1

COMPANY OVERVIEW


IndAsia Fund Advisors Private Limited (IndAsia) provides advisory services for mergers
and acquisitions, joint ventures and strategic alliances, business development, and corporate
finance matters to both domestic and multi-national corporations.

IndAsia was founded by Mr. Pradip Shah in 1998. Mr. Shahs 27 years of experience spans
financial services, credit rating and private equity in India. IndAsia team is comprised of
professionals with diverse experience in hedge fund management, investment banking, corporate
finance and fund administration.

IndAsia offers senior-level attention and a focus on long-term strategic planning to its clients.
IndAsia's perspective is unique in that it draws on the firm's historical experience as a private
equity investor, continually reassessing whether or not particular transaction will enhance
shareholder value. IndAsia has close relationships with entrepreneurial leaders, top managements
of leading companies and intermediaries across industry domains.

Service by IndAsia

Corporate Finance
By combining elements of strategic consulting and sound financial advice, IndAsia assists its
clients in formulating value-creating strategies. Through senior level attention, our experience and
insights, we add value to our clients by assessing transaction opportunities and implementing
strategies.

We assist our clients in:
Formulating their financial strategy to enhance shareholder value
Restructuring and recapitalizations
Fund raising
Identifying and assessing transaction opportunities
Business valuation
Business development


2

Strategic Alliances and Joint Ventures
IndAsia team has built up close relationships with entrepreneurial leaders and top managements
of leading companies in India and abroad. Through IndAsias established network and credibility
we assist companies in their search for a partner for market entry, supplementing critical skill-sets,
undertaking major projects, etc.
We work closely with our clients in:
Crystallising their business vision and strategy in order to understand how a strategic
alliance fits their objective
Evaluating and selecting potential partners based on the strategic fit and ability of the firms
to work together
Developing a mutual recognition of opportunities with the prospective partner
Negotiating and implementing a formal agreement that includes systems to monitor
performance

Mergers and Acquisition
IndAsia assists its clients in their endeavor to grow their business inorganically. We also assist our
clients in sale or divesture of business or divisions and enable them to focus on their core business.
IndAsia's perspective is unique in that it draws on the firm's historical experience as a private
equity investor, continually reassessing whether or not a particular transaction adds value to our
clients.
As advisors, we are actively involved in every aspect of the transaction. Our hands-on approach in
evaluating potential deals and whether it fits with the strategic objectives of our clients, valuation
of the business, negotiations, structuring and executing the transaction effectively helps us add
value to our clients and avoid potential pitfalls before they become problems.

We assist our clients in:
Evaluating the strategic options available for growth, expansion, diversification, etc.
Identifying potential partner for acquisition and evaluating if there is a strategic fit with the
client
Valuation of an entity
Negotiating terms and conditions
Structuring the transaction
Co-ordinating with various constituents to the potential transaction which include the
Company and any other professional advisors who may be required (including but not
limited to legal counsel, accounting experts, tax counsel and regulatory specialists)
Obtaining clarification of the requirements from the relevant regulatory authorities
Obtaining any required regulatory approvals
Drafting the transaction documentation together with legal counsel
Finalizing terms and conditions

3


Private Equity Syndication
IndAsias experience as a private equity investor provides us insights into the needs of a private
equity investor as well as the investee companies. We assist our clients in achieving their objectives
by helping them raising private equity funding.
With IndAsias focus on long term strategic planning and our knowledge of our clients business,
the industry prospects and our understanding of the private equity industry, we help our clients
evaluate the strategic alternatives available for raising capital and the potential sources for the
same.

IndAsia assists clients in:
Identifying and shortlisting potential investors based on the fit with our client company
Participating in negotiations
Preparation of term-sheet
Execution of the transaction















4

EQUITY VALUATION

INTRODUCTION
Equity valuation is the method of calculating theoretical values of companies and their stocks.
The main use of these methods is to predict future market prices, or more generally, potential
market prices, and thus to profit from price movement stocks that are judged undervalued (with
respect to their theoretical value) are bought, while stocks that are judged overvalued are sold, in
the expectation that undervalued stocks will, on the whole, rise in value, while overvalued stocks
will, on the whole, fall.
Stock valuation based on fundamentals aims to give an estimate of the intrinsic value of a stock,
based on predictions of the future cash flows and profitability of the business. Fundamental
analysis may be replaced or augmented by market criteria what the market will pay for the stock,
without any necessary notion of intrinsic value. These can be combined as "predictions of future
cash flows/profits (fundamental)", together with "what will the market pay for these profits?"
These can be seen as "supply and demand" sides what underlies the supply (of stock), and what
drives the (market) demand for stock?
In the view of others, such as John Maynard Keynes, stock valuation is not a prediction but
a convention, which serves to facilitate investment and ensure that stocks are liquid, despite being
underpinned by an illiquid business and its illiquid investments, such as factories.
Stocks have two types of valuations. One is a value created using some type of cash flow, sales or
fundamental earnings analysis. The other value is dictated by how much an investor is willing to
pay for a particular share of stock and by how much other investors are willing to sell a stock for
(in other words, by supply and demand). Both of these values change over time as investors change
the way they analyze stocks and as they become more or less confident in the future of stocks.
The fundamental valuation is the valuation that people use to justify stock prices. The most
common example of this type of valuation methodology is P/E ratio, which stands for Price to
Earnings Ratio. This form of valuation is based on historic ratios and statistics and aims to assign
value to a stock based on measurable attributes. This form of valuation is typically what drives
long-term stock prices.
The other way stocks are valued is based on supply and demand. The more people that want to
buy the stock, the higher its price will be. And conversely, the more people that want to sell the
stock, the lower the price will be. This form of valuation is very hard to understand or predict, and
it often drives the short-term stock market trends.
There are many different ways to value stocks. The key is to take each approach into account while
formulating an overall opinion of the stock. If the valuation of a company is lower or higher than
other similar stocks, then the next step would be to determine the reasons.

5

SCOPE OF THE PROJECT

The study is conducted only on Equity stocks of the company.
The study cover the valuation of different stock in real estate and automobile sectors.
Last five year data has been taken into consideration for study of this project.



OBJECTIVE OF THE STUDY

The main objective of equity research is to study companies, analyze financials, and look
at quantitative and qualitative aspects mainly for decisions: whether to invest or not.
Suggestion and comments for holdings sell or buy position can be given to stockholders.
Equity Research Report adds significant credibility to portfolio.
It helps to predict value of the certain equity under the specific circumstances
It is analyzing stock, its industry and its peer group to provide earnings and valuation
estimates.
Research is valuable because it fills information gaps so that each individual investors does
not need to analyze every stock. This division of labour makes the market more efficient.










6

LITERATURE REVIEW

Valuation has had a critical role in the world of finance as long as assets have been traded. There
is a significant amount of secondary and primary research that analyzes valuation as well as the
use of discounting of cash flows to determine the value of stocks. Works by economists were the
first pieces of literature to describe and formalize the discounted cash flow method in modern
economic terminology. The purpose of valuation is to determine how much something is worth so
that the investor does not pay more than the asset is worth. For instance, valuation is common in
corporate finance, portfolio management, as well is in mergers and acquisitions. Economist has
suggested that having an understanding of an assets worth and what comprises its value is vital
for selecting investments for a financial portfolio, as well as in investment and financial decision
making. Skill in valuation is one very important element of success in investing. In their research,
valuation consists of five critical steps which include understanding the business (industry
prospects, corporate strategies and position, and financial statement analysis); forecasting
company performance (forecasting earnings, sales, and financial position); choosing an
appropriate valuation model; translating the forecasts to valuation; and finally executing the
investment decision.
Economist relates investment value and intrinsic value to valuation. According to economist
investment value is the value to a particular investor based on individual investment requirements
and expectations. Economist elaborates on this statement by providing a practical example, which
would occur at an auction, by stating the best example of investment value would be an auction
setting for a company in which there are five different bidders attempting to purchase the company.
More than likely each of the bidders will offer a different price because the prices are based on the
individuals outlook and synergies that each bidder brings to the transaction. Economist identifies
that intrinsic value is based on a companys fundamentals. Economist goes on to state that future
dividends are derived from earnings forecasts and then discounted to the present, which establishes
a present value for the stock. If a stock is trading for a lower price than this calculation, it is a buy
if the stock is trading for a higher price, it is a sell
For investors, the traditional approach for the valuation of publicly traded companies includes
fundamental analysis and technical analysis. Both approaches include analyzing the available
information and using this information to estimate value and thus the expected future stock
performance of a company. However, fundamental analysis and technical analysis utilize different
information and in very different ways. Fundamental analysis pertains to focusing on a companys
fundamentals such as their products as well as competitive position and financial situation. The
objective of fundamental analysis is to determine the intrinsic value of a stock and compare it to
the price of the stock. Intrinsic value is the estimated or true value of a security which can be
determined by analyzing the underlying variables of a firm. Technical analysis is the analysis of

7

past price data and volume to determine a stocks future price. Technical analysis is one of the
oldest approaches used by stock analysts to determine stock selection.



RESEARCH METHODOLOGY

This research work consists of a survey research design. For the purpose of carrying out a sound
analysis and then arriving at a reasonable conclusion, this work entails the collection of data using
secondary sources of data collection.
SECONDARY SOURCES
The secondary data were extracted from textbooks and other related materials which included
Internet browsing
Annual Report
News Paper
Stock analysis books












8

DATA ANALYSIS



Type Public company

Traded as BSE: 532977
NSE: BAJAJ-AUTO
BSE SENSEX Constituent
CNX Nifty Constituent

Industry Automotive
Founder(s) Jamnalal Bajaj
Headquarters Pune, India
Key people Rahul Bajaj (Chairman)
Rajiv Bajaj (MD)
Products Motorcycles, three-wheeler
vehicles and cars
Employees 8,036 (March 2013)
Parent Bajaj Group
Subsidiaries Bajaj Auto Indonesia
Website www.bajajauto.com





9

Company profile

Bajaj Auto Ltd is one of the leading two & three wheeler manufacturers in India. Bajaj Auto is the
world's third-largest manufacturer of motorcycles and the second-largest in India. It is worlds
largest three-wheeler manufacturer.
The company is well known for their R&D, product development, process engineering and low-
cost manufacturing skills. The company is the largest exported of two and three-wheelers in the
country with exports forming 18% of its total sales. The company has two subsidiaries, namely
Bajaj Auto International Holdings BV and PT Bajaj Indonesia. The company was incorporated on
April 30, 2007 as a wholly owned subsidiary of erstwhile Bajaj Auto Ltd (the holding company)
with the name Bajaj Investment & Holding Ltd. The company received the certificate of
commencement of business on May 7, 2007. The holding company operated in the segments, such
as automotive, insurance and investment, and others. Considering the growth opportunities in the
auto, wind-energy, insurance and finance sectors, the holding company de-merged their activities
into three separate entities, each of which can focus on their core businesses and strengthen
competencies. The auto business of the holding company along with all assets and liabilities
pertaining thereto including investments in PT Bajaj Auto Indonesia and in a few vendor
companies transferred to Bajaj Investment & Holding Ltd. In addition a total of Rs 15,000 million
in cash and cash equivalents also transferred to Bajaj Investment & Holding Ltd. As the part of the
scheme, Bajaj Holdings and Investment Ltd were renamed as Bajaj Auto Ltd. The appointed date
of this de-merger was closing hours of business on March 31, 2007. In April 9, 2007, the company
inaugurated their green field plant at Pantnagar in Uttarakhand. In the first year of operations, the
plant produced over 275,000 vehicles. The company's vehicle assembly plant at Akurdi was shut
down from September 3, 2007 due to higher cost of production. In November 2007, Bajaj Auto
International Holdings BV, a wholly owned subsidiary company acquired 14.51% equity stake in
KTM Power Sports AG of Austria, Europe's second largest sport motorcycle manufacturer for Rs
345 crore. During the year 2007-08, the company launched XCD 125 DTS-Si and the Three-
wheeler Direct Injected auto rickshaw. The Chakan plant completed the cumulative production of
over 2 million Pulsar. During the year 2009-10, the company expanded the production capacity of
Motorised Two & Three Wheelers by 300,000 Nos to 4,260,000 Nos. The company launched
Pulsar 220 F, Pulsar 180 UG, Pulsar 150 UG, Pulsar 135 LS and Discover DTS-si in the market.
During the year 2010-11, the company expanded the production capacity of Motorised Two &
Three Wheelers by 780,000 Nos to 5,040,000 Nos. The company launched Avenger 220 DTS-i,
KTM Duke 125, Discover 150 and Discover 125 in the market. The company plans to maintain the
capacity of two and three-wheelers at the current level of 5,040,000 numbers per annum during the
year ending 31 March 2012. The total production in 2013-14 was 15,83,935 units for Two wheeler
and three wheeler.


10

Product

Bajaj Avenger

Pulsar

Discover

Platina

Bajaj RE

Ninja

KTM


Competitors

Hero motocrop

Tvs motor

Hmsi

Yamaha motor india

Kinectic motor india



11


Last five years performance


Sale of motor cycle in domestic and exports in numbers




domestic
sales for
industry
domestic
sales
growth
Bajaj auto
domestic
sales
Bajaj
auto
domestic
sales
growth
Bajaj
auto
domestic
market
share
export
for
industry
Bajaj
auto
export of
motor
cycle
Bajaj
auto
share
of
exports

2010

7,341,139 25.80%

1,781,768 39.60% 24.30%

1,103,104

725,023 65.70%

2011

9,019,090 22.90%

2,414,606 35.50% 26.80%

1,480,983

927,437 65.70%

2012

10,096,062 11.90%

2,566,757 6.30% 25.40%

1,847,517

1,267,648 68.60%

2013

10,085,586 -1%

2,463,874 -4% 24.40%

1,866,549

1,293,231 69.30%

2014

10,479,817 3.90%

2,099,230 -14.80% 20%

1,982,755

1,323,173 66.70%


12

Exports in units in 2014

FY2014 Growth

motorcycle

1,323,173 2.30%
three wheelers

260,762 2.70%
total numbers

1,583,935 2.40%


FINANCIALS

2010 2011 2012 2013 2014
total revenue

12,096.65

17,008.05

20,201.26

20,839.12

20,840.10
expenses

9,531.10

13,396.90

16,074.20

16,562.51

16,185.23
Profit before tax

2,565.55

3,611.15

4,147.06

4,276.51

4,654.87
tax expenses

703.45

1,006.29

1,019.66

1,217.16

1,390.10
profit after tax

1,597.94

3,431.68

2,993.40

3,059.45

3,264.77
EPS 55.20

119.40

105.20

108.30

116.80


13

In the year 2010 the total revenue was 12096.65 crore and sale in unit was 2,506,791 and Profit
before tax was 2565.55 crore and Profit after tax was 1597.94 crore.
In 2011 the total revenue went to 17008.05 crore that is 40% growth and Profit after tax was
3431.68 crore the revenue is increasing but the sale in numbers has been decline from the year
2013.The sale in numbers in
2012 was 3,834,405 units and it went down to 3,757,105 units in 2013. In the year 2012 Profit
after tax went down by 12.77% that is 2993.40 crore.
In 2013 again Bajaj auto Profit after tax was increased by 2.21% that is 3059.45 crore.
In 2014 It was very difficult market consequently net sales and operating income was flat
20,840.10. Sales in unit reduce by 8.7%, with Bajaj Auto selling 3.87 million units to 4.24 million
in units in the previous year. Export rose by 2.4% that is 1.58 million in units in 2013.-14 versus
1.55 million units last year. In 2014 Profit before tax (PBT) grew up by 8.85% and Profit after tax
(PAT) went up by 6.71%




Valuation




P/E Market
Cap
(Rs.
Cr)
CMP RoE
(%)
RoC
E (%)
PAT
Margi
n (%)
EBITD
A
Margin
(%)
Lates
t FY
EPS
Last
FY
EPS
Net
Debt/
Equit
y
Net
Worth
(Rs Cr)
P/B
V
off
52
wee
k
Hig
h
Div
Yiel
d
(%)
19.6

66,120.
3 2285 33% 46% 16.3% 23.3% 116.8 108 -0.04

10,167.3 6.50 2%

0.02

14

Discounted Cash Flow

2015 2016 2017 2018 2019


Operating income /EBIT 5167.81 5736.27 6367.26 7067.66 7845.11

Taxes 1550 1720.88 1910.17 2120.3 2353.53
Unlevered net income 3617.81 4015.39 4457.09 4947.36 5491.58




Depreciation & Amortisation 206.68 229.45 245.69 282.7 313.8
Capex -400 -500 -600 -700 -800
Change in working capital -1000 -900 -800 -700 -600
Free cash flow / FCF 2424.49 2844.84 3302.78 3830.06 4405.38
Terminal Value 44053.8
Total cash flow 2424.49 2844.84 3302.78 3830.06 48459.2
1.14 1.28 1.46 1.66 1.89

2126.7456 2222.53 2262.18 2307.27 25639.8

NPV /Enterprise value 34558.498
Debt 57.74
Equity Value 34500.758
No. of Outstanding Share 14.46
Price per Share 2385.9445


By using DCF model we conclude that after five year Equity Value of the company is Rs
34500.76 crore and the Price per share is Rs 2385.95 ( discount rate is 14%, terminal value is 10 )
To find the Equity value of the company we have use DCF model and for that we have taken last
five year financial records of the company and we had find the average growth of the company
that is compounded annual growth rate (CAGR) and on that basis we have calculate the Equity
Value


15

Future Plans
Bajaj Auto ltd said it plans to roll out 5,000 units of its much-delayed four-seater "quadricycle"
codenamed RE-60 from its Aurangabad plant. The company claims that the vehicle's 216-litre
petrol will deliver a mileage of 35 km per litre, with lowest emissions.
Bajaj is planning to launch its new Pulsar 375 motor bike this year in the Indian market to compete
better with both domestic and global rivals in the country.
The company is aiming to launch 2 new Pulsar, and 6 new Discover variants during the next 12
months to increase the competition and regain their No 2 position in the country. The company is
planning to expand its presence both in the Indian market as well as in foreign markets with the 8
new models planned.


















16





Type Public company

Traded as BSE: 500182
NSE: HEROMOTOCO
BSE SENSEX Constituent

Industry Automotive
Predecessor(s) Hero Honda Motors Ltd.
Founded 19-Jan-82
Headquarters New Delhi, India
Area served India, Sri Lanka
Key people Dr. Brijmohan Lall
Munjal (Chairman)
Pawan Munjal (MD & CEO)
Products Motorcycles, Scooters
Employees 5,842
Parent Hero Group
Subsidiaries Erik Buell Racing(49.2%)
Website www.heromotocorp.com

17

Company profile


Hero MotoCorp Limited is the World's single largest two-wheeler motorcycle company. The
company is engaged in the manufacture of two wheelers motorcycles and its parts. The company
has three manufacturing facilities namely Dharuhera, Gurgaon at Haryana and Haridwar at
Uttarakhand. The company is based in New Delhi, India. The company offers a range of bikes
starting from CD Dawn, CD Deluxe, Splendor Plus, Splendor NXG, Passion and Passion Pro. The
125 cubic centimeter segment offers Glamour, Super Splendor and Glamour F1. It also has an
offering called Achiever in 135 cubic centimeter segment. In the 150 cubic centimeter and above
the company offers brands like Hunk, CBZ X-treme, Karizma and the Karizma ZMR. It also offers
a 100 cubic centimeter scooter, Pleasure. Hero MotoCorp Limited was incorporated in the year
1984 with the name Hero Honda Motors Ltd. The company was established as a joint venture
company between Honda Motor Company of Japan and Hero Group. In the year 1983, they signed
a joint collaboration agreement and formed the company. The joint venture between India's Hero
Group and Honda Motor Company, Japan has not only created the world's single largest two
wheeler company but also one of the most successful joint ventures worldwide. In the year 1985,
the company commenced their commercial production at Dharuhera plant in Haryana and
introduced their first motorcycle, CD 100 in the market. In the year 1989, they launched the new
motorcycle model, Sleek in the market and in the year 1991, they introduced new motorcycle
model, CD 100 SS in the market. In the year 1995, the company introduced their extraordinary
product, Splendor in the market. In the year 1997, the company inaugurated their second
manufacturing facility at Gurgaon in Haryana. Also, they introduced new motorcycle model, Street
in the market. In the year 1999, they launched Hero Honda CBZ, the first 150cc motorcycle in the
Indian two wheeler industry. In the year 2001, the company introduced new models, Passion and
Joy in the market. In the next year, they introduced new models, Dawn and Ambition in the market.
In the year 2003, the company launched new motorcycle models namely, CD Dawn, Splendor+
and Passion Plus in the market. Also, they launched Hero Honda Karizma, the industry's first 223cc
motorcycle. In the year 2004, they introduced new models, Ambition 135 and CBZ* in the market.
During the year, they renewed the joint technical agreement with the Honda Motors Company,
Japan. In the year 2005, the company launched Super Splendor, CD Deluxe, Glamour and
Achiever in the market. In the year 2006, the company forayed into scoter segment and launched
100cc gearless scoter, Pleasure in the market. In the year 2007, the company launched Splendor
NXG, CD Deluxe, Passion Plus and Hunk in the market. During the year 2007-08, the company
commissioned their third plant at Haridwar in Uttarakhand with an initial installed capacity of
500,000 units. This plant had lean manufacturing and practices that ensure efficiency. During the
year, the company launched new models (including variants) including Splendor NXG, Hunk,
New Super Splendor, New Passion Plus, Commemorative Splendor+ and a refreshed version of

18

Pleasure. During the year 2008-09, the company increased the installed capacity of Motorised 2
wheelers upto 350CC engine by 1800000 Nos to 5200000 Nos. Also, they launched eight models:
Passion Pro (100 cubic capacity-4 Stroke), CBZ-Extreme (150 cubic capacity - 4 Stroke), Pleasure
New Aesthetics, Splendor NXG (Self Start), CD Deluxe (Self Start), Glamour FI, Glamour (Carb)
and HUNK Special Edition. Also, they launched new motorcycle model, Karizma - ZMR in the
market. During the year 2009-10, the company increased the installed capacity of Motorised 2
wheelers upto 350CC engine by 200000 Nos to 5400000 Nos. The company launched nine new
models during the year. During the year 2010-11, the company launched six new models including
variants of existing models successfully. They refreshed Glamour and Glamour FI. They
introduced the New Hunk, Super Splendor and Splendor Pro. The company launched the new
upgraded versions of CBZ Xtreme and Karizma. Also, they breached the landmark 5 million figure
cumulative sales in a single year. During the year, the Indian Promoter Group of the company,
which comprised of Hero Investments Pvt Ltd (HIPL), Bahadur Chand Investment Pvt Ltd
(BCIPL) and Hero Cycles Limited (Hero Cycles) re-aligned the shareholding in the company,
following a family agreement. As a result, Hero Cycles transferred its shareholding in the company
to HIPL on May 28, 2010. As a result of these transactions, the Indian Promoter Group of the
company now comprises of HIPL and BCIPL owned and controlled entirely by the Munjal Family
headed by Brijmohan Lall Munjal. Also, during the year, the Indian Promoter Group and Honda
Motor Co Ltd, Japan (Honda) entered into a Share Transfer Agreement (the Agreement) on
January 22, 2011. As per the terms of the Agreement, Honda had agreed to transfer its entire
shareholding of 26% in the Company to the Indian Promoter Group, bringing an end to the joint
venture between the two promoter groups of the company. The acquisition was completed on
March 22, 2011 and the shares held by Honda were transferred to the Indian joint venture partner.
In addition to the Agreement, the Indian Promoter Group and Honda also entered into a License
Agreement on January 1, 2011. As per this agreement, Honda has given to the company, the right
and license to manufacture, assemble, sell and distribute certain products and their service parts
under their Intellectual Property Rights. In July 2011, the company changed their name from Hero
Honda Motors Ltd to Hero MotoCorp Ltd. In February 2012, the company entered into a strategic
partnership with Erik Buell Racing (EBR) Of USA for contemporary technology and design inputs
to enable the company to launch high end bikes for the domestic and international markets.


Products
Karizma

CBZ Xtreme


19

Hunk

Achiever

Impulse

Ignitor

Glamour

Splendor

Passion

HF Delux

CD Dawn

Pleasure

Maestro


Competitors
Bajaj auto ltd

Tvs motor

Hmsi

Yamaha motor india

20


Kinectic motor india



Last 5 Years Performance


Hero Moto Corp sales


domestic sale
for industry
domestic
sales
growth
Hero auto
domestic
sales
Hero
auto
domestic
sales
growth
Hero
auto
domestic
market
share
2010

7,341,139 25.80%

4,600,130 23.59% 62.66%

2011

9,019,090 22.90%

5,402,444 17.44% 59.90%

2012

10,096,062 11.90%

6,235,205 15.41% 61.76%

2013

10,085,586 -1%

6,075,583 -2.56% 60.24%

2014

10,479,817 3.90%

6,245,960 2.80% 59.60%

21

FINANCIALS



2010 2011 2012 2013 2014

total revenue 16098.79 19669.9 23943.6 24166.49 25275.47

Expenses 13308.3 17189 21078.89 21637.29 22855.56

Profit before tax 2831.73 2404.76 2864.71 2529.2 28641.1

tax expenses 599.9 476.86 486.54 411.04 758.17

profit after tax 2231.83 1927.9 2378.13 2118.16 2105.93


EPS 111.77 96.54 119.09 106.07 105.61




In the year 2010 total revenue was 16098.79 crore and Prpfit after tax was 2231.83 crore.
In 2012 the total revenue increase by 22.18% and Profit after tax decrease by 13.62% that is from
2231.83 core to 1927.90 crore.

22

In 2012 the revenue increase by 21.73% and Profit after tax has also increase by 23.73% from
1927.9 crore to 2378.13 crore.
In 2013 revenue growth rate was 0.93% and Profit after tax again went down by 10.93% and sales
also went down by 2.56% that is from 6,235,205 units to 6,075,583 units but not only hero sales
went down but also the domestic sale decreased by 1%.
In 2014 sales increase by 2.8% that is from 6075583 units to 6,245,960 units and total revenue
grew up by 4.59% that is from24166.49crore to 25275.47 crore, Profit before tax (PBT) increase
by 13.24% but Profit after tax (PAT) slightly fall down by 0.58% from 2118.16 crore to 2105.93
crore.





Valuation


P/E Market
Cap
(Rs. Cr)
CMP
*
Ro
E
(%)
RoC
E
(%)
PAT
Margi
n (%)
EBIT
DA
Margi
n (%)
Lates
t FY
EPS
Last
FY
EPS
Net
Debt/
Equi
ty
Net
Worth
(Rs Cr)
P/B
V
Off
52
wee
k
Hig
h
Div
Yiel
d
(%)

24.88
52320.1
2
2620.
1
37
% 51% 8% 16%
105.2
9
106.0
7 -0.02 5622.64 9.31 5.59 2%





23

Discounted Cash Flow

2015 2016 2017 2018 2019

Operating income /EBIT 3134.75 3416.88 3724.4 4059.6 4424.5

Taxes 940.43 1025.064 1117.32 1217.88 1327.35
Unlevered net income 2194.325 2391.816 2607.08 2841.72 3097.15


Depreciation &
Amortisation 125.39 136.6752 148.976 162.384 176.98
Capex -200 -250 -350 -400 -450
Change in working capital -300 -200 -100 -50 -25
Free cash flow / FCF 1819.715 2078.4912 2306.056 2554.104 2799.13
Terminal Value 27991.3
Total cash flow 1819.715 2078.4912 2306.056 2554.104 30790.43
1.14 1.28

1.46

1.66

1.89



1,596.2 1,623.8

1,579.5

1,538.6

16,291.2

NPV /Enterprise value

22,629.4
Debt 0
Equity Value

22,629.40
No. of Outstanding Share 10.42
Price per Share

2,171.73


By using DCF model we conclude that after five year Equity Value of the company is Rs 22629.40
crore and the Price per share is Rs 2171.73 ( discount rate is 14%, terminal value is 10 )
To find the Equity value of the company we have use DCF model and for that we have taken last
five year financial records of the company and we had find the average growth of the company that
is compounded annual growth rate (CAGR) and on that basis we have calculate the Equity Value

24

Future Plans

Hero MotoCorp will launch three new scooter models and a variant by March 2016, a move that is
likely to drive up competition in the country's scooter market. While the first model 110 cc DASH
will be rolled out in the first half of the next fiscal, the 125-cc DARE will hit the road in the second
half of FY 15.

Hero MotoCorp now plans its sixth plant in India. The two wheeler major in the country is in the
process of finalizing location of this new plant into which it will pump INR 1,000 crore
investment.
Hero MotoCorp is also keen to commence selling bikes in US from next year. The company
entered 18 global markets in the past one and half years and is sure of their range of motorbikes
being well received in US markets as well. Marketing of their products will be done through Erik
Buell Racing (EBR) in which Hero has a 49.2% stake.
Hero MotoCorp countrys largest two-wheeler maker, plans to enter 50 new markets by 2020 with
a target of 20 manufacturing facilities across the globe and an overall annual turnover of Rs 60,000
crore. Hero MotoCorp had recently forayed into the African continent by launching motorcycles
in Kenya, and has plans to enter more new markets across the globle. Launching some more
additional markets, some in Africa, some in the Caribbean and Central American countries. We
are aiming for 10 per cent of our sales to come from export markets by 2017. By 2020, we will
have annual production of 12 million motorcycles and scooters every year. This will come from
20 assembly lines inside and outside the country









25






Type Public company

Traded as BSE: 532868, NSE: DLF
BSE SENSEX Constituent
Industry Real estate
Founded 1946
Founder(s) Chaudhary Raghvendra Singh
Headquarters New Delhi, India
Key people Kushal Pal Singh (Chairman)
Products Offices
Apartments
Shopping Malls
Hotels
Golf courses
infrastructure
Employees 7,542
Website www.dlf.in


26

Company Profile


DLF Ltd is engaged in the business of colonisation and real estate development. The company
operations span all aspects of real estate development, from the identification and acquisition of
land, to planning, execution, construction and marketing of projects. It is also engaged in the
business of generation of power, provision of maintenance services, hospitality and recreational
activities, life insurance and retail chain outlets. Its internal business includes development
business and rental business. The development business of the Company is involved in the sale of
residential spaces, select commercial offices and commercial complexes. The company has a
unique business model with earnings arising from development and rentals. Its exposure across
businesses, segments and geographies, mitigates any down-cycles in the market. The company has
also forayed into infrastructure, SEZ and hotel businesses. It operates in all aspects of real estate
development, ranging from acquisition of land, to planning, executing, constructing & marketing
of project. The group is also engaged in the business of generation and transmission of power,
provision of maintenance services, hospitality and recreational activities. The business of DLF is
organized on a SBU basis. The Homes SBU caters to 3 segments of the residential market - Super
Luxury, Luxury and Mid-Income. The product offering involves a wide range of products
including condominiums, duplexes, row houses and apartments of varying sizes. DLF Ltd was
incorporated in the year 1963. The company was founded by Chaudhary Raghuvendra Singh. The
company developed some of the first residential colonies in Delhi such as Krishna Nagar in East
Delhi, which was completed in 1949. Following the passage of the Delhi Development Act in
1957, the state assumed control of real estate development activities in Delhi, which resulted in
restrictions on private real estate colony development. They therefore commenced acquiring land
at relatively low cost outside the area controlled by the Delhi Development Authority, particularly
in the district of Gurgaon in the adjacent state of Haryana. This led to their first landmark real
estate development project DLF Qutab Enclave, which has now evolved into DLF City. DLF City
is spread over 3,000 acres in Gurgaon and is an integrated township, which includes residential,
commercial and retail properties in a modern city infrastructure with schools, hospitals, hotels and
shopping malls. It also boasts of the prestigious DLF Golf and Country Club with night golfing
facilities. During the period 1950-1964, the company developed 22 urban colonies. In the year
1985, the company commenced development of the 3,000-acre DLF City in Gurgaon. In the year
1996, the company ventured into group housing projects. In the year 1999, they ventured into
Grade A office spaces in Gurgaon. In the year 2002, the company ventured into organized retail
complexes. In the year 2003, they commenced development of DLF Cybercity in Gurgaon. In the
year 2004, they launched premium residential complexes with luxurious milieu of Golf Links. In
the year 2007, the company formed JVs with Prudential for Life Insurance & AMC. They also
entered into capital markets. In the year 2008, they commenced operations of DLF Emporio,

27

Indias first luxury mall. In September 2008, the joint venture company DLF Pramerica Life
Insurance Company Ltd, commenced operations with a purpose to market and sell life insurance
products in the country. In the year 2009, the company launched Capital Greens, the largest private
sector residential project in Delhi. Also, they exited its asset management JV during the year.
During the year 2009-10, the company approved the integration of Caraf Builders & Constructions
Private Limited (Caraf) (the holding company of inter-alia, DLF Assets Pvt Ltd? DAL), DLF Info
City Developers (Chandigarh) Ltd and DLF Info City Developers (Kolkata) Ltd with DLF Cyber
City Developers Ltd (DCCDL), a 100% subsidiary of DLF. In October 2009, DLF was conferred
Best Global Developer Award, 2009 by Euro money. In November 2009, DLF sold DT Cinemas
and entered into a long term strategic alliance with PVR. In March 2010, Caraf (along with its
subsidiaries) became a wholly-owned arm of Cyber City DLFs subsidiary, thus giving effect to
the integration process. During the year 2010-11, its subsidiary DLF Home Developers Ltd,
acquired additional 50% interest of Delanco Real Estate Pvt Ltd and 50% interest of Design Plus
Architecture Pvt Ltd. In May 2010, DLF launched second phase of Garden City, DLF New Indore.
In May 2011, after the phenomenal response to first phase of its project Garden City, DLF New
Indore, DLF, Indias largest real estate company, announced the launch of the second phase of the
project. In December 2011, the company along with its joint venture partner Hubtown Ltd sold
100% of their respective shareholding in DLF Ackruti Info Park (Pune) Ltd (DLF Ackruti), to an
entity controlled by real estate fund affiliated with The Blackstone Group, BRE/Mauritius
Investments II, after obtaining all necessary approvals.

Products
Offices

Apartments

Shopping Malls

Hotels

Infrastructures

Golf Course


Competitors
Oberoi reality

28


DB reality

Sobha developers

India bull real estate

Omaxe ltd

HDIL


Last 5 years performance

Area Sold
Sales
Value
(m.s.f.) (Rs. Crs)
2010 12.55 7,150

2011 10.2 6,658

2012 13.55 5,278

2013 7.24 3,815

2014 3.74 4070


29

FINANCIALS


2010 2011 2012 2013 2014

total revenue 7,850.90 10,144.44 10,223.85 9,095.74 8,298.04

expenses 5,346.27 8,144.24 8,660.37 8,256.92 8,938.98

Profit before tax 2,504.63 2,000.20 1,547.50 805.87 520.75

tax expenses 702.25 459.41 369.35 125.11 83.63

profit after tax 1,802.38 1,540.79 1,178.15 680.76 604.38


EPS 10.11 9.64 7.06 4.18 3.64


In 2010 the company revenue was Rs 7,850.9 crore as compared to Rs 10,431 crore in FY09, a
decrease of 24.73%. Profit after Tax was 1802.38.
In 2011 the company revenue was 10144.44 crore in FY11 as compared to 7850.9 crore in FY10
an increase of 29.21%. Prot before Tax was Rs 2000.2 crore for the year as compared to
Rs.2504.63 crore for the previous year, representing a decline of 20.14%. Prot after Tax was
1540.79 crore as compared to 1802.38 crore for the previous year, representing a decline of 15%.

30

In 2012 the company revenue was 10223.85 crore in FY12 as compared to 10144.44 crore in FY11
an increase of 0.78%. Prot before Tax was Rs 1547.5 crore for the year as compared to Rs.2000.2
crore for the previous year, representing a decline of 22.63%. Prot after Tax was 1178.15 crore
as compared to 1540.79 crore for the previous year, representing a decline of 24%.
In 2013 the company revenue was 9095.74 crore in FY13 as compared to 10223.85 crore in FY12
an decrease of 11.03%. Prot before Tax was Rs 805.87 crore for the year as compared to Rs
1547.5 crore for the previous year, representing a decline of 47.92%. Prot after Tax was 680.76
crore as compared to 1178.15 crore for the previous year representing a decline of 42%.
In 2014 the company revenue was 8298.04 crore in FY14 as compared to 9095.74 crore in FY13
an decrease of 8.77%. Prot before Tax was Rs 520.75 crore for the year as compared to Rs 805.87
crore for the previous year, representing a decline of 35.38%. Prot after Tax was 604.38 crore as
compared to 680.76 crore for the previous year representing a decline of 11%.




VALUATION




P/E Market
Cap
(Rs Cr)
CMP
*
Ro
E
(%)
RoC
E
(%)
PAT
Margi
n (%)
EBIT
DA
Margi
n (%)
Lates
t FY
EPS
Last
FY
EPS
Net
Debt/
Equit
y
Net
Worth
(Rs Cr)
P/B
V
off
52
wee
k
Hig
h
Div
Yiel
d
(%)

59.0
2
38278.1
7
214.8
5 2% 7% 8% 48% 3.64 4.18 0.48
29194.0
7 1.31
11.5
1 0.93

31

Discounted Cash Flow

2015 2016 2017 2018 2019


Operating income /EBIT 3,192.88 3416.38 3655.52 3911.42 4185.21

Taxes
957.86

1,024.91

1,096.66

1,173.43 1,255.56
Unlevered net income 2,235.02 2,391.47 2,558.86 2,737.99 2,929.65




Depreciation & Amortisation
255.43

170.82

182.78

195.57 209.26
Capex 200 300 400 500 600
Change in working capital 800 700 600 500 400
Free cash flow / FCF 3,490.45 3,562.29 3,741.64 3,933.57 4,138.91
Terminal Value 41389.075
Total cash flow 3,490.45 3,562.29 3,741.64 3,933.57 45,527.98
1.14

1.28

1.46

1.66 1.89

3,061.80 2,783.04 2,562.77 2,369.62 24,088.88

NPV /Enterprise value 34,866.1
Debt 16583.32
Equity Value 18,282.8
No. of Outstanding Share 133.46
Price per Share 136.99067


By using DCF model we conclude that after five year Equity Value of the company is Rs 18282.8
crore and the Price per share is Rs 136.99 ( discount rate is 14%, terminal value is 10 )
To find the Equity value of the company we have use DCF model and for that we have taken last
five year financial records of the company and we had find the average growth of the company that
is compounded annual growth rate (CAGR) and on that basis we have calculate the Equity Value

32

Future Plans

DLF Announces Leasing of 3 million sq. ft. of office space with many marquee MNCs and Indian
companies. Out of the 3 million sq. ft. leased out, a record 1.7 million sq. ft. has been leased out
in Gurgaon alone and 1.3 million sq.ft is of spaces that were re-leased. This has been achieved
despite intense competition in the office leasing space and a subdued economic environment.

Big Bazaar has signed about 50,000 sq.ft in the DLF Ltd's upcoming Mall of India in Noida as the
anchor tenant while HyperCity has taken space in the upcoming Unitech's Garden Galleria Mall
located bang opposite across the road.

New projects Size (msf) ** Sold till
- Q4 (msf)
SkyCourt 1.25 1.16
Ultima 2.17 0.63
Regal Garden 1.03 0.85
Primus 1.24 1.22
Crest 2.61 0.84
Camillias 3.55 0.45
Bhubaneshwar 0.55 0.36







33








Type Public


Traded as BSE: 533273
NSE: OBEROIRLTY

Industry Real estate

Founded 1980

Headquarters Mumbai, India

Key people Vikas Oberoi
Managing director

Products Offices
Apartments
Shopping Malls
Hotels
Golf courses

Website www.oberoirealty.com



34

Company Profile


Oberoi Realty Ltd is a Mumbai based real estate development company. The company's primary
focus is to develop residential properties. They develop residential, office space, retail, hospitality
and social infrastructure projects in mixed-use and single-segment developments. The company
has a diversified portfolio of Completed, Ongoing and Planned projects in mixed-use or single-
segment developments, which cover key segments of the real estate market, namely: residential,
office space, retail, hospitality and social infrastructure. The company has an established brand
reputation, and a track record of developing innovative projects through their emphasis on
contemporary architecture, strong project execution and quality construction in the real estate
industry. Oberoi Realty Ltd was incorporated on May 8, 1998 as a private limited company with
the name Kingston Properties Pvt Ltd. In February 20, 2002, the company acquired the land at
Goregaon, Mumbai from Ciba Specialty Chemicals (India) Ltd. Also, they acquired the land at
Goregaon, Mumbai from Novartis India Ltd. In April 8, 2003, Oberoi Mall Pvt Ltd became a
wholly owned subsidiary of the company. In February 10, 2005, the company acquired the
development rights at Andheri (West), Mumbai from Excel Industries Ltd and Shroff Family
Charitable Trust for the development of property. In March 31, 2005, the company entered into
Master Asset Purchase Agreement with Tulip Hospitality Services Ltd, Tulip Hotels Pvt Ltd, Dr.
Ajit Kerkar and SRPL for acquisition of Hotel Tulip Star at Juhu, Mumbai from Tulip Hospitality
Services Ltd. In September 26, 2005, the company acquired a land at Mulund, Mumbai from
GlaxoSmithKline Pharmaceuticals Ltd. In October 18, 2005, they acquired the land at Andheri
(East), Mumbai from Madhu Fantasy Land Pvt Ltd and Avinash Bhosale. In December 21, 2006,
Oberoi Constructions Pvt Ltd became a wholly owned subsidiary of the company. In January 14,
2007, SSIII, a company owned by a real estate fund advised by US registered investment advisers
which are wholly-owned subsidiaries of Morgan Stanley Inc, invested Rs 6,750 million in the
company. SSIII subscribed to 279,777 equity shares and 783 preference shares for Rs 5,967 million
and Rs 783 million respectively in the company. In January 2, 2008, the company entered into
Hotel Operating Services Agreement with Starwood Asia Pacific Hotels & Resort Pvt Ltd for
operating The Western Mumbai - Garden City hotel at Goregaon (East), Mumbai. In September
23, 2009, the company entered into a joint venture agreement with Skylark Build and Shree Vrunda
Enterprises for the development of the free-sale component under slum rehabilitation scheme at
Annie Besant Road, Worli, Mumbai. In October 2009, the name of the company was changed from
Kingston Properties Pvt Ltd to Oberoi Realty Pvt Ltd. In December 2009, the company was
converted in to a public limited company and the name was changed to Oberoi Realty Ltd. As of
June 30, 2010, the company completed 12 projects covering approximately 2,875,882 square feet
of Saleable Area. They are having 13 ongoing and 11 planned projects, which they expect to
provide a total Saleable Area of approximately 20,254,814 square feet. The company is having

35

five ongoing and four planned residential projects, which they expect to provide a total Saleable
Area of approximately 12,337,001 square feet. They are having five ongoing and two planned
office space projects, which they expect to provide a total Saleable Area of approximately
4,033,802 square feet. The company is having one ongoing and one planned retail project, which
they expect to provide a total Saleable Area of approximately 401,034 square feet. They are having
one ongoing and one planned hospitality project, which they expect to provide a total Saleable
Area of approximately 1,505,067 square feet. They are also having one ongoing and three planned
social infrastructure projects, which we expect to provide a total Saleable Area of approximately
1,977,911 square feet. The company is in the process of acquiring a property located in Benaulim,
Salcete, South Goa which includes a hotel, 'The Beach' and measures approximately 8.90 acres.
The aggregate consideration for the property is Rs 614 million. They propose to acquire land or
land development rights primarily in the MMR and / or Pune.


Products
Offices

Apartments

Shopping Malls

Hotels

Golf courses


Competitors
DLF

DB reality

Sobha developers


36

India bull real estate

Omaxe ltd

HDIL



FINANCIALS


2010 2011 2012 2013 2014

total revenue 805.50 1,058.78 974.78 1147.52 798.45

Expenses 325.52 442.84 368.44 464.39 391.13

Profit before tax 480.80 615.47 605.92 683.06 464.38

tax expenses 482.19 151.81 151.32 179.94 153.32

profit after tax 458.18 517.18 462.87 504.79 311.06

EPS 15.63 16.88 14.1 15.38 9.48

In the year 2010 total revenue was 805.5 crore and Profit after tax was 458.18 crore.

37

During the year 2011 the total income of the company increased to Rs.1058.78 crore as compared
to Rs.805.5 crore for the previous year, representing an increase of 31.44%. Prot before Tax
stood at Rs.615.47 crore for the year as compared to Rs.480.8 crore for the previous year
representing an increase of 28%. Prot after Tax stood at Rs.517.18 crore for the financial year
2010-11 as compared to Rs.458.18 crore for the financial year 2009-10 representing an increase
of 12.88%.
During the year 2012 the total revenue stood at 974.78 crore as compared to Rs.1058.78 crore for
the previous year, representing a decline of 7.93%. Prot before Tax stood at Rs 605.92 crore for
the year as compared to Rs.615.47 crore for the previous year, representing a marginal decline of
1.55%. Prot after Tax stood to 462.87 crore as compared to 517.18 crore for the previous year,
representing a decline of 10.50%.
During the year 2013 the total revenue stood at 1147.52 crore as compared to 1058.78 crore for
the previous year, representing an increase of 17.72%. Profit before tax stood at 683.06 crore for
the year as compared to 605.92 crore for the previous year, representing an increase of 12.73%.
Profit after tax stood at 504.79 crore as compared to 462.87 crore for the previous year,
representing an increase of 9.06%.
In the year 2014 the total revenue was 798.45 crore as compared 1147.52 crore for the previous
year, representing a decline of 30.42%. Prot before Tax stood at Rs 464.38 crore for the year as
compared to Rs.683.06 crore for the previous year, representing a decline of 32.01%. Prot after
Tax stood to 311.06 crore as compared to 504.49 crore for the previous year, representing a decline
of 38.38%.


Valuation

P/E Market
Cap
(Rs. Cr)
CM
P*
Ro
E
(%)
RoC
E
(%)
PAT
Margi
n (%)
EBIT
DA
Margi
n (%)
Lates
t FY
EPS
Last
FY
EPS
Net
Debt/
Equit
y
Net
Worth
(Rs Cr)
P/B
V
off
52
wee
k
Hig
h
Div
Yiel
d
(%)

27.3
8 8520.94 259.6 7% 10% 40% 63% 9.48
15.3
8 -0.10 4396.39

1.94

5.77

0.77

38

Discounted Cash Flow

2015 2016 2017 2018 2019

Operating income /EBIT 506.52 552.1 601.78 655.95 714.98

Taxes 151.956 165.63 180.534 196.785 214.494
Unlevered net income 354.56 386.47 421.25 459.17 500.49




Depreciation &
Amortisation 20.261 22.084 24.071 26.238 28.599
Capex -25 -20 -15 -10 -7
Change in working capital -200 -180 -140 -110 -75
Free cash flow / FCF 149.825 208.554 290.317 365.403 447.085
Terminal Value 4470.852
Total cash flow 149.825 208.554 290.317 365.403 4917.937
1.14

1.28

1.46

1.66

1.89

131.43

162.93

198.85

220.12

2,602.08

NPV /Enterprise value 3,315.41
Debt 76.06
Equity Value 3,239.35
No. of Outstanding Share 24.62
Price per Share 131.57


By using DCF model we conclude that after five year Equity Value of the company is Rs 3239.35
crore and the Price per share is Rs 131.57 ( discount rate is 14%, terminal value is 10 )
To find the Equity value of the company we have use DCF model and for that we have taken last
five year financial records of the company and we had find the average growth of the company that
is compounded annual growth rate (CAGR) and on that basis we have calculate the Equity Value


39

Future Plans

The Ritz-Carlton as its international hospitality partner for India's first hotel-cum-serviced
residences project in Worli, Mumbai. Developed by Oasis Realty (a joint venture between Sahana
and Oberoi Realty), the 238-rooms luxury hotel will get operational in 2016-17 and will be branded
and operated by The Ritz-Carlton (a wholly-owned subsidiary of global hotel major Marriott
International Inc). The hotel project will involve an investment of Rs 750 crore that will be funded
through sales of residential apartments.













40

CONCLUSIONS
The shares of Hero motocorp, DLF, and Oberoi Reality are more volatile, and are at high risk,
but may yield higher returns. All these shares are overvalued. So, in future their prices are likely
to come down. Whereas, the shares of Bajaj auto are less volatile, are at low risk, and may yield
low returns. Its shares are found to be undervalued. So, in future, their prices are likely to go up.
This DCF method will not give the real picture of the Equity value of the company it has been
conclude on analysis of the last five year financials record of the company.
Once you decide to go with one or another of these approaches, you have further choices to make
whether to use equity or firm valuation in the context of discounted cash flow valuation, which
multiple you should use to value firms or equity and what type of option is embedded in a firm.















41

BIBLIOGRAPHY


www.bseindia.com
www.nseindia.com
www.moneycontrol.com
www.equitymaster.com
www.iifl.com
www.investopedia.com
www.bajajauto.com
www.heromotocorp.com
www.dlf.com
www.oberoireality.com











42