Mr. OLX is interested to buy a major stake at Genco Ltd.

He would like to know the value of the firm

information. He collected the required information from the annual reports, from his interactions w
the future expectations in terms of percentages. Estimate the value of the firm and equity value of
technique.

Valuation Date: 1/7/2021

Share Price on Valuation Date: ₹ 25.00
Diluted Shares Outstanding 500.0

Long term growth rate 4.0%

Cost of Debt 5.2%
Tax Rate 40.0%
Cost of Equity 15.0%

2020E
Accounts Receivable Growth (%) 10.0%
Inventories Growth (%) 1.5%
Prepaid Expenses Growth (%) 19.6%
Accounts Payable Growth (%) 1.5%
Accrued Expenses Growth (%) 10.0%
Capital Expenditures Growth (%)
10.0%

Revenue Growth Rate (%)

10.0%
EBITDA Margin (%)
35.0%
EBIT Margin (%)
30.0%
D&A as a % of revenue
5.6%

Historical Balance sheet and Income statement key variables are given below
1
Income statement-key variables
2017A 2018A 2019A 2020E
Revenue ₹ 6,600.00
₹ 5,300.00 ₹ 5,700.00 ₹ 6,000.00
EBITDA ₹ 2,310.00
₹ 2,000.00 ₹ 2,080.00 ₹ 2,150.00
EBIT ₹ 1,980.00
₹ 1,700.00 ₹ 1,750.00 ₹ 1,800.00
Depreciation & Amortization ₹ 369.60
₹ 300.00 ₹ 330.00 ₹ 350.00

Balance sheet-key variables

2017A 2018A 2019A 2020E
Cash $1,500.0
₹ 700.00 ₹ 1,000.00 ₹ 1,500.00
Accounts Receivable ₹ 1,100.00 ₹ 1,250.00 ₹ 1,350.00 ₹ 1,485.00
Inventories ₹ 900.00 ₹ 925.00 ₹ 935.00 ₹ 949.03
Prepaid Expenses ₹ 50.00 ₹ 63.00 ₹ 75.00 ₹ 89.70

Accounts Payable ₹ 930.00 ₹ 960.00 ₹ 1,000.00 ₹ 1,015.00

Accrued Expenses ₹ 90.00 ₹ 88.00 ₹ 93.00 ₹ 102.30

Debt ₹ 4,250.00
₹ 2,300.00 ₹ 4,750.00 ₹ 4,250.00

Capital Expenditures ₹ 588.50

₹ 455.00 ₹ 488.00 ₹ 535.00

Calculation of WACC
Total debt ₹ 4,250.00
total equity ₹ 12,500.00 mkt capitalisation
total capital ₹ 16,750.00

W-debt 25.37%
W-equity 74.63%
cost of debt 5.2%
cost of equity 15.0%
Tax rate 40%
WACC 11.99%

Calculation of WC change
Accounts Receivable ₹ 1,100 ₹ 1,250 ₹ 1,350 ₹ 1,485
Inventories ₹ 900 ₹ 925 ₹ 935 ₹ 949
Prepaid Expenses ₹ 50 ₹ 63 ₹ 75 ₹ 90

Accounts Payable ₹ 930 ₹ 960 ₹ 1,000 ₹ 1,015

Accrued Expenses ₹ 90 ₹ 88 ₹ 93 ₹ 102
NWC ₹ 1,030 ₹ 1,190 ₹ 1,267 ₹ 1,406
Change in NWC ₹ 139

calculation of FCFF
EBIT ₹ 1,980.00
Less Tax ₹ 792.00
NI ₹ 1,188.00
Add Depreciation & amor ₹ 369.60
less capex ₹ -588.50
Less Changes to NWC ₹ -139
Cash flows to the firm ₹ 829.68

Terminal value
FCFF ₹ 829.68

EV ₹ 11,880.02
less Net debt ₹ -2,750.00
Equity value of the firm ₹ 9,130.02
no of shares outstanding ₹ 500.00
intrinsic value ₹ 18.26
current mkt price ₹ 25.00

slighly over valued

 to know the value of the firm and equity value from the accounting
eports, from his interactions with the top management he documented
f the firm and equity value of the firm by using DCF valuation

2021E 2022E 2023E 2024E

11.0% 12.0% 13.0% 13.0%
5.5% 9.1% 9.9% 9.9%
18.7% 15.6% 13.0% 15.3%
5.5% 9.1% 9.9% 9.9%
11.0% 12.0% 13.0% 13.0%
11.0% 12.0% 13.0% 13.0%

11.0% 12.0% 13.0% 13.0%

35.0% 35.0% 35.0% 35.0%
30.0% 30.0% 30.0% 30.0%
5.3% 4.1% 4.7% 4.4%

2 3 4 5
2021E 2022E 2023E 2024E
₹ 7,326.00 ₹ 8,205.12 ₹ 9,271.79 ₹ 10,477.12
₹ 2,564.10 ₹ 2,871.79 ₹ 3,245.12 ₹ 3,666.99
₹ 2,197.80 ₹ 2,461.54 ₹ 2,781.54 ₹ 3,143.14
₹ 388.28 ₹ 336.41 ₹ 435.77 ₹ 460.99

2021E 2022E 2023E 2024E

 $1,500.0 $1,500.0 $1,500.0 $1,500.0
₹ 1,648.35 ₹ 1,846.15 ₹ 2,086.15 ₹ 2,357.35
₹ 1,001.22 ₹ 1,092.33 ₹ 1,200.47 ₹ 1,319.32
₹ 106.47 ₹ 123.08 ₹ 139.08 ₹ 160.36

₹ 1,070.83 ₹ 1,168.27 ₹ 1,283.93 ₹ 1,411.04

₹ 113.55 ₹ 127.18 ₹ 143.71 ₹ 162.40

₹ 4,250.00 ₹ 4,250.00 ₹ 4,250.00 ₹ 4,250.00

₹ 653.24 ₹ 731.62 ₹ 826.73 ₹ 934.21

₹ 1,648 ₹ 1,846 ₹ 2,086 ₹ 2,357

₹ 1,001 ₹ 1,092 ₹ 1,200 ₹ 1,319
₹ 106 ₹ 123 ₹ 139 ₹ 160

₹ 1,071 ₹ 1,168 ₹ 1,284 ₹ 1,411

₹ 114 ₹ 127 ₹ 144 ₹ 162
₹ 1,572 ₹ 1,766 ₹ 1,998 ₹ 2,264
₹ 165 ₹ 194 ₹ 232 ₹ 266
₹ 2,197.80 ₹ 2,461.54 ₹ 2,781.54 ₹ 3,143.14
₹ 879.12 ₹ 984.61 ₹ 1,112.61 ₹ 1,257.25
₹ 1,318.68 ₹ 1,476.92 ₹ 1,668.92 ₹ 1,885.88
₹ 388.28 ₹ 336.41 ₹ 435.77 ₹ 460.99
₹ -653.24 ₹ -731.62 ₹ -826.73 ₹ -934.21
₹ -165 ₹ -194 ₹ -232 ₹ -266
₹ 888.48 ₹ 887.26 ₹ 1,046.01 ₹ 1,147.13

₹ 14,939.44
₹ 888.48 ₹ 887.26 ₹ 1,046.01 ₹ 16,086.57
 Infosystems DCF valuation

Equity General info

outstanding shares 192 Growth rate 5%
Market price 103.5 cash 3637.54
beta 0.7 debt 780
Risk free rate 8% cost of debt 14%
Risk premium 6% tax rate 25%
after tax Cost of
cost of equity 12.20% debt 10.50%
Matket capitalisation 19872

2014A 2015A 2016A 2017A 2018A

Revenues ₹ 29,899 ₹ 39,391 ₹ 48,298 ₹ 58,776 ₹ 70,990

EBITDA ₹ 3,271 ₹ 4,310 ₹ 5,284 ₹ 6,430 ₹ 7,767
EBIT ₹ 2,420 ₹ 3,471 ₹ 4,232 ₹ 5,118 ₹ 6,140
Depreciation & Amortisati ₹ 851 ₹ 838 ₹ 1,052 ₹ 1,312 ₹ 1,627
Working Capital Change ₹ 184 ₹ 669 ₹ 275 ₹ 268 ₹ 387
Capex ₹ 298 ₹ 877 ₹ 1,076 ₹ 1,309 ₹ 1,581

Revenues growth %
EBITDA margin %
EBIT Margin %
Depreciation & Amortisation as a % of revenue
Capex (growth rate)
Working capital change
Diluted Shares ₹ 192 ₹ 192 ₹ 192 ₹ 192 ₹ 192

Free cash flows calculations

EBIT
Less Tax
NI
Add depreciation
Less capex
less Changes ot NWC
Cash flows
Terminal

cash flows

EV ₹ 280,394.60
less net debt 2857.54
Equity value of the firm ₹ 283,252.14
out shares ₹ 192
intrinsic value of the firm 1475
market price 103.5

under valued buy

luation

WACC
Total cap 20652
W_debt 3.78%
W_equity 96.2%

WACC 12.14%

2019A 2020E 2021E 2022E 2022E 2022E

₹ 85,119 ₹ 99,589 ₹ 113,532 ₹ 126,020 ₹ 137,362 ₹ 145,604

₹ 9,312 ₹ 27,885 ₹ 26,112 ₹ 25,204 ₹ 34,341 ₹ 37,857
₹ 7,309 ₹ 24,897 ₹ 28,383 ₹ 30,245 ₹ 24,725 ₹ 29,121
₹ 2,004 ₹ 5,975 ₹ 6,812 ₹ 7,561 ₹ 8,242 ₹ 7,280
₹ 499 ₹ 3,020 ₹ 3,020 ₹ 3,020 ₹ 3,020 ₹ 3,020
₹ 1,891 ₹ 1,929 ₹ 1,967 ₹ 2,007 ₹ 2,047 ₹ 2,088

17% 14% 11% 9% 6%

28% 23% 20% 25% 26%
25% 25% 24% 18% 20%
6% 6% 6% 6% 5%
2% 2% 2% 2% 2%
3020 3020 3020 3020 3020
₹ 192

₹ 24,897 ₹ 28,383 ₹ 30,245 ₹ 24,725 ₹ 29,121

₹ 6,224 ₹ 7,096 ₹ 7,561 ₹ 6,181 ₹ 7,280
₹ 18,673 ₹ 21,287 ₹ 22,684 ₹ 18,544 ₹ 21,841
₹ 5,975 ₹ 6,812 ₹ 7,561 ₹ 8,242 ₹ 7,280
₹ -1,929 ₹ -1,967 ₹ -2,007 ₹ -2,047 ₹ -2,088
₹ -3,020 ₹ -3,020 ₹ -3,020 ₹ -3,020 ₹ -3,020
₹ 19,700 ₹ 23,112 ₹ 25,218 ₹ 21,719 ₹ 24,013
₹ 353,340

₹ 19,700 ₹ 23,112 ₹ 25,218 ₹ 21,719 ₹ 377,352

TV=( 〖𝐹𝐶𝐹𝐹〗 _(𝑛 )∗(1+𝑔))/((𝑊𝐴𝐶𝐶−𝐺))