Current FCF Margin 8.

20%
Expected FCF Margin (2025) 10%
Linear Increase each year 0.0018
Revenue Growth Rate (Till 2025) 20%
Growth (2026-2035) 10%
Expected FCF Margin (2035) 7%
Linear Increase each year 0.003

Cost of Equity (LinkedIn) 9.20%

Cost of Equity (Microsoft) 10.5%
Tax Rate 21%
Yield 2.68%
After Tax Cost of Debt 2.12%
Share Price on 10-06-2016 93.902
Value of Equity 12552
Value of Debt 1126.5
Weight of Equity 0.9176
Weight of Debt 0.0824

WACC 8.62%
(US$ mn) FY08 FY09 FY10 FY11 FY12 FY13
Revenue 78.773 120.127 243.099 522.189 972.309 1528.545
Cost of Goods and Services 18.589 26200 44.826 81.448 125.521 202.908
Selling, General and Administration 29.962 46.327 94.042 239.574 452.898 747.666
Depreciation and Amortization 7.365 11.854 19.551 43.1 79.849 134.516
R&D 0 39.444 65.104 132.222 257.179 395.643
Other opex 29.366 0 0 0 0 0
Stock based Compensation 4.605 6.152 8.703 29.768 50.49 150.16
Net Profit (Loss) -11.114 -26183.65 10.873 -3.923 6.372 -102.348

Total Current Assets 99.211 121.158 172.206 725.927 1018.797 2755.47

Cash and Cash equivalents 80.495 89.979 92.951 577.504 749.549 2329.301
Total Non Current Assets 22.851 27.401 65.98 147.77 363.533 597.323
Additions to PPE & Intangibles 23.18 15.352 53.07 104.523 193.127 296.249
Total Current Liabilities 27.725 49.273 105.472 226.659 415.379 641.991
Short term Borrowings 0 0 0 0 0 0
Long term Borrowings 0.395 0.528 1.861 0 0 0
Total Equity 93.211 97.063 124.23 624.979 908.424 2634.394
Number of Shares (million) 41.913101 41.745728 43.308742 101.48039 109.67958 120.35175

FCF Margin
FCF
FY14 FY15
2218.767 2990.911
293.797 418.858
1115.705 1526.863
236.946 420.472
536.184 775.66
0 0
219.886 498.035
-183.751 -648.977

4122.1 3935.089
3443.309 3119.382
1305.157 3076.11
795.502 389.771
882.785 1188.084
0 0
1081.553 1126.534
3330.819 4495.453
125.04195 132.0489

8.20%
245.2547
 0 1 2 3 4 5 6
Particulars 2015 2016 2017 2018 2019 2020 2021 2022
Revenue 2990.911 3589.0932 4306.912 5168.294 6201.953 7442.344 8930.812 10716.97
FCF Margin 8.20% 8.38% 8.56% 8.74% 8.92% 9.10% 9.28% 9.46%
FCF 245.2547 300.76601 368.6717 451.7089 553.2142 677.2533 828.7794 1013.826
Synergies 150 150 150 150 150 150 150 150
Total 395.2547 450.76601 518.6717 601.7089 703.2142 827.2533 978.7794 1163.826

PVF 1 0.920669 0.847631 0.780388 0.718479 0.661481 0.609005

PV 450.76601 477.5248 510.0272 548.7797 594.3638 647.4438 708.7755
Sum 14847.8588
Terminal Value 7939.14329

EV 22787.0021
Debt 1126.534
Cash 3119.382
Equity Value 24779.8501
Value per Share 185.375978
Overvalued by 5.731%
 7 8 9 10 11 12 13 14 15 16
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
12860.37 15432.44 18518.93 20370.83 22407.91 24648.7 27113.57 29824.93 32807.42 36088.16
9.64% 9.82% 10.00% 9.70% 9.40% 9.10% 8.80% 8.50% 8.20% 7.90%
1239.74 1515.466 1851.893 1975.97 2106.343 2243.032 2385.994 2535.119 2690.208 2850.965
150 150 150 150 150 150 150 150 150 150
1389.74 1665.466 2001.893 2125.97 2256.343 2393.032 2535.994 2685.119 2840.208 3000.965

0.560692 0.516211 0.47526 0.437557 0.402845 0.370887 0.341464 0.314375 0.289436 0.266474
779.2156 859.7326 951.4194 930.2329 908.9567 887.544 865.9507 844.1349 822.0572 799.6799
 17 18 19
2033 2034 2035
39696.98 43666.67 48033.34
7.60% 7.30% 7.00%
3016.97 3187.667 3362.334
150 150 150
3166.97 3337.667 3512.334

0.245335 0.225872 0.207953

776.9673 753.8853 730.4012
Deal Value per share 196
Total Value 26200
Number of Shares (millions) 133.6734694

Debt Financing 20,000

Weighted average interest rate 2.68%
Remaining Debt 6,200
Weighted average interest rate []

Given Multiples
Price to Sales 8.2
Price to FCF 100

Implied Values
Sales 3195.121951
FCF 262

Estimated Equity Value 24779.85009

Actual Multiples
Price to Sales 7.7555256
Price to FCF 94.57958048