Transaction Assumptions

(INR mn, except per share)

ACQUIRER TARGET
AAA TTT

Market Price 20 12.81

52 wk High 45 28.22
52 wk Low 27 10.49
7 Day Trading Average 12.64

Shares Oustanding 225 46

In the money shares 0 0
Fully Diluted Shares 225 46

Equity Value 4500 589.26

Net Debt 40 10 CHECK
Enterprise Value 4540 599.26
 PURCHASE PRICE RATIO ANALYSIS
Acquirer Share Price 20

Target Share Price 12.81 14 15

Fully Diluted Shares 46 46 46

Equity Value 589.26 644 690

Net Debt 10 10 10
Total Enterprise Value 599 654 700

Swap ratio 0.6 0.7 0.8

TARGET COMPANY

PREMIUM ANALYSIS

Current Price 12.81 0% 9.3% 17.1%

52 Week High 28.22 -54.6% -50.4% -46.8%
52 Week Low 10.49 22.1% 33.5% 43.0%
7 day Trading Average 12.64 1.34% 10.76% 18.67%

MULTIPLE ANALYSIS

EV/SALES
FY 2019 Sales 328 1.83 2.00 2.14
FY 2020 Sales 347 1.73 1.88 2.02
FY 2021 Sales 368 1.63 1.78 1.90

EV/EBITDA
FY 2019 EBITDA 105 5.72 6.24 6.68
FY 2020 EBITDA 104 5.75 6.28 6.72
FY 2021 EBITDA 110 5.43 5.92 6.34

EV/EBIT
FY 2019 EBIT 79 7.62 8.32 8.90
FY 2020 EBIT 76 7.85 8.56 9.16
FY 2021 EBIT 81 7.40 8.08 8.65

P/E
FY 2019 Cash EPS 1.04 12.27 13.41 14.37
FY 2020 Cash EPS 1.01 12.68 13.86 14.85
FY 2021 Cash EPS 1.08 11.86 12.96 13.89
NALYSIS

16 17 18
46 46 ### 46

736 782
### 828
10 10
### 10
746 792
### 838

0.8 0.9
### 0.9

24.9%
-43.3%
52.5%
26.58%

2.28
2.15
2.03

7.12
7.16
6.76

9.49
9.77
9.21
15.32
15.84
14.82
 SOURCES & USES OF FUNDS

Target Co
12.81 15 16 17 18
Fully Diluted Shares 46 46 46 46 46

USES OF CASH
EQUITY Consideration 589.26 690 736 782 828
Debt Assumed 230
### 230 230 230 230
Advisory Fees 20
### 20
### 20
### 20 20 0
Total Uses 839.26
### 940 986 1032 1078

#REF!
SOURCES
Equity 589.26
### 690 736 782 828
Cash Consideration 20
### 20 20 20 20
Target Debt assumed 230
### 230 230 230 230
839.26
### 940
### 986
### 1032 0 1078 0
19
46

874
230
20
1124

874
20
230
1124
 PRO-FORMA INCOME STATEMENT
Historic Forecasted period
2017 2018 2019 2020 2021
TotaL Revenue 2150 2529 2881 3155 3457
% Growth
COGS 1075 1264.5 1440 1578 1729
COGS Synergies -20 -20
Net COGS 1558 1709
% of sales 50% 50% 50% 49% 49%
Gross Profit 1075 1264.5 1440 1598 1749
% Margin 50% 50% 50% 51% 51%
SG&A 258 379 493 547 599
SG&A Synergies -30 -30
Net SG&A 517 569
% of sales 16% 16%

EBITDA with synergy 817 885 947 1081 1180

% Margin 38% 35% 33% 34% 34%
Existing Deprt +amort 116.5 136 154 189 207
% of sales 5% 5% 5% 6% 6%

EBIT with synergy 700.5 749.4 793.4 892 972

% Margin 33% 30% 28% 28% 28%
Interest (Income)/Expense 40 40 40 40 40
Income before tax 660.5 709 753 852 932
Tax@30% 198.15 213 226 255 280
Cash Net Income 462.35 497 527 596 653
% margin 22% 20% 18% 19% 19%
Diluted Shares Oustanding 254 254

stock Payment
Exchange ratio 0.6405
New Shares issued 29.463
Diluted Shares Oustanding 254 254
Acquirer EPS post M&A 2.34 2.56
Acquirer EPS before M&A 1.81 1.98 2.13 2.353 2.60
% ACCRET/DILT -0.4% -1.3%

Cash payment
Cash Consideration 589.3
Debt Financed@8% 8.0%
EBIT with synergy 701 749 793 892 972
Interest Expense 40 40 40 87 87
Income before tax 661 709 753 804 885
tax @30% 198 213 226 241 266
Cash net income 462 497 527 563 620
Diluted Shares Oustanding 225 225

Acquirer EPS post M&A 2.50 2.75

Acquirer EPS before M&A 1.81 1.98 2.13 2.35 2.60
% ACCRET/DILT 6.4% 6.0%

CAPEX 129 151.74 173 95 104

% of Sales 6% 6% 6% 3% 3%
casted period
2022 2023
3788
Assumption: no rev synergies
1894 HERE we take COGS and SG&A synergies.
-20 However, whether you identify COGS,
SG&A, or revenue synergies depends on the
1874 nature of the transaction and the
49% businesses to be combined.
1914
51%
656
-30
626
17%

1288
34%
227
6%

1061
28%
40
1021
306
715
19%
254
 254
2.81
2.87
-2.0%

1061
87
974
292
682
225

3.03
2.87
5.7%

114
3%
ergies
A synergies.
tify COGS,
pends on the
and the
ined.
 1850
ACQUIRER INCOME STATEMENT
Historic Forecasted period
2017 2018 2019 2020 2021
TotaL Revenue 1850 2220 2553 2808.3 3089.1
% Growth 20% 15% 10% 10%
COGS 925 1110 1276.5 1404 1545
% of Sales 50% 50% 50% 50% 50%
Gross Profit 925 1110 1276.5 1404 1545
% Margin 50% 50% 50% 50% 50%
SG&A 222 333 434.01 477.41 525.15
% of sales 12% 15% 17% 17% 17%

EBITDA 703 777 842.49 927 1019

% Margin 38% 35% 33% 33% 33%
Deprt +amort 92.5 111 127.65 140.42 154.46
% of sales 5% 5% 5% 5% 5%

EBIT 610.5 666 714.84 786 865

% Margin 33% 30% 28% 28% 28%

Interest (Income)/Expense (3.5%) 30 30 30 30 30

Income before tax 580.5 636 684.84 756 835
Tax@30% 174.15 190.8 205.45 226.9 250.49

Cash Net Income 406.35 445.2 479.39 529.43 584.47

% margin 22% 20% 19% 19% 19%

Cash EPS 1.81 1.98 2.13 2.35 2.60

Diluted Shares Oustanding 225 225 225 225 225

CAPEX 64.75 77.7 89.355 168.5 185.35

% of Sales 3.5% 3.5% 3.5% 6.0% 6.0%
casted period
2022 2023
3398
Revenue Growth --- at 10%
10% lacks revenue growth
1699
50%
1699
50%
577.67 Opetating costs high
17%

1121
33%
169.9
5%

951
28%

30
921
276.44

645.02
19%

2.87

225

203.88
6.0%
 ###
TARGET INCOME STATEMENT
Historical Forecasted Period
2017 2018 2019 2020 2021
TotaL Revenue 300 309 328 347 368
% Growth 3% 6% 6% 6%
COGS 150 154.5 164 174 184
% of Sales 50% 50% 50% 50% 50%
Gross Profit 150 154.5 164 174 184
% Margin 50% 50% 50% 50% 50%
SG&A 36 46.35 59 69 74
% of sales 12% 15% 18% 20% 20%

EBITDA 114 108 105 104 110

% Margin 38% 35% 32% 30% 30%
Deprt +amort 24 25 26 28 29
% of sales 8% 8% 8% 8% 8%

EBIT 90 83.4 78.6 76 81

% Margin 30% 27% 24% 22% 22%

Interest (Income)/Expense (8%) 10 10 10 10 10

Income before tax 80 73 69 66 71
Tax@30% 24 22 21 20 21

Cash Net Income 56 51 48 46 50

% margin 19% 17% 15% 13% 13%

Cash EPS 1.22 1.12 1.04 1.01 1.08

Diluted Shares Oustanding 46 46 46 46 46

CAPEX 18 18.54 20 10 11
% of Sales 6% 6% 6% 3% 3%
ecasted Period
2022 2023
390
6% growing Revenues
195
50%
195
50%
78 SG&A high, scope of
20% operational synergies

117
30%
31
8%

86
22%

10
76
23

53
14%

1.15

46

12
Lacks Gowth Opportunities
3%
 PROFORMA BALANCE SHEET

2019 2019 2019

ACQUIRER TARGET Adjustments Pro Forma
ASSETS
Current Assets
Cash & Equiv 1200 170 1370
Accnts Rec 370 120 490
Inventory 50 30 80
Other Current Assets 50 25 75
Total Current Assets 1670 345 2015

Net PP&E 320 105 425 Any goodwill items e

target's balance shee
D&A 125 35 160 of acquisition are wri
Goodwill 1330 20 -20 129 1459 purchase price allo
Intangibles 245 95 340 since their fair values
Other Assets 150 120 270
Finnacing fee 20 20
Total Assets 3840 720
### ### 4689

Liabilities and SH equity

Current Liabilities
Accounts payable 165 50 215
Accrued Expenses 70 5 75
Other Current Liabilities 15 5 20
current portion of LTDebt 0 0 0
Total Current Liabilities 250 60 310

Term Loans 1240 180 1420

Other LT Liabilities 50 0 50
Total Liabilities 1540 240 1780

Common shares@FV 10 2250 460 -460 589 2839

Retained earnings 50 20 70
RE adjustment

Total SH Equity 2300 480 2909

Total Liabilities & SH equity 3840 720
### ### 4689

check 0 ###
0 ### 0
 GOODWILL
equity consideration - original equity

Any goodwill items existing on the

target's balance sheet at the time
of acquisition are written off in the
purchase price allocation (PPA)
since their fair values (FVs) are zero

0
DCF TARGET

2017 2018 2019 2020 2021 2022

TotaL Revenue 300 309 328 347 368 390
% Growth 3% 6% 6% 6% 6%
COGS 150 154.5 164 174 184 195
% of Sales 50% 50% 50% 50% 50% 50%
Gross Profit 150 154.5 164 174 184 195
% Margin 50% 50% 50% 50% 50% 50%
SG&A 36 46.35 59 69 74 78
% of sales 12% 15% 18% 20% 20% 20%

EBITDA 114 108 105 104 110 117

% Margin 38% 35% 32% 30% 30% 30%
Deprt +amort 24 25 26 28 29 31
% of sales 8% 8% 8% 8% 8% 8%

EBIT 90 83.4 78.6 76 81 86

Tax rate 30% 30% 30% 30% 30% 30%
EBIT(1-T) 63.0 58.4 55.0 53.5 56.7 60.1
Add: Depreciation 24.0 24.7 26.2 27.8 29.4 31.2
Less: Capex 18.0 18.5 19.7 20.8 22.1 23.4
Less changes in WC 6 6 7 7 7 8

FCFF 63 58 55 53 57 60
PV of FCFF 170
WACC 12%

EBITDA Perptuity
Multiple meth
5
Terminal value 585 569
PV of TV 330 321
Enterprise Value 500 491

Total Enterprise Value Total Enterprise Value

500 4.5 5 5.5 491 4% 4.77%
11% 487 521 556 11% 553 553
12.2% 467 500 533 12% 498 498
13% 453 484 516 13% 452 452

EV more sensitive to Growth rate than Exit multiple

 CAGR WACC CALCUALTION
20018-22 TARGET
4.77% BETA 1.15
Rf 5%
2.97% RPr 7%
Wd 10%
We 90%
Kd 4%
Ke 13%
WACC 12.15%

1.59%

PV OF SYNERGY GAIN
2020 2021 2022
ΔEBIT 50 50 50
Tax Rate 30% 30% 30%
ΔFCFF 35 35 35
NPV 80.42
TV 327.7154
PV of TV 241.7

PV of SYNERGY 322

prise Value
6%
553
498
452

iple
WACC CALCUALTION
Merged entity
BETA 1.05
Rf 5%
RPr 7%
Wd 20%
We 80%
Kd 4%
Ke 12%
WACC 10.68%