based on Relative Valation using the EV/ Sales multiple. Suzlon Energy Limited Loss making company in the renewable energy sector Rs 14.85
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Name of the company Type of company Valuation Methodology
Price as per Valuation Methodology used
Market Price as on 21-10-2016NSE Comparison result Remarks
Container Corporation of India Limited
Profit making Logistics service provider
Free Cash Flow to Equity discounted at the cost of equity Rs.320.93 Rs.1347.00 Overvalued
1.Year 2022 calculation represents theTerminal Value calculation.2. The cost of equity has been calculated by arriving at the USD cost of equity and the infation differential between USD and India.
ICICI Bank LimitedFinancial services conglomerate
Free Cash Flow to Equity discounted at the cost of equity Rs. 124.77 Rs.277.95 Overvalued
1. The FCFE for the group calculation isbased on the average profit after tax calculated for each company in the group.2. The cost of equity has been calculated by arriving at the USD cost of equity and the infation differential between USD and India.
LIC Housing Finance Limited Housing Finance company
Free Cash Flow to Equity discounted at the cost of equity Rs.409.86 Rs.599.50 Overvalued
1.The FCFE has been calculated based on the forecasted growth in its assets and the equity capital required to generate that growth.2.The cost of equity has been calculated by arriving at the USD cost of equity and the infation differential between USD and India.
Balmer Lawrie and Company Limited
Diversified company with interests in Industrial Packaging, Travel and Vacation, Greases and Lubricants, and Logistics.
Relative Valuation using the Enterprise Value to Sales Ratio Rs.2985.33 Rs.697.00 Undervalued.
1. For each of the 4 businesses, a list ofcomparable firms was taken and relationship between EV/ Sales on one hand and the Operating Profit Margin (proxy for return)and Debt- Equity Ratio (proxy for risk) was obtained using multiple regression analysis.2. The debt equity ratio for each businessis obtained using the median debt equity ratio for the sector and the segmental information provided in the Annual Report of the company. 3. The reasons for the low valuation ofthe stock can be seen from a comparison between the business-wise OPM for Balmer Lawrie and the average OPM for the companies in each of the business that it is operating in
Free Cash Flow to the Firm discounted at the cost of capital. Negative N A
1. Calculation of FCFF is based on theAsset Turnover Ratio and growth forecasts for its domestic sales and foreign sales .2. The cost of debt used for the cost ofcapital calculation is based by applying a spread based on its credit rating.2. The analysis is based on the optimistic assumption that the company will grow out of its debt overhang , maintaining a heathy market share in the domestic market and regaining its overseas market share.3. Calculation of FCFF also considers theoption overhang in the capital structure and uses the Black Scholes option valuation model to value the sam.
Equity as an Option Rs.5.49 Overvalued
1. The Firm Value needed to calculatethe value of equity as an option is based on Relative Valation using the EV/ Sales multiple.Suzlon Energy Limited
Loss making company in the renewable energy sector Rs 14.85
in Rs crores in Rs crores in Rs crores in Rs crores in Rs crores in Rs croresGrowth in net income after tax 0.11 0.11 0.11 0.11 0.11 0.09Net Income after tax 1031.38 1144.83 1270.77 1410.55 1565.71 1698.80ROE (in decimals) 0.20 0.20 0.19 0.19 0.17 0.16Equity reinvestment rate 0.55 0.56 0.58 0.59 0.65 0.52Equity reinvestment in amount 567.26 645.80 735.71 838.70 1013.11 882.63FCFE 464.12 499.03 535.06 571.84 552.60 816.17Beta Unlevered 0.81 0.81 0.81 0.81 0.81 0.81Debt Equity Ratio 0.03 0.03 0.03 0.03 0.03 0.03Levered Beta 0.83 0.83 0.83 0.85 0.90 1.00risk free rate 1.58 1.58 1.58 1.58 1.58 1.58equity risk premium 10.78 10.78 10.78 10.78 10.78 10.78cost of equity in US dollars 10.50 10.50 10.50 10.74 11.28 12.36cost of equity in INR (in %) 14.44 14.44 14.44 14.69 15.25 16.36Inflation rate in US 1.58%Inflation rate in INR 5.20%Year 1.00 2.00 3.00 4.00 5.00PV of FCFE 405.56 381.03 356.99 332.67 278.94 10378.33
4502.02Sum of PV of FCFE 6257.21No of shares 194974191.00Intrinsic Value per share 320.93
CONTAINER CORPORATION OF INDIA LIMITED
CONTAINER CORPORATION OF INDIA/ ACTUALS in Rs crores in Rs crores in Rs crores in Rs crores in Rs croresMonth and year for financial statement March 31 2016 March 31 2015 Mar 31, 2014 Mar 31, 2013 Mar 31, 2012Profit before exceptional item & extraordinary items and tax as per P and L 1072.70 1319.93 1253.60 1202.69Net Income before tax as per P and L 1072.21 1319.81 1253.60 1202.69Current Tax as per Pand L 299.84 319.01 268.02 241.60Deferred tax as per P and L -10.08 -55.05 29.04 31.47Total tax 289.76 263.96 297.06 273.07Net Income,i.e after tax; as per calculations 782.94 1055.97 956.54 929.62Net income after tax as per P & L 781.78 1054.44 949.86 930.61Interest and Dividend Income as per Cash Flow statement 290.23 323.45 311.09 300.77After tax interest and dividend income 211.80 258.76 237.37 232.48Non Cash Net Income 571.14 797.21 719.17 697.14MINUSCapex as per Cash Flow stataemnt 761.07 998.65 534.35 585.80Less: Depriciation as per cash flow stataement 402.73 410.89 193.38 176.32Net Capex 358.34 587.76 340.97 409.48MINUSChange in non cash WC as per Cash Flow statement 159.39 -105.91 232.42 -42.45ADDNew Debt raised as per Cash Flow stataement 47.58 17.18 0.00 10.01Less: debt Repayment(INCL INTEREST PAID)as per cash flow stataement 35.31 52.82 39.74 32.96Net Debt raised 12.27 -35.64 -39.74 -22.95FREE CASH FLOW TO EQUITY 65.68 279.72 106.04 307.16D/E ratiotax rate 0.27 0.20 0.24 0.23Equity reinvested 505.46 517.49 613.13 389.98Equity Reinvestment Rate 0.65 0.49 0.64 0.42Return on Equity= Net Income as per P and L / Book Value of equity as per balance sheet 0.10 0.15 0.15 0.17Return on Equity excl Cash= Non cash Net Income/ Non Cash Book Value of Equity 0.13 0.19 0.22 0.25BookValue of equity as per Balance Sheet 7975.20 7516.79 6889.75 6220.47 5,555.19Less: Cash and Marketable securities (Current Investments) as per Balance Sheet 1112.55 2950.99 2698.41 2945.95 2,761.63Non cash book value of equity 6862.65 4565.80 4191.34 3274.52 2793.56
ICICI Bank Group Forecasts
Year Year PAT (in crores)Reinvestment Rate ROE Growth
in million Rs in million Rs in million Rs in million Rs in million Rs2012 683.6 1,172.50 1,681.80 509.30 174.302013 197.9 1,681.80 1,862.30 180.50 17.402014 329.8 1,862.30 2,180.40 318.10 11.702015 8.7 2,180.40 2,187.90 7.50 1.202016 -212.3 2,187.90 1,975.60 -212.30 0.00
ICICI International Limited
Year Net ProfitOp balance of Share Capital
Closing Balance of Share Capital
Increase/ Decrease in Share Capital FCFE
in Rs in Rs in Rs in Rs in Rs 2012(in '000 for Net profit, op and closing balance AND in Rs for Increase/ Decrease and FCFE ) -4,411 73,356 82,692 9336000 -137,47,0002013 20,59,957 82,692 902,90,557 7598557 -55,38,6002014 -27,29,426 902,90,557 969,48,042 66,57,485 -93,86,9112015 -79,37,208 969,48,042 930,20,312 -39,27,730 -40,09,4782016 -48,88,424 930,20,312 937,20,546 7,00,234 -55,88,658
ICICI Investment Management Company Limited
Year Net ProfitOp balance of Share Capital
Closing Balance of Share Capital
Increase/ Decrease in Share Capital FCFE
in Rs '000 in Rs '000 in Rs '000 in Rs '000 in Rs '0002012 17,156 1,26,310 1,43,466 17,156 02013 8,976 1,43,466 1,52,442 8,976 02014 1,899 1,52,442 1,54,341 1,899 02015 -20,253 1,54,341 1,34,088 -20,253 02016 -18,544 1,34,088 1,15,544 -18,544 0
ICICI Trusteeship Services Limited
Year Net ProfitOp balance of Share Capital
Closing Balance of Share Capital
Increase/ Decrease in Share Capital FCFE
in Rs '000 in Rs '000 in Rs '000 in Rs '000 in Rs '0002012 338 3,271 3,609 338 02013 470 3,609 4,079 470 02014 388 4,079 4,467 388 02015 321 4,467 4,788 321 02016 531 4,788 5,319 531 0
ICICI Bank UK PLC
Year Net ProfitOp balance of Share Capital
Closing Balance of Share Capital
Increase/ Decrease in Share Capital FCFE
in million Rs in million Rs in million Rs in million Rs in million Rs2012 1,291.70 34,766.00 36,102.90 1,337 -452013 864 36,102.90 37,279 1,176 -3122014 1,512 37,279 37,690 411 1,1012015 1,214 37,690 36,137 -1,553 2,7672016 36 36,137 36,144 7 29
ICICI Bank Canada
Year Net ProfitOp balance of Share Capital
Closing Balance of Share Capital
Increase/ Decrease in Share Capital FCFE
as of 31st Dec and NOT 31st March in millions Rs. in millions Rs. in millions Rs.
Rs in millions Rs in millions Rs in millions Rs in millions Rs in millions
Share Capital 1563.40 1563.40 1563.40 1563.40 1563.40Reserves and Surplus 7105.20 6543.00 5859.50 5227.10 4646.30Shareholders funds 8668.60 8106.40 7422.90 6790.50 6209.70Growth in Share Capital OR Reinvestment amount 562.20 683.50 632.40 580.80 361.70Growth in share capital % 6.94 9.21 9.31 9.35 6.19Reinvestment Rate 28.76 31.44 47.97 47.73 42.22Profit after tax 1954.70 2173.70 1318.30 1216.80 856.80ROE 24.11 29.28 19.41 19.60 14.65Fundamental Growth rate 0.07 0.09 0.09 0.09 0.06Long Term Borrowings 3800.00 2850.00 3650.00 3100.00 3400.00Short Term Borrowings 132143.50 127642.80 82213.30 78628.10 68171.00
Current maturities of Long term Borrowings 0.00 800.00 800.00 2000.00 1100.00Total Borrowings 135943.50 131292.80 86663.30 83728.10 72671.00Interest and Dividend Income 10315.30 9111.10 6764.10 6147.40 4460.20Profit and Loss on securities 2889.50 3528.00 1499.70 1898.60 1349.20Total 13204.80 12639.10 8263.80 8046.00 5809.40Total of "Revenue from Operations" 13602.30 13047.80 9016.40 8256.90 5972.30Interest earned 7.42 7.05 7.47 6.34 5.82Interest Expenses 9450.40 8642.40 6106.60 5636.60 4034.10Rate of interest paid 6.95 6.58 7.05 6.73 5.55Interest spread 0.47 0.47 0.42 -0.40 0.26Non Current Investments:
Govt Securities- market value and NOT the FV. The Schedule will have the market value 1808.80 7539.00 9379.90 3155.20 0.00Current Investments:Inventories - Securities held as stock in Trade- market value 137141.00 121715.60 81224.20 93864.90 76698.40Total Investments 138949.80 129254.60 90604.10 97020.10 76698.40
Purchases of Securities- market value 6863703.70 7438516.60 6384677.10 4132028.60 3138574.40Sales of securities- market value 6849067.00 7400878.10 6397837.30 4116853.30 3117656.10Borrowings as a multiple of share capital 15.68 16.20 11.68 12.33 11.70Investments as a multiple of share capital 16.03 15.94 12.21 14.29 12.35Short term borrowings as a % of stock in trade (current investments) 96.36 104.87 101.22 83.77 88.88FCFE 1392.50 1490.20 685.90 636.00 495.10
ICICI SECURITIES LIMITED/ ACTUALS 2016 2015 2014 2013 2012in Rs million in Rs million in Rs million in Rs million in Rs million
Growth in Assets (in %) 25.00 25.00 25.00 25.00 25.00 23.00 21.00 19.00 18.00 10.00 8.50 Assets (in Rs. Lakhs) 156,46,649.86 195,58,312.33 244,47,890.41 305,59,863.01 381,99,828.77 469,85,789.38 568,52,805.15 676,54,838.13 798,32,708.99 878,15,979.89 952,80,338.19 Capital (in Rs. Lakhs) Assuming a Capital to Asset ratio of 9%. 14,08,198.49 17,60,248.11 22,00,310.14 27,50,387.67 34,37,984.59 42,28,721.04 51,16,752.46 60,88,935.43 71,84,943.81 79,03,438.19 85,75,230.44 Existing Capital (in Rs. Lakhs) 9,14,597.70 16,96,014.79 17,60,248.11 22,44,316.34 27,51,487.83 35,05,396.59 42,28,721.04 51,16,752.46 60,88,935.43 71,84,943.81 79,03,438.19 Reinvestment needed (in Rs. Lakhs) 4,93,600.79 64,233.32 4,40,062.03 5,06,071.33 6,86,496.76 7,23,324.45 8,88,031.42 9,72,182.97 10,96,008.38 7,18,494.38 6,71,792.25 Return on Equity (in %) 22.50 22.50 22.50 22.50 22.50 22.00 21.50 20.00 20.00 18.00 15.00 Profit after tax (in Rs. Lakhs) 2,05,784.48 3,81,603.33 3,96,055.82 5,04,971.18 6,19,084.76 7,71,187.25 9,09,175.02 10,23,350.49 12,17,787.09 12,93,289.89 11,85,515.73 FCFE (in Rs. Lakhs) -2,87,816.31 3,17,370.01 -44,006.20 -1,100.16 -67,412.00 47,862.80 21,143.61 51,167.52 1,21,778.71 5,74,795.50 5,13,723.48 Cost of equity risk free rate 1.58 1.58 1.58 1.58 1.58 1.58 1.58 1.58 1.58 1.58 beta 1.42 1.40 1.35 1.30 1.25 1.20 1.15 1.10 1.05 1.00 equity risk premium 10.78 10.78 10.78 10.78 10.78 10.78 10.78 10.78 10.78 10.78 inflation rate -india 5.20 5.20 5.20 5.20 5.20 5.20 5.20 5.20 5.20 5.20 inflation rate- US 1.58 1.58 1.58 1.58 1.58 1.58 1.58 1.58 1.58 1.58 cost of equity-in USD (in %) 16.85 16.67 16.13 15.59 15.06 14.52 13.98 13.44 12.90 12.36 cost of equity- in INR(in %) 17.46 17.27 16.71 16.15 15.59 15.03 14.48 13.92 13.36 12.80 cost of capital in decimals 0.1746 0.1727 0.1671 0.1615 0.1559 0.1503 0.1448 0.1392 0.1336 0.1280 1 + cost of capital in decimals 1.1746 1.1727 1.1671 1.1615 1.1559 1.1503 1.1448 1.1392 1.1336 1.1280
PV of FCFE (in Rs. Lakhs) -2,45,043.04 2,30,420.04 -27,375.87 -589.24 -31,235.40 19,278.99 7,439.68 15,804.53 33,182.09 1,57,394.50 79,03,438.19
19,09,138.68 Total FCFE (in Rs. 20,68,414.96 No of shares 5046,63,000.00 Intrinsic Value (Rs./share) 409.86
LIC HOUSING FINANCE / ACTUALS 2016 (in Rs. lakhs) 2015(in Rs.lakhs) 2014 (in Rs. lakhs) 2013 (in Rs. lakhs) 2012 (in Rs. lakhs) 2011( in Rs.) 2010(in Rs) Share Capital 9,14,597.70 7,81,843.78 7,53,289.62 6,48,129.06 5,68,220.54 416910,41,272.00 338767,23,594.00 Profit after tax 1,66,079.05 1,38,618.87 1,31,718.63 1,02,320.66 91,419.61 97448,62,002.00 66217,60,807.00 Dividends 27,756.69 25,233.00 22,710.00 19,177.00 18,168.00 16613,00,000.00 14239,00,000.00 Dividend % 16.71 18.20 17.24 18.74 19.87 17.05 21.50 Retention % 83.29 81.80 82.76 81.26 80.13 82.95 78.50 Revenue from Operations 12,39,614.56 10,66,934.62 9,18,138.22 7,57,592.03 6,11,486.04 468008,58,227.00 345576,97,060.00 Interest Income 12,25,085.30 10,54,667.50 9,07,333.66 7,45,908.67 5,98,268.79 446965,56,020.00 328266,56,394.00 Interest cost 9,30,675.81 8,31,024.58 7,17,437.57 5,92,459.63 4,59,106.52 309771,00,788.00 239571,12,365.00 Ratios Equity Capital/ Total Assets Ratio (in %) 7.31 7.22 8.25 8.33 9.01 8.16 8.90 Growth in Share Capital 16.98 3.79 16.23 14.06 36.29 23.07 Growth in Assets 15.52 18.63 17.39 23.36 23.47 34.16 Return on Equity 21.24 18.40 20.32 18.01 21.93 28.77 Reinvestment 1,32,753.92 28,554.16 1,05,160.56 79,908.52 1,51,310.13 78,143.18 Reinvestment Rate 79.93 20.60 79.84 78.10 165.51 80.19 Fundamental Growth rate 16.98 3.79 16.23 14.06 36.29 23.07 Interest cost to interest income ratio 75.08 77.89 78.14 78.20 75.08 66.19 69.32 Total Borrowings 114,78,422.55 99,40,346.71 84,10,662.28 70,65,090.23 57,40,718.45 4625542,20,711.00 3562421,20,216.00 Long Term 90,65,813.59 80,51,855.04 67,71,232.88 56,26,793.67 46,11,129.74 4070060,87,696.00 3101498,22,039.00 Short Term 5,44,044.21 2,69,800.96 3,73,811.08 2,43,724.47 1,75,862.14 446222,40,744.00 374317,45,717.00 Current Maturities of Long term Debt 14,83,259.17 13,31,530.99 10,58,514.24 10,05,890.74 8,21,735.01 - - Temporary Book OverDraft 3,85,305.58 2,87,159.72 2,07,104.08 1,88,681.35 1,31,991.56 109258,92,271.00 86605,52,460.00 Interest rate paid 8.11 8.36 8.53 8.39 8.00 6.70 6.72 Interest rate received 9.79 9.73 9.93 9.59 9.48 8.75 8.62 Net Interest Margin 1.68 1.37 1.40 1.20 1.49 2.05 1.90
LIC HOUSING FINANCE LIMITED
Calculation of value per share based on relative valuation using the EV/ Sales approach:
Calculations for business-wise Debt Equity Ratio:
As per Balance Sheet:
Borrowings as on 31Mar 2016
in lakhs (figures as per "Consolidated Subsidiary & Joint Venture Companies" in Consolidated Balance Sheet as at 2016.
Long term borrowings 6438.4 Short Term Borrowings 6686.02 Current Maturities of Long Term Debt 2923.36 Total Debt 16047.78 Equity 116767.92 Debt- Equity Ratio 0.137 Cash and Cash Equivalents 45751.45
Business wise split:
Total Industrial Packaging Travel and Vacation Greases and Lubricants LogisticsEV/ Sales arrived at based on regression equation 1.69488176 2.138324809 1.732092359 5.710877Sales (in Rs. Lakhs) 94823.07 124496.93 38403.39 57379.49EV (in Rs. Lakhs) 160713.89 266214.87 66518.22 327687.21Debt.(in Rs. Lakhs) 9957.94 44.58 3552.73 2492.53Equity MINUS Cash (in Rs. Lakhs) 805086.42 150755.95 266170.29 62965.49 325194.68Cash (Rs lakhs) 45751.45Equity (Rs lakhs) 850837.87No of shares 28500641Value (in Rs per share) based on Relative Valuation 2985.33
100% of the debt as per balance sheet spread over 70% of the assets as per segment info as the balance 30% o the assets are either "Other Assets" or "Unallocable Assets". To that extent, the debt equity ratio is overstated.
BALMER LAWRIE AND COMPANY LIMITED
Regression output of EV/ Sales against Operating Profit Margin and Debt-Equity Ratio:
Comparison Table
Business Operating Profit Margin (%)
Debt equity ratio
Balmer and Lawrie –Greases and Lubricants 10.27 0.18 Median for the Lubricants and Greases industry 7.14 0.79 Average for the Lubricants and Greases industry 15.38 0.80
List of comparable firms for Greases and Lubricants business:Prices as on 06-Oct-2016
Balmer Lawrie- Industrial Packaging 9.44 0.18Median for the Industrial Packaging industry 9.22 0.81Average for the Industrial Packaging industry 12.06 1.17
Regression output of EV/ Sales against Operating Profit Margin and Debt-Equity Ratio:
Comparison Table
Business
Operating Profit Margin (%)
Debt equity ratio
Balmer Lawrie- Logistics 24.54 0.10 Median in the Logistics Industry 17.29 0.47 Average in the Logistics Industry 21.13 0.61
List of comparable firms for Logistics business:Prices as on 06-Oct-2016
Regression output of EV/ Sales against Operating Profit Margin and Debt-Equity Ratio:
Comparison Table
Business Operating Profit Margin (%)
Debt equity ratio
Balmer Lawrie- Travel and Vacation 1.95 0.002 Median for the Travel and Vacations industry 13.18 0.010 Average for the Travel and Vacations industry 15.48 0.871
List of comparable firms for Travel and Vacations business:Prices as on 06-Oct-2016
Note: The option value referred to above represents the value of the management/ employee options issued by the company.
Equity Value of Suzlon:in Rs. crores
FCFF 1230.76Less: Debt 11430.76Less: Minority Interest 3.19Less: Option value calculated as below 0.07Add: Investments under the heading "CurrentAssets" 316.19Add: Cash and Bank balance 629.29Total -9257.78No of equity shares in crores 502.05Intrinsic Value per share (in Rs.) -18.44
SUZLON ENERGY LIMITED/ FORECASTS
2017 2018 2019 2020 2021 2022 2023 2024 2025Terminal Value
in Rs. Crores in Rs. Crores in Rs. Crores in Rs. Crores in Rs. Crores in Rs. Crores in Rs. Crores in Rs. Crores in Rs. Crores in Rs. CroresSegment Revenue(India Sales + Other than India Sales) 11443.39 12381.08 14023.59 16719.89 20388.96 23513.12 29398.47 36746.21 45822.29 56486.04India sales 8649.18 8371.67 8270.49 8464.76 8543.68 6516.32 5942.89 5081.17 4657.74 5030.36Other than India Sales 2794.21 4009.41 5753.10 8255.13 11845.28 16996.80 23455.58 31665.04 41164.55 51455.68Market share in the domestic market 0.26 0.22 0.19 0.17 0.15 0.10 0.08 0.06 0.05 0.05Total market in India 33266.06 38053.05 43528.88 49792.69 56957.85 65163.24 74286.10 84686.15 93154.77 100607.15Total Assets= Fixed Assets + WorkingCapital 7581.86 8203.14 9291.39 11077.83 13508.79 15578.72 19478.08 24346.35 30359.75 37425.07Incremental Total Assets. 3200.05 621.28 1088.25 1786.44 2430.96 2069.93 3899.36 4868.27 6013.40 7065.32EBIT (1-t) as a % of sales 8.00 9.00 9.50 10.50 12.00 13.00 14.00 14.50 15.00 15.50EBIT(1- T() 915.47 1114.30 1332.24 1755.59 2446.68 3056.71 4115.79 5328.20 6873.34 8755.34FCFF -2284.58 493.02 243.99 -30.85 15.71 986.78 216.42 459.93 859.95 1690.02Year 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00Cost of capital as per table below (in %) 23.97 23.97 23.97 23.97 23.97 23.97 23.50 23.00 22.50 20.00PV of the FCFF -1842.85 320.80 128.06 -13.06 5.37 271.84 49.39 87.79 138.44 14083.50
2084.98PV of the FCFF (in Rs. Crores) 1230.76
SUZLON ENERGY LIMITED
COST OF CAPITAL CALCULATION in %risk free rate (10 year US govt bond rate) 1.58levered beta (levered beta is negative because of negative debt-equity ratio ; which is because of the negative equity in the company. -0.3423equity risk premium for India 10.78Cost of equity in USD -2.11inflation rate in US 1.58inflation rate in India 5.2Cost of equity in INR 1.378505918US risk free rate 1.58country default spread 1.36spread based on BBB- rating 3.25cost of debt in USD 6.19cost of debt in INR 9.97Share Capital -7082.77Debt 11430.76Total 4347.99Weighted Average Cost of Capital weighted by the amount of debt and capital in the capital structure. 23.97
Option Valuation:Number of options outstanding 40340800Exercise Period till 31-03-2019Average exercise price (in rs.) 26.955Volatility 12.48651Average stated maturity (in days) 908Stock price as on 04-10-2016 15.25interest rate (in %) 5.46Value per option (in Rs.) 0.018Value of the options outstanding (in Rs.) 726134.4Value of the options outstanding (in Rs. crores) 0.07
SUZLON ENERGY LIMITED/ ACTUALS 2016 2015 2014 2013 2012 2011 2010 2009in Rs crores in Rs crores in Rs crores in Rs crores in Rs crores in Rs crores in Rs crores in Rs crores
Valuing Equity as an optionSuzlon Energy Ltd. Source Amount (in Rrs. Crores)
Market Capas on 10-Oct-2016 (valueresearchonline.com) 7421
Debt Annual Report for 2015-16 11489.3
Firm Value Market Cap + Debt 18910.3
Firm ValueCalculated from EV/ Sales approach as per below 12213.72
Life of the optionAverage tenor of the debt calculated as per below 1175
Volatility of firm value 12.48651Riskless interest rate (in %) 5.46Option Value of the equity (in crores) 2756.9Value of equity per share (in Rs.) 5.49
Calculations for the life of the option:Source: Annual report 2015-16
Loan Type Loan TenorAmountin Rs crores
Tenor considered in days
Secured + unsecured upto 1 year upto 1 year 294.81 365
secured + unsecured from 2 to 5 years
average of 2 to 5 years is 3.5 years 7693.02 1277.5
secured + unsecured above 5 years
above 5 years is considered as 5 years 1533.26 1825
short term borrowings short term 1909.67 365Leases
less than one year 8.98 365
> 1 and < 5 years, so average is 3 yrs 25.84 1095> 5 years 23.72 1825
TOTAL 11489.3 1175.49Weighted Average tenor of the debt with the amounts outstanding as the weights(rounded off) 1175
Calculations of Firm Value using EV/Sales approach:Source: valueresearchonline.comPrices as on 10-10-2016
Median EV/ Sales 1.31TTM Sales (Sept 2015- Jun 2016)(in Rs crore) 8589.94Enterprise Value (in Rs crore) 11268.24Cash and Current InvestmentsMar 2016 Consolidated (in Rs crore) 945.48Firm Value (in Rs. Crores) 12213.72