Analysis of Earnings and Dividend Level

Return on Equity (ROE) =Profit After Tax (PAT) / Shareholders Fund

Date
FY
2010

Profit After
Tax

Shareholders
Funds

46,310.00

Return on
Equity%

182,880.0

25.322615
92

FY
2011

52,977.00

240,371.0

22.039680
33

FY
2012

55,730.00

286,163.0

19.474914
65

FY
2013

66,359.00

284,983.0

23.285248
59

FY
2014

77,967.00

344,886.0

22.606600
44

All values in million INR

The return on equity has remained close to 20% which is extremely high compared
to other industries.

Calculation of Book Value per share

Book Value per Share = (Paid up capital +Reserve and Surplus)/No. of
share outstanding
Date
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014

Paid Up
Capital
31,600.
1
35,031.
9
35,374.
1
16,686.
1
17,596.
1

Reserve &
Surplus

(Paid up Capital +
Reserve & Surplus)

Total Shares
Outstanding

Book
value

150,843.0

182,443.1

2,445.4

74.61

204,648.0

239,679.9

2,454.4

97.65

249,940.0

285,314.1

2,458.8

116.04

267,126.0

283,812.1

2,462.9

115.23

325,903.0

343,499.1

2,466.3

139.28

All values in million INR

Calculations of EPS
Earnings Per Share (EPS) = NPAT / No. of Outstanding Shares

Date
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014

Profit
AfterTax
46,310.00
52,977.00
55,730.00
66,359.00
77,967.00

Total Shares Outstanding

2,445.4
2,454.4
2,458.8
2,462.9
2,466.3

Earnings Per Share

18.93756227
21.58442128
22.66593166
26.94306106
31.61272072

All values in million INR

Calculation of Dividend Per Share

Dividend Per Share (DPS) = Dividend / Number of Outstanding Share
Date
FY
2010
FY
2011
FY
2012
FY
2013
FY
2014

Dividends

Total Shares
Outstanding

Dividends per Share

8,809.00

2,445.4

3.602267028

14,726.50

2,454.4

6.000018497

14,752.00

2,458.8

5.999781516

17,247.00

2,462.9

7.00262171

19,595.00

2,466.3

7.945044216

All values in million INR

Calculation of Dividend payout ratio

Dividend Payout Ratio = Equity Dividend / PAT
Date
Dividends
Profit AfterTax
Dividend Payout Ratio
FY
2010
8,809.00
46,310.00
0.190218095
FY
2011
14,726.50
52,977.00
0.277979123
FY
2012
14,752.00
55,730.00
0.264704827
FY
2013
17,247.00
66,359.00
0.259904459
FY
2014
19,595.00
77,967.00
0.251324278

Calculation of Debt-Equity Ratio

Debt Equity Ratio = Long Term Debt / Share Holder Equity

Date
3/31/201
0
3/31/201
1
3/31/201
2
3/31/201
3
3/31/201
4

Net Debt

Shareholders
Equity

-34,047.0

182,880.0

-57,621.0

240,371.0

-60,669.0

286,163.0

-68,618.0

284,983.0

-111,007.0

344,886.0

Debt-Equity Ratio
-0.18617126
-0.239716938
-0.212008541
-0.240779275
-0.321865776

Growth Performance
Compound Annual Growth Rate for TCS
CAGR OF Revenues = (Revenues for 2014/Revenues for 2010)^1/4 -1
= (434269/272129)^1/4-1 = 0.123
CAGR OF EPS = (EPS for 2014/ EPS for 2010) ^1/4 -1
= 0.13
CAGR OF DPS = (DPS for 2014/ DPS for 2010) ^1/4 -1
=0.218

Sustainable Growth Rate =Average Retention Ratio * Average

Return on Equity
where,
Average Retention Ratio = Average of (1-Dividend Payout Ratio)
Dividend
1-Dividend
Date
Payout
Payout Ratio
Ratio
3/31/201 0.1902180
0.809781905
0
95
3/31/201 0.2779791
0.722020877
1
23
3/31/201 0.2647048
0.735295173
2
27
3/31/201 0.2599044
0.740095541
3
59

3/31/201
4

0.2513242
78

0.748675722
Average=0.7511
73843

Average Return on Equity =22.54%

Calculation of Retention ratio for Maruti Suzuki
Average Retention Ratio = 0.7511
Sustainable Growth Rate = 16.9%

ESTIMATION OF INTRINSIC VALUE

Particulars

Sales
Operating profit (loss)

2014
434,269.
00
83,972.0
0

2015(Projected
)

473,024.90
95,331.90

% Change Assumed

8.924399393
13.52819988

Pretax Income

101,005.
00

112,031.70

Income Before XO Items

78,405.0
0

86,622.50

Net profit (loss)

77,967.0
0

86,586.60

Net Inc Avail to Common

Shareholders

77,967.0
0

86,622.50

Basic EPS Before XO Items

31.76

35.07

10.42191436

Basic EPS

31.76

35.07

10.42191436

10.91698431

10.48083668

11.05544654

11.10149166

Establish a PE Ratio: The PE Ratio may be derived from the constant growth
dividend model, or cross-section analysis, or historical analysis. This ratio shows the
price, the investors are willing to pay for every rupee of earnings per share.

Constant Growth Dividend Model

PE Ratio =Dividend Payout Ratio/(Required Return on Equity - Expected Growth
Rate in Dividends)
Where,
Required ROE = Risk-free return + (Beta of Equity)*(Expected
market risk premium)
and
Expected growth rate in dividends = Retention ratio * Return on Equity
Average Dividend Payout Ratio = 0.248826157

Required ROE

The following assumptions have been made

The risk-free rate is 7.718%
The Beta of stock is 0.48
The expected market risk premium is 11.340%
ROE = 22%
Expected growth rate = 16.9%
Expected PE ratio = =0.21/ (0.22-0.169) =4.11

Historical Analysis: PE ratio = Price/Earning

March-13 = 17.48
March -14 = 17.1
Average PE ratio= (17.48+17.10)/2 = 17.29

The Weighted PE Ratio

PE ratio based on the constant growth dividend model = 4.11
PE ratio based on historical analysis = 17.29
Weighted PE Ratio = (4.11 + 17.29)/2 = 10.7
Estimation of Intrinsic Value = Projected EPS * Appropriate PE=35.07*10.7=375.249
INR

DCF Valuation of Wipro

Discounted cash flow
analysis