Kansai Nerolac Paints Ltd SUBHAJIT HAZRA

M&M Mar-07 Mar-08 Mar-09 Mar-13

Sales + 1,264 1,368 1,369 2,801
Sales growth rate 8% 0% 105%
Expenses + 1,099 1,196 1,219 2,463
Operating Profit 165 172 150 338
OPM % 13% 13% 11% 12%
Other Income 28 40 33 132
Interest 2 2 2 1
Depreciation 36 42 38 47
Profit before tax 155 168 143 422
Tax % 34% 30% 29% 30%
Net Profit 104 120 103 293
EPS in Rs 2.03 2.22 1.91 5.44
GROWTH RATE OF EPS 9% -14% 185%
Dividend Payout % 28% 27% 31% 20%
Dividend per share amount 0.5684 0.5994 0.5921 1.088
Retained profit ratio 72% 73% 69% 80%
Dividend Growth Rate 5.45% -1.22% 83.75%
1+Dividend Growth Rate 105.45% 98.78% 183.75%

Required growth rate (g) P=D1/(r-g) g=(-D1/P)+r

cost of equity(r), assumed =15%

D1 REQUIRED GROWTH RATE

based on last 5 years CAGR 5.814247426 13.9119%
based on last 10 years CAGR 6.4675627689 13.7896%
based on last 5 years SGR 5.71630228 13.9302%

acc. To :
MARKET PRICE DIVIDENT EXPECTED
current market price 534.35 13.9119%
13.7896%
13.9302%

52 weeks high  675  14.1386%

14.0418%
14.1531%
52 weeks low 495 13.8254%
13.6934%
13.8452%

CONCLUSION: GIVEN THE SALES GROWTH RATE AND EPS GROWTH RATE , IT IS UNLIKELY THAT THE COMPANY

COST OF EQUITY,r

r=
10.79%

IT IS VERY LIKELY THAT THE COST OF EQUITY IS SUCH A FAIR VALUE OF A COMPANY LIKE KANSAI NEROLAC PAI
MBA SCM 2140032

Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21

3,120 3,505 3,767 4,053 4,658 5,424 5,280 5,074
11% 12% 7% 8% 15% 16% -3% -4%
2,753 3,054 3,182 3,315 3,864 4,672 4,476 4,211
367 451 585 737 794 753 804 863
12% 13% 16% 18% 17% 14% 15% 17%
10 22 563 98 71 61 26 38
2 1 0 0 1 10 21 24
66 68 68 70 77 106 142 165
310 404 1,079 765 787 697 667 712
33% 32% 16% 33% 35% 36% 23% 26%
208 274 901 509 514 453 521 530
3.86 5.09 16.72 9.44 9.55 8.4 9.67 9.83
-29% 32% 228% -44% 1% -12% 15% 2%
29% 28% 18% 32% 27% 31% 33% 53%
1.1194 1.4252 3.0096 3.0208 2.5785 2.604 3.1911 5.2099
71% 72% 82% 68% 73% 69% 67% 47%
2.89% 27.32% 111.17% 0.37% -14.64% 0.99% 22.55% 63.26%
102.89% 127.32% 211.17% 100.37% 85.36% 100.99% 122.55% 163.26%

=based on last 5 years CAGR

=based on last 10 years CAGR
=based on last 5 years SGR

=based on last 5 years CAGR

=based on last 10 years CAGR
=based on last 5 years SGR
 =based on last 5 years CAGR
=based on last 10 years CAGR
=based on last 5 years SGR

IKELY THAT THE COMPANY TO SHOW A LONG-TERM SUSTAINABLE GROWTH RATE OF 15% JUSTIFY THE PRICE

LIKE KANSAI NEROLAC PAINT LTD

 65% avg of last 5 years RE

173.11% product of (1+DGR) for last 5 years

12% CAGR of last 5 years (dividend growth ratio)

15% Last 5 years R.O.E, direct from company's website

9.72% susutainable growth rate (R.O.E*R.E)

534.35 CURRENT MARKET PRICE

869% product of (1+DGR) for last 10 years

24% CAGR of last 10 years

Summary:

Last year Dividend = 5.2099

Cost of equity,r = 15%
CAGR (5 YEAR) = 12%
CAGR (10 YEAR) = 24%
ROE(5 YEAR) = 15%
CMP(as on 07 Feb,22) = 534.35
52-Wk High = 675
52-Wk Low = 495