Blue Font Means Hard Coding Assumptions Risk Free Rate Mkt Risk Premium Debt Beta Asset

Beta Tax Rate Terminal Growth Rate Capex ($ Thousands) Debt Ratio Kd Rho () WACC

5% 7.20% 0.25 1.5 Debt-Equity Ratio 40% Ke 5% (After 5 years) WACC_CCF 1500 40% (Assumption is D/V contant and as no number mentioned in the case)

FCF Method

Valuation being done in 2001 2001 EBIT Tax on EBIT NOPAT Add : Depreciation Less: Capex Less : Inc in Working Capital Free Cash Flow Terminal Levered Value Levered Value NPV of the business 2002E -20 -8 -12 200 300 0 -112

Rs. 3,131.78 Rs. 3,704.53 Rs. 1,631.78

CCF Method D/E required Ke Req WACC_CCF req Debt Rs. 1,252.71 40% of V 2001 Rs. 1,252.71

Seems high, but NPV built int 2002E Rs. 1,481.81 Rs. 85.18 -63.1106324 Rs. -77.93 Rs. -77.93

Debt Interest Net Income CCF CCF Check Terminal Value Levered Value FCFE Method

Rs. 3,131.78

2001 FCFE

2002E Rs. 65.99

Terminal Value Equity Value Equity Value Check APV Method All discounting at Rho

Rs. 1,879.07 Rs. 1,879.07

2001 Terminal Unlevered Vaue Unlevered Value Tax Shield Terminal Value of Tax Shield Value of Tax Shield Levered Value

2002E

Rs. 2,728.49 Discounting unlevered cash f Rs. 34.07 Rs. 403.29 Rs. 3,131.78

6.800% 15.800% 14.712% Reconfirm 14.71200% Using Ke calculated during CCF 40 is debt, 60 must be equity 66.67% 21.800% 15.800%

entioned in the case)

2006E 825 330 495 300 300 0 495 Rs. 5,351.63 Rs. 4,243.54 Rs. 4,716.85 Rs. 5,096.79 Rs. 5,351.63 these 2 figures should exactly tally

2003E 135 54 81 225 300 0 6

2004E 335 134 201 250 300 0 151

2005E 565 226 339 275 300 0 314

ems high, but NPV built into that EV figure of 3131 2003E 2004E 2005E 2006E Rs. 1,697.41 Rs. 1,886.74 Rs. 2,038.71 Rs. 2,140.65 Rs. 100.76 Rs. 115.42 Rs. 128.30 Rs. 138.63 Last yr debt used for calculating next yr's interest 20.5421313 131.74549 262.021086 411.820428 Rs. 46.31 Rs. 197.17 Rs. 365.32 Rs. 550.45 FCF + Tax Shield which is Int*Tax Rate Rs. 46.31 Rs. 197.17 Rs. 365.32 Rs. 550.45 Net Income + Depreciation - Capex + Interest paid 5351.62685 Should Tally

2003E Rs. 161.15

2004E Rs. 271.07

2005E Rs. 389.00

2006E Rs. 513.76 Additional debt assumed to be distributed as dividend, hence added

3210.97611 (Terminal Value - Last Yr Debt) should give the same value Rs. 3,210.98

2006E Rs. 4,812.50 Using Last Free Cash Flow scounting unlevered cash flow at unlevered cost of equity Using FCF and (Last Yr FCF + Terminal Value) Rs. 40.31 Rs. 46.17 Rs. 51.32 Rs. 55.45 Interest * Tax Rate 539.126853

2003E

2004E

2005E

yr's interest

Interest paid

buted as dividend, hence added here

d give the same value