Student Id: Usman Aftab 180759

Case Summary:
An automobile ancillary client of JM finance limited wanted to pursue acquisition of an original
automobile equipment manufacturer for expanding their two wheelers and four wheelers’
vehicles segments.
Problem Statements:
1- What is the net worth of target company- “Talbros Automotive Components Limited”?
2- What is the expected transaction value of the acquisition considering the control premium for
maximizing the return and synergy benefits?
Company Overview: Talbros Automotive Components Limited:
 Talbros is an Indian based company.
 It has been established with the partnership with UK company “Coopers Payen” in 1965.
 Listed in Bombay and New York stock exchange.
 Major products: Gaskets and heat Shields, Forgings, Suspension system, Anti vibration
components etc.
 Major product line: Passenger vehicles, Commercial, Two and three wheelers, and firm
equipment.
 Major customers: Bajaj Auto, Mahindra, Maroti Sujuki, Force Motors, General Motors etc.
 Comparable firm Valuation Analysis

Company Munjal Gabriel Minda Sona Weighted

Koyo
Name Showa India Industries Avera
Steeri
Limite Limite Limited ge
ng
d d multip
Syste
le
ms
Limite
d
EV/Sales 0.32 0.6 0.43 0.7 0.511
EV/EBITD 4 7.6 5.23 5.6 5.123
A
Price/EPS 7.7 12.8 10.81 14.4 11.201
Weight 0.4 0.1 0.1 0.4
Talbros Automotive Components
Limited
Current market price of share Rs119
Common shares outstanding 12,345,630
Net debt Rs1,065 million
Revenue Rs5,030 million
EBITDA Rs620 million
EPS Rs21

Valuation based on EV/Sales

EV/ Sales Multiple 0.511
Sales Rs 5,030 million
EV Rs 2,570.33 million
Net Debt Rs 1,065 million
Equity value Rs 1,505.33 million
Common shares outstanding 12,345,630
Value per share Rs 121.9322141
Valuation based on EV/EBITDA
EV/ EBITDA Multiple 5.123
EBITDA Rs 620 million
EV Rs 3,176.26 million
Net Debt Rs 1,065 million
Equity value Rs 2,111.26 million
Common shares outstanding 12,345,630
Value per share Rs 171.0127389

Valuation based on P/E Multiple

P/E 11.201
EPS Rs 21
Value per share Rs235.221

Average value per share =Rs176.05532

 Comparable transaction analysis
Ann. Date Target Deal EV (in Rs EV/Sal EV/EBITD P/E Weight
Compa Value millions) es A Multip
ny (in Rs Multip Multiple le
millions) le
2014-05-20 Kar 456 589.2 0.49 7.01 24.47 0.4
Mobiles
Limite
d
(60.43
%
stake)
2013-06-27 JMT Auto 2,439 3,453.2 1.03 6.17 18.07 0.2
Limited
(52.61%
stake)
Mag 0.15
Engineeri
2012-08-03 ng Private 700 700.0 1.07 4.78 NA
Limited
(100%
stake)
2012-01-05 Trinity 741 893.2 1.06 9.88 117.81 0.15
India
Limited
(78%
stake)
2010-12-10 Igarashi 776 1,523.4 0.96 8.12 38.73 0.1
Motors
India
Limited
 (51.9%
stake)
Weighted 1.8685 7.049 24.67734
average
multiple
Valuation based on EV/Sales
EV/ Sales Multiple 1.868
Sales Rs3,887 million
EV Rs7,262.859 million
Net Debt Rs1,065 million
Equity value Rs6,197.859 million
Common shares outstanding 12,345,630
Value per share Rs502.0286126

Valuation based on EV/EBITDA

EV/ EBITDA Multiple 7.049
EBITDA Rs403 million
EV Rs2840.747 million
Net Debt Rs1,065 million
Equity value Rs1,775.77
Common shares outstanding 12,345,630
Value per share Rs143.836078

Valuation based on P/E Multiple

P/E 24.677338
EPS Rs11.4
Value per share Rs281.32165

Weight
 Weighted Rs242.9717 Valuation 0.2
based
average
on EV/Sales
value per
share
Valuation 0.6
based
on
EV/EBITDA
Valuation 0.2
based
on P/E
Multiple

Table Summary:
Value per share (comparable firm Rs176.0553177
analysis)
Value per share (comparable Rs242.9716988
transaction
analysis)
Weight (comparable firm analysis) 0.6
Weight (comparable transaction 0.4
analysis)
Final price per share Rs202.8218701
Deal value Rs2,503,963,765