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    Free Cash Flow Estimate (In INR CRS) : The Discounted Cash Flow (DCF) Model Module 3, Chapter 15

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    Raman Chawla
    The document presents a discounted cash flow valuation of a company. It provides estimates of free cash flow for the years 2011-2014 and inputs for the DCF model such as a 10 year period, 18% growth rate for the first 5 years, 15% for the next 5 years, and a 3.5% terminal growth rate. It then shows the intrinsic value calculation of Rs. 11,064.55 crores using a 10% discount rate. An intrinsic value band of Rs. 197.6 to Rs. 241.5 crores is presented based on a 10% model error.

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    Free Cash Flow Estimate (In INR CRS) : The Discounted Cash Flow (DCF) Model Module 3, Chapter 15

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    Raman Chawla
    14 views6 pages
    The document presents a discounted cash flow valuation of a company. It provides estimates of free cash flow for the years 2011-2014 and inputs for the DCF model such as a 10 year period, 18% growth rate for the first 5 years, 15% for the next 5 years, and a 3.5% terminal growth rate. It then shows the intrinsic value calculation of Rs. 11,064.55 crores using a 10% discount rate. An intrinsic value band of Rs. 197.6 to Rs. 241.5 crores is presented based on a 10% model error.

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    The document presents a discounted cash flow valuation of a company. It provides estimates of free cash flow for the years 2011-2014 and inputs for the DCF model such as a 10 year period, 18% growth rate for the first 5 years, 15% for the next 5 years, and a 3.5% terminal growth rate. It then shows the intrinsic value calculation of Rs. 11,064.55 crores using a 10% discount rate. An intrinsic value band of Rs. 197.6 to Rs. 241.5 crores is presented based on a 10% model error.

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    14 views6 pages

    Free Cash Flow Estimate (In INR CRS) : The Discounted Cash Flow (DCF) Model Module 3, Chapter 15

    Uploaded by

    Raman Chawla
    The document presents a discounted cash flow valuation of a company. It provides estimates of free cash flow for the years 2011-2014 and inputs for the DCF model such as a 10 year period, 18% growth rate for the first 5 years, 15% for the next 5 years, and a 3.5% terminal growth rate. It then shows the intrinsic value calculation of Rs. 11,064.55 crores using a 10% discount rate. An intrinsic value band of Rs. 197.6 to Rs. 241.5 crores is presented based on a 10% model error.

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    of 6

    The Discounted Cash Flow (DCF) Model

    Module 3, Chapter 15
    Version 1.0

    Free Cash Flow Estimate (In INR Crs)


    2011 - 12 2012 - 13 2013 - 14
    Net cash from Operating Activities 367.0 472.0 394.0
    Capital Expenditures 156.0 108.0 189.5
    Free Cash Flow (FCF) 211.0 364.0 204.5
    3 Year Average Free Cash flow 259.8

    Inputs Cash flow & Present Value Table


    Number of years considered 10 Sl No
    FCF Growth rate for first 5 years 18% 1
    FCF Growth rate for last 5 years 15% 2
    Terminal Growth Rate 3.50% 3
    Discount Rate 10% 4
    5
    Intrinsic Value Calculation (INR Crs, unless indicated) 6
    Total PV of cash flow 11,064.55 7
    Total Debt 46.00 8
    Cash & Cash Balance 177.00 9
    Net Debt (131.00) 10
    Share Capital 51.00
    Face Value (INR) 1.00 Terminal Year
    Number of Shares 510,000,000 Terminal Value
    Share Price (INR) 219.52 PV of Terminal Value

    Intrinsic Value Band


    Model Error leeway 10%
    Lower Intrinsic value band 197.6
    Upper Intrinsic value band 241.5

    Disclaimer – This DCF model is for educational purpose only.


    ash flow & Present Value Table
    Year Cash flow f Cash flow
    2014 - 15 306.60 278.73
    2015 - 16 361.79 299.00
    2016 - 17 426.91 320.75
    2017 - 18 503.76 344.07
    2018 - 19 594.44 369.10
    2019 - 20 683.60 385.87
    2020 - 21 786.14 403.41
    2021 - 22 904.06 421.75
    2022 - 23 1,039.67 440.92
    2023 - 24 1,195.62 460.96

    erminal Year 2023 - 24


    erminal Value 19,037.99
    V of Terminal Value 7,339.97
    The Discounted Cash Flow (DCF) Model
    Module 3, Chapter 15
    Version 1.0

    Free Cash Flow Estimate (In INR Crs)


    2017-18 2018-19 2019-20
    Net cash from Operating Activities 794.0 796.0 845.0
    Capital Expenditures 133.0 273.0 262.0
    Free Cash Flow (FCF) 661.0 523.0 583.0
    3 Year Average Free Cash flow 589.0

    Inputs Cash flow & Present Value Table


    Number of years considered 10 Sl No
    FCF Growth rate for first 5 years 18% 1
    FCF Growth rate for last 5 years 18% 2
    Terminal Growth Rate 3.50% 3
    Discount Rate 10% 4
    5
    Intrinsic Value Calculation (INR Crs, unless indicated) 6
    Total PV of cash flow 27,767.99 7
    Total Debt 113.00 8
    Cash & Cash Balance 190.00 9
    Net Debt (77.00) 10
    Share Capital 51.00
    Face Value (INR) 1.00 Terminal Year
    Number of Shares 510,000,000 Terminal Value
    Share Price (INR) 545.98 PV of Terminal Value

    Intrinsic Value Band


    Model Error leeway 10%
    Lower Intrinsic value band 491.4
    Upper Intrinsic value band 600.6
    ash flow & Present Value Table
    Year Cash flow f Cash flow
    2014 - 15 695.02 631.84
    2015 - 16 820.12 677.79
    2016 - 17 967.75 727.08
    2017 - 18 1,141.94 779.96
    2018 - 19 1,347.49 836.68
    2019 - 20 1,590.04 897.53
    2020 - 21 1,876.24 962.81
    2021 - 22 2,213.97 1,032.83
    2022 - 23 2,612.48 1,107.95
    2023 - 24 3,082.73 1,188.53

    erminal Year 2023 - 24


    erminal Value 49,086.53
    V of Terminal Value 18,924.98
    WACC Weighted Avgerage Cost of Capital
    Discout Rate = ROCE ~ 24%

    Stock Name Weighted No.


    2015 2016 2017 2018 2019
    Wt 1 2 3 4 5
    ROCE 20% 27% 35% 35% 31% 32%
    PBT ₹668.00 ₹1,095.50 ₹1,239.00 ₹1,331.20 ₹1,376.00
    PAT ₹501.00 ₹746.20 ₹773.79 ₹955.19 ₹979.40
    Effective Tax slab 25% 32% 38% 28% 29% 25.50%
    PBT Growth 13% 13% 7% 3% 7%
    Equity Capital
    Face Value
    Number of shares #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

    P/E 62.00

    MCAP

    Average Share

    Buy Target <


    eighted No.
    2020 P

    ₹1,479.18
    ₹1,101.99

    #DIV/0!
    #DIV/0!
    51.27

    62.00

    ₹68,323.24

    ₹1,332.62

    1012.6

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