[This question paper contains 8 printed pages.) Sr. No. of Question Paper 2 7846 Unique Paper Code : 61017928 Name of the Paper : Business Analysis and Valuation Name of the Course Bachelor of Management Studies (BMS), 2023 (LOCF) Semester : OV Duration 3 Hours “Maximum Marks TB 1. Write your Roll No. on the top immediately on receipt of this question paper. 2. Use of Scientific Calculator is allowed. 3. Question No. 1 is compulsory. 4, Do any FOUR out of the remaining questions, 3. All questions carry equal marks. 1. On the basis of following information about Ashok Leyland for period from financial year 2020-22, you are required to: wancial ratios each on the basis of (a) Analyse the company's financial results using key profitability, solvency, Liquidity and Turnover. (b) Comment on the overall financial health of the company using Du Pont Analysis and explain the findings. P.T.O.7546 2 (¢) What are the factors of consideration for qualitative analysis of a company? Financial Highlights of Askok Leyland (in Rs. million) REVENUE FROM OPERATIONS [GROSS] 756,600.00|703,726.00| 883,298.00 (Other Income “3Ma)20363[ 17447 TOTAL INCOME(I+H) 789,944.00] 733,083.00 900,745.00] EXPENSES Cost Of Materials Consumed '346,348.00]332,964.00]397,396.00 Purchase Of Stock-In Trade 187,672.00] 1 72,54 1.00}263,975.00, [Changes In Inventories OF FG,WIP And Stock-In Trade] __-2387| 2736] 931 Excise Duty [Employee Benefit Expenses 34162] 34,316.00] 40,514.00 'Finance Costs 1,342.00] 1,018.00) 1266 Depreciation And Amortisation Expenses 35,284.00] 30,341.00] 27,890.00 (Other Expenses 118,896.00] 108,375.00]126,727.00 ‘Vehicles/dies for own use 71,217.00} -728.00| -1,445.00 [TOTAL EXPENSES 720,100.00) 681,563.00]855,392.00 [Share of Profit of associates 1,175.00| 1,588.00] 1,464.00] |Share of Profit of Joint venture 9.00) 102.00) 155.00 PROFIT/LOSS BEFORE TAX 71,028.00] $3,210.00] 46,972.00 [TAX EXPENSES [Current Tax 13765] 11,362.00] 14,310.00 [Deferred Tax 487.00] -2,243.00| _-6133 TOTAL TAX EXPENSES 14,252.00] 9,319.00} 8,177.00) |PROFIT/LOSS FOR THE PERIOD 36,776.00 [43,891.00 |38,795.00 [OTHER COPREHENSIVE INCOME7546 3 ‘A (@ Items that will not be reclassified to profit of loss (a) gain / (Joss) of defined benefit obligation () gain / (loss) on change in fair value of equity ‘instruments: (©) gain/(oss) on share of other comprehensive income in associate and joint venture -718.00 _ [545.00 223.00 -3,902.00 [4,704.00 3,170.00 10.00 14.00 A Gi) Income tax relating to items that will not be reclassified to profit or loss B (i) Items that will be reclassified to profit or loss (a) effective portion of gain / (loss) on hedging, instruments in a cash flow hedge 203.00 _|-123.00 268.00 B (i) Income tax relating to items that will be ‘reclassified to profit or loss Total Other Comprehensive Income (A (iti) BE+Hi)) Total Comprehensive Income for the period (VIT + van) Eamings per equity share (*) [Basic EPS (Rs.) -4,417.00_|5,136.00 3,129.00 52,359.00 49,027.00 41,924.00 187.95] 14533 128.43 [No of Shares 187.95] 145.3 128.43) Earueesiea Rei cin [NON-CURRENT ASSETS Property, plant and equipment 147,905.00] 141,785.00] 128,261.00 Capital Work-In-Progress. 13,443.00] 11,993.00] 26,462.00 Intangible Assets 3358 (5217 6,402 Right-of-use Assets 6890 $860 5712 Financial assets Investments. 1362 345,29 1.00]379,346.00 P.T.0.7546 [Loans 2[__2.00[ 2.00 |Other financial assets 365 369) 375 |Non current Tax assests(Net) 5,446.00 |Deffered Tax assets LA1L00 Other Non-Current Assets. 17,216.00} 16,867.00) 25,204.00 TOTAL NON-CURRENT ASSETS 551871 1527384 [578621 CURRENT ASSETS Inventories | 32,139.00] 30,490.00] 35,323.00 Financial assets Investments 12188) 84157) 41,001 Trade Receivables 19,777.00} 12,799.00) 20,345.00 (Cash And Cash Equivalents 208.00] 408.00) 351.00 Other bank balances 30063 30,071 Short Term Loans And Advances [252 230 305 (Other financial assets [656 [oaa7 25,930 ‘Current tax assets (Net) 5272 5407 (OtherCurrentAssets 7,974.00| 15,462.00] 14,608.00 ‘TOTAL CURRENT ASSETS: 84,406.00] 185,443.00] 167,934.00} TOTAL ASSETS (636,277.00|712,827.00| 746,555.00 EQUITY AND LIABILITIES EQUITY = i Equity Share Capital 1510] 1510] 1510: (Other Equity '523,496.00]551,825.00 Equity attribute table to owners of the eompany |Non Controlling interest | Reserves and Surplus 492,812.00} [TOTAL EQUITY 494323] 525006] _ 553335} [LIABILITIES |NON-CURRENT LIABILITIES Financial Liabil7546 5 Borrowings 54.00] 28.00 Lease liabilities 398.00] 392.00 _ 329.00 Long Term Provisions 516.00 447.00) 844.00 Deferred Tax Liabilities [Net] 6575___~(aa54 |Other Long Term Liabilities 21,158.00] 21,295.00) 21,812.00 TOTAL NON-CURRENT LIABILITIES 28,901.00] 26,616.00] 22,985.00 |CURRENT LIABILITIES Financial Liabilities ‘Short Term Borrowings 1,063.00] 4,888.00| 3,819.00 Trade Payables |Total outstanding dues of micro, small and medium. 481 698.00} 1,087 enterprises |Total outstanding due of creditors other than micro, 74,307. 00) 100983} 96,565.00 small and medium enterprises 103.00) 74) 30.00 [Other Financial Liabilities 9,040.00] _ 12720 20,272.00 [Short Term Provisions 6,807.00] 7,428.00] 8,613.00 (Net) 6,962.00] 8,547.00] 11,113.00 |Other Current Liabilities 14,091.00] 25,867.00) 28,686.00 [TOTAL CURRENT LIABILITIES ” 113,054.00] 161,205.00] 170,235.00) |TOTAL LIABILITIES 141,955.00] 187,821.00) 193,220.00) TOTAL EQUITY AND LIABILITIES (636,277.00}712,827.00|746,555.00 (1S marks) Televista Corporation is expected to grow at a higher rate for 4 years; thereafter the growth rate will fall and stabilise at a lower level. The following information is available: Base Year (Year 0) Information i Revenues = 1600 million EBIT = 240 million P.T.O.7546 6 Capital expenditure = 200 million Depreciation = 120 million Working capital as a percentage of revenues = 25 percent Paid up equity capital (10 par) = 180 million Market value of debt = 600 million Inputs for the High Growth Period Length of the high growth period = 4 years Growth rate in revenues, depreciation, BIT and capital expenditure ~ 20 percent Working capital as a percentage of revenues = 25 percent Cost of debt = 15 percent (pre-tax) Debt equity ratio = 1.5: 1 Risk-free rate = 12 percent Market risk premium = 7 percent Equity beta = 1.25 Tax rate will increase to 24% in linear increments of 6 percent. Inputs for the Stable Growth Period Expected growth rate in revenues and EBIT = 10 percent Capital expenditures are offset by depreciation Working capital as a percentage of revenues ~ 25 percent Cost of debt = 14 percent (pre-tax) Debt-equity ratio 1:1 Risk-free rate = 12 percent Market risk premium = 6 percent Equity beta = 1.00 Calculate the value of the firm, (sy7546 7 a3 ‘The following financial information is available for the company SDH Lid: + EBITDA : 400 million * Book value of assets: 1,000 million Sales: 2,500 million Based on an evaluation of a number of listed pharmaceutical companies, P&G, HUL, and Dabur have been found to be comparable to company SDI Ltd. The financial information for these companies is given below (in million Rs.): P&G Bia 600 2000 3200 EBITDA, 280 360 480) Book value of assets 800 1000 1400 Enterprise value(EV) 2000 3500 4200 (a) What is the Enterprise value/Revenue of P&G, HUI and Dabur? 8) (b) Considering total assets as weightage for all the three firms, and using EV/EBITDA, EV/ Sales and EV/ Book Value as base, find the value of SDH Pvt Ltd. (12) You have been provided the following financial data of two companies: Particulars: Krishna Ltd. Rama Ltd. Famnings after taxes Rs. 7,00,000 Rs, 10,00,000 Equity shares outstanding Rs. 2,00,000 Rs. 4,00,000 Earnings per share 35 25 Price-earnings ratio 0 times 14 times Market price per share Rs. 35 Rs. 35 PLEO.7546 8 Company Rama Lid, is acquiring the company Krishna Ltd. exchanging its share on a one- two-one basis of company Krishna Ltd's share. The exchange ratio is based on the market prices of the shares of the two companies You are required to calculate - (i) The EPS subsequent to merger, (ii) Change in EPS for the shareholders of Rama Ltd. and Krishna Ltd., (iii) The market value of the post-merger firm, (iv) The profits accruing to shareholders of both the Companies. (5) 5. The current earnings per share (EPS) of Gamma Limited is Rs.5.00. For the next five years, the earnings per share is expected to grow at 20 % and the dividend payout ratio in the high growth period will be 20 %. The growth rate in earnings per share will decline linearly for the following five years to 10% per year. During this period, the dividend payout ratio will increase linearly from 20% to 60%. After the tenth year, the growth rate in earnings per share will remain stable at 10 % for ever. During the stable growth rate period, the payout ratio will be 60%. During the high growth period, the cost of equity will be 18 %; during the transition period, the cost of equity will fall by 0.8 % per year; finally, during the stable growth period, the cost of equity will be 14 %. What is the intrinsic value per share as per the three-stage dividend discount model? (1s) 6. Write short note on following (any three) G x 5-15) (a) Relative Valuation (b) Valuation of Intangibles (©) Levered and Unlevered Beta (d) Concept of cost of capital (300)