ARGENT RESEARCH

Compact LBO Model

Table of Contents

Target Co Financial Statement Information & General Assumptions

Leverage Buy Out(LBO) Model

Target Company Information

Company : G M BREVERIES
Ticker : NSE : GMBREW
https://www.screener.in/company/GMBREW/

About : G M Breweries Ltd, set up in 1981 manufactures and markets

Alcoholic Beverages such as Country Liquor (CL) and
Indian-made Foreign Liquor (IMFL).
The Co. has a monopoly in country liquor in the districts of Mumbai,
Thane & Palghar.It is the single largest manufacturer of country liquor
in the State of Maharashtra with a sizable market share

Market Position : The Company contributes about 25-30 % of the total Excise duty
for country liquor in the whole of Maharashtra.

ARGENT RESEACH
RAJATH MADHYASTHA
 ARGENT RESEARCH
Target Company - G M BREWERIES Ltd

Income Statement Information Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 TTM
All fig in Inr Cr. Unless stated

Revenue 425.88 464.01 468.63 340.12 458.47 593.51 598.35

COGS 318.29 347.15 379.94 264.81 362.93 476.51 475.97
EBITDA 107.59 116.86 88.69 75.31 95.54 117.00 122.38
Depreciation 5.99 7.33 7.29 5.48 6.06 5.81 5.81
Interest Expenses 0.03 0.07 0.05 0.06 0.01 0.04 0.06
EBT 101.57 109.46 81.35 69.77 89.47 111.15 116.51
Other Income 9.72 13.74 9.43 30.29 28.58 20.47 20.13
Provision for taxation 38.39 40.90 22.93 19.97 24.69 31.75 33.02
Net Profit 72.90 82.30 67.85 80.09 93.36 99.86 103.62

Balance Sheet Information Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 TTM
All fig in Inr Cr. Unless stated

Equity Share Capital 14.63 18.29 18.29 18.29 18.29 18.29 -

Reserves 276.65 348.53 412.10 486.71 572.75 663.48 -
Total Borrowings - - - - - - -
Trade Pyables 5.00 4.00 11.00 3.00 3.00 9.00 -
Other Liabilities 52.00 42.00 64.00 75.00 78.00 0.00 -

Fixed Assets 110.85 139.48 159.04 137.90 136.83 185.06 -

Investments 107.69 162.78 225.98 286.52 378.87 445.73 -
Inventory 12.00 18.00 21.00 28.00 32.00 37.00 -
Trade Receivables 1.00 2.00 1.00 1.00 3.00 0.00 -
Cash Equivalents 10.00 1.00 22.00 7.00 27.00 24.00 -
Other Assets 45.00 52.00 30.00 92.00 71.00 69.00 -

Financial Statement Anaysis Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Average
Days in the Period 365 365 365 365 365 365

Income Statement
Revenue Growth % - 8.95% 1.00% -27.42% 34.80% 29.45% 9.36%
COGS % 74.74% 74.82% 81.07% 77.86% 79.16% 80.29% 77.99%
EBITDA Growth Rate % 8.62% -24.11% -15.09% 26.86% 22.46%
Depreciaton (% on Opening Fixed Assets) 6.61% 5.23% 3.45% 4.39% 4.25% 4.79%
Interest Expenses - - - - -

Balance Sheet
Inventory Days Ratio 13.76 18.93 20.17 38.59 32.18 28.34 25
Accounts Receivable Days Ratio 0.86 1.57 0.78 1.07 2.39 - 1
Accounts payable Days Ratio 5.73 4.21 10.57 4.14 3.02 6.89 6

General Assumptions
Revenue Growth Taper 5%
Revenue Growth 10%
COGS & ON Revenue 70%
Capex % on Revenue 2%
Inventory Days Ratio (Days) 25
Accounts Receivable Days Ratio (Days) 1
Accounts payable Days Ratio (Days) 6

COMPACT LBO MODEL Page 2 of 5 ARGENT RESEARCH

 ARGENT RESEARCH
Leverage Buy Out Model
Model Inputs
All figures in INR Crs unless stated

First Year of Forecast 2024 Leverage (xEBITDA) 6.0x

LTM EBITDA - Target Co 122.4 Entry Multiple (xEBITDA) 10.0x
EBITDA Growth Rate 20.0% Exit Multiple (xEBITDA) 10.0x
Depreciation 5.81 Exit Year 2028
Interest Rate 7.0% LTM EBITDA- Target Co 122.4
Tax Rate 30.0% Entry Multiple 10.0x
Purchase Enterprise Value - Taget Co 1,223.8

Leverage Greater than Entry Multiple? NO

[=1]"YES";[=0]"NO"

Sources & Uses

Sources x $ Uses $
Debt 6.0x 734.3 Purchase Enterprise Value 1,223.8
Equity 4.0x 489.5 Total Uses 2 1,223.8
Total Sources 10.0x 1,223.8

Income Statement
2023A 2024F 2025F 2026F 2027F 2028F

EBITDA Growth 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%

EBITDA 117.0 140.4 168.5 202.2 242.6 291.1

Depreciation 5.8 5.8 5.8 5.8 5.8

Earnings Before Interest and Taxes (EBIT) 134.6 162.7 196.4 236.8 285.3

Interest 49.5 45.1 39.2 31.3 21.0

Earnings Before Taxes (EBT) 85.1 117.5 157.1 205.5 264.3

Taxes 3 25.5 35.3 47.1 61.6 79.3

Net Income 59.6 82.3 110.0 143.8 185.0

Discretionary Cash Flow

2024F 2025F 2026F 2027F 2028F

Net Income 59.6 82.3 110.0 143.8 185.0

Depreciation 5.8 5.8 5.8 5.8 5.8
Changes in Working Capital 1.6 (2.6) (3.0) (3.5) (4.0)
Capital Expenditure (13.0) (14.3) (15.8) (17.5) (19.5)
Discretionary Cash Flow 54.0 71.2 97.0 128.7 167.4

Compact LBO Model Page 3 of 5 ARGENT RESEARCH

 Debt Schedule

All figures in INR Crs unless stated 2023A 2024F 2025F 2026F 2027F 2028F

Discretionary Cash Flow 54.0 71.2 97.0 128.7 167.4

Beginning Balance 734.3 680.3 609.1 512.1 383.4

Add / (Repay) (54.0) (71.2) (97.0) (128.7) (167.4)
Ending Balance 734.3 680.3 609.1 512.1 383.4 216.0

Interest Rate 7.0% 7.0% 7.0% 7.0% 7.0%

Interest Expense 49.5 45.1 39.2 31.3 21.0

Equity Return
2023A 2024F 2025F 2026F 2027F 2028F

Enterprise Value
EBITDA 140.4 168.5 202.2 242.6 291.1
Exit Multiple 10.0x 10.0x 10.0x 10.0x 10.0x
Exit Enterprise Value 1,404.0 1,684.8 2,021.8 2,426.1 2,911.3

Equity Value
Net Debt 680.3 609.1 512.1 383.4 216.0
Exit Equity Value 723.7 1,075.7 1,509.7 2,042.7 2,695.3

Cash Flow to Equity 1

Cash Dividend – – – – –
Cash from Exit – – – – 2,695.3
Cash Flow to Equity (489.5) – – – – 2,695.3

Equity Return
Internal Rate of Return 40.66%

Equity Return Sensitivity

Cash Cash Cash

Debt Equity Total In Out On Cash IRR 2
4.0x 10.0x 489.5 2,695.3 5.5x 40.7%
0x 10.0x 10.0x 1,223.8 3,559.9 2.9x 26.2%
1.0 9.0x 10.0x 1,101.4 3,432.7 3.1x 26.8%
3.0x 7.0x 10.0x 856.7 3,155.1 3.7x 29.9%
5.0x 5.0x 10.0x 611.9 2,851.7 4.7x 36.0%
6.0x 4.0x 10.0x 489.5 2,695.3 5.5x 40.7%

Compact LBO Model Page 4 of 5 ARGENT RESEARCH

 Working Capital & CapEx Schedule

All figures in INR Crs. 2023A 2024F 2025F 2026F 2027F 2028F

Days in the period 365 365 365 365 365 365

Revenue Growth - 9.50% 9.93% 10.37% 10.84% 11.33%
Revenue 593.51 649.89 714.41 788.53 874.01 973.03
COGS 476.51 454.93 500.09 551.97 611.81 681.12

Inventory 37.00 31.57 34.70 38.30 42.46 47.27

Accounts receivables 0.00 1.98 2.18 2.40 2.66 2.96
Accounts Payables 9.00 7.18 7.89 8.71 9.65 10.75

Change in Working Capital

Inventory 5.43 -3.13 -3.60 -4.15 -4.81
Accounts receivables -1.98 -0.20 -0.23 -0.26 -0.30
Accounts Payables -1.82 0.71 0.82 0.94 1.09
Net Changes 1.63 -2.62 -3.01 -3.47 -4.02

Capital Expenditure 13.00 14.29 15.77 17.48 19.46

Compact LBO Model Page 5 of 5 ARGENT RESEARCH