Free Cash Flow to Equity Model of Valuation
1
Year 2014 2015 2016 2017 2018 2019
Revenue 11334.22 15163.92 20870.80 22494.70 29055.22 32615.61
Net Profit Margin -1.448% 0.883% 3.267% 7.065% 6.059% 6.36%
Net Profit -164.12 133.89 681.93 1589.36 1760.38 2074.90
(+) Depriciation & Amortisation 529.97 579.91 523.94 572.79 645.89 704.02
D&A Growth Rate 9.42% -9.65% 9.32% 12.76% 9.00%
(-) Capex -1027.95 -836.28 503.99 200.60 402.86
Fixed Assets 7087.47 6059.52 5223.24 5727.23 5927.83 6330.69
(-) Change in Non cash Working Capital -494.43 844.32 6.69 -2380.74 702.54
Inventories 1544.05 1566.45 1922.33 2901.03 2207.69 2826.87
Trade Receivables 1381.09 1353.77 1461.38 1238.40 1175.50 1164.06
Trade Payables 2592.44 3081.95 2701.12 3450.15 5074.65 4979.85
Non Cash Working Capital 332.70 -161.73 682.59 689.28 -1691.46 -988.92
(+) Change in Debt 290.37 1553.75 1311.34 2236.16 839.19
Long Term Borrowings 5491.18 6219.40 7527.11 8876.42 10228.09 11307.69
Short Term Borrowings 1264.49 826.64 1072.68 1034.71 1919.20 1678.79
Total Borrowings 6755.67 7046.04 8599.79 9911.13 12147.29 12986.48
Free Cash Flow To Equity 2236.18 1197.83 1651.47 4586.41 2512.71
PV of FCFE #REF!
Cost of Equity #REF! Year 2014 2015 2016
RONW (%) -15.10% 6.89% 16.28%
Sum of PV of FCFE #REF! Retention 100.00% 45.25% 87.16%
Ratio
Constant Growth Rate 5.00%
Retention Ratio 50.00% Sensitivity Cost of Equi
Return on Equity 12.73% Analysis #REF! 12.00% 13.00%
4.00% 241.51 213.83
Ternimal Value #REF! Constant 5.00% 268.00 233.72
PV of Terminal Value #REF! Growth 6.00% 303.32 259.29
Rate
7.00% 352.77 293.37
Intrinsic Value of Equity (In cr) #REF! 8.00% 426.95 341.10
No. of shares Outstanding 257.5
Intricsic Value per share #REF! Interpretation : Stock in Under-Valued and therefore invest
Market Value per Share 120.00 Further Analysis is required before making th
uation
2 3 4 5
2020 2021 2022 2023
36966.39 41094.17 45978.25 49839.31
6.68% 7.01% 7.36% 7.73%
2469.27 2882.24 3386.04 3853.90
767.38 836.45 911.73 993.78
9.00% 9.00% 9.00% 9.00%
268.02 357.91 297.98 337.94
6598.71 6956.62 7254.61 7592.54
-513.66 -874.20 -580.28 -122.02
3126.73 3297.32 3385.42 3816.58
1079.03 971.97 936.99 864.78
5708.34 6646.06 7279.47 7760.43
-1502.57 -2376.77 -2957.06 -3079.07
1780.18 1538.34 1540.45 1379.18
12695.01 13956.99 15201.26 16456.50
2071.65 2348.01 2644.19 2768.13
14766.66 16305.00 17845.45 19224.63
5262.46 5773.31 6120.51 6010.94
#REF! #REF! #REF! #REF!
2017 2018
25.24% 23.51%
79.13% 65.11%
Cost of Equity
14.00% 15.00% 16.00% 17.00%
191.70 173.60 158.53 145.78
207.06 185.74 168.29 153.76
226.26 200.57 180.02 163.20
250.94 219.10 194.34 174.53
283.84 242.94 212.25 188.37
-Valued and therefore investor should buy the share.
is required before making the decision
Ashok Leyland
Consolidated Balance Sheet ------------------- in Rs. Cr. -------------------
14-Mar 15-Mar 16-Mar 17-Mar 18-Mar
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 266.07 284.59 284.59 284.59 292.71
Total Share Capital 266.07 284.59 284.59 284.59 292.71
Revaluation Reserves 1,173.93 1,021.81 0 0 0
Reserves and Surplus 2,549.23 3,204.91 4,979.11 6,108.36 7,127.88
Total Reserves and Surplus 3,723.16 4,226.72 4,979.11 6,108.36 7,127.88
Total Shareholders Funds 3,989.23 4,511.31 5,263.70 6,392.94 7,420.59
Minority Interest 652.11 263.15 417.29 588.99 825.33
NON-CURRENT LIABILITIES
Long Term Borrowings 5,491.18 6,219.40 7,527.11 8,876.42 10,228.09
Deferred Tax Liabilities [Net] 411.42 510.31 329.1 126.93 298.51
Other Long Term Liabilities 9.63 8.21 212.01 94.56 240.67
Long Term Provisions 126.72 139.54 207.69 189.16 313.32
Total Non-Current Liabilities 6,038.95 6,877.47 8,275.91 9,287.07 11,080.59
CURRENT LIABILITIES
Short Term Borrowings 1,264.49 826.64 1,072.68 1,034.71 1,919.20
Trade Payables 2,592.44 3,081.95 2,701.12 3,450.15 5,074.65
Other Current Liabilities 2,867.35 3,504.49 4,267.13 5,565.11 6,584.75
Short Term Provisions 129.74 459.63 200.87 349.35 612.89
Total Current Liabilities 6,854.02 7,872.70 8,241.81 10,399.32 14,191.48
Total Capital And Liabilities 17,534.31 19,524.62 22,198.71 26,668.32 33,517.99
ASSETS
NON-CURRENT ASSETS
Tangible Assets 6,262.35 5,386.65 4,692.74 5,072.23 5,069.47
Intangible Assets 528.57 456.74 443.14 410.82 418.93
Capital Work-In-Progress 270.15 165.79 66.26 195.92 251.11
Intangible Assets Under Development 26.4 50.34 21.11 48.27 188.31
Fixed Assets 7,087.47 6,059.52 5,223.24 5,727.23 5,927.83
Non-Current Investments 690.18 806.37 766.97 845.21 966.84
Deferred Tax Assets [Net] 10.01 21.8 75.74 113.48 141.78
Long Term Loans And Advances 2,384.82 4,253.94 5,705.43 6,701.86 9,935.69
Other Non-Current Assets 262.17 129.62 804.53 1,009.82 1,016.56
Total Non-Current Assets 11,216.38 11,956.91 13,329.80 15,505.35 19,096.43
CURRENT ASSETS
Current Investments 474.38 693 264.11 1,088.11 3,415.74
Inventories 1,544.05 1,566.45 1,922.33 2,901.03 2,207.69
Trade Receivables 1,381.09 1,353.77 1,461.38 1,238.40 1,175.50
Cash And Cash Equivalents 113.42 905.09 1,716.52 1,063.61 1,230.51
Short Term Loans And Advances 2,476.75 2,609.29 2,772.04 4,132.99 5,117.99
OtherCurrentAssets 328.25 440.12 732.52 738.84 1,274.13
Total Current Assets 6,317.93 7,567.71 8,868.90 11,162.98 14,421.56
Total Assets 17,534.31 19,524.62 22,198.71 26,668.32 33,517.99
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 0 0 434.1 593.66 638.71
BONUS DETAILS
Bonus Equity Share Capital 139.26 139.26 139.26 139.26 139.26
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market Value 273.11 467.5 22.06 0 0
Non-Current Investments Unquoted Book Value 625.57 751.95 802.76 880.87 1,019.29
CURRENT INVESTMENTS
Current Investments Unquoted Book Value 474.38 693 264.11 1,088.11 3,415.74
Ashok Leyland
Consolidated Profit & Loss account ------------------- in Rs. Cr. -------------------
14-Mar 15-Mar 16-Mar 17-Mar 18-Mar
INCOME
Revenue From Operations [Gross] 11,961.87 16,097.75 21,930.48 23,813.55 29,336.74
Less: Excise/Sevice Tax/Other Levies 627.66 933.83 1,059.68 1,318.86 281.52
Revenue From Operations [Net] 11,334.22 15,163.92 20,870.80 22,494.70 29,055.22
Other Operating Revenues 152.5 176.97 389.1 376.27 564.35
Total Operating Revenues 11,486.72 15,340.89 21,259.90 22,870.97 29,619.57
Other Income 92.45 188.83 163.62 130.69 199.88
Total Revenue 11,579.17 15,529.71 21,423.52 23,001.66 29,819.45
EXPENSES
Cost Of Materials Consumed 7,030.12 9,824.58 12,821.94 14,069.56 17,317.71
Purchase Of Stock-In Trade 732.5 645.51 1,616.03 1,403.62 750.5
Operating And Direct Expenses 12.79 13.98 0 0 0
Changes In Inventories Of FG,WIP And Stock-In Trade 363.06 -41.46 -464.18 -739.47 1,149.86
Employee Benefit Expenses 1,345.58 1,536.11 1,710.67 1,850.00 2,257.48
Finance Costs 805.49 872.29 925.05 1,048.80 1,231.72
Depreciation And Amortisation Expenses 529.97 579.91 523.94 572.79 645.89
Other Expenses 1,580.64 1,845.03 2,596.51 2,993.32 3,895.59
Total Expenses 12,400.15 15,275.96 19,729.96 21,198.62 27,248.75
Profit/Loss Before Exceptional, ExtraOrdinary Items And Tax -820.98 253.76 1,693.56 1,803.04 2,570.71
Exceptional Items 520.77 -295.32 -406.33 40.09 0.39
Profit/Loss Before Tax -300.21 -41.56 1,287.24 1,843.13 2,571.10
Tax Expenses-Continued Operations
Current Tax 54.66 79.64 513.63 440.03 789.28
Deferred Tax -123.15 92.78 -17.06 -243.91 -38.17
Total Tax Expenses -68.5 172.42 496.57 196.12 751.12
Profit/Loss After Tax And Before ExtraOrdinary Items -231.71 -213.97 790.66 1,647.01 1,819.98
Profit/Loss From Continuing Operations -231.71 -213.97 790.66 1,647.01 1,819.98
Profit Loss From Discontinuing Operations 0 0 0 -4.23 -12.73
Net Profit Loss From Discontinuing Operations 0 0 0 -4.23 -12.73
Profit/Loss For The Period -231.71 -213.97 790.66 1,642.78 1,807.25
Minority Interest 57.66 338.62 -30.24 -43.55 -53.44
Share Of Profit/Loss Of Associates 9.92 9.24 -78.49 -9.87 6.57
Consolidated Profit/Loss After MI And Associates -164.12 133.89 681.93 1,589.36 1,760.38
OTHER ADDITIONAL INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) -1 0 2 6 6
Diluted EPS (Rs.) -1 0 2 6 6
DIVIDEND AND DIVIDEND PERCENTAGE
Equity Share Dividend 0 128.06 154.14 325.4 549.48
Tax On Dividend 0 26.07 0 0 0
Particulars Formula 14 15 16 17 18
1 Liquidity Ratios
Current Ratio CA/CL 0.92 0.96 1.08 1.07 1.02
Quick Ratio QA/QL 0.70 0.76 0.84 0.79 0.86
Inventory Days / Inventory Holding Period 365/Inventory Turnover ratio 80 58 50 63 54
Debtors Days / Collection Period 365/Debtors Turnover Ratio 44 33 25 22 15
Creditors Days / Payment Period 365/Creditors Turnover ratio 135 154 126 115 126
CCC DIO+DSO-DPO
2 Turnover Ratios
Capital Employed Turnover Ratio Sales/CE 1.1 1.3 1.5 1.4 1.5
Fixed Assets Turnover Ratio Sales/Fixed Assets 1.6 2.5 4.0 3.9 4.9
Inventory Turnover Ratio COGS/AI 5 6 7 6 7
Debtors Turnover Ratio Net Credit sales/AD 8 11 15 17 24
Creditors Turnover Ratio COGS/AC 3 2 3 3 3
3 Leverage Ratios
Equity Ratio Equity/CE 0.37 0.39 0.38 0.39 0.38
Debt Ratio Debt/CE 0.51 0.53 0.54 0.55 0.53
Debt to Equity Ratio Debt/Equity 1.69 1.56 1.63 1.55 1.64
Equity to Total Assets Ratio Equity/TA 0.23 0.23 0.24 0.24 0.22
Debt to Total Assets Ratio Debt/TA 0.39 0.36 0.39 0.37 0.36
4 Profitability Ratios
Return on Capital Employed NOPAT/Invested Capital (0.02) (0.02) 0.06 0.10 0.09
Return on Equity Net Income/Equity (0.06) (0.05) 0.15 0.26 0.24
5 DuPoint Analysis (ROE Decomposition)
Profit Margin Net Income/Revenue -2.04% -1.41% 3.79% 7.30% 6.22%
Assets Turnover Sales/TA 0.65 0.78 0.94 0.84 0.87
Leverage Assets/Equity 4.40 4.33 4.22 4.17 4.52
(assuming COGS to be Cost of materials consumed only
Assuming all of sales (revenue from operations ) to be credit sales
(assuming COGS to be Cost of materials consumed only
