Safal Niveshak Stock Warning!

Excel can be a wonde

deadly weapon if you wish t
Analysis Excel (Ver. 4.0) careful of what you are gettin
garbage out. And if you need th
given stock, you m
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Basic Company Details
Parameters Details
Company CENTRAL DEPOSITORY SERVICES (INDIA) LT
Current Stock Price (Rs) 1,247 Remember! Focus on decisio
Face Value (Rs) 10.0 evidenc
No. of Shares (Crore) 10.5
Market Capitalization (Rs Crore) 13,028

Key Financials - Trend

Parameters Details
Sales Growth (9-Year CAGR)
Profit Before Tax Growth (9-Year CAGR)
Net Profit Growth (8-Year CAGR)
Average Debt/Equity (5-Years, x)
Average Return on Equity (5-Years)
Average P/E (5-Years, x)
Latest P/E (x)
15.2% Please! It's your money. Plea
cause you to lose it all! I've de
14.2% but you alone are responsible
15.4% ever after! I am not a sadist
- analyzing companies on you
instead of a map, for you can c
17.7%
26.4
Warning! Excel can be a wonderful tool to analyze the past. But it can be a
deadly weapon if you wish to use it to predict the future! So be very
careful of what you are getting into. Here, garbage in will always equal
garbage out. And if you need the excel to tell you what you must do with a
given stock, you must not use this tool anyways.

Remember! Focus on decisions, not outcomes. Look for disconfirming

evidence. Calculate. Pray!

Please! It's your money. Please don't blame me if results of this excel
cause you to lose it all! I've designed this excel to aid your own thinking,
but you alone are responsible for your actions. I want to live peacefully
ever after! I am not a sadist who wants you to do the hard work by
analyzing companies on your own. But I'd rather give you a compass
instead of a map, for you can confuse map with territory and lose it all. All
the best!
 Days ratio
measures how
quickly cash is
being collected
from debtors. The
longer it takes for
a company to
Balance Sheet
collect, the greater
CENTRAL
the number ofDEPOSITORY SERVICES (INDIA) LTD
Rs Cr debtors
Mar-12 days. The
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
Equity Share Capital number of105
105 debtor 105 105 105 105 105 105 105 105
Reserves days should
199 224be 249 265 375 429 494 564 619 773
compared to that
Borrowings -
Vishal: - - - - - - - - -
of other
Other Liabilities Debt/Equity
66 87 (D/E) 101 122 74 73 92 116 138 207
companies
Vishal: Fixed-in the
Total ratio,
369
same calculated
416 toby 455
industry 491 553 607 690 784 862 1,084
asset turnover
dividing a is
see if it isof sales
the ratio
company’s total
Net Block unusually
6 the
Vishal:
(on Thehigh
profit 8 andor 10 7 4 5 76 75 74 86
debt or borrowings
Capital Work in Progress low.
inventory
-
loss account) turnover
1 to 0 - - 0 - - - 10
by its stockholders'
Investments ratio
the value
307
equity, is an of fixed
is 342
used to 375 389 457 503 521 593 665 709
A high (on
efficiency number
Other Assets assets
measure
55 shows aratio
the
64 70 95 92 98 93 115 123 278
here
that
balance shows sheet). thatIta
how
Total company's416
369 455 491 553 607 690 784 862 1,084
company how
effectively
indicates is sellingwell
financial leverage.
its
theproduct
inventory
business istois
The D/E ratio
Working Capital customers
-11 its fixed
managed
using by on
-23 -32 -27 18 25 2 -0 -15 72
indicates
credit and howtaking
Debtors comparing
7 debt
assets
much cost
a8 of
to generate 6 7 13 13 19 19 26 24
Inventory longer
goods
sales.
- to collect
sold with
-using - - - - - - - -
company
money. This is may
Cash & Bank** average
to finance inventory
its 4,735 3,367 3,190 3,393 2,605 3,546 4,739 5,829
lead
for a to
Generally cash flow
period. This
assets
** Manually enter this number; Convert
problems relative Rs to
tobecause Crore if not already done in the Annual Reports; Use Cash+Bank+Current Investments from Consolidated Balance Sheet in Annual Reports
measures
speaking,
the value of how
the
of
many the times
higher long
the ratio,
shareholders’
duration between
Debtor Days 25better,
average
the
equity. 34
inventory 25 24 39 33 37 36 42 25
Inventory Turnover the
is
becausetime aofhigh
-“turned” -a sale
or sold - - - - - - - -
and
during
ratio the a time
period.
indicates thethe In 9.3
Fixed Asset Turnover 15.4
A high
company
10.7
debt/equity
receives
15.8 33.5 28.0 2.5 2.6 3.0 4.0
other
business
ratio words,has- it less
Debt/Equity - generally
payment. - - - - - - - -
measures
money
means tiedA
that how lowin
up
a
Return on Equity 18%
number
many times
fixed assets
15%
here a
for
14% 12% 19% 16% 17% 17% 15% 23%
company
means that has been
Return on Capital Employed 26%
company
each unit
aggressive ofinit takes
20%
sold its 18% 17% 27% 22% 24% 22% 19% 30%
a company
total
currency averageof fewer
sales
financing
days its its
to collect
inventory
revenue.
growth withAamountdebt.
accounts
during the
declining ratio year. may
Aggressive
receivable. In
indicate that the
leveraging
effect,
business is the ability
over-
practices are often
to determine
invested in with the
plant,
associated
average length
equipment, or of
high levels of risk.
time
othermay that
fixeda assets.
This
company’s result in
volatile
outstanding earnings as
a result ofare the
balances
additional interest
carried in
expense.
receivables can in
some cases tell a
great deal about
the nature of the
company’s cash
flow. (Source:
Investopedia)
 Vishal: This
number shows
how much wealth
the business has
created for
Vishal: Check for
shareholders
sales growth. If a
(excluding
business is not
Profit & Loss Account / Income Statement
dividends) for
growing for a few
every Rupee it has
years, or CENTRAL
growing DEPOSITORY SERVICES (INDIA) LTD
retained over
Rs Cr slower than
Mar-12 the
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Trailing
years.
industry and
Sales 96 91 89 105 123 146 188 196 225 344 396
peers, you may
% Growth YOY This idea is from
give it a pass. -6% -2% 19% 17% 19% 29% 5% 15% 53%
Expenses Warren38 Buffett 56 56 60 59 67 77 87 136 132 148
who wrote this in
Material Cost (% of Sales) 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Check for wide fluctuations in key
his 1984 letter –
Power and Fuel “For1% a number of 1% 1% 1% 1% 0% 0% 0% 0% 0% expense items. For manufacturing firms,
Other Mfr. Exp 8% managers
reasons 9% 11% 9% 8% 7% 5% 7% 7% 0% check their material costs etc. For
Employee Cost like13%
to withhold19% 20% 19% 18% 17% 17% 18% 22% 12% services firms, look at employee costs.
Selling and Admin Cost unrestricted
13% readily
14% 27% 25% 15% 12% 11% 10% 11% 0%
Check this
Vishal: Important
distributable
Operating Profit number58 especially
profitability 35 33 45 64 79 110 109 89 212 248
earnings from
Operating Profit Margin for60%
firms Better
number.
shareholders 39%
with –debt.to 37% 43% 52% 54% 59% 56% 40% 62% 63%
Other Income It shows
than
expand25 the safety
Operating
the 33 35 23 72 41 38 49 59 57 49
Other Income as % of Sales of interest
Margin.
corporate
25.5% Check
empire out
36.7% 39.1% 22.2% 58.3% 28.0% 20.2% 25.1% 26.3% 16.6% 12.3%
Depreciation payments,
changes
over 4 in and
which the 3 5 6 4 4 7 10 12 9 8
whether
same the firmto
Interest managers
Vishal: - over years,
rule,
Suggests - - - - - - - 0 0 0
has enough
and explore
operate from profits
a
Interest Coverage(Times) #DIV/0!
the
to #DIV/0!
attractiveness
pay the #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 4,549 12,977 9,594
reasons
position of same.
for the
Profit before tax (PBT) of a 78
same.
Vishal:firmBetter
exceptional in the 66 62 63 131 117 141 148 136 260 288
% Growth YOY eyes of number
Mr.
Falling/rising
growth
financial comfort,-16%
PBT -5% 0% 110% -11% 21% 5% -8% 90%
PBT Margin Market.
margin
than
etc. But
81% Lower
Netmay
weprofit
believe
72% 70% 59% 107% 80% 75% 76% 61% 76% 73%
P/Es
indicate
growth,
there reflect lower
because
Tax 23is only
attractivenss,
one15
and
13 19 40 30 38 33 30 58 69
narrowing/expandi
EPS
valid isreason
adjusted for for
Net profit higher55 reflect 51 50 43 91 87 104 115 107 201 219
ng moat.
any dilution etc.
retention.
% Growth YOY Seek gradual -9%
higher
Unrestricted -2% -12% 110% -5% 20% 11% -7% 89%
Net Profit Margin attractiveness.
58%inshould
growth
earnings this 56% be 56% 41% 74% 59% 55% 59% 47% 59% 55%
EPS However,
5.3 only
number,
retained P/Esbe
and in
4.8
when 4.7 4.2 8.7 8.3 9.9 11.0 10.2 19.3 20.9
isolation
carefulisof
there atell
a
% Growth YOY -9% -2% -12% 110% -5% 20% 11% -7% 89%
nothing about
declining
reasonable number. the
Price to earning quality of–the 28.5 22.1 21.0 34.1 59.6
prospect backed
Price -
business, - - - - - 283 243 214 656 1,247
preferably by
Dividend Payout especially
32.9% evidence
historical when40.9% 42.4% 52.7% 28.7% 36.5% 35.5% 36.8% 44.3% 46.9%
Market Cap you are
or, when- looking at - - - - - 2,954 2,535 2,240 6,856
Retained Earnings short37 term by a30
appropriate, 29 21 65 55 67 73 59 107
numbers.
thoughtful analysis
Buffett's $1 Test 12.7
of the future – that
for every dollar
retained by the
TRENDS: 10 YEARS 7 YEARS
corporation, at 5 YEARS 3 YEARS
Sales Growth 15.2%
least 21.3%
one dollar of 22.8% 22.3%
PBT Growth market
14.2%value22.6%
will 14.6% 22.4%
PBT Margin be created
75.7% for
76.2% 73.4% 70.5%
Price to Earning owners.
26.4 This will
26.4 26.4 25.7
happen only if the
capital retained
Check for long term vs short term trends here. Check if the growth over
past 3 or 5 years has slowed down /produces
improved compared to long term (7 to
incremental
10 years) growth numbers.
earnings equal to,
or above, those
generally available
to investors.”

Formula is -
Change in
Market Cap
over, say, 10
years Divided By
Total Retained
Earnings during
the same period

Here, Retained
Earnings = Net
Profit minus
Dividend paid

Bigger the
number, more
wealth has been
created by the
business for every
Rupee retained,
which is good.
 Cash Flow Statement
CENTRAL DEPOSITORY SERVICES (INDIA) LTD
Rs Cr Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Total
Cash from Operating Activity (CFO) 40 24 35 43 28 43 79 86 82 193 653
% Growth YoY -39% 47% 22% -34% 50% 86% 8% -4% 134%
Cash from Investing Activity -35 -6 -13 -19 0 18 -67 -67 -33 -107 -329
Cash from Financing Activity -4 -18 -23 -23 -28 -31 -38 -20 -51 -47 -284
Net Cash Flow -0 -0 -1 0 1 29 -26 -1 -1 38 40
CFO/Sales 41% 26% 40% 41% 23% 29% 42% 44% 36% 56%
CFO/Net Profit 71% 47% 71% 99% 31% 49% 77% 75% 77% 96%
Capex** 315 212 364 565 607 937 1,156 1,638 1,238 824
FCF -276 -188 -329 -522 -579 -894 -1,077 -1,552 -1,156 -632 -7,203
Average FCF (3 Years) -1,113
FCF Growth YoY -32% 75% 59% 11% 55% 20% 44% -26% -45%
FCF/Sales -286% -207% -370% -495% -471% -613% -574% -791% -514% -184%
FCF/Net Profit -498% -367% -666% -1196% -636% -1043% -1044% -1368% -1089% -315%

** Manually enter this number;

Convert to Rs Crore if not already
done in the Annual Reports; Use
"Capital expenditure" number
shown under "Cash Flow from
Investing Activities" segment of
Consolidated Cash Flow Statement
available in the Annual Reports
 Key Ratios
CENTRAL DEPOSITORY SERVICES (INDIA) LTD
Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17 Mar/18 Mar/19 Mar/20
Sales Growth -5.7% -2.0% 18.5% 16.5% 18.8% 28.6% 4.6% 14.7%
PBT Growth -16.1% -4.9% 0.2% 109.7% -11.2% 21.3% 4.8% -7.9%
Net Profit Growth -8.8% -1.9% -12.4% 109.9% -5.0% 19.7% 10.8% -7.1%
Dividend Growth 15.0% 0.0% 10.0% 13.6% 20.0% 16.7% 14.3% 12.5%
Operating Cash Flow Growth -39.3% 47.5% 21.6% -33.8% 50.4% 85.5% 8.1% -4.2%
Free Cash Flow Growth -31.9% 75.3% 58.8% 10.8% 54.6% 20.4% 44.2% -25.5%

Operating Margin 60.3% 38.6% 36.8% 43.1% 52.0% 54.4% 58.8% 55.5% 39.6%
PBT Margin 81.3% 72.4% 70.3% 59.4% 106.9% 79.8% 75.3% 75.5% 60.6%
Net Margin 57.5% 55.7% 55.7% 41.2% 74.2% 59.3% 55.2% 58.5% 47.4%

Debtor Days 25.3 34.0 25.4 23.9 38.7 33.2 36.7 35.6 42.2
Inventory Turnover - - - - - - - - -
Fixed Asset Turnover 15.4 10.7 9.3 15.8 33.5 28.0 2.5 2.6 3.0
Debt/Equity - - - - - - - - -
Debt/Assets 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Interest Coverage (Times) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! ###
Return on Equity 18.3% 15.4% 14.0% 11.8% 19.0% 16.2% 17.3% 17.2% 14.7%
Return on Capital Employed 25.8% 20.0% 17.7% 17.0% 27.4% 21.9% 23.6% 22.2% 18.9%
Free Cash Flow (Rs Cr) -276 -188 -329 -522 -579 -894 -1,077 -1,552 -1,156
Mar/21
52.7%
90.2%
88.6%
100.0%
134.4%
-45.4%

61.6%
75.5%
58.6%

25.2
-
4.0
-
0.0%
###
22.9%
29.6%
-632
What to look for?
Higher is better, but also look for long term stability and consistency
Higher is better, but also look for long term stability and consistency
Higher is better, but also look for long term stability and consistency
Higher isn't always better, esp. when the company is generating high ROE, which means the management is allocating capital
Higher is better, but also look for long term stability and consistency
Higher is better, but also look for long term stability and consistency

Higher is better, but also look for long term stability and consistency, plus the nature of the industry. Also compare with industry
Higher is better, but also look for long term stability and consistency, plus the nature of the industry. Also compare with industry
Higher is better, but also look for long term stability and consistency, plus the nature of the industry. Also compare with industry

Lower/reducing is better. Compare with industry peer(s)

Higher/rising is better. Compare with industry peer(s)
Higher/rising is better. Compare with industry peer(s)
Nil / lower than 0.5 / reducing is better
Lower is better
Look for number > 5
Look for number > 20%. Also check if the debt is low/nil. Compare with industry peer(s)
Look for number > 20%. Also check if the debt is low/nil. Compare with industry peer(s)
Look for positive and rising numbers. If the company consistently generates negative FCF over say 10 years, avoid it.
120% Profit Margin 35%
Capital A
100% 30%
80% 25%
20%
60%
15%
40%
10%
20% Check for a rising trend and/or 5%
consistency. Compare with a close
0% competitor 0%
Jan/12 Jan/14 Jan/16 Jan/18 Jan/20 Jan/12 Jan/14

Operating Margin PBT Margin

Net Margin R

400
Revenue 120% Revenue and
350 100%
300 80%
250 60%
200 40%
150 20%
100 0%
50 -20% Jan/13 Jan/15
- -40%
Jan/12 Jan/14 Jan/16 Jan/18 Jan/20

Revenue Growth

300 Profit Over Time 500 Operating a

250 -
200 Jan/12 Jan/14
-500
150
-1,000
100
50 -1,500
- -2,000
Jan/12 Jan/14 Jan/16 Jan/18 Jan/20

PBT Net Profit Operating Ca

Data for Charts (Please don't touch any number below)
Margins
Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17 Mar/18 Mar/19 Mar/20
Operating Margin 60% 39% 37% 43% 52% 54% 59% 56% 40%
PBT Margin 81% 72% 70% 59% 107% 80% 75% 76% 61%
Net Margin 58% 56% 56% 41% 74% 59% 55% 59% 47%

Management Effectiveness
Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17 Mar/18 Mar/19 Mar/20
ROE 18% 15% 14% 12% 19% 16% 17% 17% 15%
ROCE 26% 20% 18% 17% 27% 22% 24% 22% 19%

Revenue & Profit Growth

Mar/13 Mar/14 Mar/15 Mar/16 Mar/17 Mar/18 Mar/19 Mar/20 Mar/21
Revenue Growth -6% -2% 19% 17% 19% 29% 5% 15% 53%
PBT Growth -16% -5% 0% 110% -11% 21% 5% -8% 90%
Net Profit Growth -9% -2% -12% 110% -5% 20% 11% -7% 89%

Revenue & Profit

Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17 Mar/18 Mar/19 Mar/20
Revenue 96 91 89 105 123 146 188 196 225
PBT 78 66 62 63 131 117 141 148 136
Net Profit 55 51 50 43 91 87 104 115 107

Cash Flows
Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17 Mar/18 Mar/19 Mar/20
Operating Cash Flow 40 24 35 43 28 43 79 86 82
Free Cash Flow -276 -188 -329 -522 -579 -894 -1,077 -1,552 -1,156
%
Capital Allocation Quality
%
% Note: Please ignore the dates on
% the X-axis. The figures are for/as on
the year ending date, which for most
% Indian companies would be 31st
% March of that year
%
%
Jan/12 Jan/14 Jan/16 Jan/18 Jan/20

ROE ROCE

% Revenue and Profit Growth (YoY)

%
%
%
%
%
%
% Jan/13 Jan/15 Jan/17 Jan/19 Jan/21
%

Revenue Growth PBT Growth Net Profit Growth

00 Operating and Free Cash Flow

-
Jan/12 Jan/14 Jan/16 Jan/18 Jan/20
00
00
00
00

Operating Cash Flow Free Cash Flow

Mar/21
62%
76%
59%

Mar/21
23%
30%

Mar/21
344
260
201

Mar/21
193
-632
se ignore the dates on
he figures are for/as on
ng date, which for most
panies would be 31st
ch of that year
 Common Size P&L
Rs Cr Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Raw Material Cost 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Change in Inventory 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Power and Fuel 1% 1% 1% 1% 1% 0% 0% 0% 0% 0%
Other Mfr. Exp 8% 9% 11% 9% 8% 7% 5% 7% 7% 0%
Employee Cost 13% 19% 20% 19% 18% 17% 17% 18% 22% 12%
Selling and Admin Cost 13% 14% 27% 25% 15% 12% 11% 10% 11% 0%
Other Expenses 6% 19% 5% 4% 7% 9% 8% 9% 21% 26%
Operating Profit 60% 39% 37% 43% 52% 54% 59% 56% 40% 62%
Other Income 25% 37% 39% 22% 58% 28% 20% 25% 26% 17%
Depreciation 4% 3% 6% 6% 3% 3% 4% 5% 5% 3%
Interest 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Profit Before Tax 81% 72% 70% 59% 107% 80% 75% 76% 61% 76%
Tax 24% 17% 15% 18% 33% 21% 20% 17% 13% 17%
Net Profit 58% 56% 55% 41% 74% 59% 55% 58% 47% 58%
Dividend Amount 19% 23% 24% 22% 21% 21% 19% 21% 21% 27%

Common Size Balance Sheet

Rs Cr Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Equity Share Capital 28% 25% 23% 21% 19% 17% 15% 13% 12% 10%
Reserves 54% 54% 55% 54% 68% 71% 72% 72% 72% 71%
Borrowings 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Other Liabilities 18% 21% 22% 25% 13% 12% 13% 15% 16% 19%
Total Liabilities 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Net Block 2% 2% 2% 1% 1% 1% 11% 10% 9% 8%
Capital Work in Progress 0% 0% 0% 0% 0% 0% 0% 0% 0% 1%
Investments 83% 82% 83% 79% 83% 83% 75% 76% 77% 65%
Other Assets 15% 15% 15% 19% 17% 16% 14% 15% 14% 26%
Total Assets 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Receivables 2% 2% 1% 1% 2% 2% 3% 2% 3% 2%
Inventory 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Cash & Bank 10% 9% 9% 13% 7% 8% 6% 7% 6% 19%
 A common-size financial statement is displays line
items as a percentage of one selected or common
figure. Creating common-size financial statements
makes it easier to analyze a company over time and
compare it with its peers. Using common-size
financial statements helps investors spot trends that a
raw financial statement may not uncover.
 Vishal: This is the
latest "Cash and
Dhandho Intrinsic Value Calculation
Bank" number that
Read the book - The Dhandho Investor by Mohnish Pabrai
is updated
automatically in
CENTRAL DEPOSITORY SERVICES (INDIA) LTD this sheet from the CENTRAL DEPOSITORY SERVICES (I
Dhandho IV - Lower Range "Cash Flow Sheet". Dhandho IV - Higher Range
This cash number
Year FCF (Rs Cr) PV of FCF (Rs Cr) Assumed FCF Growth Year
is added to arrive
0 Excess Cash (Latest) 5,829 Yearat1-3
the Intrinsic 15% 0 Excess Cash (Latest)
1 FY18 (1,280) (1,143) YearValue.
4-6 10% 1 FY18
2 FY19 (1,472) (1,174) Year 7-10 5% 2 FY19
3 FY20 (1,693) (1,205) Discount Rate 12% 3 FY20
4 FY21 (1,862) (1,184)
Vishal: This is the 4 FY21
5 FY22 (2,049) price at which
(1,162)the Last 5-Years' CAGR 5 FY22
6 FY23 (2,254) business is
(1,142)atSales
sold 23% 6 FY23
the end of the
7 FY24 (2,366) (1,070) PBT 15% 7 FY24
10th year. This
8 FY25 (2,485) (1,003)
price is calculated FCF 2% 8 FY25
9 FY26 (2,609) (941)
using a multiple - 9 FY26
10 FY27 (2,739) (882)
like 10x or 15x - to 10 FY27
10 -27,392 10th year's
(8,819) 10
Intrinsic Value calculated FCF.
(13,897) Intrinsic Value
Current Mkt. Cap. 13,028 Current Mkt. Cap.
Premium/(Discount) to IV -194% Premium/(Discount) to IV

Note: See explanation of this model here

P.S. In case of companies earning negative FCF, where this model will not work, you must use a normalized positive FCF as th
number. This number is your assumption of FCF the business will earn in a normal year, without capex. Check the history
business while arriving at your assumption, and use your judgment wisely without twisting the model to fit your version of r
Calculation
by Mohnish Pabrai

TRAL DEPOSITORY SERVICES (INDIA) LTD

Dhandho IV - Higher Range
FCF (Rs Cr) PV of FCF (Rs Cr) Assumed FCF Growth
Excess Cash (Latest) 5,829 Year 1-3 20%
(1,336) (1,193) Year 4-6 15%
(1,603) (1,278) Year 7-10 10%
(1,924) (1,369) Discount Rate 12%
(2,212) (1,406)
(2,544) (1,444)
(2,926) (1,482)
(3,218) (1,456)
(3,540) (1,430)
(3,894) (1,404)
(4,284) (1,379)
(64,253) (20,688)
Intrinsic Value (28,700)
Current Mkt. Cap. 13,028
Premium/(Discount) to IV -145%

use a normalized positive FCF as the starting

, without capex. Check the history of this
ng the model to fit your version of reality.
 Vishal: Instead of
trailing 12-months
EPS as Graham
Vishal:
proposed, Instead
I haveof
assumed EPS
Ben Graham Formula (Low Range) Ben Graham Formula (High Range
used the average
growth
Net Profit rateof of
last
next 7-10 years
five years. The as
Company Name SERVICES (INDIA) LTD reason ICompany
Graham have usedName
proposed,
Year Ended Mar/21 INet
have assumed
Year Ended
Profit instead
50% of last five
of EPS is so that I
Avg 5-Yr Net Profit (Rs Crore) 122.6 years
arrive CAGR
atAvg in netNet Profit (Rs Crore)
Intrinsic
5-Yr
profit
value in(toterms
arriveofat
PE Ratio at 0% Growth 8.5 PE Ratio at 0% Growth
the lower
market caplevel
andof
Long-Term Growth Rate 8.6 the Long-Term
Value Growth Rate
not Intrinsic
stock price.
range)
Ben Graham Value (Rs Crore) 3,147 Ben Graham Value (Rs Crore)
Current Market Cap (Rs Crore) 13,028 Current Market Cap (Rs Crore)

EXPLANATION
Ben Graham's Original Formula: Value = EPS x (8.5 + 2G)
Here, EPS is the trailing 12 month EPS, 8.5 is the P/E ratio of a stock with 0% growth and g is the growth rate for the next 7-10

Ben Graham's Revised Formula: Value = [EPS x (8.5 + 2G) x 4.4] / Y

Here, 4.4 is what Graham determined to be his minimum required rate of return. At the time of around 1962 when Graham was

Note: I have used Graham's original formula in the above calculations

 Vishal: Instead of
assumed EPS
m Formula (High Range) growth rate of
next 7-10 years as
SERVICES (INDIA) LTD Graham proposed,
Mar/21 I have assumed
100% of last five
122.6 years CAGR in net
profit (to arrive at
8.5
the upper level of
17.2 the Intrinsic Value
range)
5,253
13,028

is the growth rate for the next 7-10 years

of around 1962 when Graham was publicizing his works, the risk free interest rate was 4.4% but to adjust to the present, we divide this num
resent, we divide this number by today’s AAA corporate bond rate, represented by Y in the formula above.
 company looks to
investment
calculated
be undervalued in its
from
discount
the Cash
with 0% rate. Flow In
growth
other
Statement
rate, you words, in ifthe
have a
stock
annual is
more upside a "riskier"
report. than
Safal
Safal Niveshak:
Niveshak:
investment
downside. than
The
In
Sincea 2-stage
it isn’t DCF,
another,
FCF formula adjust = for
Dicounted Cash Flow Valuation
higher
we break
practical
some
Net
you
risk
Cash tothe
in
setnext
the
the
growth
10 years rate,
intothe two
CENTRALforecast
cash cash
DEPOSITORY flows SERVICES (INDIA) LTD
higherflow
from/(used
Safal
phases
growth
Niveshak:
you
of setin)
five up
for an
estimates
Operating infiniteandis
If
the this
years figure
downside
each, and
number
some
Activitiesin ofthe years,
minus
Initial Cash Flow (Rs Cr) negative,
potential.
(1,113)
thenusualcalculatei.e.,
Just in
be
the (25,342)
it’s
discount
Purchase toof
rate. end
brackets,
reasonable
FCF growth it and
means
based 13,028
the
Fixed DCF with a
that
use
on theAssets
common
growth company
rates
Years terminal
1-5
Ignore value.yet
6-10
simple -195%
has
sense.
assumedmore Cash
below.
FCF Growth Rate 15%junk
In models
case 12%
of
than Debt. This is like
The
CAPM best
companies to getterminal
the
Discount Rate 12%automatically
On most of earning
the
growth
discount
negative rate
rate.
FCF, is 0%,
Terminal Growth Rate 2%added
stocks to
I the
value, PVI of
and
People
where thethis
inhighest
themodel
cash
rarelyflowsgo below
above
you
finance
will should
not world go pour(for
to
15% give(forawork,
complete
the first you
Net Debt Level (Rs Cr) safest
(5,829)
out
musttheir businesses)
picture
5-year useofhearts
athe to
period),
is 2%. the most
obtain
normalized positive
company's
and that’s only for
Year accurate
FCF asGrowth
valuation.
the safest,
FCF thediscount
starting
cash- Present Value
rate
number. by analyzing
generating This
1 !(1,280!) 15% (1,143)
risk
number free isrates,
businesses. your
This is
2 !(1,472!)
beta,
assumption 15%
risk2xpremiumof FCF (1,174)
approx. India's
3 !(1,693!)
and
the WACC.
business
expected
15%
long-It's
will (1,205)
4 !(1,947!)
just
earn short
in a
term GDP growth15% of
normal (1,237)
5 rubbish!
year,(in
!(2,239!)
rate What’s
without
15%
real (1,271)
6 the
capex.
!(2,508!) point12%
terms). in (1,271)
7 learning 12%
!(2,809!) every (1,271)
method
The goal12% ofof
8 !(3,146!)
hammering a nail
(1,271)
9 choosing12%
!(3,523!) a growth (1,271)
when
rate isall to you
findhave a
10 !(3,946!)
to do is hit
number 12%
which it onis (1,271)
the head. So yet
conservative do
Final Calculations not
not over-
very low or
complicate
pessimistic,this and
Terminal Year (4,025)
aspect.
close to reality in
PV of Year 1-10 Cash Flows (12,383)
order to capture
Terminal Value (12,960)
The beauty of old
potential future
Total PV of Cash Flows (25,342)
school Graham
gains without
Current Market Cap (Rs Cr) 13,028
and Buffett too
eliminating is that
their
manyinvestments
investment
Note: See explanation of DCF here are based on
candidates.
common sense,
not volatility and
other mumbo
jumbo. There is no
hard and fast rule
for choosing a
discount rate.
Using a high
discount rate to
discount the future
cash just means
you are willing to
pay less today for
the future cash
and vice versa. Do
understand that -
“You can’t
compensate for
risk by using a
high discount
rate.”

The important
aspect is not
deciding upon a
discount rate, but
in being logical
and reasonable
about cash
high discount
rate.”

The important
aspect is not
deciding upon a
discount rate, but
in being logical
and reasonable
about cash
projections.

Another way you

can look at
discount rate is to
not using different
discount rates for
different
businesses. It
won't really matter
what rate you use
as long as you are
being intellectually
honest and
conservative about
future cash flows.
Valuation
ES (INDIA) LTD

DCF Value (As calculated in cell B29)

Current Market Cap
DCF as % of Current Mkt Cap
 Expected Returns Model
CENTRAL DEPOSITORY SERVICES (INDIA) LTD
Particulars Mar/12 Mar/13 Mar/14 Mar/15 Mar/16 Mar/17 Mar/18
Vishal: Highest
Net Profit (Rs Crore) EPS55 51
growth you 49 44 91 86 103
Net Profit Margin 58% accord
should 56%
to a 55% 41% 74% 59% 55%
Return on Equity high
18%quality15% 14% 12% 19% 16% 17%
businessMaximum
Vishal: is 15%
p.a. P/E you
exit
Calculations (Enter values only in black cells)
should accord to a
Estimated CAGR in Net Profit over next 10 years 12%
high-quality
Estimated Net Profit after 10 years (Rs Cr) 622 is 20x.
business
Current P/E (x) 65.0
Exit P/E in the 10th year from now (x, Estimated) 20.0
Esti. Market Cap (10th year from now; Rs Cr) 12,445
Cost of Capital/Discount Rate 12%
Discounted Value (Rs Cr) 4,007
Current Market Cap (Rs Cr) 13,028

Note: See explanation of this model here

el
IA) LTD
Mar/19 Mar/20 Mar/21 CAGR (9-Yr) CAGR (5-Yr)
114 106 200 15% 17%
58% 47% 58%
17% 15% 23%
 Intrinsic Value Range
CENTRAL DEPOSITORY SERVICES (INDIA) LTD
Lower Higher Remember! Give importance to a stock's valuations / fai
Dhandho -13,897 ### only "after" you have answered in "Yes" to these two que
Ben Graham 3,147 5,253 (1) Is this business simple to be understood? and (2) C
DCF -25,342 understand this business?
Expected Return 4,007
Don't try to quantify everything. In stock research, the les
Current Market Cap. 13,028 mathematical you are, the more simple, sensible, and use
be your analysis and results. Great analysis is generally "
the-envelope".
Explanation: Considering the above
range, we can say that Hero Moto's IV Also, your calculated "fair value" will be proven wrong
range is between Rs 55,000 crore to Rs future, so don't invest your savings just because you fall
95,000 crore. It's a big range, but that's with it. Don't look for perfection. It is overrated. Focus
fine (who is looking for precision?). Now, decisions, not outcomes. Look for disconfirming evide
if the current market cap is within this IV
range, it makes the stock
reasonably/attractively priced. If the
current market cap is higher then the
higher value of the range, it makes it
overpriced. But remember, these are just
numbers!
 importance to a stock's valuations / fair value
ave answered in "Yes" to these two questions -
ess simple to be understood? and (2) Can I
understand this business?

fy everything. In stock research, the less non-

are, the more simple, sensible, and useful will
nd results. Great analysis is generally "back-of-
the-envelope".

lated "fair value" will be proven wrong in the

vest your savings just because you fall in love
ook for perfection. It is overrated. Focus on
outcomes. Look for disconfirming evidence.
CENTRAL DEPOSITORY SERVICES (INDIA) LTD
SCREENER.IN
Narration Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
Sales 51 58 53 54 60 65 89 86 103 117
% Growth YOY 18% 12% 69% 59% 72% 80%
Expenses 23 36 28 38 34 27 35 30 40 44
Operating Profit 28 23 25 16 26 38 54 56 63 74
Other Income 18 15 17 14 13 21 12 17 7 13
Depreciation 3 3 3 3 3 2 3 3 2 2
Interest - - - - 0 0 0 0 0 -
Profit before tax 43 35 38 27 36 56 64 71 69 85
PBT Margin 85% 60% 73% 51% 60% 86% 71% 82% 67% 72%
% Growth YOY -17% 61% 67% 157% 92% 50%
Tax 9 7 9 6 8 10 15 17 17 21
Net profit 34 27 29 21 29 46 49 54 52 64
% Growth YOY -15% 68% 66% 158% 81% 38%
OPM 55% 39% 47% 30% 43% 58% 61% 65% 61% 63%
COMPANY NAME CENTRAL DEPOSITORY SERVICES (IND
LATEST VERSION 2.10 PLEASE DO NOT MAKE ANY CHANG
CURRENT VERSION 2.10

META
Number of shares 10.45
Face Value 10
Current Price 1246.7
Market Capitalization 13028.02

PROFIT & LOSS

Report Date Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Sales 96.24 90.75 88.93 105.42 122.85 146
Raw Material Cost
Change in Inventory
Power and Fuel 0.55 0.75 0.76 0.61 0.69 0.67
Other Mfr. Exp 7.31 7.93 9.34 9.26 9.25 9.74
Employee Cost 12.52 17.27 17.6 19.58 21.95 25.39
Selling and admin 12.16 12.62 24.37 26.69 18.04 17.15
Other Expenses 5.7 17.17 4.14 3.87 9 13.63
Other Income 24.5 33.3 34.74 23.45 71.58 40.85
Depreciation 4.21 2.61 4.97 6.24 4.19 3.7
Interest
Profit before tax 78.29 65.7 62.49 62.62 131.31 116.57
Tax 22.91 15.19 12.94 19.2 40.18 29.98
Net profit 55.34 51.1 49.35 43.66 91 85.78
Dividend Amount 18.18 20.9 20.9 22.99 26.12 31.35

Quarters
Report Date Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20
Sales 50.95 58.4 52.66 54.13 59.89 65.28
Expenses 22.89 35.76 28.14 38.04 34.08 27.2
Other Income 17.74 15.03 16.69 14.36 13.08 20.73
Depreciation 2.62 2.69 2.99 3.03 3.03 2.46
Interest 0.03 0.01
Profit before tax 43.18 34.98 38.22 27.42 35.83 56.34
Tax 9 7.07 9.16 5.82 7.68 9.61
Net profit 33.56 27.43 29.31 20.81 28.6 46.16
Operating Profit 28.06 22.64 24.52 16.09 25.81 38.08
BALANCE SHEET
Report Date Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Equity Share Capital 104.5 104.5 104.5 104.5 104.5 104.5
Reserves 198.53 224.01 248.91 264.9 374.82 428.82
Borrowings
Other Liabilities 65.75 87.06 101.47 121.77 73.66 73.18
Total 368.78 415.57 454.88 491.17 552.98 606.5
Net Block 6.23 8.47 9.61 6.69 3.67 5.22
Capital Work in Progress 1.31 0.18 0.26
Investments 307.44 341.99 375.39 389.26 457.47 502.9
Other Assets 55.11 63.8 69.7 95.22 91.84 98.12
Total 368.78 415.57 454.88 491.17 552.98 606.5
Receivables 6.68 8.46 6.19 6.91 13.01 13.27
Inventory
Cash & Bank 35.27 35.33 40.98 65.6 40.37 48.32
No. of Equity Shares 104500000 104500000 104500000 104500000 104500000 104500000
New Bonus Shares
Face value 10 10 10 10 10 10

CASH FLOW:
Report Date Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Cash from Operating Activity 39.5 23.96 35.33 42.95 28.42 42.74
Cash from Investing Activity -35.33 -5.99 -12.53 -19.44 0.27 18.19
Cash from Financing Activity -4.33 -18.17 -23.45 -23.48 -27.67 -31.44
Net Cash Flow -0.16 -0.2 -0.66 0.03 1.01 29.49

PRICE:

DERIVED:
Adjusted Equity Shares in Cr 10.45 10.45 10.45 10.45 10.45 10.45
DO NOT MAKE ANY CHANGES TO THIS SHEET

Mar-18 Mar-19 Mar-20 Mar-21

187.69 196.25 225.06 343.72

0.65 0.52 0.44

9.72 13.98 15.36
31.14 35.59 48.85 41.33
21.49 19.8 25.01
14.32 17.43 46.38 90.57
37.99 49.19 59.19 56.92
6.95 9.92 11.73 9.2
0.03 0.02
141.41 148.2 136.45 259.52
37.78 33.38 29.73 58.26
103.18 113.51 106.16 200.34
36.58 41.8 47.02 94.05

Sep-20 Dec-20 Mar-21 Jun-21

89.21 86.13 103.09 117.28
34.84 30.12 39.7 43.55
11.95 17.07 7.17 12.51
2.6 2.51 1.63 1.64
0.01 0.01 0.01
63.71 70.56 68.92 84.6
14.84 16.53 17.28 20.6
48.75 53.69 51.74 63.87
54.37 56.01 63.39 73.73
 Mar-18 Mar-19 Mar-20 Mar-21
104.5 104.5 104.5 104.5
494.25 563.64 619.49 772.72

91.59 115.65 138.34 206.78

690.34 783.79 862.33 1084
76.09 75.24 74.35 86.16
10.06
521.04 593.25 664.59 709.42
93.21 115.3 123.39 278.36
690.34 783.79 862.33 1084
18.85 19.14 26.03 23.74

41.95 55.5 53.7 207.68

104500000 104500000 104500000

10 10 10 10

Mar-18 Mar-19 Mar-20 Mar-21

79.3 85.7 82.14 192.56
-67.09 -66.78 -32.66 -107.23
-37.73 -20.09 -50.51 -47.16
-25.52 -1.17 -1.02 38.17

282.65 242.55 214.4 656.05

10.45 10.45 10.45 10.45

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