Year 0 1 2 3 4 5

CFs 10 11.5 13.225 13.88625 14.58056

Terminal CF 1055.682
Total CFs 86.52479 9.090909 9.504132 9.936138 9.484496 9.053382
PV of CFs
Present value 0.00 1763.73
10th year value 2738.17
5th year value 0.00
1142.207
6 7 8 9 10 11
15.30959 16.07507 16.87882 17.72276 18.6089 19.17
2738.17
8.641865 8.249053 7.874096 7.516182 7.174538

13.91781 13.28518 12.68131 12.10489 11.55466 1700.186

2294.439 16.1116 15.37926 2262.948

Variables 2019 2020 2021 2022 2023 2024 2025
Assets 11250 12166.88 13158.48 14230.89 15390.71 16645.05 17643.75
Net Fixed assets 8437.5 9125.156 9868.856 10673.17 11543.03 12483.79 13232.82
Current assets 2812.5 3041.719 3289.619 3557.723 3847.677 4161.263 4410.939
Debt 3937.5 4258.406 4605.466 4980.812 5386.748 5825.768 6175.314
Equity 6187.5 6691.781 7237.161 7826.99 8464.89 9154.778 9704.065
Current liabilities 1125 1216.688 1315.848 1423.089 1539.071 1664.505 1764.375
sales 17500 18926.25 20468.74 22136.94 23941.1 25892.3 27445.84
Operating expenses 13125 14194.69 15351.55 16602.71 17955.83 19419.23 20584.38
Dep 2109.375 2281.289 2467.214 2668.292 2885.758 3120.947
EBIT 4375 4731.563 5117.185 5534.235 5985.276 6473.076 6861.46
Int 385 416.3775 450.3123 487.0127 526.7043 569.6306 603.8085
PBT 3990 4315.185 4666.873 5047.223 5458.571 5903.445 6257.652
Tax 1197 1294.556 1400.062 1514.167 1637.571 1771.033 1877.295
PAT 2793 3020.63 3266.811 3533.056 3821 4132.411 4380.356

1 2 3 4 5 6
NOPAT 3062.5 3312.094 3582.029 3873.965 4189.693 4531.153 4803.022
Depreciation 2109.375 2281.289 2467.214 2668.292 2885.758 3120.947 3308.204
Capex 687.6563 743.7002 804.3118 869.8632 940.7571 749.0273
Working capital 1687.5 1825.031 1973.771 2134.634 2308.606 2496.758 2646.563
NWC 137.5312 148.74 160.8624 173.9726 188.1514 149.8055
FCFF 4768.195 5156.803 5577.083 6031.615 6523.192 7212.393
PV 3999.053 3627.327 3290.155 2984.324 2706.921 2510.14
NPV 19117.9216635425

Assets turnover ratio 1.55555555555556

Debt to Equity Ratio 0.636363636363636
Operating cost Ratio 0.629464285714286
Cost of Debt ( assumed) 8.80%
Tax 30%
Cost of Equity 13.1%
Cost of capital 19.23%
Industry information
Firm TA Sales Beta D/E Tax Rate Unlevered
1 20000 25000 0.91 0.9 30% 0.558282
2 17500 22000 0.6 0.75 30% 0.393443
3 8000 14000 1.1 1 30% 0.647059
4 5000 9000 0.5 0.3 30% 0.413223
5 25000 33000 1.3 1.2 30% 0.706522
Average 0.83 0.543706

Levered Beta 0.785902

D/E Tax rate

Beta 0.636364 0.3

Additional information
1. Capital structure is expected to reamin the same
2. Asset turn over ratio is expected to reain constant and real growth rate is expected to be 3%
3. Expected infation for next five years is 5% and then a long term average of 3%
4. All other ratios remain constant
5. Dep: 25% and is already included in Operating expenses
6. Avg market return is 15% and that of 10 year govt bond is 6%

Actual sales growth rate 8.15% For first five years

6% Next
Cost of debt
8.75
8.25
9.5
8
9.5
8.8
Variables 2019 2020 2021 2022 2023 2024 2025
Assets 11250 12166.875 13158.475 14230.891 15390.70867 16645.051 17658.735
Net Fixed assets 8437.5 9125.2 9868.9 10673.2 11543.0 12483.8 13244.1
Current assets 2812.5 3041.7188 3289.6188 3557.7228 3847.677168 4161.2629 4414.6838
Debt 3937.5 4258.4063 4605.4664 4980.8119 5386.748035 5825.768 6180.5573
Equity 6187.5 6691.7813 7237.1614 7826.9901 8464.889769 9154.7783 9712.3043
Current liabilities 1125 1216.6875 1315.8475 1423.0891 1539.070867 1664.5051 1765.8735
sales 17500 18926.3 20468.7 22136.9 23941.1 25892.3 27469.1
Operating expenses 13125 14194.688 15351.555 16602.706 17955.82678 19419.227 20601.858
Dep 2109.375 2281.2891 2467.2141 2668.292072 2885.7579 3120.9471
EBIT 4375 4731.5625 5117.1848 5534.2354 5985.275594 6473.0756 6867.2859
Int 346.5 374.73975 405.28104 438.31144 474.0338271 512.66758 543.88904
PBT 4028.5 4356.8228 4711.9038 5095.924 5511.241767 5960.408 6323.3968
Tax 1007.125 1089.2057 1177.976 1273.981 1377.810442 1490.102 1580.8492
PAT 3021.375 3267.6171 3533.9279 3821.943 4133.431325 4470.306 4742.5476
NWC 1687.5 1825.0313 1973.7713 2134.6337 2308.606301 2496.7577 2648.8103
Delta NWC 137.53125 148.74005 160.86236 173.9726431 188.15141 152.05254

1 2 3 5 4 6
FCFF 4098.8 4432.8 4794.1 5184.8
5607.4 5758.7
PV 3678.7 3570.7 3465.9 3364.2
3265.5 108042.7
Total valuation of the 80263.7 62918.673
1.0 2 3 4 5 6
FCFE 4138.6483 4475.9481 4840.7379 5235.258065 5661.9316 5705.5471
PV 3714.4573 3605.4439 3499.6298 3396.921243 3297.227 107045.91
62338.208
Total equity valuation 79851.887

Asset turnover ratio 1.55555556

cost of equity 11.42% cost of capital 108042.67
cost of debt 8.80% 62918.673
growth rate 1.0609
Industry information
Firm TA Sales D/E Beta Cost of debt
1 20000 25000 0.9 0.91 8.75
2 17500 22000 0.75 0.6 8.25
3 8000 14000 1 1.1 9.5
4 5000 9000 0.3 0.5 8
5 25000 33000 1.2 1.3 9.5
0.882 avg 8.8
modified b 0.76 8.8%

Additional information
1. Capital structure is expected to reamin the same
2. Asset turn over ratio is expected to reain constant and real growth rate is expected to be 3%
3. Expected infation for next five years is 5% and then a long term average of 3%
4. All other ratios remain constant
5. Dep: 25% and is already included in Operating expenses

6. Avg market return is 15% and that of 10 year govt bond is 6%

 Asset turnover ratio sales/assets
35% debt ratio through out the time period

Operating expenses to to
s find operating expenses of further years
Operating exp/sales 0.75

tax asumption 25%

s expected to be 3%

D/E 0.538462
wd 0.35
we 0.65

weighted average cost of capital

WACC (Wd*kd*0.75)+(ke*we)
ke Rf+beta*(R 12.84 11.42% sir got
kd 8.80%
 boutght the stock Oct 2017 ₹ 240
hit high Jan 2018 ₹ 500
exhibit 1 stock fluctuations
initial investment from funds
current market pric169 millionfor the fund
loss of 592 millionfor the fund

net asset value dro 35% year to date

>25% of investors withdrawn their money from fund

Quantitiative side
Principal first discounted cash flow and relative valuation methods
Qualitative side
focused on intrinsic values of shares
QGLP Quality, growth, longitivity, price

Khandelwal funds CAG 28 for five years

fund delivered CAGR 38% previous year

Indian economy growth
IT industry growth

Sales increment CAGR

Net fixed assetsfallen by
cash and shortterm invest
receivales increased

EBITDA
terminal growthrate
longterm debt
cost of equity
Rf
beta
Rm
7 to 7.2%
7 to 8%

25.40%
>85%
65% in prev 5 years
3 times

23% of sales
6%
0.00
capm formula
7.848
0.456
11.58
Particulars FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
Sales and Services Revenue 8896.50 13531.81 15471.35 19518.93 27804.45 31907.37
Other Revenue 0.27 0.06 0.09 0.34
Total revenue 8896.77 13531.87 15471.35 19519.02 27804.79 31907.37
Total Revenue 8896.77 13531.87 15471.35 19519.02 27804.79 31907.37
Operating Expense 7508.36 11112.18 11656.50 14168.58 20553.46 25307.17
Selling and Marketing 19.13 33.11
Depreciation and Amortization 550.06 874.44 1570.62 1808.72 1648.56
(–) Other Operating Income 0.00 0.00 0.15 0.00 0.00 0.00
Operating Expenses 8058.42 11986.62 13226.97 15977.30 22221.15 25340.28
Operating Expenses 8058.42 11986.62 13227.12 15981.75 22221.16 25340.29
Operating income 838.35 1545.25 2244.38 3541.72 5583.64 6567.09
Operating Income 838.35 1545.26 2244.38 3537.27 5583.63 6567.09

Interest Expense 158.66 498.24 791.87 718.02 676.87 546.89

(–) Interest Income 5.36 15.66 27.03 24.64 30.53 0.00
Interest Expense, Net 153.30 482.58 764.84 693.38 646.34 546.89
(+) Foreign Exchange (Gain) Loss 0.25 4.47 -20.45 -33.49 -19.76 0.00
(+) Other Non-Operating (Income) Loss 16.82 59.21 67.14 57.48 72.24 0.00
Non-Operating Expense 170.37 546.26 811.53 717.37 698.82 546.89

Pre-tax income 667.98 998.99 1432.85 2824.35 4884.82 6020.20

Pre-tax Income 667.99 998.99 1432.87 2819.90 4884.81 6060.32
Income Tax Expense 186.70 320.46 393.64 1070.12 1674.85 2111.75
Income (Loss) from Continuing Operations 481.28 678.53 1039.23 1749.78 3209.96 3948.57
FY 2017
40003.69
0.95
40004.64
40004.64
30484.60
59.94
733.87
0.00
31278.41
31278.41
8726.23
8726.23

467.19
0.00
467.19
0.00
44.17
511.36

8214.87
8214.87
2970.19
5244.68
 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Total Assets
Cash, Cash Equivalents, and Short-Term Investments 90.39 58.359 25.43 25.8 69.29
Accounts and Notes Receivable 2745.17 4454.83 6527.37 7682.98 11993.24
Inventories 177.49 244.33 537.68 1624.85 1693.63
Prepaid Expenses 559.13 48.46
Taxes Receivable 26.32 69.01
Miscellaneous Short-Term Assets 219.24 378.55 1991.85 2336.78 3587.24
Total current assets 3817.74 5253.539 9082.33 11670.41 17343.4
Total Current Assets 3817.75 5253.53 9082.33 11670.42 17343.4
Property, Plant, and Equipment 3627.52 7263.97 8187.86 10468.07 10494.66
(–) Accumulated Depreciation 1403.95 2247.74 3816.67 5622.77 7665.45
fixed assets 2223.57 5016.23 4371.19 4845.3 2829.21
Property, Plant, and Equipment, Net 2223.57 5016.22 4371.19 4845.3 2829.22
Long-Term Investments and Receivables 12.51 14.5 23.13 25.5 13.5
Total Intangible Assets 500 500
(+) Deferred Tax Assets
(+) Investments in Affiliates 21 0.13 2.5
(+) Miscellaneous Long-Term Assets 318.81 377.44 349.26 704.97 183.75
Total Non-current assets 3075.89 5908.29 4743.58 5575.77 3028.97
Total Non-current Assets 3075.89 5908.29 4743.58 5575.77 3028.97
Total assets 6893.63 11161.83 13825.91 17246.18 20372.37
Total Assets 6893.63 11161.82 13825.91 17246.19 20372.36
Liabilities and Shareholders' Equity
Accounts Payable 868.24 1218.32 1754.76 2524.32 2131.32
Accrued Taxes 203.47 185.63 11.95 6.94 4.96
Interest and Dividends Payable 56.15 124.32 37.93 9.59 20.56
Other Payables and Accruals 12.38 17.22 59.96 92.13 692.63
Short-Term Debt 1634.25 2155.89 2852.18 3216.26 3155.74
Miscellaneous Short-Term Liabilities 40.24 901.78 1578.4 1995.11 1478.7
Total current liabilities 2814.73 4603.16 6295.18 7844.35 7483.91
Total Current Liabilities 2814.73 4603.17 6295.18 7844.34 7483.91
(+) Long-Term Debt 1559.61 1456.85 862.1 374.06
(+) Accrued Liabilities
(+) Pension Liabilities
(+) Deferred Tax Liabilities 517.21 731.59 828.82 711.59 425.31
(+) Miscellaneous Long-Term Liabilities 4.76 69.92 78.37 33.21 15.72
Total non-current liabilities 521.97 2361.12 2364.04 1606.9 815.09
Total Non-current Liabilities 521.97 2361.12 2364.05 1606.9 815.09
Total liabilities 3336.7 6964.28 8659.22 9451.25 8299
Total Liabilities 3336.7 6964.29 8659.23 9451.24 8298.99
Share Capital and Additional Paid-in Capital 2168.18 2176.182 502.5 1524.99 3003.48
(+) Retained Earnings 1259.05 1800.6 0 0 0
(+) Other Equity 129.7 192.25 4635.68 6269.96 9069.89
Equity before Minority Interest 3556.93 4169.032 5138.18 7794.95 12073.37
Equity before Minority Interest 3556.93 4169.03 5138.17 7794.95 12073.37
(+) Minority/Non- controlling Interest 0 28.5 28.5 0 0
Totla equity 3556.93 4197.532 5166.68 7794.95 12073.37
Total Equity 3556.93 4197.53 5166.68 7794.95 12073.37
Total Liabilities and Equity 6893.63 11161.82 13825.91 17246.19 20372.36
Capital Expenditure 604.63 3744.93 930.29 2283.89 43.61

Outstanding Equity Shares in 2017 (in Million) 529.4

FY 2016 FY 2017

1405.84 5830
8498.68 8243.57
5070.57 4991.89
2850.51
40.48
358.7
14975.09 22315.15
19282.39 22314.76
10606.24 582.93
9284.02 295.46
1322.22 287.47
1322.22 287.47
111.53 12.85

19.04 40.56

187.7 28.78
1640.49 369.66
1640.49 369.67
16615.58 22684.81
20922.88 22684.42

1144.11 296.87

6.3
1.91
3075.53 1440.19
580.12 368.41
4799.76 2113.68
4799.76 2113.67
161.69
9.89
23.34
129.95 0
0 0
291.64 33.23
291.64 33.23
5091.4 2146.91
5091.4 2146.9
4728.76 4730.21
10389.48 14,509.80
713.25 1297.52
15831.49 20537.53
15831.48 20537.53
0 0
15831.49 20537.53
15831.48 20537.53
20922.88 22684.42
133.56 111.57
Variables 2011 2012 2013 2014
Total assets ₹ 6,893.63 ₹ 11,161.83 ₹ 13,825.91 ₹ 17,246.18
Net Fixed assets ₹ 2,223.57 ₹ 5,016.23 ₹ 4,371.19 ₹ 4,845.30
Current assets ₹ 3,817.74 ₹ 5,253.54 ₹ 9,082.33 ₹ 11,670.41
Debt ₹ 521.97 ₹ 2,361.12 ₹ 2,364.04 ₹ 1,606.90
Equity ₹ 3,556.93 ₹ 4,197.53 ₹ 5,166.68 ₹ 7,794.95
Current liabilities ₹ 2,814.73 ₹ 4,603.16 ₹ 6,295.18 ₹ 7,844.35
sales ₹ 8,896.50 ₹ 13,531.81 ₹ 15,471.35 ₹ 19,518.93
Operating expenses ₹ 8,058.42 ₹ 11,986.62 ₹ 13,226.97 ₹ 15,977.30
Long-Term Debt ₹ 1,559.61 ₹ 1,456.85 ₹ 862.10
EBIT ₹ 838.35 ₹ 1,545.25 ₹ 2,244.38 ₹ 3,541.72
Int ₹ 153.30 ₹ 482.58 ₹ 764.84 ₹ 693.38
Non-operating expense(including int) ₹ 170.37 ₹ 546.26 ₹ 811.53 ₹ 717.37
PBT ₹ 667.98 ₹ 998.99 ₹ 1,432.85 ₹ 2,824.35
Tax ₹ 186.70 ₹ 320.46 ₹ 393.64 ₹ 1,070.12
PAT ₹ 481.28 ₹ 678.53 ₹ 1,039.21 ₹ 1,754.23
capital expenditure ₹ 604.63 ₹ 3,744.93 ₹ 930.29 ₹ 2,283.89
NWC ₹ 1,003.01 ₹ 650.38 ₹ 2,787.15 ₹ 3,826.06
Delta NWC ₹ -352.63 ₹ 2,136.77 ₹ 1,038.91

FCFF ₹ 4,617.09 ₹ 4,917.80 ₹ 5,794.40

1 2 3
PV ₹ 4,214.21 ₹ 4,097.01 ₹ 4,406.08

Total valuation of the firm ₹ 132,580.69

Assumption: tax rate 30%

1 2 3
FCFE ₹ 5,838.89 ₹ 4,279.65 ₹ 4,714.28
PV ₹ 5,329.40 ₹ 3,565.37 ₹ 3,584.76

Total equity valuation of the firm ₹ 126,795.72

 2015 2016 2017
₹ 20,372.37 ₹ 16,615.58 ₹ 22,684.81 Rf 7.848
₹ 2,829.21 ₹ 1,322.22 ₹ 287.47 Beta 0.456
₹ 17,343.40 ₹ 19,282.39 ₹ 22,315.15 Rm-Rf 3.75
₹ 815.09 ₹ 291.64 ₹ 33.23 Ke 9.56
₹ 12,073.37 ₹ 15,831.49 ₹ 20,537.53 9.56%
₹ 7,483.91 ₹ 4,799.76 ₹ 2,113.68 Terminal value(Ke) 11.60%
₹ 27,804.45 ₹ 31,907.37 ₹ 40,003.69
₹ 22,221.15 ₹ 25,340.28 ₹ 31,278.41
₹ 374.06 ₹ 161.69
₹ 5,583.64 ₹ 6,567.09 ₹ 8,726.23
₹ 646.34 ₹ 546.89 ₹ 467.19
₹ 698.82 ₹ 546.89 ₹ 511.36
₹ 4,884.82 ₹ 6,020.20 ₹ 8,214.87
₹ 1,674.85 ₹ 2,111.75 ₹ 2,970.19
₹ 3,209.97 ₹ 3,908.45 ₹ 5,244.68
₹ 43.61 ₹ 133.56 ₹ 111.57
₹ 9,859.49 ₹ 14,482.63 ₹ 20,201.47
₹ 6,033.43 ₹ 4,623.14 ₹ 5,718.84

₹ 9,985.83 ₹ 9,212.04 ₹ 11,586.45

4 5 6
₹ 6,930.68 ₹ 5,835.74 ₹ 206,900.89
₹ 107,096.97

4 5 6
₹ 9,045.35 ₹ 8,616.85 ₹ 11,097.73
₹ 6,277.94 ₹ 5,458.69 ₹ 198,173.70
₹ 102,579.56