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We have projected FCFE and FCFF for Punj Lloyd using the financial statements. We have estimated the
growth rate for the firm using the formula;
`
`
`
Where,
`
!
"#!
For calculating the growth rate we have used the arithmetic averages of the various values for the last
four years.
For projecting both the FCFF and FCFE, we have made the following assumptions:
i rowth Rate has bee linked to the Reinvestment Rate till 2018, after that the growth rate has
been assumed to be 4% considering the growth of the Indian economy to be 4% afterwards
i For calculating the Reinvestment ratio the average values of all the parameters over the last
four years have been used
i -he net sales have been forecasted to grow at the calculated growth rate to take care of the
accounting manipulations
i CAPEX, change in NWC, Depreciation, New dwbt issued and debt repaid have been forecasted
linking them to the net revenue, the ratios which they had in 2010 have been maintained for
future years
i CAPEX has been assumed to be equal to depreciation from the year 2012
i -he terminal value has been assumed to be the value of the firm in 2018
xRs in Crs)
V $
%
&
'
()*
+"
'
*(*
+"
,-**`"
!4'`5
&67
,-*+`"
,-*.
`"
,-*/
`"
,-*0
`"
,-*1`"
,-*2
`"
,-*3
`"
,-*)`
"
,-+(`
"
6,85
2
0
7,11
7
0
8,576
)820)
**8*(/
*+81.0
*/8.23
*18.1(
*381*1
+*8*3.
++8(.(
++8)**
18)0
*
280.
2
38021
)820)
**8*(/
*+81.0
*/8.23
*18.1(
*381*1
+*8*3.
++8(.(
++8)**
13.8%
13.8%
13.8%
13.8%
13.8%
13.8%
13.8%
13.8%
4.0%
4.0%
Raw Materials
2377
3259
3708
4220
4801
5463
6217
7074
8049
8371
8706
138.
42
0.02
3
324
9
125.
69
0.01
9
240.433
4574
0.032
273.585
4725
0.032
311.30
8632
0.032
354.23
3226
0.032
403.07
645
0.032
458.65
4391
0.032
521.89
566
0.032
593.85
691
0.032
617.61
119
0.032
642.31
564
0.032
Salaries,Wages &
Bonus
D
Other
Manufacturing
Expenses
D
Selling
and
Administration
Expenses
D
Miscellaneous
Expenses
D
Less:
Preoperative
Expenses
Capitalised
Operating
expensebefore
depreciation
D
570
698
466
530
603
686
781
888
1011
1150
1196
1244
9.37
%
10.6
4%
6.10%
6.10%
6.10%
6.10%
6.10%
6.10%
6.10%
6.10%
6.10%
6.10%
1798
146
1
1458
1659
1888
2148
2444
2781
3165
3601
3745
3895
29.5
4%
22.2
7%
19.10%
19.10%
19.10%
19.10%
19.10
%
19.10%
19.10
%
19.10
%
19.10
%
19.10
%
1074
.58
919.
15
878
999
1137
1293
1472
1674
1905
2168
2255
2345
17.6
6%
14.0
1%
11.50%
11.50%
11.50%
11.50%
11.50
%
11.50%
11.50
%
11.50
%
11.50
%
11.50
%
128.
15
2.11
%
109.
81
1.67
%
99
113
128
146
166
189
215
245
255
265
1.30%
1.30%
1.30%
1.30%
1.30%
1.30%
1.30%
1.30%
1.30%
1.30%
6086
656
3
7633
8685
9883
11245
12796
14560
16568
18853
19607
20391
0.89
0.92
0.89
0.89
0.89
0.89
0.89
0.89
0.89
0.89
0.89
0.89
119
133
183
208
237
270
307
349
398
452
471
489
6,20
6
745
6,69
6
841
7,816
8,894
10,120
11,515
13,103
14,910
16,966
19,305
20,077
20,880
760
865
984
1,120
1,274
1,450
1,650
1,878
1,953
2,031
Interest
251
429
515
515
515
515
515
515
515
515
515
515
PB-
495
413
246
350
470
605
760
936
1,136
1,363
1,438
1,516
Excise Duty
7 6!
Sales growth
`9V`!7:`5
Depreciation
34%
34%
34%
34%
34%
34%
34%
34%
34%
34%
34%
34%
V
327
272
162
231
310
400
502
617
749
900
949
1001
c
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Operating Income=
841
760
865
984
1,120
1,274
1,450
1,650
1,878
1,953
2,031
Operating
Incomex1-tax rate)=
555.3042
501.7
276
570.9
08
649.627
3274
739.2
008
841.1
25
957.1
03
1089.
073
1239.2
3862
1288.
808
1340.
36
CAPEX=
225.93
Change in NWC=
-117.4
Depreciation=
132.68
FCFF=
579.4542
408.2
836
42.11
381
269.8
92
558.6
953
307.1
059
42.11
381
307.1
059
799.0
112
349.4
51
42.11
381
349.4
51
914.9
892
397.6
348
42.11
381
397.6
348
1046.
959
452.46
2411
42.113
8073
452.46
2411
1197.1
2481
470.5
609
42.11
381
470.5
609
1246.
694
489.3
833
42.11
381
489.3
833
1298.
247
(;*0).1+/+3
V
=6 $
,,,
V
=6 $
$ $
6
-
02);/0/+
314.8
234
42.11
381
208.4
461
422.4
169
(;**+
(/1
./*;0
3+0
358.520
9266
42.1138
073
237.187
5293
486.180
1227
276.4
519
42.11
381
183.1
874
366.3
493
<
.+);/
.2+
.0.;0.+
(.32
.10;.
+32
/1);3
+2)
/3.;3
*/3
/)2;3
*2+
0**;31
13*2
7 6
$
+*+.1;22*12
=6
$
*2.(/;**(.*
13.78843669
13
12
11
10
(;**+(/1*/
21236.77167
0.12
19402.12583
0.13
17534.72535
0.14
16021.64799
0.15
14767.87658
0.16
13709.92258
0.1
24895.04751
0.09
29214.59508
0.08
35622.83472
0.07
46198.4751
0.06
67175.95663
0.05
129723.6998
21236
.77
19402
.13
17534
.73
16021
.65
14767
.88
13709
.92
24895
.05
29214
.6
35622
.83
46198
.48
67175
.96
12972
3.7
21236
.77
19402
.13
17534
.73
16021
.65
14767
.88
13709
.92
24895
.05
29214
.6
35622
.83
46198
.48
67175
.96
12972
3.7
21236.7
7167
19402.1
2583
17534.7
2535
16021.6
4799
14767.8
7658
13709.9
2258
24895.0
4751
29214.5
9508
35622.8
3472
46198.4
751
67175.9
5663
129723.
6998
21236
.77
19402
.13
17534
.73
16021
.65
14767
.88
13709
.92
24895
.05
29214
.6
35622
.83
46198
.48
67175
.96
12972
3.7
21236
.77
19402
.13
17534
.73
16021
.65
14767
.88
13709
.92
24895
.05
29214
.6
35622
.83
46198
.48
67175
.96
12972
3.7
21236
.77
19402
.13
17534
.73
16021
.65
14767
.88
13709
.92
24895
.05
29214
.6
35622
.83
46198
.48
67175
.96
12972
3.7
21236
.77
19402
.13
17534
.73
16021
.65
14767
.88
13709
.92
24895
.05
29214
.6
35622
.83
46198
.48
67175
.96
12972
3.7
21236.
7717
19402.
1258
17534.
7254
16021.
648
14767.
8766
13709.
9226
24895.
0475
29214.
5951
35622.
8347
46198.
4751
67175.
9566
129723
.7
21236
.77
19402
.13
17534
.73
16021
.65
14767
.88
13709
.92
24895
.05
29214
.6
35622
.83
46198
.48
67175
.96
12972
3.7
21236
.77
19402
.13
17534
.73
16021
.65
14767
.88
13709
.92
24895
.05
29214
.6
35622
.83
46198
.48
67175
.96
12972
3.7
c
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Net Income=
272
162
231
310
400
502
617
749
900
949
1001
CAPEX=
225.93
Change in
NWC=
Depreciation=
-117.40
276.45
19
42.113
81
183
314.823
4
42.1138
1
208
358.5209
266
42.11380
73
237
408.28
36
42.113
81
270
307.10
59
42.113
81
307
349.45
1
42.113
81
349
397.63
48
42.113
81
398
452.462
411
42.1138
073
452
470.56
09
42.113
81
471
489.38
33
42.113
81
489
New Debt
Issued=
Debt Repaid=
565.15
515
515
515
515
515
515
515
515
515
429
786.09
85
515
515
515
515
515
515
515
515
515
515
,,`
/..;((
+)3;+1
3+;3(
*/1;01
+*);(3
/0);.)
020;.2
2(2;./
302;0*
)(2;(3
)03;1.
(;*0).1+/+3
Present Value
of FCFE=
V
=6
$$
7
6-
432.9954
<
257.26
16
(;**+(/
1
61.6014
3
94.05173
222
121.26
13
219.32
56
236.93
73
251.24
34
262.714
636
7 66 $
`
$
`
V $&
>
)0.1;2/03./
133
20));.0./*+
..+()02/0
+32;*1301//
*.;23
3//
+32;*
131
.(3;0
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+0/
/(3;/
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02.
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030
+30;3
+3/
+11;/
.*+
*.
*+
**
*(
)
3
2
0
/
.
+
+12;*
3(3
+31;)
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2.
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+10;)
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+/2;)
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203
+3.;1+)2
*/
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).3
.//;2+)(
3*2
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)(1
///;/1)2
1(2
+/+;(/21
..+
++0;3(21
*(.
++(;0
310
+.1;1
3))
+02;(
+
+3*;1
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.*+;(
.2+
.0(;2
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/(*;3
/12
+*);0
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+(/;)
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03)
+*.;2
)..
+.+;(
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+0/;(
1*
+3*;.
.+*
.*1;(
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./2
*)3;/
0..
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321
+(3;0
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++3;*
)..
+0+;0
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+3.;/
003
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)33
*23;1
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+++
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)0+
*2+;*
((3
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(*+
+(.;)
++)
++0;/
212
+0+;)
(0/
+3);*
()1
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2)2
*/);1
++)
*/.;*+)
+/2
*0.;*1/
*/*
*10;3.0
*/0
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(/3
+((;*./
3)
++/;+21
(13
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1).
*..;.33
/(/
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+00
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3*0
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222
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201
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23.
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321
3.;+0
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32.
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*(.;2
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10.
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23;(+
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20;(.
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32;/*
01*
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11;.+
*2)
(;*3
(;*)
(;+
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(;++
(;+.
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+./;)
123
+++;(
**
+*(;/
3.+
+((;*
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//0
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(01
+.+;/
.03
+*3;3
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+(1;3
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122
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)+/
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2/+
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/.+
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13.
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1+1
*00;//1*
3)1
*)+;+
)2.
*3*;+
+3)
*2*;/
032
*1+;2
100
*0/;)
210
*/2;)
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*2/;(
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3(3
*00;.
+./
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01+
*..;+
()1
*+1;)
302
*+*;.
20*
**1;+
3)2
*/(;1
1*0
*.+;3
+/.
*+0;)
(2
**);2
0+3
**/;+
.)+
*();+
1)*
*(/;2
1//
*+0;0(0
0*1
**3;1*+
*+
**+;0+3
/(*
*(2;**1
.*3
*(+;+13
(00
)2;3)3*
(2.
).;).22
/+3
)2;)1
+*1
)+;22
2++
33;+(
+)
3/;*.
0
3(;/)
+*+
22;+(
)2.
2/;+.
0)1
30;/2
2)
3*;(1
.)3
22;*2
*(1
2.;2*
(*0
2(;1*
*20
12;3+
(22
10;+)
+)*
2.;2)
()1
2(;()
103
11;3.
)2*
1.;)/
00+
1*;.0
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0);(+
.1
01;)*
+.+
1+;30
3++
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/20
02;*2
*(3
0/;3(
00/
0+;1)
((.
0(;23
1.)
/);(1
.)1
c
+?
*.?
*/?
*0?
*1?
(?
3.70
3.07
2.62
2.29
2.03
*;2/
$`
-he peer group of Punj Lloyd includes:
*+?
*.?
*/?
*0?
*1?
3(?
4.38
3.50
2.91
2.49
2.17
)(?
5.53
4.15
3.32
2.76
2.37
& 6
.;(?
.;0?
/;(?
2.48
2.57
2.67
2.21
2.28
2.35
1.99
2.04
2.10
1.81
1.85
1.90
1.66
1.69
1.73
((?
7.82
5.22
3.92
3.14
2.62
/;0?
2.78
2.44
2.17
1.95
1.77
0;(?
2.91
2.53
2.24
2.00
1.81
(?
14.68
7.37
4.93
3.71
2.98
i ammon India
i ind Constructions xCC)
i IVRCL
i NCC
-he values for each firm were calculated as below:
+
B ;
;
' (
=
)
(
AC 6*
!"
%
! $
!&$ #
#$
%
# $
%
""$
%
# #
&!$& $$
&&" &
"& &
" &"
%
$ &
%
& #
%
&$ $
"#
&$& &
#
!"!# $#
#
## &
&6
!$ "&
&" $
! #
%
! "
%
" "
A+) +
%
# !
%
! #
$ "
$ &
&"
&$
!! "
!$ ##
#"
%
"$ "
%
$!
! $"
%
# &
"
$!
"
%
&
%
$
Calculation of ratios
A + &
ammon India
ind. Construct.
IVRCL
NCC
Average
D
0.016
0.007
0.011
0.014
0.012
V#`
ammon India
ind. Construct.
IVRCL
NCC
Average
D
9.5
27.7
10.5
12
14.925
=6&
0(;2(
=6&
/2;+2
V#@=
ammon India
ind. Construct.
IVRCL
NCC
Average
D
0.630
1.200
0.830
0.790
0.863
=6&
)+;//
`=#`@!7<
ammon India
ind. Construct.
IVRCL
NCC
Average
`=#`@!7
ammon India
ind. Construct.
IVRCL
NCC
Average
+(*(
4.99
8.77
5.22
5.32
6.08
`=
=6&
+(*(
5.85
11.53
5.75
5.83
7.24
0)*);..
23;++
`=
=6&
1()+;*2
3.;/+
`=#&<%`&
ammon India
ind. Construct.
IVRCL
NCC
Average
+(*(
0.53
1.15
0.57
0.67
0.73
`=
=6&
0*32;)1
01;*)
DCF Valuation Method
i DDM Valuation
i FCFE Valuation
Comparative Multiples Method
i P/S
i P/BV
i P/E
i EV/ EBI-DA
i EV/ EBIi EV/S
c
<
6 $6
,6
-he market price at close to Rs. 68 is way below our valuation; this can be attributed to a very high risk
perception of the company by the investors. But still the difference is very high which means the market
does not perceive the company to grow at the rate we have calculated using their reinvestment ratio.
Also since all the competitors of Punj are valued at almost the same relative value, we can say that the
market is a bit inefficient.
<
6 $6
66
All the multiples suggest prices very close to the market value, which is in-line with the implicit
assumption of the methods that the markets are efficient.
<
6 $6
'
-he DD method gives us a very low price because of the very small amount of dividends paid by the
company, which is natural because the company is growing very fast and is operating in a very volatile
environment, which obligates the company to maintain a low dividend level.
c
! " #cc
233
4
. 5
.
0
/
16 .
1.
4611.
71.
3503.0000
12<4.5600
2514.7000
1613.3200
1530.1800
3577.0700
1<44.<000
1517.1800
1853.2600
2245.6600
0.<7<3
0.6656
1.6575
0.8705
0.6814
*ABCDE
0.3400
-AHBED
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0.00461834
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12.2216561
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