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    Group-2 TechMSatyam Merger

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    Neeraj Mohan
    The document discusses the valuation of a deal between Tech Mahindra and Mahindra Satyam. It outlines assumptions made for the valuation, including revenue growth rates in line with NASSCOM predictions of 11-14% and a risk free rate of 8.81% based on 91 day T-bill rates. It then values Tech Mahindra separately at Rs. 9,238 Cr and Mahindra Satyam separately at Rs. 8,478 Cr using a discounted cash flow approach. Finally, it states that the enterprise value of the combined TechMSatyam entity is Rs. 18,204 Cr.

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    Group-2 TechMSatyam Merger

    Uploaded by

    Neeraj Mohan
    7 views6 pages
    The document discusses the valuation of a deal between Tech Mahindra and Mahindra Satyam. It outlines assumptions made for the valuation, including revenue growth rates in line with NASSCOM predictions of 11-14% and a risk free rate of 8.81% based on 91 day T-bill rates. It then values Tech Mahindra separately at Rs. 9,238 Cr and Mahindra Satyam separately at Rs. 8,478 Cr using a discounted cash flow approach. Finally, it states that the enterprise value of the combined TechMSatyam entity is Rs. 18,204 Cr.

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    The document discusses the valuation of a deal between Tech Mahindra and Mahindra Satyam. It outlines assumptions made for the valuation, including revenue growth rates in line with NASSCOM predictions of 11-14% and a risk free rate of 8.81% based on 91 day T-bill rates. It then values Tech Mahindra separately at Rs. 9,238 Cr and Mahindra Satyam separately at Rs. 8,478 Cr using a discounted cash flow approach. Finally, it states that the enterprise value of the combined TechMSatyam entity is Rs. 18,204 Cr.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    7 views6 pages

    Group-2 TechMSatyam Merger

    Uploaded by

    Neeraj Mohan
    The document discusses the valuation of a deal between Tech Mahindra and Mahindra Satyam. It outlines assumptions made for the valuation, including revenue growth rates in line with NASSCOM predictions of 11-14% and a risk free rate of 8.81% based on 91 day T-bill rates. It then values Tech Mahindra separately at Rs. 9,238 Cr and Mahindra Satyam separately at Rs. 8,478 Cr using a discounted cash flow approach. Finally, it states that the enterprise value of the combined TechMSatyam entity is Rs. 18,204 Cr.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
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    Download as docx, pdf, or txt
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    Valuation of the deal

    Following Assumptions are taken while doing the valuation: 1. Revenue growth is taken in line with NASSCOMs predict of 11-14% (SPA-The Financial Advisors Report) 2. Risk free rate is taken as 8.81% 91 day T- bill rate (source:
    http://www.rbi.org.in/home.aspx) 3. Risk premium taken as 10.76% (source: Prof. P. Mohantys Website) 4. Terminal Growth rate is taken as 6%. 5. Reduction in operating cost due to synergy is taken as 5%.

    Tech Mahindra valuation:


    We have used Discounted cash flow of valuation approach in valuing Tech mahindra. The CAGR from 2008-11 in sales is 11%. We have taken 8% growth rate in 2012 and 2013 and 9% in 201416. This was due to bad macro scenario, TechMs over-exposer to telecom and overreliance to British telecom, which is retendering projects. The operating margins are taken as 20% of sales throughout the forecast period. CAPEX is taken as 1% of sales. TechM Debt/ equity ratio is 53.88 % making it high debt company.

    The enterprise value of TechM comes out to be Rs 9,238 Cr.

    Mahindra Satyam Valuation: the Enterprise value of Mahindra Satyam comes out to be Rs
    8478 Cr

    TechMSatyam Valuation:

    The Enterprise value of combines entity comes out to be Rs 18,204 Cr.

    Swap ratio :

    Comparative Ratios Pre and Post Merger:

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