Heritage Foods Income Statement

Heritage Foods (in crores) FY16 FY17

INCOME
Revenue from operations (net) 2380 2643
Other income 7 6
Total revenue 2387 2649

EXPENSES
Cost of materials consumed 1879 2063
Power and fuel 29 28
Employee benefit expenses 139.99 164.72
Finance Costs 15.49 11.22
Depreciation and amortization expenses 34.51 37.8
Other expenses 201.68 246.16
Profit before exceptional and extraordinary
items and tax 87 98
Exceptional Items 1 0
Profit before tax 86 98
Tax 31 31
Profit after Tax 55.01 67
Weighted average number of equity shares
outstanding (in crores) 2.3199 2.3199
Earnings per share (EPS) 23.7 28.9
Dividend per share 3 4
 Actual Average Growth
Heritage Foods
FY16 FY17 FY18 FY19 FY20
Revenue 2387 2649 2913.90 3205.29 3525.82
% Growth 0.109761 10.0% 10% 10% 10%
Cost of Materials Consumed 1879 2063 2281.533 2509.686 2760.655
% of Revenue 0.78718056 0.778784 78.3% 78.3% 78.3% 78.3%
Gross Profit 508 586 632.3673 695.604 765.1644
% of Revenue 0.21281944 0.221216 21.7% 21.7% 21.7% 21.7%
Operating Expenses 168.99 192.72 209.1422 230.0564 253.0621
% of Revenue 0.07079598 0.072752 7.2% 7.2% 7.2% 7.2%
Other Income or Expenses 201.68 246.16 258.49 284.34 312.77
% of Revenue 0.08449099 0.092926 8.9% 8.9% 8.9% 8.9%
EBITDA 137.33 147.12 164.74 181.21 199.33
% margin 0.05753247 0.055538 5.7% 5.7% 5.7% 5.7%
D&A 34.51 37.8 41.85 46.04 50.64
% of Revenue 0.01445748 0.01427 1.4% 1.4% 1.4% 1.4%
EBIT 102.82 109.32 122.88 135.17 148.69
% margin 0.04307499 0.041268 4.2% 4.2% 4.2% 4.2%
Finance Costs 15.49 11.22 15.63 17.19 18.91
% of Revenue 0.00648932 0.004236 0.5% 0.5% 0.5% 0.5%
PBT 87.33 98.1 107.26 117.98 129.78
% of Revenue 0.03658567 0.037033 3.7% 3.7% 3.7% 3.7%
Tax 31 31 32.18 35.40 38.93
% of PBT 0.35497538 0.316004 33.5% 30.0% 30.0% 30.0%
PAT 56.33 67.1 75.08 82.59 90.85
% of Revenue 0.02359866 0.02533 2.4% 2.6% 2.6% 2.6%

Capex -83.545 -92.715 -101.99 -112.19 -123.40

% of Revenue 0.035 0.035 3.5% 3.5% 3.5% 3.5%
 Forecast Period
FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28
3878.40 4266.24 4692.87 5162.15 5678.37 6246.20 6870.82 7557.91
10% 10% 10% 10% 10% 10% 10% 10%
3036.72 3340.392 3674.431 4041.874 4446.062 4890.668 5379.735 5917.7083
78.3% 78.3% 78.3% 78.3% 78.3% 78.3% 78.3% 78.3%
841.6809 925.8489 1018.434 1120.277 1232.305 1355.535 1491.089 1640.1979
21.7% 21.7% 21.7% 21.7% 21.7% 21.7% 21.7% 21.7%
278.3683 306.2051 336.8256 370.5082 407.559 448.3149 493.1464 542.46101
7.2% 7.2% 7.2% 7.2% 7.2% 7.2% 7.2% 7.2%
344.05 378.45 416.30 457.93 503.72 554.09 609.50 670.45
8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9%
219.27 241.19 265.31 291.84 321.03 353.13 388.44 427.29
5.7% 5.7% 5.7% 5.7% 5.7% 5.7% 5.7% 5.7%
55.71 61.28 67.41 74.15 81.56 89.72 98.69 108.56
1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4%
163.56 179.91 197.91 217.70 239.47 263.41 289.75 318.73
4.2% 4.2% 4.2% 4.2% 4.2% 4.2% 4.2% 4.2%
20.80 22.88 25.17 27.68 30.45 33.49 36.84 40.53
0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
142.76 157.04 172.74 190.01 209.02 229.92 252.91 278.20
3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7%
42.83 47.11 51.82 57.00 62.70 68.98 75.87 83.46
30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0%
99.93 109.93 120.92 133.01 146.31 160.94 177.04 194.74
2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6%

-135.74 -149.32 -164.25 -180.68 -198.74 -218.62 -240.48 -264.53

3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%
 Heritage Foods Balance Sheet

Heritage Foods (in crores) FY16 FY17

EQUITY AND LIABILITIES
Shareholder's funds 240 303
Share Capital 23.19 23.19
Reserves and surplus 217 280

NON CURRENT LIABILITIES

Long term borrowings 65.84 69.45
Deferred tax liabilities (net) 18.68 19.08
Other long-term liabilities 10.45 11.48
Long-term provisions 5.51 4.89

CURRENT LIABILITIES
Short-term borrowings 39.25 65.87
Trade payables 84.66 50.75
Other current liabilities 94.7 107.16
Short-term provisions 15.82 5.98
TOTAL 575 638

ASSETS
FIXED ASSETS
Property, plant, and equipment 310 281
Intangible assets 2 0
Capital work-in-progress 10 8
Non-current investments 1 149
Long-term loans and advances 24 17
Other non-current assets 1 1

CURRENT ASSETS
Current investments 0.02 0.02
Inventories 145 116
Trade receivables 29 11
Cash and bank balances 45 46
Short-term loans and advances 7 8
Other current assets 2 1
TOTAL 575 638
 Calculation of Net Working Capital
Actual Average Growth
Heritage Foods
FY16 FY17 FY18 FY19
Current investments 0.02 0.02
Inventories 145 116
Trade receivables 29 11
Short-term loans and advances 7 8
Other current assets 2 1
TOTAL CURRENT ASSETS 183.02 136.02 186.52 205.17
% Of Revenue 7.7% 5.1% 6.4% 6.4% 6.4%

Short-term borrowings 39.25 65.87

Trade payables 84.66 50.75
Other current liabilities 94.7 107.16
Short-term provisions 15.82 5.98
TOTAL CURRENT LIABILITIES 234.43 229.76 269.46 296.40
% of Revenue 9.8% 8.7% 9.2% 9.2% 9.2%

NET WORKING CAPITAL -51.41 -93.74 -82.94 -91.23

% of Revenue -2.2% -3.5% -2.8% -2.8% -2.8%

Increase/Decrease in Net working capital -42.33 10.80 -8.29

of Net Working Capital
Forecast Period
FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28

225.69 248.26 273.08 300.39 330.43 363.48 399.82 439.81 483.79

6.4% 6.4% 6.4% 6.4% 6.4% 6.4% 6.4% 6.4% 6.4%

326.04 358.65 394.51 433.96 477.36 525.09 577.60 635.36 698.90

9.2% 9.2% 9.2% 9.2% 9.2% 9.2% 9.2% 9.2% 9.2%

-100.35 -110.39 -121.43 -133.57 -146.93 -161.62 -177.78 -195.56 -215.11

-2.8% -2.8% -2.8% -2.8% -2.8% -2.8% -2.8% -2.8% -2.8%

-9.12 -10.04 -11.04 -12.14 -13.36 -14.69 -16.16 -17.78 -19.56

 Heritage Foods (in crs.) Actual Average Growth
Financial Year --> 16 17 18
EBITDA 137.33 147.12 164.74
Income Tax -31.00 -31.00 -32.18
Capex -83.55 -92.72 -101.99
Increase/Decrease in Net Working Capital -42.33 10.80

Unlevered Free Cash Flows 22.79 -18.93 41.38

Present value of each cash flow in FY17 -18.93 39.40745

Shares outstanding 2.32

Current Share price 1400
Equity Value 3247.86
Total Debt 135.32
Total Capital Employed 3383.18

Calculation of WACC
Debt to total capital 4.0%
Equity to total capital 96.0%

Cost of debt 8.5%

Cost of equity 9.0%
Equity Risk Premium 4.0%
Beta 0.5
Risk free rate 7%
Market return 11%
Tax rate 30%
WACC 8.88%

Growth Rate 5%

Terminal Value 1617.64

PV of Terminal Value 945.80
PV of Future Cash Flows 325.28

ENTERPRISE VALUE (in crores) 1271.08

Debt 135.32
Minority Interest 0
Cash 46
Equity Value 1360.40
Shares Outstanding 2.32
Per Share Price (in INR) 586.40
 Forecast Period
19 20 21 22 23 24 25 26 27
181.21 199.33 219.27 241.19 265.31 291.84 321.03 353.13 388.44
-35.40 -38.93 -42.83 -47.11 -51.82 -57.00 -62.70 -68.98 -75.87
-112.19 -123.40 -135.74 -149.32 -164.25 -180.68 -198.74 -218.62 -240.48
-8.29 -9.12 -10.04 -11.04 -12.14 -13.36 -14.69 -16.16 -17.78

25.34 27.87 30.66 33.72 37.10 40.81 44.89 49.38 54.31

22.98201 24.07639 25.22288 26.42397 27.68226 29.00046 30.38143 31.82817 33.3438
 28
427.29
-83.46
-264.53
-19.56

59.74
34.9316