Valuation:

We have used discounted cash flow (DCF) methodology to value the company. The current market price of LUCKY cement is 75.5 per share approx as on dec 28 2011. We have calculated WACC of 14.87%. in WACC computation ,the CAPM based calculation of cost of equity (RE) of 19.94%(Risk free rate of 12.5%, Risk premium of 6% and beta of 1.24) we take beta from Bloomberg and terminal growth rate from past industry trend while cost of debt is 6.76% as per financial statement.

Distribution of capital structure:

shareholder equity 27,772,829 Debt 10,696,789 total equity 41,209,855

Data for computation:

Following data is taken from the financial statement of Lucky Cement fiscal year 2011 and from the related financial websites and KSE 100 index. The beta of the Lucky cement is taken from Bloomberg while the market return is taken from the history of KSE and use risk free rate 12.5%.

beta rf rm

1.24 12.5% 29%

CAPM

33%

Calculation for WACC:

Lucky Cement 2011 41,209,855 10,696,789 27,772,829

Total Capital Total debt Share holders equity Weight of Equity

0.67 Weight of debt 0.26 cost of equity cost of debt 0.07 Tax Rate wacc 35% 0.23 0.33

The above given detailed is taken from financial statement of lucky cement and on the bases of these we calculated weighted average cost of capital of 23%.

Valuation of FCFF:

Valuation of FCFF Total Capital Present value of FCFF @ 23% Present value of FCFF 2011 2012 2013 2014 41,209,855 44671482.82 48423887 52491493.92 36318278.72 32007329 28208084.68 121,393,500 2015 56900779.41 24859807.96

PKR

Discounted cash flow valuation: We have used discounted cash flow(DCF) methodology to value the company. Our targeted price of the company for December 2011 is PAK Rs 108.8 per share. we have calculated WACC of 23%. In which we take CAPM of 33% and beta of the lucky cement is taken from Bloomberg financial web site.

2011 Sale 26,017,519 Net Income 3,970,400 Capx 1,905,143 Working Capital 1,691,652 Depreciation 1,570,545 0.70 [Capex Dep + Inv(WC)] 21,060 FCFE=Net Income -0.70 [Capex Dep + Inv(WC)] 3,949,340 Present value of FCFE @ 23% Stock value (Terminal) Present value @ 23% Present value of FCFE Total Value of firm No. of outstanding Shares Price per Share 216145382 153122838 10089182 163212020 1,500,000 108.808

2012 33,562,599 5034389.85 3356259.9 6712519.8 1678130 4698763.86 335626 307914

2013 43,295,752 6494362.8 4329575.2 8659150.4 2164788 6061405 432958 364412

2014 558,515,200 83777280 55851520 111703040 27925760 78192128 5585152 4312762

2015 720,484,608 108072691.2 72048460.8 144096921.6 36024230 100867845 7204846 5104095