Persistent System - With Historic Data-Unsolved - IMS Proschool
Persistent System - With Historic Data-Unsolved - IMS Proschool
Persistent System - With Historic Data-Unsolved - IMS Proschool
fundamental approach
Project Company
starting t = 0 does not start at t =0
life is finite life is infinite (going concern)
assumptions were given to us we have figure out the drivers and take assumptions
Maruti x
AIRTEL BROADBAND
DTH
HOSPITAL IN USA
WANTS SOFTWARE FOR MGMT.
VALUATION OF COMPANY
Wd = 1 - We
Kd = INT RATE * (1 - TAX RATE)
Ke = Rf + BETA*(Rm - Rf) <=== CAPITAL ASSET PRICING MODEL (CAPM)
EV = PV OF ALL FCFF DISCOUTNED AT WACC
MATHEMAICALLY , EV WOULD BE
WE CAN ESTIMATE THE FCFF FOR NEXT 6 YEARS USING OUR FORECASTS
FOR THE REMAINING YEARS TILL INFINITE WE USE 2 STAGE BASED H-MODEL
OF VALUATION
THIS MODEL CONSIDERS THE BUSINESS LIFE CYCLE STAGES AND MODERATES THE
GROWTH RATE
STAGE -1 : LINEAR DECLINE IN GROWTH RATE OF PROFITS OR CASH FLOWS
STAGE -2 : TERMINAL VALUATION BASED ON GORDON GROWTH MODEL
COST DRIVERS
ESTIMATES OF
CFS
CASH FLOW
ASSET
SCHEDULE
BS
BALANCE
SHEET RATIO
HISTORICAL
FORECASTS
DATA
ANNUAL
REPORT
DCF
VALUATION
RELATIVE
VALUATION
Intirinsic Price
> CMP
+15% BUY
INVESTMENT
DECISION
Persistent Systems
Layout
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)
Date Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
Year 2013 - A 2014 - A 2015 - A 2016 - A 2017 - A 2018 - A 2019 - E 2020 - E 2021 - E 2022 - E
Mar-23 Mar-24
2023 - E 2024 - E
Revenue foresting:-
=> It is the first forecasting that we do.
=> It is the first cash inflow coming from the operation.
=> It is considered as limiting factor forecasting.
=> All the other forecastinh will be directly or indirectly dependent on it.
EPS
Basic 48.62 32.04 36.84 34.74 37.68
Diluted 46.90 31.16 36.33 34.66 37.68
Number of Shares
Basic 38.59 77.80 78.89 79.82 80.01
Diluted 40.00 80.00 80.00 80.01 80.01
Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
2018 - A 2019 - E 2020 - E 2021 - E 2022 - E 2023 - E 2024 - E
0.79 - - - - - -
4,293 4,747 5,363 6,023 6,743 7,541 8,432
- - - - - - -
4,293 4,747 5,363 6,023 6,743 7,541 8,432
40.39
40.39
Property, Plant and Equipment 2,800 2,785 3,021 2,968 2,768 2,581 2,761 3,105 3,596
Capital work-in-progress 1,174 307 40 24 48 8 8 8 8
Goodwill - 23 24 78 76 77 77 77 77
Other Intangible assets 702 1,269 995 1,325 2,515 2,464 2,464 2,464 2,464
Intangible assets under development - - - 242 241 45 45 45 45
Investments 173 823 2,308 1,469 2,339 2,881 2,881 2,881 2,881
Loans 199 138 58 86 131 143 143 143 143
Other non-current financial assets - 13 870 922 37 37 37 37
Deferred tax assets (net) 190 261 244 129 306 642 642 642 642
Other non-current assets 524 459 81 649 72 92 92 92 92
Total Non Current Assets 5,763 6,066 6,784 7,840 9,421 8,969 9,148 9,492 9,984
Investments 3,116 4,071 4,661 4,914 4,500 5,916 5,916 5,916 5,916
Trade receivables 2,451 3,028 3,586 4,275 4,754 4,847 5,390 6,007 6,677
Cash and Cash equivalents 561 957 987 1,400 1,461 1,344 - - -
Other bank balances - - 526 39 48 1,070 1,070 1,070 1,070
Loans 346 410 11 9 14 7 7 7 7
Other current financial Assets - - 909 1,764 2,316 2,758 2,758 2,758 2,758
Current tax assets (net) - - 20 153 94 114 114 114 114
Other current assets 434 902 397 803 855 1,563 1,563 1,563 1,563
Total Current Assets 6,908 9,368 11,097 13,358 14,043 17,620 16,819 17,436 18,106
Total Assets 12,671 15,434 17,881 21,199 23,464 26,589 25,967 26,928 28,089
Equity share capital 400 400 800 800 800 800 800 800 800
Other equity 9,783 11,823 13,901 15,778 18,193 20,472 23,182 26,243 29,681
Total Equity 10,183 12,223 14,701 16,578 18,993 21,272 23,982 27,043 30,481
Borrowings 14 32 26 27 22 17 17 17 17
Deferred payment liabilities 559 301 - - 20 - - - -
Provisions 80 93 116 124 146 160 160 160 160
Deferred tax liabilities (net) - 1 3 - 111 270 270 270 270
Total Non Current Liabilities 653 426 145 151 298 447 447 447 447
Trade Payables 319 434 497 1,599 1,209 1,673 2,162 2,667 3,354
Deferred Payment Liabilities - - - 4 1 - - - -
Other Financial liabilities - - 535 535 453 396 396 396 396
Other Current Liabilities 468 1,140 730 1,108 1,119 1,201 1,201 1,201 1,201
Provisions 1,048 1,211 1,274 1,224 1,391 1,599 1,599 1,599 1,599
Total Current Liabilities 1,835 2,785 3,036 4,469 4,173 4,870 5,359 5,864 6,551
Total Liabilities and Shareholders Equity 12,671 15,434 17,881 21,199 23,464 26,589 29,787 33,354 37,479
9 10 11
53.63 52.55 51.46
40.52 43.86 47.20
Persistent Systems
Cash Flow Statement
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)
Date Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
Year 2013 - A 2014 - A 2015 - A 2016 - A 2017 - A 2018 - A 2019 - E 2020 - E 2021 - E 2022 - E
Payment towards capital expenditure (1,156) (581) (957) (1,659) (2,176) (655)
Proceeds from sale of fixed assets 4 3 3 12 7 3
Payment towards acquisition of subs - (32) - (307) - (408)
Purchase of tax free bonds - - - (243) (514) (595)
Proceeds from sale of tax free bond - - - 456 654 -
Purchase of non-current investment (50) (651) (6) (73) - -
Investments in mutual funds (10,908) (12,492) (15,451) (13,397) (10,789) (15,502)
Proceeds from sale / maturity of m 9,846 11,591 13,702 14,023 10,472 14,290
Proceeds from sale of other curren - - - 20 - -
Investments in bank deposits having (520) (24) (15) (523) (10) (326)
Investments in Deposit with financia (28) - - (300) (135) (595)
Maturity of bank deposits having or 921 42 100 400 - 42
Inter corporate deposits refunded 50 7 0 0 0 0
Interest received 101 28 74 202 82 101
Dividends received 29 150 233 227 189 171
Net Cash (used in) investing activities
Cash In Deposits
Mar-23 Mar-24
2023 - E 2024 - E
(1,154) (1,291)
(217) (242)
Persistent Systems
Revenue Drivers
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)
Date Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19
Year 2010 - A 2011 - A 2012 - A 2013 - A 2014 - A 2015 - A 2016 - A 2017 - A 2018 - A 2019 - E
Method-2 (CAGR %)
Revenue from Operations 6,012 7,758 10,003 12,945 16,692 18,913 23,123 28,784 30,337 37,140
CAGR % - 8 Years 22.426% 22%
Revenue % By Geography
North America 85.60% 82.50% 84.8% 85.1% 85.5% 85.5% 86.40% 83.50%
Europe 5.90% 7.30% 6.5% 5.4% 6.7% 6.5% 5.50% 7.50%
India 0.0% 0.0% 0.0% 0.0% 0.0% 6.7% 5.50% 6.30%
ROW 8.50% 10.20% 8.7% 9.5% 7.8% 1.3% 2.60% 2.70%
ROW + India 8.5% 10.2% 8.7% 9.5% 7.8% 8.0% 8.1% 9.0%
Segment Revenue
North America 6,641 8,253 10,977 14,204 16,170 19,770 24,870 25,331 30,670
Europe 458 730 841 901 1,267 1,503 1,583 2,275 2,861
ROW + India 659 1,020 1,126 1,586 1,475 1,850 2,332 2,730 3,345
Total Revenue 7,758 10,003 12,945 16,692 18,913 23,123 28,784 30,337 36,876
Revenue From operations in USD Mn 238 274 309 352 429 471 483 532
Revenue from Operations in INR Mn 12,945 16,692 18,913 23,123 28,784 30,337 32,839 37,272
Average Exchange Rate (INR/USD) 3% 54.4 60.9 61.3 65.8 67.1 64.5 68.0 70.0
Reveune Mix
Services 82.8% 82.0% 80.9% 78.9% 72.0% 74.4%
IP Led 17.2% 18.0% 19.1% 21.1% 28.0% 25.6%
Employee Details
Technical 6,540 7,349 7,861 8,618 8,808 8,329 8,816 9,330
Sales & BD 99 150 224 201 193 211
Others 331 358 421 445 459 436
Total 6,970 7,857 8,506 9,264 9,460 8,976 9,471 9,993
Team Addition 887 649 758 196 (484) 495 522
% Team Added 12.7% 8.3% 8.9% 2.1% -5.1% 5.5% 5.5%
Technical team Added 809 512 757 190 (479) 487 514
Technical as % Total Team Added 91.2% 78.9% 99.9% 96.9% 99.0% 98.4% 98.4%
Billed Person Months 41,176 44,033 46,094 48,950 52,626 56,406 56,145 59,417
GDC 3,294 3,980 5,113 6,623 7,280 9,255 8,494 8,989
India 37,882 40,053 40,981 42,327 45,346 47,151 47,655 50,432
Utlilisation %
Linear 74.1% 70.9% 71.7% 74.7% 76.5% 79.2% 77.9% 77.9%
GDC 88.6% 86.8% 88.9% 86.2% 85.5% 87.2% 86.4% 86.4%
India 73.1% 69.7% 70.1% 73.1% 75.3% 77.8% 76.5% 76.5%
IP Led Person Months 8,974 9,148 10,207 13,509 19,978 19,982 20,573 21,772
Development Team
Billed Software Professionals
Billable Software Professionals 4,628 5,174 5,354 5,463 5,730 5,933.83 6,008 6,358
IP-Led Professionals 747.83 762.33 850.58 1,125.75 1,664.83 1,665.17 1,714 1,814
Trainees 1,164 1,412 1,656 2,030 1,413 730 1,094 1,157
As % Technical Team
Billed Software Professionals
Billable Software Professionals 70.8% 70.4% 68.1% 63.4% 65.1% 71.2% 68.1% 68.1%
IP-Led Professionals 11.4% 10.4% 10.8% 13.1% 18.9% 20.0% 19.4% 19.4%
Trainees 17.8% 19.2% 21.1% 23.5% 16.0% 8.8% 12.4% 12.4%
Other Income
Other Income 286 310 938 773 958 1,191 1,226 1,226
Cash BOP + Current Investments 3,549 4,071 4,661 4,914 4,500 5,916 5,916 5,916
Other Income Rate % 8.1% 7.6% 20.1% 15.7% 21.3% 20.1% 20.7% 20.7%
Mar-21 Mar-22 Mar-23 Mar-24
2021 - E 2022 - E 2023 - E 2024 - E
8 8 8 8
20 20 20 20
Revenue from Operations 12,945 16,692 18,913 23,123 28,784 30,337 32,839 37,272 42,303
Employee Benefit expense 7,188 9,090 11,114 14,068 18,008 18,316 20,186 22,911 26,004
Cost of technical professionals 536 906 1,090 1,587 1,818 3,181 2,759 3,131 3,554
Other Expenses 2,094 2,553 2,806 3,554 4,304 4,153 4,703 5,338 6,058
Depreciation
Interest Expense
Tax Expense
Effective Tax Rate (Tax Expense/PBT) 28.7% 27.3% 25.5% 25.0% 24.8% 24.7% 24.7% 24.7% 24.7%
Dividends Paid 340 440 560 1,040 480 800 727 821 922
Dividend Tax 55 75 107 212 98 150 137 154 173
Dividend Payout Ratio 18.1% 17.6% 19.3% 37.5% 15.9% 24.8% 20.3% 20.3% 20.3%
Dividend Tax as % of Dividend Paid 16.2% 17.0% 19.1% 20.4% 20.4% 18.8% 18.8% 18.8% 18.8%
Mar-22 Mar-23 Mar-24
2022 - E 2023 - E 2024 - E
Property, Plant and Equipment 2,800 2,785 3,021 2,968 2,768 2,581 2,761 3,105 3,596 4,227
Other Intangible Assets 702 1,269 995 1,325 2,515 2,464 2,464 2,464 2,464 2,464
Total Fixed Assets 3,502 4,054 4,016 4,293 5,283 5,045 5,224 5,568 6,060 6,690
Depreciation & Amortisation 783 1,026 939 990 1,490 1,585 1,670 1,755 1,891 2,073
Depreciation & Amortisation Rate % 27.0% 20.7% 20.4% 27.7% 28.2% 28.0% 28.0% 28.0% 28.0%
Purchase of Fixed Assets 1,156 581 957 1,659 2,176 655 1,849 2,099 2,382 2,704
Purchase of Fixed Assets as % Reve 8.9% 3.5% 5.1% 7.2% 7.6% 2.2% 5.6% 5.6% 5.6% 5.6%
Mar-23 Mar-24
2023 - E 2024 - E
4,995 5,905
2,464 2,464
7,459 8,369
2,300 2,573
28.0% 28.0% Depr%=Depr/Opn+pur/2
3,069 3,483
5.6% 5.6%
Persistent Systems
Valuation-DCF
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)
Valuation Data
Total Debt (Long Term Borrowings) (2018)
Cash & Cash Equivalents (2018)
Number of Diluted Shares (2019)
Tax Rate (2019)
Interest Expense Rate (2019) 10%
MV of Equity
Total Debt
Total Capital
WACC
We
Wd
Ke
Kd
WACC
FCFF
Terminal Value
Total Cash Flow
Target Price
% Returns Rating
% Returns < 5% SELL
>5%, < 15% BUY
Rating >15% BUY
Terminal Growth %
4.0% 4.3% 4.5% 4.8%
13.0%
13.3%
13.5%
13.8%
WACC
14.0%
14.3%
14.5%
14.8%
15.0%
ublication 2003
PEER DATA
Capitalization Revenue
Number of Equity Enterprise
Company Name Ticker Share Price Debt Cash TTM 1-Y FWD 2-Y FWD
Shares Value Value
Mar-18 Mar-19 Mar-20
MindTree MINT.NS 869 164 3,009 3,289 54,628 70,145 79,599
Hexaware HEXT.NS 353 297 - 1,033 46,478 54,208 61,116
Mphasis MBFL.NS 1,040 193 3,899 7,067 63,775 77,586 88,933
Cyient CYIE.NS 608 113 2,410 9,807 39,139 46,893 52,713
Maximum
75th Percentile
Median
25th Percentile
Minimum
Persistent Systems
Valuation Statistics
Enterprise Value / Revenue
Mar-18 Mar-19 Mar-20
MindTree
Hexaware
Mphasis
Cyient
Maximum
75th Percentile
Median
25th Percentile
Minimum
Persistent Systems
EPS
TTM 1-Y FWD 2-Y FWD
Mar-18 Mar-19 Mar-20
34.00 45.75 51.38
19.00 21.70 24.72
43.00 56.41 63.85
36.00 39.45 47.69
P / E Multiple
Mar-18 Mar-19 Mar-20
Persistent Systems
Valuation-Summary
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)