Safal Niveshak Stock Analysis Excel (Ver.

4
www.safalniveshak.com

HOW TO USE THIS SPREADSHEET

Step 1 - This spreadsheet works only on Screener.in. The first step is to create a free account here - https://www.screener.in/r
Step 2 - After creating your account, while you are logged in to Screener.in website, visit this page - https://www.screener.in/e
Step 3 - Visit the home page of Screener.in and choose a company of your choice. Once you do that, you will see details of you
financial statement table called "Quarterly Results" and click on "View Consolidated". Now, all data you see for this company w

Step 4 - Scroll back to the top of the page, and you will see a button "Export to Excel" on the right side. Click the button and the
the exact format as "Safal Niveshak's Stock Analysis Excel Ver. 4.0". Now onwards, any excel you export for any company on S
Step 5 - Email me your love and testimonial for helping you with this excel. :-)

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"
which you must update manually from the company's annual reports. Don’t forget to make these changes as these numbers are
3. You may update the sheet and add your own analysis, formulae etc. and then upload again to Screener.in site using the Ste
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 (
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.

Note: All data is sourced from Screener.in

 Safal Niveshak Stock Warning! Excel can be a wonde
deadly weapon if you wish t
Analysis Excel (Ver. 4.0) careful of what you are gettin
garbage out. And if you need th
given stock, you m
www.safalniveshak.com
Basic Company Details
Parameters Details
Company HERO MOTOCORP LTD
Current Stock Price (Rs) 2,881 Remember! Focus on decisio
Face Value (Rs) 2.0 eviden
No. of Shares (Crore) 20.0
Market Capitalization (Rs Crore) 57,542

Key Financials - Trend

Parameters Details
Sales Growth (9-Year CAGR) 11.3% Please! It's your money. Plea
cause you to lose it all! I've de
Profit Before Tax Growth (9-Year CAGR) 12.7% but you alone are responsible
Net Profit Growth (8-Year CAGR) 12.5% ever after! I am not a sadist
Average Debt/Equity (5-Years, x) 0.0 analyzing companies on you
instead of a map, for you can c
Average Return on Equity (5-Years) 34.9%
Average P/E (5-Years, x) 20.0
Latest P/E (x) 15.6
Warning! Excel can be a wonderful tool to analyze the past. But it can be a
deadly weapon if you wish to use it to predict the future! So be very
careful of what you are getting into. Here, garbage in will always equal
garbage out. And if you need the excel to tell you what you must do with a
given stock, you must not use this tool anyways.

Remember! Focus on decisions, not outcomes. Look for disconfirming

evidence. Calculate. Pray!

Please! It's your money. Please don't blame me if results of this excel
cause you to lose it all! I've designed this excel to aid your own thinking,
but you alone are responsible for your actions. I want to live peacefully
ever after! I am not a sadist who wants you to do the hard work by
analyzing companies on your own. But I'd rather give you a compass
instead of a map, for you can confuse map with territory and lose it all. All
the best!
 Buffett Checklist - Read, Remember, Follow!
Source - Buffettology by Mary Buffett & David Clark
Parameter

Consumer monopoly or commodity?

Understand how business works

Is the company conservatively financed?

Are earnings strong and do they show an

upward trend?

Does the company stick with what it

knows?

Has the company been buying back its

shares?

Have retained earnings been invested

well?

Is the company’s return on equity above

average?

Is the company free to adjust prices to

inflation?
Does the company need to constantly
reinvest in capital?

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.

Focus on decisions, not outcomes. Look for disconfirming evidence.

 Balance Sheet
HERO MOTOCORP LTD
Rs Cr Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
Equity Share Capital 40 40 40 40 40 40 40 40 40 40
Reserves 3,761 3,425 2,916 4,250 4,966 5,560 6,501 8,794 10,071 11,729
Borrowings 78 66 693 719 642 284 - - - -
Other Liabilities 2,206 4,992 7,083 4,886 4,001 4,218 3,987 3,796 4,645 5,036
Total 6,085 8,523 10,732 9,895 9,649 10,102 10,528 12,631 14,757 16,805

Net Block 1,574 1,659 4,080 3,786 3,071 2,243 2,913 3,584 4,396 4,655
Capital Work in Progress 121 48 50 39 62 854 713 605 465 318
Investments 3,369 3,926 5,129 3,964 3,624 4,089 3,154 4,581 5,890 7,525
Other Assets 1,022 2,890 1,473 2,107 2,892 2,916 3,749 3,860 4,006 4,307
Total 6,085 8,523 10,732 9,895 9,649 10,102 10,528 12,631 14,757 16,805

Working Capital -1,184 -2,102 -5,610 -2,779 -1,109 -1,302 -238 64 -639 -729
Debtors 150 108 131 272 665 921 1,390 1,283 1,562 1,520
Inventory 327 436 525 676 637 670 815 673 656 824
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 4 3 2 4 10 13 18 16 20 17
Inventory Turnover 38 36 37 35 37 38 34 42 43 39
Fixed Asset Turnover 7.8 9.5 4.8 6.2 7.7 11.3 9.5 7.9 6.5 6.9
Debt/Equity 0.0 0.0 0.2 0.2 0.1 0.1 - - - -
Return on Equity 34% 64% 65% 55% 42% 38% 36% 36% 33% 31%
Return on Capital Employed 46% 80% 66% 58% 45% 49% 51% 50% 46% 45%
 Profit & Loss Account / Income Statement
HERO MOTOCORP 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 12,319 15,758 19,398 23,579 23,768 25,275 27,585 28,443 28,500 32,230 33,050
% Growth YOY 28% 23% 22% 1% 6% 9% 3% 0% 13%
Expenses 10,635 13,096 16,865 19,960 20,484 21,735 24,198 23,988 23,866 26,950 27,688
Material Cost (% of Sales) 71% 68% 73% 74% 73% 72% 72% 68% 67% 68% Check for wide fluctuations in key
Power and Fuel 1% 1% 1% 0% 1% 1% 1% 0% 0% 0% expense items. For manufacturing firms,
Other Mfr. Exp 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% check their material costs etc. For
Employee Cost 3% 3% 3% 3% 3% 4% 4% 5% 5% 5% services firms, look at employee costs.
Selling and Admin Cost 9% 9% 7% 5% 6% 6% 7% 7% 7% 7%
Operating Profit 1,684 2,662 2,533 3,619 3,284 3,540 3,387 4,455 4,635 5,280 5,362
Operating Profit Margin 14% 17% 13% 15% 14% 14% 12% 16% 16% 16% 16%
Other Income 280 363 290 365 398 446 493 422 522 526 510
Other Income as % of Sales 2.3% 2.3% 1.5% 1.5% 1.7% 1.8% 1.8% 1.5% 1.8% 1.6% 1.5%
Depreciation 181 191 402 1,097 1,142 1,107 540 438 493 556 571
Interest 3 2 15 21 12 12 11 5 6 6 7
Interest Coverage(Times) 705 1,349 160 135 213 244 301 908 771 840 782
Profit before tax (PBT) 1,781 2,832 2,405 2,865 2,529 2,867 3,329 4,435 4,658 5,244 5,294
% Growth YOY 59% -15% 19% -12% 13% 16% 33% 5% 13%
PBT Margin 14% 18% 12% 12% 11% 11% 12% 16% 16% 16% 16%
Tax 500 600 477 487 411 758 943 1,275 1,281 1,547 1,601
Net profit 1,282 2,232 1,928 2,378 2,118 2,109 2,386 3,160 3,377 3,697 3,692
% Growth YOY 74% -14% 23% -11% 0% 13% 32% 7% 9%
Net Profit Margin 10% 14% 10% 10% 9% 8% 9% 11% 12% 11% 11%
EPS 64.2 111.8 96.5 119.1 106.1 105.6 119.5 158.3 169.1 185.1 184.9
% Growth YOY 74% -14% 23% -11% 0% 13% 32% 7% 9%
Price to earning 17.0 17.4 17.8 17.7 14.3 21.0 20.7 18.8 19.1 20.2 15.6
Price 1,093 1,941 1,714 2,107 1,517 2,222 2,476 2,980 3,231 3,732 2,881
Dividend Payout 31.2% 98.4% 108.8% 37.8% 56.6% 61.5% 50.2% 45.5% 50.3% 51.3%
Market Cap 21,819 38,768 34,222 42,080 30,296 44,362 49,436 59,515 64,524 74,530
Retained Earnings 882 35 -169 1,479 920 811 1,187 1,722 1,680 1,800
Buffett's $1 Test 5.1

TRENDS: 10 YEARS 7 YEARS 5 YEARS 3 YEARS

Sales Growth 11.3% 7.5% 6.3% 5.3%
PBT Growth 12.7% 11.8% 15.7% 16.4%
PBT Margin 13.9% 13.5% 14.3% 16.1%
Price to Earning 18.4 18.8 20.0 19.4

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
HERO MOTOCORP LTD
Rs Cr Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Total
Cash from Operating Activity (CFO) 1,359 2,687 2,254 2,360 1,890 2,963 2,250 3,849 4,028 3,981 27,621
% Growth YoY 98% -16% 5% -20% 57% -24% 71% 5% -1%
Cash from Investing Activity -861 -528 -1,322 93 -733 -1,617 12 -2,206 -1,944 -1,915 -11,022
Cash from Financing Activity -500 -2,109 -955 -2,458 -1,056 -1,415 -2,231 -1,687 -2,096 -2,047 -16,553
Net Cash Flow -2 49 -23 -6 101 -69 32 -44 -12 19 46
CFO/Sales 11% 17% 12% 10% 8% 12% 8% 14% 14% 12%
CFO/Net Profit 106% 120% 117% 99% 89% 141% 94% 122% 119% 108%
Capex** 315 212 364 565 607 937 1,156 1,638 1,238 824
FCF 1,044 2,475 1,890 1,795 1,283 2,026 1,094 2,211 2,790 3,157 19,766
Average FCF (3 Years) 2,719
FCF Growth YoY 137% -24% -5% -28% 58% -46% 102% 26% 13%
FCF/Sales 8% 16% 10% 8% 5% 8% 4% 8% 10% 10%
FCF/Net Profit 81% 111% 98% 75% 61% 96% 46% 70% 83% 85%

** Manually enter this number;

Convert to Rs Crore if not already
done in the Annual Reports; Use
"Capital expenditure" number
shown under "Cash Flow from
Investing Activities" segment of
Consolidated Cash Flow Statement
available in the Annual Reports
 Key Ratios
HERO MOTOCORP LTD
Mar/09 Mar/10 Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17
Sales Growth 27.9% 23.1% 21.6% 0.8% 6.3% 9.1% 3.1% 0.2%
PBT Growth 59.0% -15.1% 19.1% -11.7% 13.4% 16.1% 33.2% 5.0%
Net Profit Growth 74.1% -13.6% 23.4% -10.9% -0.4% 13.1% 32.5% 6.9%
Dividend Growth 450.0% -4.5% -57.1% 33.3% 8.3% -7.7% 20.0% 18.1%
Operating Cash Flow Growth 97.7% -16.1% 4.7% -19.9% 56.8% -24.1% 71.1% 4.6%
Free Cash Flow Growth 137.1% -23.6% -5.0% -28.5% 57.9% -46.0% 102.1% 26.2%

Operating Margin 13.7% 16.9% 13.1% 15.3% 13.8% 14.0% 12.3% 15.7% 16.3%
PBT Margin 14.5% 18.0% 12.4% 12.1% 10.6% 11.3% 12.1% 15.6% 16.3%
Net Margin 10.4% 14.2% 9.9% 10.1% 8.9% 8.3% 8.6% 11.1% 11.8%

Debtor Days 4.4 2.5 2.5 4.2 10.2 13.3 18.4 16.5 20.0
Inventory Turnover 37.7 36.1 37.0 34.9 37.3 37.7 33.8 42.3 43.4
Fixed Asset Turnover 7.8 9.5 4.8 6.2 7.7 11.3 9.5 7.9 6.5
Debt/Equity 0.0 0.0 0.2 0.2 0.1 0.1 - - -
Debt/Assets 1.3% 0.8% 6.5% 7.3% 6.6% 2.8% 0.0% 0.0% 0.0%
Interest Coverage (Times) 705.1 1,349.4 159.5 135.5 213.4 243.6 301.2 907.9 771.0
Return on Equity 33.7% 64.4% 65.2% 55.4% 42.3% 37.7% 36.5% 35.8% 33.4%
Return on Capital Employed 46.0% 80.3% 66.3% 57.6% 45.0% 48.9% 51.1% 50.3% 46.1%
Free Cash Flow (Rs Cr) 1,044 2,475 1,890 1,795 1,283 2,026 1,094 2,211 2,790
Mar/18
13.1%
12.6%
9.5%
11.8%
-1.2%
13.1%

16.4%
16.3%
11.5%

17.2
39.1
6.9
-
0.0%
840.1
31.4%
44.6%
3,157
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

Lower/reducing is better. Compare with industry peer(s)

Higher/rising is better. Compare with industry peer(s)
Higher/rising is better. Compare with industry peer(s)
Nil / lower than 0.5 / reducing is better
Lower is better
Look for number > 5
Look for number > 20%. Also check if the debt is low/nil. Compare with industry peer(s)
Look for number > 20%. Also check if the debt is low/nil. Compare with industry peer(s)
Look for positive and rising numbers. If the company consistently generates negative FCF over say 10 years, avoid it.
20% Profit Margin 100% Capital Allo
Check for a rising trend a
15% 80% Numbers > 20% long term
has zero/marginal debt. C
60%
10%
40%
5%
Check for a rising trend and/or consistency. 20%
Compare with a close competitor
0% 0%
Jan/09 Jan/11 Jan/13 Jan/15 Jan/17 Jan/09 Jan/11 J

Operating Margin PBT Margin

Net Margin RO

35,000
Revenue 80% Revenue and P
Check for a rising trend. Check for a r
30,000 Compare gro
60%
25,000
20,000 40%
15,000
20%
10,000
5,000 0%
Jan/10 Jan/12
- -20%
Jan/09 Jan/11 Jan/13 Jan/15 Jan/17
Revenue Grow
Net Profit Gr

6,000 Profit Over Time Operating an

5,000 Check
Check for a rising trend. for positive numb
5,000 which are rising over tim
4,000
4,000
3,000
3,000
2,000
2,000
1,000 1,000
- -
Jan/09 Jan/11 Jan/13 Jan/15 Jan/17 Jan/09 Jan/11

PBT Net Profit Operating Cash F

Data for Charts (Please don't touch any number below)
Margins
Mar/09 Mar/10 Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17
Operating Margin 14% 17% 13% 15% 14% 14% 12% 16% 16%
PBT Margin 14% 18% 12% 12% 11% 11% 12% 16% 16%
Net Margin 10% 14% 10% 10% 9% 8% 9% 11% 12%

Management Effectiveness
Mar/09 Mar/10 Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17
ROE 34% 64% 65% 55% 42% 38% 36% 36% 33%
ROCE 46% 80% 66% 58% 45% 49% 51% 50% 46%

Revenue & Profit Growth

Mar/10 Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17 Mar/18
Revenue Growth 28% 23% 22% 1% 6% 9% 3% 0% 13%
PBT Growth 59% -15% 19% -12% 13% 16% 33% 5% 13%
Net Profit Growth 74% -14% 23% -11% 0% 13% 32% 7% 9%

Revenue & Profit

Mar/09 Mar/10 Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17
Revenue 12,319 15,758 19,398 23,579 23,768 25,275 27,585 28,443 28,500
PBT 1,781 2,832 2,405 2,865 2,529 2,867 3,329 4,435 4,658
Net Profit 1,282 2,232 1,928 2,378 2,118 2,109 2,386 3,160 3,377

Cash Flows
Mar/09 Mar/10 Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17
Operating Cash Flow 1,359 2,687 2,254 2,360 1,890 2,963 2,250 3,849 4,028
Free Cash Flow 1,044 2,475 1,890 1,795 1,283 2,026 1,094 2,211 2,790
% 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

Revenue and Profit Growth (YoY)

Check for a rising trend and/or low volatility.
Compare growth rates with a close competitor.

Jan/10 Jan/12 Jan/14 Jan/16 Jan/18

Revenue Growth PBT Growth

Net Profit Growth

Operating and Free Cash Flow

0 Check for positive numbers and
which are rising over time.
0
0
0
0

Jan/09 Jan/11 Jan/13 Jan/15 Jan/17

Operating Cash Flow Free Cash Flow

Mar/18
16%
16%
11%

Mar/18
31%
45%

Mar/18
32,230
5,244
3,697

Mar/18
3,981
3,157
 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 71% 68% 73% 74% 73% 72% 72% 68% 67% 68%
Change in Inventory 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Power and Fuel 1% 1% 1% 0% 1% 1% 1% 0% 0% 0%
Other Mfr. Exp 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
Employee Cost 3% 3% 3% 3% 3% 4% 4% 5% 5% 5%
Selling and Admin Cost 9% 9% 7% 5% 6% 6% 7% 7% 7% 7%
Other Expenses 2% 2% 2% 2% 2% 2% 3% 3% 4% 3%
Operating Profit 13% 17% 13% 15% 14% 14% 12% 16% 17% 16%
Other Income 2% 2% 1% 2% 2% 2% 2% 1% 2% 2%
Depreciation 1% 1% 2% 5% 5% 4% 2% 2% 2% 2%
Interest 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Profit Before Tax 14% 18% 12% 12% 11% 11% 12% 16% 16% 16%
Tax 4% 4% 2% 2% 2% 3% 3% 4% 4% 5%
Net Profit 10% 14% 10% 10% 9% 8% 9% 11% 12% 11%
Dividend Amount 3% 14% 11% 4% 5% 5% 4% 5% 6% 6%

Common Size Balance Sheet

Rs Cr Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Equity Share Capital 1% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Reserves 62% 40% 27% 43% 51% 55% 62% 70% 68% 70%
Borrowings 1% 1% 6% 7% 7% 3% 0% 0% 0% 0%
Other Liabilities 36% 59% 66% 49% 41% 42% 38% 30% 31% 30%
Total Liabilities 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Net Block 26% 19% 38% 38% 32% 22% 28% 28% 30% 28%
Capital Work in Progress 2% 1% 0% 0% 1% 8% 7% 5% 3% 2%
Investments 55% 46% 48% 40% 38% 40% 30% 36% 40% 45%
Other Assets 17% 34% 14% 21% 30% 29% 36% 31% 27% 26%
Total Assets 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Receivables 2% 1% 1% 3% 7% 9% 13% 10% 11% 9%
Inventory 5% 5% 5% 7% 7% 7% 8% 5% 4% 5%
Cash & Bank 4% 22% 1% 1% 2% 1% 2% 1% 1% 1%
 A common-size financial statement is displays line
items as a percentage of one selected or common
figure. Creating common-size financial statements
makes it easier to analyze a company over time and
compare it with its peers. Using common-size financial
statements helps investors spot trends that a raw
financial statement may not uncover.
 Dhandho Intrinsic Value Calculation
Read the book - The Dhandho Investor by Mohnish Pabrai

HERO MOTOCORP LTD HERO MOTOCORP LTD

Dhandho IV - Lower Range Dhandho IV - Higher Range
Year FCF (Rs Cr) PV of FCF (Rs Cr) Assumed FCF Growth Year
0 Excess Cash (Latest) 5,829 Year 1-3 15% 0 Excess Cash (Latest)
1 FY18 3,127 2,792 Year 4-6 10% 1 FY18
2 FY19 3,596 2,867 Year 7-10 5% 2 FY19
3 FY20 4,136 2,944 Discount Rate 12% 3 FY20
4 FY21 4,549 2,891 4 FY21
5 FY22 5,004 2,840 Last 5-Years' CAGR 5 FY22
6 FY23 5,505 2,789 Sales 6% 6 FY23
7 FY24 5,780 2,615 PBT 16% 7 FY24
8 FY25 6,069 2,451 FCF 20% 8 FY25
9 FY26 6,372 2,298 9 FY26
10 FY27 6,691 2,154 10 FY27
10 66,909 21,543 10
Intrinsic Value 54,012 Intrinsic Value
Current Mkt. Cap. 57,542 Current Mkt. Cap.
Premium/(Discount) to IV 7% Premium/(Discount) to IV

Note: See explanation of this model here

P.S. In case of companies earning negative FCF, where this model will not work, you must use a normalized positive FCF as th
number. This number is your assumption of FCF the business will earn in a normal year, without capex. Check the history
business while arriving at your assumption, and use your judgment wisely without twisting the model to fit your version of r
Calculation
by Mohnish Pabrai

HERO MOTOCORP LTD

Dhandho IV - Higher Range
FCF (Rs Cr) PV of FCF (Rs Cr) Assumed FCF Growth
Excess Cash (Latest) 5,829 Year 1-3 20%
3,263 2,914 Year 4-6 15%
3,916 3,122 Year 7-10 10%
4,699 3,345 Discount Rate 12%
5,404 3,434
6,214 3,526
7,146 3,621
7,861 3,556
8,647 3,492
9,512 3,430
10,463 3,369
156,947 50,533
Intrinsic Value 90,170
Current Mkt. Cap. 57,542
Premium/(Discount) to IV -36%

use a normalized positive FCF as the starting

, without capex. Check the history of this
ng the model to fit your version of reality.
 Ben Graham Formula (Low Range) Ben Graham Formula (High Range
Company Name HERO MOTOCORP LTD Company Name
Year Ended Mar/18 Year Ended

Avg 5-Yr Net Profit (Rs Crore) 2,945.9 Avg 5-Yr Net Profit (Rs Crore)
PE Ratio at 0% Growth 8.5 PE Ratio at 0% Growth
Long-Term Growth Rate 5.9 Long-Term Growth Rate

Ben Graham Value (Rs Crore) 59,759 Ben Graham Value (Rs Crore)
Current Market Cap (Rs Crore) 57,542 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

Ben Graham's Revised Formula: Value = [EPS x (8.5 + 2G) x 4.4] / Y

Here, 4.4 is what Graham determined to be his minimum required rate of return. At the time of around 1962 when Graham was

Note: I have used Graham's original formula in the above calculations

m Formula (High Range)
HERO MOTOCORP LTD
Mar/18

2,945.9
8.5
11.8

94,479
57,542

is the growth rate for the next 7-10 years

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 num
resent, we divide this number by today’s AAA corporate bond rate, represented by Y in the formula above.
 Dicounted Cash Flow Valuation
HERO MOTOCORP LTD

Initial Cash Flow (Rs Cr) 2,719 61,902

57,542
Years 1-5 6-10 108%
FCF Growth Rate 15% 12%
Discount Rate 12%
Terminal Growth Rate 2%

Net Debt Level (Rs Cr) (5,829)

Year FCF Growth Present Value

1 3,127 15% 2,792
2 3,596 15% 2,867
3 4,136 15% 2,944
4 4,756 15% 3,023
5 5,469 15% 3,104
6 6,126 12% 3,104
7 6,861 12% 3,104
8 7,684 12% 3,104
9 8,606 12% 3,104
10 9,639 12% 3,104

Final Calculations
Terminal Year 9,832
PV of Year 1-10 Cash Flows 30,246
Terminal Value 31,656
Total PV of Cash Flows 61,902
Current Market Cap (Rs Cr) 57,542

Note: See explanation of DCF here

Valuation
TD

DCF Value (As calculated in cell B29)

Current Market Cap
DCF as % of Current Mkt Cap
 Expected Returns Model
HERO MOTOCORP LTD
Particulars Mar/09 Mar/10 Mar/11 Mar/12 Mar/13 Mar/14 Mar/15
Net Profit (Rs Crore) 1,282 2,232 1,928 2,378 2,118 2,109 2,386
Net Profit Margin 10% 14% 10% 10% 9% 8% 9%
Return on Equity 34% 64% 65% 55% 42% 38% 36%

Calculations (Enter values only in black cells)

Estimated CAGR in Net Profit over next 10 years 12%
Estimated Net Profit after 10 years (Rs Cr) 11,483
Current P/E (x) 15.6
Exit P/E in the 10th year from now (x, Estimated) 20.0
Esti. Market Cap (10th year from now; Rs Cr) 229,669
Cost of Capital/Discount Rate 12%
Discounted Value (Rs Cr) 73,947
Current Market Cap (Rs Cr) 57,542

Note: See explanation of this model here

el
Mar/16 Mar/17 Mar/18 CAGR (9-Yr) CAGR (5-Yr)
3,160 3,377 3,697 12% 12%
11% 12% 11%
36% 33% 31%
 Intrinsic Value Range
HERO MOTOCORP LTD
Lower Higher Remember! Give importance to a stock's valuations / fai
Dhandho 54,012 90,170 only "after" you have answered in "Yes" to these two que
Ben Graham 59,759 94,479 (1) Is this business simple to be understood? and (2) C
DCF 61,902 understand this business?
Expected Return 73,947
Don't try to quantify everything. In stock research, the le
Current Market Cap. 57,542 mathematical you are, the more simple, sensible, and us
be your analysis and results. Great analysis is generally "
the-envelope".
Explanation: Considering the above
range, we can say that Hero Moto's IV Also, your calculated "fair value" will be proven wrong
range is between Rs 55,000 crore to Rs future, so don't invest your savings just because you fall
95,000 crore. It's a big range, but that's with it. Don't look for perfection. It is overrated. Focus
fine (who is looking for precision?). Now, decisions, not outcomes. Look for disconfirming evide
if the current market cap is within this IV
range, it makes the stock
reasonably/attractively priced. If the
current market cap is higher then the
higher value of the range, it makes it
overpriced. But remember, these are just
numbers!
importance to a stock's valuations / fair value
ve answered in "Yes" to these two questions -
ess simple to be understood? and (2) Can I
understand this business?

fy everything. In stock research, the less non-

are, the more simple, sensible, and useful will
nd results. Great analysis is generally "back-of-
the-envelope".

lated "fair value" will be proven wrong in the

vest your savings just because you fall in love
ok for perfection. It is overrated. Focus on
outcomes. Look for disconfirming evidence.
HERO MOTOCORP LTD
SCREENER.IN
Narration Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18
Sales 7,505 7,399 7,796 6,365 6,923 7,981 8,362 7,314 8,564 8,810
% Growth YOY -8% 8% 7% 15% 24% 10%
Expenses 6,316 6,169 6,427 5,285 5,965 6,685 6,906 6,156 7,193 7,433
Operating Profit 1,189 1,230 1,369 1,080 958 1,296 1,456 1,158 1,371 1,377
Other Income 117 120 152 132 118 132 118 110 167 116
Depreciation 115 115 119 125 135 133 136 138 148 148
Interest 1 2 2 2 1 2 2 2 2 2
Profit before tax 1,190 1,234 1,400 1,085 939 1,293 1,436 1,128 1,387 1,343
PBT Margin 16% 17% 18% 17% 14% 16% 17% 15% 16% 15%
% Growth YOY -21% 5% 3% 4% 48% 4%
Tax 357 351 396 313 221 379 425 323 420 434
Net profit 833 883 1,004 772 718 914 1,010 805 967 909
% Growth YOY -14% 4% 1% 4% 35% -1%
OPM 16% 17% 18% 17% 14% 16% 17% 16% 16% 16%
COMPANY NAME HERO MOTOCORP LTD
LATEST VERSION 2.10 PLEASE DO NOT MAKE ANY CHA
CURRENT VERSION 2.10

META
Number of shares 19.97
Face Value 2
Current Price 2881.25
Market Capitalization 57541.86

PROFIT & LOSS

Report Date Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Sales 12319.12 15758.18 19397.93 23579.03 23768.11 25275.47
Raw Material Cost 8,760.22 10,730.41 14,135.17 17,365.41 17,364.86 18,221.53
Change in Inventory 18.21 -5.95 24.06 83.84 -32.80 -8.36
Power and Fuel 73.7 81.05 100.47 112.66 129.18 137.46
Other Mfr. Exp 113.33 143.49 164.83 187.56 213.96 232.61
Employee Cost 370.71 437.83 618.95 735.52 820.92 930.04
Selling and admin 1047.27 1401.46 1396.59 1155.37 1392.12 1591.85
Other Expenses 287.75 296.02 473.29 487.57 529.79 613.56
Other Income 280.3 363.33 289.62 364.57 398.38 446.38
Depreciation 180.66 191.47 402.38 1097.34 1141.75 1107.37
Interest 2.53 2.1 15.17 21.3 11.91 11.82
Profit before tax 1781.46 2831.73 2404.76 2864.71 2529.2 2867.25
Tax 499.7 599.9 476.86 486.58 411.04 758.17
Net profit 1281.76 2231.83 1927.9 2378.13 2118.16 2109.08
Dividend Amount 399.4 2196.7 2096.85 898.65 1198.2 1298.05

Quarters
Report Date Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17
Sales 7505.17 7398.91 7796.28 6364.6 6922.8 7980.5
Expenses 6315.99 6168.83 6427.41 5284.86 5965.24 6684.59
Other Income 116.76 120.37 152.36 131.93 118.23 131.7
Depreciation 114.74 115.24 119.25 124.85 135.3 132.95
Interest 1.22 1.50 1.55 1.52 1.48 1.58
Profit before tax 1189.98 1233.71 1400.43 1085.3 939.01 1293.08
Tax 356.69 350.62 396.21 313.25 221.26 379.04
Net profit 833.29 883.09 1004.22 772.05 717.75 914.04
Operating Profit 1189.18 1230.08 1368.87 1079.74 957.56 1295.91

BALANCE SHEET
Report Date Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Equity Share Capital 39.94 39.94 39.94 39.94 39.94 39.94
Reserves 3760.81 3425.08 2916.12 4249.89 4966.3 5559.93
Borrowings 78.49 66.03 693.35 719.44 641.58 284.26
Other Liabilities 2205.9 4992.04 7082.8 4886.14 4001.16 4217.97
Total 6085.14 8523.09 10732.21 9895.41 9648.98 10102.1
Net Block 1573.71 1658.78 4080.28 3785.51 3070.98 2243.25
Capital Work in Progress 120.54 48.14 49.96 38.84 62.09 854.11
Investments 3368.75 3,925.71 5128.75 3964.26 3623.83 4088.77
Other Assets 1022.14 2890.46 1473.22 2106.8 2892.08 2915.97
Total 6085.14 8523.09 10732.21 9895.41 9648.98 10102.1
Receivables 149.94 108.39 130.59 272.31 665 920.58
Inventory 326.83 436.40 524.93 675.57 636.76 669.55
Cash & Bank 219.57 1907.21 71.52 76.82 181.04 117.5
No. of Equity Shares 199687500 199687500 199687500 199687500 199687500 199687500
New Bonus Shares
Face value 2 2 2 2 2 2

CASH FLOW:
Report Date Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Cash from Operating Activity 1359.03 2686.64 2254.16 2359.78 1890.43 2963.41
Cash from Investing Activity -861.19 -528.17 -1322.31 92.79 -732.94 -1617.02
Cash from Financing Activity -499.93 -2109.31 -955.23 -2458.16 -1056.27 -1414.93
Net Cash Flow -2.09 49.16 -23.38 -5.59 101.22 -68.54

PRICE: 1092.661111 1941.4571 1713.8026 2107.2825 1517.1525 2221.5579

DERIVED:
Adjusted Equity Shares in Cr 19.97 19.97 19.97 19.97 19.97 19.97
DO NOT MAKE ANY CHANGES TO THIS SHEET

Mar-15 Mar-16 Mar-17 Mar-18

27585.3 28442.7 28500.46 32230.49
19,783.88 19,321.72 18,974.11 21,857.79
29.97 11.88 -63.17 23.15
158.47 122.13 112.62 138.77
245.4 209.85 204.61 240.32
1172.87 1315.93 1396.01 1540.13
1933 2071.56 2077.3 2159.1
934.51 958.42 1037.83 1037.34
492.74 422.43 522.43 525.82
539.97 437.64 492.73 555.6
11.09 4.89 6.05 6.25
3328.82 4434.87 4658.46 5244.16
943.18 1274.68 1281.34 1546.8
2385.64 3160.19 3377.12 3697.36
1198.2 1437.84 1697.45 1897.15

Sep-17 Dec-17 Mar-18 Jun-18

8361.99 7314.21 8564.04 8809.82
6906.29 6156.22 7193.45 7432.53
117.6 110.02 166.5 115.73
136.03 138.28 148.34 148.17
1.56 1.57 1.54 2.11
1435.71 1128.16 1387.21 1342.74
425.22 322.73 419.81 433.57
1010.49 805.43 967.4 909.17
1455.7 1157.99 1370.59 1377.29
 Mar-15 Mar-16 Mar-17 Mar-18
39.94 39.94 39.94 39.94
6501.39 8794.47 10071.35 11728.94

3986.68 3796.17 4645.42 5035.94

10528.01 12630.58 14756.71 16804.82
2912.69 3584.35 4395.59 4654.54
712.55 605.4 465.05 318.39
3154.11 4581.02 5889.85 7525.2
3748.66 3859.81 4006.22 4306.69
10528.01 12630.58 14756.71 16804.82
1389.59 1282.8 1561.87 1520.18
815.49 672.98 656.31 823.58
159.25 131.36 136.73 141.34
199687500 199690088 199696838 199696838

2 2 2 2

Mar-15 Mar-16 Mar-17 Mar-18

2250 3849.14 4028.02 3980.85
12.08 -2206.19 -1943.94 -1915.22
-2230.52 -1686.69 -2095.63 -2046.66
31.56 -43.74 -11.55 18.97

2475.67 2980.37368 3231.11316 3732.16429

19.97 19.97 19.97 19.97

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