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IMPORTANT INSTRUCTIONS
1. Ensure that the company whose data you are downloading has numbers at least starting from FY08 (March 2008). This is be
from, say, FY10, you will see incorrect data for FY08 and FY09 (which will be of Hero Motocorp on whose financials I have crea
2. All financial data of your chosen company will be automatically updated in the sheet you download, except "Cash and Bank"
figures, which you must update manually from the company's annual reports. Don’t forget to make these changes as these num
3. You may update the sheet and add your own analysis, formulae etc. and then upload again to Screener.in site using the Step
"Data Sheet" because this will cause errors in your future downloads.
4. DON’T touch any cell except the black ones, where you are required to update the numbers manually from Annual Reports (j
the growth assumptions etc.
4. I have added Comments and Instructions wherever necessary so as to explain the concepts. Read those carefully before wo
5. This sheet is not a replacement of the work required to read annual reports as part of the analysis process. So please do tha
some discrepancy in numbers (though rare), but you will know this only when you read annual reports.
6. I could not find a bug/errors in this spreadsheet, but if you notice some, please email me at - vishal@safalniveshak.com - and
7. I will keep on updating the sheet from time to time and will update the same on the website. I invite you to share your feedba
together.
8. This excel won't work for banking and financial services companies.
Conclusion
Never Forget
Buffett Checklist - Read, Remember, Follow!
Source - Buffettology by Mary Buffett & David Clark
Explanation
Seek out companies that have no or less competition, either due to a patent or brand name or similar intangible that
makes the product unique. Such companies will typically have high gross and operating profit margins because of their
unique niche. However, don't just go on margins as high margins may simply highlight companies within industries with
traditionally high margins. Thus, look for companies with gross, operating and net profit margins above industry norms.
Also look for strong growth in earnings and high return on equity in the past.
Try to invest in industries where you possess some specialized knowledge (where you work) or can more effectively
judge a company, its industry, and its competitive environment (simple products you consume). While it is difficult to
construct a quantitative filter, you should be able to identify areas of interest. You should "only" consider analyzing
those companies that operate in areas that you can clearly grasp - your circle of competence. Of course you can
increase the size of the circle, but only over time by learning about new industries. More important than the size of the
circle is to know its boundaries.
Seeks out companies with conservative financing, which equates to a simple, safe balance sheet. Such companies
tend to have strong cash flows, with little need for long-term debt. Look for low debt to equity or low debt-burden ratios.
Also seek companies that have history of consistently generating positive free cash flows.
Rising earnings serve as a good catalyst for stock prices. So seek companies with strong, consistent, and expanding
earnings (profits). Seek companies with 5/10 year earnings per share growth greater than 25% (along with safe
balance sheets). To help indicate that earnings growth is still strong, look for companies where the last 3-years
earnings growth rate is higher than the last 10-years growth rate. More important than the rate of growth is the
consistency in such growth. So exclude companies with volatile earnings growth in the past, even if the "average"
growth has been high.
Like you should stock to your circle of competence, a company should invest its capital only in those businesses within
its circle of competence. This is a difficult factor to screen for on a quantitative level. Before investing in a company,
look at the company’s past pattern of acquisitions and new directions. They should fit within the primary range of
operations for the firm. Be cautious of companies that have been very aggressive in acquisitions in the past.
Buffett prefers that firms reinvest their earnings within the company, provided that profitable opportunities exist. When
companies have excess cash flow, Buffett favours shareholder-enhancing maneuvers such as share buybacks. While
we do not screen for this factor, a follow-up examination of a company would reveal if it has a share buyback plan in
place.
Seek companies where earnings have risen as retained earnings (earnings after paying dividends) have been
employed profitably. A great way to screen for such companies is by looking at those that have had consistent
earnings and strong return on equity in the past.
Consider it a positive sign when a company is able to earn above-average (better than competitors) returns on equity
without employing much debt. Average return on equity for Indian companies over the last 10 years is approximately
16%. Thus, seek companies that earn at least this much (16%) or more than this. Again, consistency is the key here.
That's what is called "pricing power". Companies with moat (as seen from other screening metrics as suggested above
(like high ROE, high grow margins, low debt etc.) are able to adjust prices to inflation without the risk of losing
significant volume sales.
Companies that consistently need capital to grow their sales and profits are like bank savings account, and thus bad
for an investor's long term portfolio. Seek companies that don't need high capital investments consistently. Retained
earnings must first go toward maintaining current operations at competitive levels, so the lower the amount needed to
maintain current operations, the better. Here, more than just an absolute assessment, a comparison against
competitors will help a lot. Seek companies that consistently generate positive and rising free cash flows.
Sensible investing is always about using “folly and discipline” - the discipline to identify excellent businesses, and wait
for the folly of the market to drive down the value of these businesses to attractive levels. You will have little trouble
understanding this philosophy. However, its successful implementation is dependent upon your dedication to learn and
follow the principles, and apply them to pick stocks successfully.
Net Block 281 290 290 326 397 402 440 504 475 448
Capital Work in Progress - - - - 2 23 27 16 15 9
Investments 12,119 13,055 14,538 17,402 21,155 24,118 20,569 25,155 28,196 30,781
Other Assets 26,577 30,478 36,872 42,898 49,748 50,428 62,104 69,162 86,523 107,295
Total 38,977 43,822 51,699 60,627 71,302 74,970 83,140 94,838 115,209 138,533
Working Capital 25,337 28,945 35,179 41,150 47,607 47,822 59,831 66,697 83,814 104,493
Debtors - - - - - - - - - -
Inventory - - - - - - - - - -
Cash & Bank** 4,735 3,367 3,190 3,393 2,605 3,546 4,739 5,829
** Manually enter this number; Convert to Rs Crore if not already done in the Annual Reports; Use Cash+Bank+Current Investments from Consolidated Balance Sheet in Annual Reports
Debtor Days - - - - - - - - - -
Inventory Turnover - - - - - - - - - -
Fixed Asset Turnover 11.8 12.7 14.0 17.0 15.5 17.3 16.9 15.4 18.3 21.8
Debt/Equity 7.7 8.0 8.8 9.3 9.9 9.4 9.5 10.4 11.6 10.1
Return on Equity 12% 10% 12% 14% 13% 12% 13% 6% 9% 7%
Return on Capital Employed 7% 7% 6% 8% 8% 8% 8% 6% 6% 6%
Profit & Loss Account / Income Statement
FEDERAL BANK LTD
Rs Cr Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Trailing
Sales 3,315 3,673 4,052 5,558 6,168 6,946 7,419 7,748 8,677 9,753 10,935
% Growth YOY 11% 10% 37% 11% 13% 7% 4% 12% 12%
Expenses 995 1,032 1,307 1,260 1,367 1,617 1,663 2,490 2,706 3,274 3,719
Material Cost (% of Sales) 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Check for wide fluctuations in key
Power and Fuel 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% expense items. For manufacturing
Other Mfr. Exp 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% firms, check their material costs etc. For
Employee Cost 10% 10% 12% 10% 10% 11% 12% 14% 13% 13% services firms, look at employee costs.
Selling and Admin Cost 4% 4% 4% 4% 4% 4% 5% 5% 5% 5%
Operating Profit 2,320 2,641 2,745 4,299 4,801 5,329 5,756 5,258 5,972 6,478 7,215
Operating Profit Margin 70% 72% 68% 77% 78% 77% 78% 68% 69% 66% 66%
Other Income 516 531 517 532 664 694 878 808 1,082 1,159 1,253
Other Income as % of Sales 15.6% 14.5% 12.8% 9.6% 10.8% 10.0% 11.8% 10.4% 12.5% 11.9% 11.5%
Depreciation 43 50 54 57 79 94 75 105 122 123 -
Interest 2,000 2,262 2,305 3,605 4,193 4,717 5,039 5,240 5,625 6,170 6,922
Interest Coverage(Times) 1 1 1 1 1 1 1 1 1 1 1
Profit before tax (PBT) 793 860 902 1,170 1,194 1,212 1,521 720 1,307 1,344 1,547
% Growth YOY 8% 5% 30% 2% 2% 26% -53% 82% 3%
PBT Margin 24% 23% 22% 21% 19% 17% 21% 9% 15% 14% 14%
Tax 293 395 315 393 356 373 515 244 476 465 540
Net profit 500 465 587 777 838 839 1,006 476 831 879 1,007
% Growth YOY -7% 26% 32% 8% 0% 20% -53% 75% 6%
Net Profit Margin 15% 13% 14% 14% 14% 12% 14% 6% 10% 9% 9%
EPS 5.8 5.4 6.9 9.1 9.8 9.8 11.7 2.8 4.8 4.5 5.1
% Growth YOY -7% 26% 32% 8% 0% 20% -76% 74% -8%
Price to earning 2.9 5.2 6.3 4.7 4.7 4.8 5.5 16.4 19.2 21.7 17.8
Price 17 28 43 43 46 47 65 45 93 97 90
Dividend Payout 17.1% 18.4% 24.8% 19.8% 18.4% 20.4% 18.7% 25.3% 18.7% 22.4%
Market Cap 1,442 2,404 3,686 3,654 3,900 4,045 5,558 7,816 15,988 19,095
Retained Earnings 415 379 442 623 684 668 817 355 676 682
Buffett's $1 Test 3.1
Check for long term vs short term trends here. Check if the growth over
past 3 or 5 years has slowed down / improved compared to long term (7
to 10 years) growth numbers.
Cash Flow Statement
FEDERAL BANK LTD
Rs Cr Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17Mar-18 Total
Cash from Operating Activity (CFO) 918 -555 1,269 -801 2,899 1,225 5,164 -1,519 3,757 -4,697 7,658
% Growth YoY -160% -328% -163% -462% -58% 322% -129% -347% -225%
Cash from Investing Activity -156 -59 -144 -1,599 -3,479 -736 -1,364 1,991 -2,383 -1,576 -9,506
Cash from Financing Activity -71 -100 -99 2,184 768 321 -3,549 168 659 8,025 8,305
Net Cash Flow 692 -714 1,025 -216 187 809 251 640 2,032 1,751 6,458
CFO/Sales 28% -15% 31% -14% 47% 18% 70% -20% 43% -48%
CFO/Net Profit 183% -120% 216% -103% 346% 146% 513% -319% 452% -534%
Capex** 315 212 364 565 607 937 1,156 1,638 1,238 824
FCF 603 -767 904 -1,366 2,292 288 4,008 -3,157 2,519 -5,522 -198
Average FCF (3 Years) -2,053
FCF Growth YoY -227% -218% -251% -268% -87% 1293% -179% -180% -319%
FCF/Sales 18% -21% 22% -25% 37% 4% 54% -41% 29% -57%
FCF/Net Profit 120% -165% 154% -176% 273% 34% 398% -664% 303% -628%
Operating Margin 70.0% 71.9% 67.7% 77.3% 77.8% 76.7% 77.6% 67.9% 68.8%
PBT Margin 23.9% 23.4% 22.3% 21.0% 19.4% 17.4% 20.5% 9.3% 15.1%
Net Margin 15.1% 12.6% 14.5% 14.0% 13.6% 12.1% 13.6% 6.1% 9.6%
Debtor Days - - - - - - - - -
Inventory Turnover - - - - - - - - -
Fixed Asset Turnover 11.8 12.7 14.0 17.0 15.5 17.3 16.9 15.4 18.3
Debt/Equity 7.7 8.0 8.8 9.3 9.9 9.4 9.5 10.4 11.6
Debt/Assets 85.7% 85.8% 86.9% 87.7% 88.1% 87.3% 88.0% 88.9% 89.9%
Interest Coverage (Times) 1.4 1.4 1.4 1.3 1.3 1.3 1.3 1.1 1.2
Return on Equity 11.6% 9.9% 11.5% 13.6% 13.2% 12.1% 13.0% 5.9% 9.3%
Return on Capital Employed 7.4% 7.4% 6.4% 8.1% 7.8% 8.2% 8.1% 6.5% 6.2%
Free Cash Flow (Rs Cr) 603 -767 904 -1,366 2,292 288 4,008 -3,157 2,519
Mar/18
12.4%
2.9%
5.8%
27.1%
###
###
66.4%
13.8%
9.0%
-
-
21.8
10.1
89.2%
1.2
7.2%
5.5%
-5,522
What to look for?
Higher is better, but also look for long term stability and consistency
Higher is better, but also look for long term stability and consistency
Higher is better, but also look for long term stability and consistency
Higher isn't always better, esp. when the company is generating high ROE, which means the management is allocating capital
Higher is better, but also look for long term stability and consistency
Higher is better, but also look for long term stability and consistency
Higher is better, but also look for long term stability and consistency, plus the nature of the industry. Also compare with industry
Higher is better, but also look for long term stability and consistency, plus the nature of the industry. Also compare with industry
Higher is better, but also look for long term stability and consistency, plus the nature of the industry. Also compare with industry
12,000
Revenue Revenue and Pro
100%
Check for a rising trend. Check for a ris
10,000 80% Compare grow
60%
8,000
40%
6,000 20%
4,000 0%
-20% Jan/10 Jan/12
2,000
-40%
- -60%
Jan/09 Jan/11 Jan/13 Jan/15 Jan/17 Revenue Growth
Net Profit Grow
Management Effectiveness
Mar/09 Mar/10 Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17
ROE 12% 10% 12% 14% 13% 12% 13% 6% 9%
ROCE 7% 7% 6% 8% 8% 8% 8% 6% 6%
Cash Flows
Mar/09 Mar/10 Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17
Operating Cash Flow 918 -555 1,269 -801 2,899 1,225 5,164 -1,519 3,757
Free Cash Flow 603 -767 904 -1,366 2,292 288 4,008 -3,157 2,519
%
Capital Allocation Quality
Check for a rising trend and/or consistency.
% Numbers > 20% long term are good. Also check if the company
% has zero/marginal debt. Compare with a close competitor Note: Please ignore the dates
% on the X-axis. The figures are
% for/as on the year ending date,
which for most Indian
% companies would be 31st
% March of that year
%
%
Jan/09 Jan/11 Jan/13 Jan/15 Jan/17
ROE ROCE
Mar/18
7%
6%
Mar/18
9,753
1,344
879
Mar/18
-4,697
-5,522
Common Size P&L
Rs Cr Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Raw Material Cost 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Change in Inventory 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Power and Fuel 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Other Mfr. Exp 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
Employee Cost 10% 10% 12% 10% 10% 11% 12% 14% 13% 13%
Selling and Admin Cost 4% 4% 4% 4% 4% 4% 5% 5% 5% 5%
Other Expenses 16% 14% 15% 9% 7% 7% 5% 13% 12% 15%
Operating Profit 70% 72% 68% 77% 78% 77% 78% 68% 69% 66%
Other Income 16% 14% 13% 10% 11% 10% 12% 10% 12% 12%
Depreciation 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
Interest 60% 62% 57% 65% 68% 68% 68% 68% 65% 63%
Profit Before Tax 24% 23% 22% 21% 19% 17% 21% 9% 15% 14%
Tax 9% 11% 8% 7% 6% 5% 7% 3% 5% 5%
Net Profit 15% 13% 14% 14% 14% 12% 14% 6% 10% 9%
Dividend Amount 3% 2% 4% 3% 2% 2% 3% 2% 2% 2%
P.S. In case of companies earning negative FCF, where this model will not work, you must use a normalized positive FCF as
starting number. This number is your assumption of FCF the business will earn in a normal year, without capex. Check the his
this business while arriving at your assumption, and use your judgment wisely without twisting the model to fit your version of
Calculation
by Mohnish Pabrai
Avg 5-Yr Net Profit (Rs Crore) 806.0 Avg 5-Yr Net Profit (Rs Crore)
PE Ratio at 0% Growth 8.5 PE Ratio at 0% Growth
Long-Term Growth Rate 0.5 Long-Term Growth Rate
Ben Graham Value (Rs Crore) 7,618 Ben Graham Value (Rs Crore)
Current Market Cap (Rs Crore) 17,932 Current Market Cap (Rs Crore)
EXPLANATION
Ben Graham's Original Formula: Value = EPS x (8.5 + 2G)
Here, EPS is the trailing 12 month EPS, 8.5 is the P/E ratio of a stock with 0% growth and g is the growth rate for the next 7-10
806.0
8.5
1.0
8,386
17,932
e of around 1962 when Graham was publicizing his works, the risk free interest rate was 4.4% but to adjust to the present, we divide this nu
e present, we divide this number by today’s AAA corporate bond rate, represented by Y in the formula above.
Dicounted Cash Flow Valuation
FEDERAL BANK LTD
Final Calculations
Terminal Year (7,424)
PV of Year 1-10 Cash Flows ###
Terminal Value ###
Total PV of Cash Flows ###
Current Market Cap (Rs Cr) 17,932
META
Number of shares 198.47
Face Value 2
Current Price 90.35
Market Capitalization 17932.13
Quarters
Report Date Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
Sales 2066.25 2281.42 2315.95 2324.09 2379.6 2501.2
Expenses 691.73 750.72 697.99 808.36 779.69 779.66
Other Income 272.07 275.41 282.11 329.1 287.22 228.63
Depreciation
Interest 1340.06 1490.03 1473.56 1523.42 1480.69 1551.2
Profit before tax 306.53 316.08 426.51 321.41 406.44 398.97
Tax 105.29 110.43 169.92 111.26 142.74 138.96
Net profit 201.24 205.65 256.59 210.15 263.7 260.01
Operating Profit 1374.52 1530.7 1617.96 1515.73 1599.91 1721.54
BALANCE SHEET
Report Date Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Equity Share Capital 171.03 171.03 171.05 171.05 171.06 171.06
Reserves 4148.74 4513.56 4931.98 5529.87 6188.39 6774.52
Borrowings 33417.13 37604.71 44903.14 53178.15 62801.85 65419.24
Other Liabilities 1239.69 1533.01 1692.91 1747.7 2140.77 2605.65
Total 38976.59 43822.31 51699.08 60626.77 71302.07 74970.47
Net Block 280.78 289.77 289.82 326.14 397.47 402.33
Capital Work in Progress 2.4 22.62
Investments 12118.97 13054.65 14537.67 17402.49 21154.59 24117.85
Other Assets 26576.84 30477.89 36871.59 42898.14 49747.61 50427.67
Total 38976.59 43822.31 51699.08 60626.77 71302.07 74970.47
Receivables
Inventory
Cash & Bank 3437.09 2723.39 3748.3 3532.55 3719.99 4529.38
No. of Equity Shares 171317910 171317910 171317910 171317910 171329541 856663830
New Bonus Shares
Face value 10 10 10 10 10 2
CASH FLOW:
Report Date Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Cash from Operating Activity 918.11 -555.25 1268.5 -800.95 2899.17 1224.76
Cash from Investing Activity -155.76 -58.73 -144.21 -1598.5 -3479.26 -736.36
Cash from Financing Activity -70.74 -99.73 -99.38 2183.7 767.53 320.99
Net Cash Flow 691.61 -713.71 1024.91 -215.75 187.44 809.39
DERIVED:
Adjusted Equity Shares in Cr 85.66 85.66 85.66 85.66 85.66 85.67
DO NOT MAKE ANY CHANGES TO THIS SHEET
2 2 2 2
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