Safal Niveshak Stock Analysis Excel (Ver.

3
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. 3.0". 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 wonderful tool to analyze
the past. But it can be a weapon of mass destruction
Analysis Excel (Ver. 3.0) to predict the future! So be very careful of what you
are getting into. Here, garbage in will always equal
garbage out.
www.safalniveshak.com
Basic Company Details
Parameters Details
Company MRF LTD
Current Stock Price (Rs) 63,926 Remember! Focus on decisions, not outcomes.
Face Value (Rs) 10.0 Look for disconfirming evidence. Calculate. Pray!
No. of Shares (Crore) 0.4
Market Capitalization (Rs Crore) 27,105

Key Financials - Trend

Parameters
Sales Growth (9-Year CAGR)
Profit Before Tax Growth (9-Year CAGR)
Net Profit Growth (8-Year CAGR)
Average Debt/Equity (5-Years, x)
Average Return on Equity (5-Years)
Average P/E (5-Years, x)
Latest P/E (x)
Please! It's your money. Please don't blame me if
Details
results of this excel cause you to lose it all! I've
12.3% Atleast 10% designed this excel to aid your own thinking, but
17.2% Atleast 15% you alone are responsible for your actions. I want to
18.2% Atleast 15% live peacefully ever after! I am not a sadist who
0.3 wants you to do the hard work by analyzing
18.8% Atleast 15% companies on your own. But I'd rather give you a
17.6 compass instead of a map, for you can confuse map
with territory and lose it all. All the best!
24.9

Rs
 250,000 125,000 10,417

100 1,700
200,000

2,000 3,400,000

17

1,000,000 15 15,000,000
 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
MRF LTD
Rs Cr Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-16 Mar-17 Mar-18 Mar-19
Equity Share Capital 4 4 4 4 4 4 4 4 4 4
Reserves 1,351 1,684 2,290 2,857 3,651 4,535 7,220 8,637 9,734 10,833
Borrowings 672 1,354 1,600 1,708 1,599 1,903 2,464 2,333 2,163 2,506
Other Liabilities 735 964 2,452 2,676 3,050 3,417 3,605 4,175 4,675 5,162
Total 2,763 4,007 6,345 7,245 8,305 9,860 13,293 15,149 16,576 18,505

Net Block 936 1,331 1,973 2,919 2,974 3,436 4,608 5,502 6,092 6,786
Capital Work in Progress 285 498 1,042 415 359 628 1,059 848 1,079 1,403
Investments 144 73 73 429 904 1,081 3,138 3,382 4,145 3,855
Other Assets 1,397 2,106 3,258 3,482 4,068 4,715 4,488 5,416 5,260 6,461
Total 2,763 4,007 6,345 7,245 8,305 9,860 13,293 15,149 16,576 18,505

Working Capital 662 1,142 806 806 1,017 1,298 883 1,241 585 1,300
Debtors 577 807 1,302 1,454 1,559 1,715 1,839 1,969 2,150 2,383
Inventory 653 1,112 1,529 1,665 1,817 1,826 1,900 2,425 2,197 2,993
Cash & Bank** 60 46 57 65 337 728 124 343 233 105
** 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 37 39 49 44 46 47 33 54 52 54
Inventory Turnover 9 7 6 7 7 7 11 6 7 5
Fixed Asset Turnover 6.1 5.6 4.9 4.1 4.1 3.9 4.4 2.4 2.5 2.4
Debt/Equity 0.5 0.8 0.7 0.6 0.4 0.4 0.3 0.3 0.2 0.2
Return on Equity 18% 21% 27% 20% 22% 20% 35% 17% 12% 10%
Return on Capital Employed 18% 16% 10% 19% 25% 23% 46% 21% 16% 12%
 Profit & Loss Account / Income Statement
MRF LTD
Rs Cr Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-16 Mar-17 Mar-18 Mar-19 Trailing
Sales 5,667 7,459 9,752 11,964 12,248 13,329 20,179 13,412 14,954 16,062 16,711
% Growth YOY 32% 31% 23% 2% 9% 51% -34% 11% 7%
Expenses 4,985 6,625 8,942 10,692 10,468 11,386 15,749 10,763 12,666 13,750 14,389
Material Cost (% of Sales) 62% 69% 76% 71% 65% 63% 56% 58% 60% 64% Check for wide fluctuations in key
Power and Fuel 5% 5% 4% 5% 5% 5% 4% 4% 4% 5% expense items. For manufacturing firms,
Other Mfr. Exp 4% 4% 4% 3% 4% 4% 4% 5% 5% 5% check their material costs etc. For
Employee Cost 6% 5% 5% 4% 5% 6% 6% 7% 7% 7% services firms, look at employee costs.
Selling and Admin Cost 7% 7% 6% 6% 6% 7% 6% 6% 6% 7%
Operating Profit 681 834 810 1,272 1,780 1,943 4,430 2,649 2,287 2,311 2,323
Operating Profit Margin 12% 11% 8% 11% 15% 15% 22% 20% 15% 14% 14%
Other Income 34 29 429 32 25 66 324 328 331 422 440
Other Income as % of Sales 0.6% 0.4% 4.4% 0.3% 0.2% 0.5% 1.6% 2.4% 2.2% 2.6% 2.6%
Depreciation 250 262 248 302 374 424 737 611 707 808 886
Interest 69 63 98 159 196 232 361 257 259 273 276
Interest Coverage(Times) 7 10 10 6 7 7 11 9 7 7 7
Profit before tax (PBT) 396 538 893 843 1,235 1,353 3,656 2,109 1,653 1,652 1,599
% Growth YOY 36% 66% -6% 47% 10% 170% -42% -22% 0%
PBT Margin 7% 7% 9% 7% 10% 10% 18% 16% 11% 10% 10%
Tax 145 181 274 264 427 445 1,146 623 521 522 512
Net profit 251 358 619 579 809 908 2,509 1,486 1,132 1,131 1,087
% Growth YOY 43% 73% -6% 40% 12% 176% -41% -24% 0%
Net Profit Margin 4% 5% 6% 5% 7% 7% 12% 11% 8% 7% 7%
EPS 591.3 842.9 1,459.0 1,366.2 1,906.6 2,141.7 5,916.9 3,504.3 2,668.2 2,665.8 2,563.7
% Growth YOY 43% 73% -6% 40% 12% 176% -41% -24% 0%
Price to earning 9.7 10.4 4.5 7.5 7.0 15.3 6.5 17.4 27.2 21.8 24.9
Price 5,746 8,759 6,618 10,273 13,385 32,682 38,297 60,954 72,513 57,987 63,926
Dividend Payout 4.2% 5.9% 1.7% 1.8% 1.6% 2.3% 1.7% 1.7% 2.2% 2.3%
Market Cap 2,437 3,715 2,807 4,357 5,677 13,861 16,242 25,852 30,754 24,593
Retained Earnings 240 336 608 569 796 887 2,467 1,461 1,106 1,105
Buffett's $1 Test 2.3

TRENDS: 10 YEARS 7 YEARS 5 YEARS 3 YEARS

Sales Growth 12.3% 7.4% 5.6% -7.3%
PBT Growth 17.2% 9.2% 6.0% -23.3%
PBT Margin 10.6% 11.8% 13.1% 12.4%
Price to Earning 12.7 14.7 17.6 22.1

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.
 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 62% 69% 76% 71% 65% 63% 56% 58% 60% 64%
Change in Inventory -4% 2% 3% 0% 0% 0% 0% 2% -1% 4%
Power and Fuel 5% 5% 4% 5% 5% 5% 4% 4% 4% 5%
Other Mfr. Exp 4% 4% 4% 3% 4% 4% 4% 5% 5% 5%
Employee Cost 6% 5% 5% 4% 5% 6% 6% 7% 7% 7%
Selling and Admin Cost 7% 7% 6% 6% 6% 7% 6% 6% 6% 7%
Other Expenses 1% 1% 0% 1% 1% 1% 1% 1% 1% 1%
Operating Profit 20% 7% 2% 10% 14% 15% 22% 16% 16% 7%
Other Income 1% 0% 4% 0% 0% 0% 2% 2% 2% 3%
Depreciation 4% 4% 3% 3% 3% 3% 4% 5% 5% 5%
Interest 1% 1% 1% 1% 2% 2% 2% 2% 2% 2%
Profit Before Tax 7% 7% 9% 7% 10% 10% 18% 16% 11% 10%
Tax 3% 2% 3% 2% 3% 3% 6% 5% 3% 3%
Net Profit 4% 5% 6% 5% 7% 7% 12% 11% 8% 7%
Dividend Amount 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

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 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Reserves 49% 42% 36% 39% 44% 46% 54% 57% 59% 59%
Borrowings 24% 34% 25% 24% 19% 19% 19% 15% 13% 14%
Other Liabilities 27% 24% 39% 37% 37% 35% 27% 28% 28% 28%
Total Liabilities 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Net Block 34% 33% 31% 40% 36% 35% 35% 36% 37% 37%
Capital Work in Progress 10% 12% 16% 6% 4% 6% 8% 6% 7% 8%
Investments 5% 2% 1% 6% 11% 11% 24% 22% 25% 21%
Other Assets 51% 53% 51% 48% 49% 48% 34% 36% 32% 35%
Total Assets 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Receivables 21% 20% 21% 20% 19% 17% 14% 13% 13% 13%
Inventory 24% 28% 24% 23% 22% 19% 14% 16% 13% 16%
Cash & Bank 2% 1% 1% 1% 4% 7% 1% 2% 1% 1%
COMPANY NAME MRF LTD
LATEST VERSION 2.10 PLEASE DO NOT MAKE ANY CHANGES TO THIS SHEET
CURRENT VERSION 2.10

META
Number of shares 0.42
Face Value 10
Current Price 63926.35
Market Capitalization 27104.77

PROFIT & LOSS

Report Date Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-16 Mar-17 Mar-18 Mar-19
Sales 5666.51 7458.57 9751.61 11963.83 12247.78 13329.3 20179.41 13411.98 14953.71 16061.72
Raw Material Cost 3,492.61 5,163.67 7,418.69 8,438.21 7,995.21 8,442.09 11,288.89 7,722.80 9,031.34 10,323.17
Change in Inventory -220.11 144.09 305.71 28.01 27.58 -14.41 14.48 227.71 -77.61 613.83
Power and Fuel 285.93 392.59 437.38 619.24 601.01 665.57 843.37 580.94 638.23 763.53
Other Mfr. Exp 220.14 288.77 364.61 398.16 439.68 524.71 906.11 639.8 697.33 827.7
Employee Cost 317.13 378.51 447.15 521.43 611.74 742.39 1285.22 1000.36 1092.36 1165.28
Selling and admin 418.3 505.95 539.94 675.06 765.35 905.12 1207.55 869.18 961.43 1073.89
Other Expenses 30.84 39.32 39.69 67.74 82.26 92.14 232.72 177.58 167.95 210.53
Other Income 34.16 28.87 429.22 31.9 25.07 65.8 323.59 327.5 330.65 421.73
Depreciation 250.4 261.5 248.24 301.81 373.7 423.88 737.12 610.58 706.72 807.6
Interest 68.96 63.16 97.73 158.84 196.07 231.7 360.6 256.58 258.74 273.40
Profit before tax 396.25 538.06 893.11 843.25 1235.41 1353.09 3655.9 2109.37 1652.65 1652.18
Tax 145.46 180.55 274.33 263.84 426.8 444.76 1146.47 623.15 521.04 521.57
Net profit 250.78 357.5 618.77 579.4 808.6 908.32 2509.43 1486.22 1131.61 1130.6
Dividend Amount 10.6 21.2 10.6 10.6 12.72 21.2 42.4 25.44 25.44 25.44
Quarters
Report Date Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19
Sales 3882.99 3946.77 4095.03 4137.67 4470.82 4007.63
Expenses 3297.5 3380.85 3524.4 3554.35 3858.48 3451.42
Other Income 71.52 112 126.42 111.79 105.84 95.48
Depreciation 187.06 200.11 205.53 214.9 228.36 237.63
Interest 66.01 68.91 70.68 61.71 72.01 71.75
Profit before tax 403.94 408.9 420.84 418.5 417.81 342.31
Tax 136.38 130.61 130.01 124.57 144.54 113.35
Net profit 267.56 278.29 290.83 293.93 273.27 228.96
Operating Profit 585.49 565.92 570.63 583.32 612.34 556.21

BALANCE SHEET
Report Date Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-16 Mar-17 Mar-18 Mar-19
Equity Share Capital 4.24 4.24 4.24 4.24 4.24 4.24 4.24 4.24 4.24 4.24
Reserves 1351.46 1684.19 2289.9 2856.84 3651.2 4535.31 7220.1 8636.52 9733.95 10833.11
Borrowings 671.91 1,354.33 1,599.50 1,707.80 1,598.96 1,902.77 2,463.90 2,332.84 2,162.90 2,506.31
Other Liabilities 735.11 964.26 2451.67 2676.18 3050.35 3417.42 3605.23 4175.14 4675.08 5161.83
Total 2762.72 4007.02 6345.31 7245.06 8304.75 9859.74 13293.47 15148.74 16576.17 18505.49
Net Block 935.96 1330.64 1972.5 2918.83 2974.08 3435.86 4608.29 5502.24 6092.17 6786
Capital Work in Progress 285.01 497.72 1042.25 414.65 359.12 627.54 1059.28 847.93 1078.91 1403.47
Investments 144.39 72.87 72.87 429.29 903.78 1081.19 3137.9 3382.1 4145 3854.68
Other Assets 1397.36 2105.79 3257.69 3482.29 4067.77 4715.15 4488 5416.47 5260.09 6461.34
Total 2762.72 4007.02 6345.31 7245.06 8304.75 9859.74 13293.47 15148.74 16576.17 18505.49
Receivables 576.75 807.04 1302.44 1454.11 1558.85 1715.36 1838.72 1969 2149.93 2382.71
Inventory 652.87 1,112.41 1,528.98 1,664.75 1,816.92 1,826.25 1,899.81 2,425.27 2,197.33 2,993.20
Cash & Bank 60.13 46.45 57.21 64.8 336.97 727.61 124.23 342.61 232.9 104.5
No. of Equity Shares 4241214 4241214 4241214 4241143 4241143 4241143 4241143 4241143 4241143 4241143
New Bonus Shares
Face value 10 10 10 10 10 10 10 10 10 10
CASH FLOW:
Report Date Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-16 Mar-17 Mar-18 Mar-19
Cash from Operating Activity 846.87 158.31 634.06 1034.4 1499.41 1699.48 3043.47 1955.72 2412.98 1252.85
Cash from Investing Activity -232.24 -786.21 -1111.12 -976.93 -958.63 -1790.64 -3407.81 -1392.7 -2013.88 -1386.15
Cash from Financing Activity -657.03 614.22 486.38 -51.44 -313.02 67.16 212.31 -437.62 -452.58 42.19
Net Cash Flow -42.4 -13.68 9.32 6.03 227.76 -24 -152.03 125.4 -53.48 -91.11

PRICE: 5746.45 8759.45 6617.7 10272.75 13385.05 32681.95 38296.75 60954.45 72513.25 57987.15

DERIVED:
Adjusted Equity Shares in Cr 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42
 Cash Flow Statement
MRF LTD
Rs Cr Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-16 Mar-17 Mar-18 Mar-19 Total
Cash from Operating Activity (CFO) 847 158 634 1,034 1,499 1,699 3,043 1,956 2,413 1,253 14,538
Cash from Investing Activity -232 -786 -1,111 -977 -959 -1,791 -3,408 -1,393 -2,014 -1,386 -14,056
Cash from Financing Activity -657 614 486 -51 -313 67 212 -438 -453 42 -489
Net Cash Flow -42 -14 9 6 228 -24 -152 125 -53 -91 -8
CFO/Sales 15% 2% 7% 9% 12% 13% 15% 15% 16% 8%
CFO/Net Profit 338% 44% 102% 179% 185% 187% 121% 132% 213% 111%
Capex** 375 315 212 364 565 607 937 1156 1638 1238
FCF 472 -157 422 670 934 1,092 2,106 800 775 15 7,131
Average FCF (3 Years) 530
FCF/Sales 8% -2% 4% 6% 8% 8% 10% 6% 5% 0%
FCF/Net Profit 188% -44% 68% 116% 116% 120% 84% 54% 68% 1%

** 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
 Earnings Power Value (Bruce Greenwald)
Read the book - Value Investing: From Graham to Buffett and Beyond by Bruce Greenwald (EPV is explained Page 93 onwards)
Explanation - Earnings power value (EPV) is a technique for valuing stocks by making an assumption about the sustainability of current earnings and the cost of capital but
assuming no further growth. EPV formula = Adjusted Earnings / Cost of Capital

Company Name MRF LTD

Latest Year Ended Mar-19

Calculation of Normalized Earnings EPV with Different Cost of Capital

(Rs Crore) Sep/14 Mar/16 Mar/17 Mar/18 Mar/19 Discount Rate EPV Net Cash** Total EPV Per Share
Sales 13,329 20,179 13,412 14,954 16,062 10% 12,633 -2,402 10,231 24,129
EBIT 1,585 4,017 2,366 1,911 1,926 12% 10,527 -2,402 8,125 19,164
Less - Adjustment 8 20 12 10 10 15% 8,422 -2,402 6,020 14,198
EBIT (Adjusted) 1,577 3,996 2,354 1,902 1,916 Current Market Cap (Rs Crore) 27,105
EBIT Margin'(Adjusted) 12% 20% 18% 13% 12% EPV as % of Market Cap 30%
Tax Rate 33% 31% 30% 32% 32%
Earnings After Tax (Adjusted) 1,059 2,743 1,659 1,302 1,311
** Change the "Cash & Bank" number in "Balance Sheet" sheet
Depreciation 424 737 611 707 808
(Row #19) so that the correct number automatically reflects here
Maintenance Capex (See Table Below) 234 -1,428 3,492 1,106 855
Earnings After Tax (Normalized, A) 1,249 4,908 -1,223 903 1,263
Reported Profit After Tax (B) 908 2,509 1,486 1,132 1,131

EPV Process (as per Greenwald's book, slightly modified) -

1. Start with operating earnings, i.e. EBIT. Adjust any one-time charges. I deduct 0.5% of reported EBIT as this adjustment
2. Apply a tax rate to the adjusted EBIT. I use the actual tax rate calculated from the Income Statement. After reducing this tax, we arrive at Adjusted Earnings After Tax
3. Add back Depreciation
4. Subtract Maintenance Capex
5. After these four steps, you arrive at Normalized Earnings
6. Divide this Normalized Earnings number by the Discount Rate to arrive at EPV. I use 12% discount rate/cost of capital.
7. Note that Greenwald's process as per his book is slightly more detailed than what I have used here

Calculation of Maintenance Capex

(Rs Crore) Sep/14 Mar/16 Mar/17 Mar/18 Mar/19
Fixed Assets (PPE) 3,436 4,608 5,502 6,092 6,786
Net Sales 13,329 20,179 13,412 14,954 16,062
PPE/Sales 0.26 0.23 0.41 0.41 0.42
Change in Sales 1,082 6,850 -6,767 1,542 1,108
Total Capex 607 937 1,156 1,638 1,238
Growth Capex 373 2,365 -2,336 532 383
Maintenance Capex 234 -1,428 3,492 1,106 855

Calculating Maintenance Capex, as per Greenwald's book -

1. Calculate the Average Gross Property Plant and Equipment (PPE) / Sales ratio over 5-7 years
2. Calculate current year’s increase in sales
3. Multiply PPE/Sales ratio by increase in sales to arrive at Growth Capex
4. Maintenance Capex = Total Capex figure from the cash flow statement minus Growth Capex calculated above
 Dhandho Intrinsic Value Calculation
Read the book - The Dhandho Investor by Mohnish Pabrai

MRF LTD MRF LTD

Dhandho IV - Lower Range Dhandho IV - Higher Range
Year FCF (Rs Cr) PV of FCF (Rs Cr) Assumed FCF Growth Year FCF (Rs Cr) PV of FCF (Rs Cr) Assumed FCF Growth
0 Excess Cash (Latest) 105 Year 1-3 15% 0 Excess Cash (Latest) 105 Year 1-3 20%
1 FY18 609 544 Year 4-6 10% 1 FY18 636 568 Year 4-6 15%
2 FY19 701 559 Year 7-10 5% 2 FY19 763 608 Year 7-10 10%
3 FY20 806 574 Discount Rate 12% 3 FY20 916 652 Discount Rate 12%
4 FY21 886 563 4 FY21 1,053 669
5 FY22 975 553 Last 5-Years' CAGR 5 FY22 1,211 687
6 FY23 1,073 543 Sales 6% 6 FY23 1,392 705
7 FY24 1,126 509 PBT 6% 7 FY24 1,532 693
8 FY25 1,183 478 FCF -56% 8 FY25 1,685 681
9 FY26 1,242 448 9 FY26 1,853 668
10 FY27 1,304 420 10 FY27 2,039 656
10 13,037 4,198 10 30,581 9,846
Intrinsic Value 9,493 Intrinsic Value 16,538
Current Mkt. Cap. 27,105 Current Mkt. Cap. 27,105
Premium/(Discount) to IV 186% Premium/(Discount) to IV 64%

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 the starting
number. This number is your assumption of FCF the business will earn in a normal year, without capex. Check the history of this
business while arriving at your assumption, and use your judgment wisely without twisting the model to fit your version of reality.
 Ben Graham Formula (Low Range) Ben Graham Formula (High Range)
Company Name MRF LTD Company Name MRF LTD
Year Ended Mar/19 Year Ended Mar/19

Avg 5-Yr Net Profit (Rs Crore) 1,433.2 Avg 5-Yr Net Profit (Rs Crore) 1,433.2
PE Ratio at 0% Growth 8.5 PE Ratio at 0% Growth 8.5
Long-Term Growth Rate 3.5 Long-Term Growth Rate 6.9

Ben Graham Value (Rs Crore) 22,120 Ben Graham Value (Rs Crore) 32,058
Current Market Cap (Rs Crore) 27,105 Current Market Cap (Rs Crore) 27,105

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 years

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 publicizing his works, the risk free interest rate was

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

 Dicounted Cash Flow Valuation
MRF LTD

Initial Cash Flow (Rs Cr) 530 12,062 DCF Value (As calculated in cell B29)
27,105 Current Market Cap
Years 1-5 6-10 44% DCF as % of Current Mkt Cap
FCF Growth Rate 15% 12%
Discount Rate 12%
Terminal Growth Rate 2%

Net Debt Level (Rs Cr) 2,402

Year FCF Growth Present Value

1 609 15% 544
2 701 15% 559
3 806 15% 574
4 927 15% 589
5 1,066 15% 605
6 1,194 12% 605
7 1,337 12% 605
8 1,497 12% 605
9 1,677 12% 605
10 1,878 12% 605

Final Calculations
Terminal Year 1,916
PV of Year 1-10 Cash Flows 5,893
Terminal Value 6,168
Total PV of Cash Flows 12,062
Current Market Cap (Rs Cr) 27,105

Note: See explanation of DCF here

 Expected Returns Model
MRF LTD
Particulars Sep/09 Sep/10 Sep/11 Sep/12 Sep/13 Sep/14 Mar/16 Mar/17 Mar/18 Mar/19 CAGR (9-Yr) CAGR (5-Yr)
Net Profit (Rs Crore) 251 358 619 579 809 908 2,509 1,486 1,132 1,131 18% 7%
Net Profit Margin 4% 5% 6% 5% 7% 7% 12% 11% 8% 7%
Return on Equity 18% 21% 27% 20% 22% 20% 35% 17% 12% 10%

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) 3,511
Current P/E (x) 24.0
Exit P/E in the 10th year from now (x, Estimated) 20.0
Esti. Market Cap (10th year from now; Rs Cr) 70,229
Cost of Capital/Discount Rate 12%
Discounted Value (Rs Cr) 22,612
Current Market Cap (Rs Cr) 27,105

Note: See explanation of this model here

 Intrinsic Value Range
MRF LTD
Lower Higher Remember! Give importance to a stock's valuations / fair value
EPV 8,125 only "after" you have answered in "Yes" to these two questions -
Dhandho 9,493 16,538 (1) Is this business simple to be understood? and (2) Can I
Ben Graham 22,120 32,058 understand this business?
DCF 12,062
Don't try to quantify everything. In stock research, the less non-
Expected Return 22,612 mathematical you are, the more simple, sensible, and useful will
Current Market Cap. 27,105 be your analysis and results. Great analysis is generally "back-of-
the-envelope".

Also, your calculated "fair value" will be proven wrong in the

future, so don't invest your savings just because you fall in love
with it. Don't look for perfection. It is overrated. Focus on
decisions, not outcomes. Look for disconfirming evidence.
MRF LTD
SCREENER.IN
Narration Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19
Sales - - - - 3,883 3,947 4,095 4,138 4,471 4,008
% Growth YOY #DIV/0! #DIV/0! #DIV/0! #DIV/0! 15% 2%
Expenses - - - - 3,298 3,381 3,524 3,554 3,858 3,451
Operating Profit - - - - 585 566 571 583 612 556
Other Income - - - - 72 112 126 112 106 95
Depreciation - - - - 187 200 206 215 228 238
Interest - - - - 66 69 71 62 72 72
Profit before tax - - - - 404 409 421 419 418 342
PBT Margin #DIV/0! #DIV/0! #DIV/0! #DIV/0! 10% 10% 10% 10% 9% 9%
% Growth YOY #DIV/0! #DIV/0! #DIV/0! #DIV/0! 3% -16%
Tax - - - - 136 131 130 125 145 113
Net profit - - - - 268 278 291 294 273 229
% Growth YOY #DIV/0! #DIV/0! #DIV/0! #DIV/0! 2% -18%
OPM 15% 14% 14% 14% 14% 14%
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