267491_64439_stock_analysis

Fill up data

Basic Company DetailsCurrent Stock Price (Rs) 473.05 Pl UpdateFace Value (Rs) 10.00 Pl UpdateNo. of Shares (Crore) 97.12 Pl UpdateMarket Capitalization (Rs Crore) 45,943.34 Pl UpdatePromoter Shareholding (Latest Quarter) 31% Pl UpdatePromoter Pledged Shareholding (Latest Quarter) 9% Pl Update

Key Financials (Last 5-Years)Sales Growth (05-Year CAGR) 18%Gross Profit Growth (05-Year CAGR) 16%Net Profit Growth (05-Year CAGR) 15%Average Debt/Equity (x) 0.03 Average Return on Equity 37%

Mar'14 Mar'13 Mar'12 Mar'11 Mar'10

12Months 12Months 12Months 12Months 12Months

INCOME:

Sales Turnover 10418.78 8971.7 9139.39 7244.59 5794.09

Excise Duty 0 0 812.31 638.57 426.37

NET SALES 10418.78 8971.7 8327.08 6606.02 5367.72

Other Income 0 0 0 0 0

TOTAL INCOME 10592.44 9097.85 8414.41 6675.87 5417.41

EXPENDITURE:

Manufacturing Expenses 114.65 101.65 151.34 127.44 99.33

Material Consumed 5969.32 5185.09 4722.85 3654.93 2835.4

Personal Expenses 482.43 404.59 343.51 302.34 262.73

Selling Expenses 0 0 1425.28 1128.32 940.34

Administrative Expenses 2075.11 1733.1 284.23 231.72 196.96

Expenses Capitalised 0 0 0 0 0

Provisions Made 0 0 0 0 0

TOTAL EXPENDITURE 8641.51 7424.43 6927.21 5444.75 4334.76

Operating Profit 1777.27 1547.27 1399.87 1161.27 1032.96

EBITDA 1950.93 1673.42 1487.2 1231.12 1082.65

Depreciation 212.32 126.98 99.49 94.48 60.74

Other Write-offs 0 0 0 0 0

EBIT 1738.61 1546.44 1387.71 1136.64 1021.91

Interest 26.08 30.56 27.88 16.34 19.1

EBT 1712.53 1515.88 1359.83 1120.3 1002.81

Taxes 533.51 465.88 406.92 351.9 336.46

Profit and Loss for the Year 1179.02 1050 952.91 768.4 666.35

Non Recurring Items -9.96 0 3.1 2.53 100.92

Other Non Cash Adjustments 0 0 2.38 4.22 7.23

Other Adjustments 0 0 0 0 0

REPORTED PAT 1169.06 1050 958.39 775.15 774.5

KEY ITEMS

Preference Dividend 0 0 0 0 0

Equity Dividend 426.35 366.94 321.45 256.83 258.98

Equity Dividend (%) 444.48 382.54 335.12 267.75 269.99

Shares in Issue (Lakhs) 9591.98 959.2 959.2 959.2 959.2

EPS - Annualised (Rs) 12.19 109.47 99.92 80.81 80.74

Work Out

Diluted EPS (Rs) 12.14 10.81 9.81 7.91 6.86

Equity Dividend Per Shares 4.39 3.78 3.31 2.64 2.67

PLEASE UPDATE

Ratio

18%

19%15%16%

14%

14%

15%

13%13%

15%

Particulars Mar'14 Mar'13 Mar'12 Mar'11 Mar'10

Liabilities 12 Months 12 Months 12 Months 12 Months 12 Months

Share Capital 95.92 95.92 95.92 95.92 95.92

Reserves & Surplus 3505.01 2926.34 2391.86 1879.4 1461.3

Net Worth 3600.93 3022.26 2487.78 1975.32 1557.22

Secured Loan 6.65 9.28 17.01 23.43 25.59

Unsecured Loan 32.86 37.48 151.21 40.7 40.7

TOTAL LIABILITIES 3640.44 3069.02 2656 2039.45 1623.51

Assets

Gross Block 2908.1 2803.73 1659.51 1611.22 1194.39

(-) Acc. Depreciation 895.9 701.84 650.47 554.03 486.93

Net Block 2012.2 2101.89 1009.04 1057.19 707.46

Capital Work in Progress 37.95 52.55 827.3 67.32 380.72

Investments 1030.19 449.7 542.22 1034.76 703.69

Inventories 1665.05 1480.79 1264.42 1071.76 763.14

Sundry Debtors 712.36 633.88 500.24 366.68 331.43

Cash and Bank 745.36 566.86 500.97 20.47 28.6

Loans and Advances 478.6 362.61 361.22 270.88 241.68

Total Current Assets 3601.37 3044.14 2626.85 1729.79 1364.85

Current Liabilities 2423.55 2078.94 1929.18 1511.37 1229.04

Provisions 617.72 500.32 420.23 338.24 304.17

Total Current Liabilities 3041.27 2579.26 2349.41 1849.61 1533.21

NET CURRENT ASSETS 560.1 464.88 277.44 -119.82 -168.36

Misc. Expenses 0 0 0 0 0

TOTAL ASSETS(A+B+C+D+E) 3640.44 3069.02 2656 2039.45 1623.51

PLEASE UPDATE

Particulars Mar'14 Mar'13 Mar'12 Mar'11 Mar'10

Profit Before Tax 1702.57 1515.88 1362.93 1122.83 1104.81

1368.84 1081.12 753.67 743.25 847.41

-615.38 -424.87 -464.87 -410.23 -241.81

-559.67 -590.35 -297.06 -321.15 -237.99

193.79 65.9 -8.26 11.85 367.61

551.57 500.97 509.23 495.55 127.94

745.36 566.87 500.97 507.4 495.55

753.46 656.25 288.8 333.02 605.6

Net Cash Flow from Operating Activity

Net Cash Used in Investing Activity

Net Cash Used in Financing Activity

Net Inc/Dec In Cash and Cash Equivalent

Cash and Cash Equivalent - Beginning of the Year

Cash and Cash Equivalent - End of the Year

PLEASE UPDATE

Key Ratios calculated figures,

Operational & Financial Ratios Mar'14 Mar'13 Mar'12

Diluted Earnings Per Share (Rs) 12.14 10.81 9.81 Diluted Book Value Per Share (Rs) 37.08 31.12 25.62 Tax Rate (%) 31% 31% 30%Dividend Per Share (Rs) 4.39 3.78 3.31 Dividend Pay Out Ratio (%) 0% 0% 0%

Profitability Ratios Mar'14 Mar'13 Mar'12

Gross Margin (%) 43% 42% 42%EBITDA Margin (%) 18% 18% 18%EBIT Margin (%) 16% 19% 21%Net Profit Margin (%) 11% 12% 11%

Performance Ratios Mar'14 Mar'13 Mar'12

Return on Equity (%) 33% 35% 38%Return on Capital Employed (%) 61% 52% 99%Return on Invested Capital (%) 19% 23% 12%Sales/Working Capital (x) 2.97 3.04 3.42

Efficiency Ratios Mar'14 Mar'13 Mar'12

Receivable Days 25 25 22 Inventory Days 57 59 55 Payable Days 105 103 102

Growth Ratios Mar'14 Mar'13 Mar'12

Net Sales Growth (%) 16% 8% 26%EBITDA Growth (%) 17% 13% 21%PBIT Growth (%) 12% 11% 22%PAT Growth (%) 12% 10% 24%

Financial Stability Ratios Mar'14 Mar'13 Mar'12

Total Debt/Equity (x) 0.01 0.02 0.07 Debt Burden (x) 0.05 0.07 0.58 Current Ratio (x) 1.17 1.16 1.04 Quick Ratio (x) 0.63 0.60 0.54 Interest Cover (x) 66.66 50.60 49.77

Mar'11 Mar'10

7.91 6.86 20.34 16.03

31% 34% 2.64 2.67

0% 0%

Mar'11 Mar'10

43% 46%18% 20%26% 32%12% 12%

Mar'11 Mar'10

39% 43%104% 151%

16% 13% 4.01 4.17

Mar'11 Mar'10

20 22 59 51 101 103

Mar'11 Mar'10

23% 0%14% 0%11% 0%15% 0%

Mar'11 Mar'10

0.03 0.04 0.19 0.11 0.90 0.85 0.34 0.38 69.56 53.50

calculated figures,

Initial Cash Flow 527.43

Years 1-5 Discounted Cash Flow

FCF Growth Rate 15%Discount Rate 12%Terminal Growth Rate 2%

Shares Outstanding (Crore) 97.12 Net Debt Level -1,736.04 39.51 1775.55

Year FCF Growth Present Value1 607 15% 542 2 698 15% 556 3 802 15% 571 4 922 15% 586 5 1,061 15% 602

Final CalculationsTerminal Year 1,082 PV of Year 1-05 Cash Flows 2,857 Terminal Value 6,140 Total PV of Cash Flows 8,997 Number of Shares 97 DCF Value / Share (Rs) 111

discounted cash flow (DCF

A2

Safal Niveshak: Normalize! It's better to take a 3-5 years average FCF as this starting number instead of the latest year's FCF. This is for the simple reason that the latest year can be a best/worst number. FCF can be calculated from the Cash Flow Statement in the annual report. FCF formula = Net Cash from/(used in) Operating Activities minus Purchase of Fixed Assets

A4

Safal Niveshak: In a 2-stage DCF, we break the next 10 years into two phases of five years each, and then calculate the FCF growth based on growth rates assumed in Cells B9 and B10 below.

A5

Safal Niveshak: Be conservative! Prefer to value stocks based on the present data rather than what will happen in the future. Anything could happen even in 1 year, and if the growth rate is too high and the company cannot meet those expectations, there is no where to go but down. The best practice is to keep growth rates as low as possible. If the company looks to be undervalued with 0% growth rate, you have more upside than downside. The higher you set the growth rate, the higher you set up the downside potential. Just be reasonable and use common sense. On most of the stocks I value, I rarely go above 15% (for the first 5-year period), and that’s only for the safest, cash-generating businesses like Colgate, HUL, Infosys etc. This is approx. 2x India's expected long-term GDP growth rate. The goal of choosing a growth rate is to find a number which is conservative yet not very low or pessimistic, and close to reality in order to capture potential future gains without eliminating too many investment candidates.

A6

Safal Niveshak: This is the rate at which you discount the future cash flows to the present value. So what would be a good rate? Considering that the “average” market return is about 10-15%, a minimum discount rate should be set to 10%. I use 10% as a minimum for stable and predictable companies such as Colgate, Infosys, HUL while 15% is a good return for less predictable companies such as, say Opto Circuits. Also, do not adjust the entire risk of a investment in its discount rate. In other words, if Opto Circuits is a "riskier" investment that say Titan, adjust for some risk in the cash flow growth estimates and some in the discount rate. Ignore simple yet junk models like CAPM to get the discount rate. People in the finance world pour out their hearts to obtain the most accurate discount rate by analyzing risk free rates, beta, risk premium and WACC. It's just short of rubbish! What’s the point in learning every method of hammering a nail when all you have to do is hit it on the head. So do not over-complicate this aspect. The beauty of old school Graham and Buffett is that their investments are based on common sense, not volatility and other mumbo jumbo. There is no hard and fast rule for choosing a discount rate. Using a high discount rate to discount the future cash just means you are willing to pay less today for the future cash and vice versa. Do understand that - “You can’t compensate for risk by using a high discount rate.” The important aspect is not deciding upon a discount rate, but in being logical and reasonable about cash projections. Another way you can look at discount rate is to not using different discount rates for different businesses. It won't really matter what rate you use as long as you are being intellectually honest and conservative about future cash flows.

A7

Safal Niveshak: Since it isn’t practical to forecast cash flows for an infinite number of years, it’s usual to end the DCF with a terminal value. The best terminal growth rate is 0%, and the highest you should go (for safest businesses) is 2%.

A11

Safal Niveshak: If this figure is negative, i.e., in brackets, it means that the company has more Cash than Debt. This is automatically added to the PV of cash flows below to give a complete picture of the company's valuation.

Buffett Valuation Spreadsheet

Date of Analysis: 18/Apr/23

Current Stock Data 10-Year AveragesPrice: 473.1 Return on Equity:EPS: 12.1 Payout Ratio:DPS: 4.4 P/E Ratio-High:

BVPS: 37.1 PE Ratio P/E Ratio-Low:P/E: 39.0 18 218.51 P/E Ratio:

Earnings Yield: 2.6% Sustainable GrowthDividend Yield: 0.9%

P/BV: 12.8

Govt. Bond Yield: 0.0%

Historical Company DataPrice

Year EPS DPS BVPS High LowL-4 6.9 80.7 16.0 737 449 L-3 7.9 80.8 20.3 714 334 L-2 9.8 99.9 25.6 501 332 L-1 10.8 109.5 31.1 448 195 L 12.1 12.1 37.1 579 332

Annually Compounded Rates of GrowthFactor EPS DPS BVPS High Price Low Price5-Year Growth 12.1% -31.5% 18.3% -4.7% -5.8%

Projected Company Data Using Historical Earnings Growth RateYear EPS DPS

L (Current) 12.1 105.1 19.2 Earnings after 10 yearsL+1 13.6 117.8 668.9 Sum of dividends paid over 10 yearsL+2 15.3 132.1 L+3 17.1 148.0 1,006 Projected price (Average P/E * EPS)L+4 19.2 165.9 1,674 Total gain (Projected Price + Dividends)L+5L+6 13.5% Projected return using historical EPS growth rateL+7 [(Total Gain / Current Price) ^ (1/10)] - 1L+8L+9

L+10

Projected Company Data Using Sustainable Growth RateYear BVPS EPS DPS

L (Current) 37.1 13.9 120.4 170.6 Earnings after 10 years (BVPS * ROE)L+1 (69.4) (26.0) (225.3) 1,004.4 Sum of dividends paid over 10 yearsL+2 129.9 48.7 421.6 L+3 (243.1) (91.1) (789.1) 8,950 Projected price (Average P/E * EPS)L+4 454.9 170.6 1,476.8 9,954 Total gain (Projected Price + Dividends)L+5L+6 35.6% Projected return using sustainable growth rateL+7L+8L+9

L+10

B47

Safal Niveshak: This is the latest year's book value per share.

D47

Safal Niveshak: DPS is calculated as: EPS x Payout Ratio. Payout ratio = DPS / EPS, or how much of a year's earnings is paid out at dividends.

B48

Safal Niveshak: This book value and those in subsequent years are calculated using the formula… Previous year's Book Value + Latest year's EPS - Latest year's Dividend per share This is because this year's shareholder's equity (book value) is simply last years equity + profits generated in this year - dividends paid in this year.

Buffett Valuation Spreadsheet

10-Year AveragesReturn on Equity: 37.5%

Payout Ratio: 865.8%P/E Ratio-High: 67.6 P/E Ratio-Low: 37.4

P/E Ratio: 52.5 Sustainable Growth -287.2%

P/E RatioHigh Low ROEPayout Ratio

107.4 65.4 42.8% 1176.8%90.2 42.2 38.9% 1021.4%51.1 33.9 38.3% 1018.4%41.4 18.1 34.7% 1012.6%47.7 27.4 32.7% 100.0%

Earnings after 10 yearsSum of dividends paid over 10 years

Projected price (Average P/E * EPS)Total gain (Projected Price + Dividends)

Projected return using historical EPS growth rate[(Total Gain / Current Price) ^ (1/10)] - 1

Warning! Past is no predictor of the future. So be careful using numbers in this sheet - that are based on past numbers - into your fair value calculations. Of

course past can give some indications of the future, but the future is never always the same.

G12

Safal Niveshak: Sustainable Growth is usually calculated as: (ROE * (1 - Payout Ratio)) Here, (1 - Payout Ratio) = Profits retained by the company after paying the dividend. In the long term, a company's profit growth is sustained at its RoE levels, thus this formula.

Earnings after 10 years (BVPS * ROE)Sum of dividends paid over 10 years

Projected price (Average P/E * EPS)Total gain (Projected Price + Dividends)

Projected return using sustainable growth rate

Warning! Past is no predictor of the future. So be careful using numbers in this sheet - that are based on past numbers - into your fair value calculations. Of

course past can give some indications of the future, but the future is never always the same.

Year Mar'14 Mar'13 Mar'12 Mar'11 Mar'10

Diluted EPS (Rs) 12.14 10.81 9.81 7.91 6.86 Stock Price - High (Rs) 578.60 448.10 500.90 713.80 737.00 High P/E (x) 47.66 41.45 51.05 90.22 107.42 Stock Price - Low (Rs) 332.20 195.40 332.35 334.05 448.65 Low P/E (x) 27.36 18.07 33.87 42.22 65.39 Average P/E (x) 37.51 29.76 42.46 66.22 86.41

Valuation - Different Methods (Rs)Graham Number 95 Avg P/E Ratio Valuation 573 EPV 101 DCF 111 Historical Earnings Growth 6 Sustainable Earnings Growth 2,882

Fair Value Range (Rs/Share)High End 628 Low End 67 Margin of Safety (MoS) 50%Fair Value after MoS 174 Current Mkt. Price (CMP, Rs) 473 Premium / (Discount) 172.3%

PL UPDATE

Year Open High Low CloseNo. of

Shares

2010 622.7 737 448.65 678.95 ###

2011 684.2 713.8 334.05 335.25 ###

2012 339 500.9 332.35 428.3 ###

2013 431.1 448.1 195.4 423.45 ###

2014 425 578.6 332.2 459.95 ###

Remember! Give importance to a stock's fair value only "after" you have

answered in "Yes" to these two questions - (1) Is this business simple to be understood? and (2) Can I understand this business?

Don't try to quantify everything. In stock research, the less non-mathematical you are, the more simple, sensible, and useful will 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. Pray!

A12

Safal Niveshak: The Graham number or Benjamin Graham number measures a stock's fair value. Named after Benjamin Graham, the founder of value investing, the Graham Number can be calculated as follows: Graham Number = SQRT(22.5*Latest year's book value per share*Last 3 or 5 years' average earnings per share) The final number is, theoretically, the maximum price that a defensive investor should pay for the given stock. Put another way, a stock priced below the Graham Number would be considered a good value, if it also meet a number of other criteria. The complete Graham selection procedure is much more elaborate. No decision should be made based on this number alone.

A16

Safal Niveshak: This number is discounted to its present value.

A17

Safal Niveshak: This number is discounted to its present value.

A22

Safal Niveshak: Valuation is an imprecise art (yes, however smart you may think you are!). Also, the future is inherently unpredictable. Thus, it’s important to bring in the most-important investing concept of “margin of safety” into the picture. This is what Graham wrote about margin of safety in The Intelligent Investor… "Confronted with the challenge to distill the secret of sound investment into three words, we venture the motto, MARGIN OF SAFETY." Margin of safety is simply the discount factor that you use with your intrinsic value calculation. So if you arrive at an intrinsic value of Rs 100 for a stock that trades at Rs 80, you might think that you have found a bargain. But what if your intrinsic value calculation is wrong? Yes, it will be wrong, at least 100% of the times! Thus, you will do yourself a world of good by buying the stock only at say 50% discount to your intrinsic value calculation, or around Rs 50. Now when you bring your intrinsic value assumption down to Rs 50 – by giving a 50% discount to the original calculated value of Rs 100, don’t think that you are trying to be ultra-conservative. What you are doing is providing yourself protection against: 1. Bad luck 2. Bad timing, and 3. Bad judgment. Margin of safety was, and will always be, the bedrock of value investing. You can’t ignore this at any cost…or it will turn out to be a costly affair!

A23

Safal Niveshak: This is the fair value or comfortable buying price of the stock after adjusting for Margin of Safety.

A25

Safal Niveshak: Here are the definitions... Premium = Stock Price is more than the Fair Value, which means the stock is expensive. Discount = Stock Price is less than the Fair Value, which means the stock is cheap. Warning: Valuation must only be looked after assessing the quality of a business. Otherwise, if the business is bad, or getting bad, a cheap stock can be a "value trap".

No. of * Spread

Trades H-L C-O

7,580,853 ### 82,020,996 18.8 288.35 56.25

5,095,603 ### 62,437,641 23.01 379.75 -348.95

4,385,630 ### 44,401,849 19.28 168.55 89.3

4,535,273 ### 50,035,678 20.98 252.7 -7.65

4,146,265 ### 34,745,700 22.07 246.4 34.95

Remember! Give importance to a stock's fair value only "after" you have

answered in "Yes" to these two questions - (1) Is this business simple to be understood? and (2) Can I understand this business?

Don't try to quantify everything. In stock research, the less non-mathematical you are, the more simple, sensible, and useful will 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. Pray!

Total Turnover

Deliverable Quantity

% Deli. Qty to Traded

Qty

267491_64439_stock_analysis

Documents