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Valuation Mergers Project

1) The company generated an NOPAT of Rs. 26,103 Cr in 2021 with a ROIC of 40%. 2) The FCFF for 2021 was Rs. 23,118 Cr and is projected to grow at 5% annually for the next 5 years. 3) Discounting the FCFF flows at 8% yields a firm value of Rs. 369,547 Cr. With a market cap of Rs. 299.84 Cr, the company is undervalued.

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suraj nair
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37 views3 pages

Valuation Mergers Project

1) The company generated an NOPAT of Rs. 26,103 Cr in 2021 with a ROIC of 40%. 2) The FCFF for 2021 was Rs. 23,118 Cr and is projected to grow at 5% annually for the next 5 years. 3) Discounting the FCFF flows at 8% yields a firm value of Rs. 369,547 Cr. With a market cap of Rs. 299.84 Cr, the company is undervalued.

Uploaded by

suraj nair
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Particulars Amount (Rs.

In Cr)
a EBIT or Operating Profit 30,952.43
b Tax 4,849.30
t = b/a Tax ratio (t) 0.16
c = a*(1-t) NOPAT 26,103.13
d Invested Capital 2021 65,273.26

e = c/d ROIC 0.40

Cost of Capital/ Discount Rate (k) -


p CAPEX 2,985.10 ke
K K (CAPM (Ke) = Rf+B*Rm) 0.08
q Changes in working capital -
R = p+q Reinvestment 2,985.10
RR = R/c Reinvestment Rate (RR) 0.11
g = RR*e Growth (g) 0.05
c-R FCFF 23,118.03

1 2
Year
2021 2022
EBITDA 32,367.96 33,848.22
NOPAT (EBITDA * (1-t)) 27,296.89 28,545.24
Reinvestment (NOPAT*RR) 3,121.62 3,264.37

FCFF 24,175.27 25,280.86

Year FCFF PVIF @ 8%

1 24175.2719908704 0.9259
2 25280.864149435 0.8573
3 26437.0176428024 0.7938
4 27646.0447599638 0.7350
5 28910.3635363351 0.6806
Terminal Value 411,663.46 0.6806
Present Value of Free Cash Flow to Firm
Cash and Bank and Balance
Total Value of ITC/ Enterprise Value
Debt Outstanding
Total Value of Equity
No. Of Shares Outstanding
Intrinsic Value of Equity
Market price as on 11.08.2022
Inference
Particulars
Current Assets exlcuding Cash
Current Liabilities + Provision

Risk free rate Beta of ITC Risk Premium Cost of Equity =


Rf+ β (Rm-Rf)
Rf β Rm-Rf ke
0.065 0.66 0.0218 0.08

3 4 5
2023 2024 2025
35,396.18 37,014.93 38,707.71 Terminal Value
29,850.68 31,215.82 32,643.39
3,413.66 3,569.78 3,733.03

26,437.02 27,646.04 28,910.36 411,663.46


G=K*RR 0.009

PVCF

22,384.51
21,674.27
20,986.56
x
19,675.91
280,171.24
364,892.48
4,654.42
369,546.90
-
369,546.90
1,232.5
299.84
220.05
Undervalued
2020 2019
14,246.97 Changes in Working
14,279.68 Capital
9,492.22 10,006.02
4,787.46 4,240.95 546.51

Cost Cost rates Weights

ke 0.08 1
kd 0.02 0
1

Pre tax 0.02

Growth Beyond 5 Years

No of share o/s 1232.5 crs

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