Copy of Mindtree Model Reference

7/29/2019 Copy of Mindtree Model Reference

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Reference Model

MindtreePrepared By: Neerav Koli, Distance Learning , Mumb

Mumbai

IMS Proschool Pvt Ltd,

Maharashtra High School Complex,

Principal N.M Kale Marg, Off Gokhale Rd,

Dadar (W), Mumbai 400028

+91 9372895050

http://proschoolonline.com

Email ID : [email protected]

Tel. No. : 022-65285393/94
http://proschoolonline.com/http://proschoolonline.com/


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i


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Directions

Mindtree is one of the young IT company of the country which has seen commendable success withidemand in the investment market. This gave us the opportunity to guide our student to come out witat IMS Proschool to hone their financial modeling skills.

This model is being developed by a financial modeling student at IMS Proschool. This is provided asthe objective of the reference model, the formulas and linkages of the model are kept intact.

IMS Proschool provides certificate programs in Financial Modeling. The program grooms the candidanalysis and modeling skills. The program aims to impart the necessary skills required to perform thwith the practical skill sets required to perform financial analysis, modeling and valuation through Ex

please contact the address furnished below. You can also email us at the below mentioned email-id.


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IMS Proschool Pvt Ltd,

Maharashtra High School Complex,

Principal N.M Kale Marg, Off Gokhale Rd,

Dadar (W), Mumbai 400028

+91 9372895050

n a few span of time. A financial model of such a company is in greata financial model on the company. These exercises help the student

reference model and is for information purpose only. Keeping in view

tes for entry level jobs in the finance sector which require financialrole of a Financial Research Analyst. The program equips students

el.For more details,

Tel. No. : 022-65285393/94

Email ID : [email protected]


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Mindtree Ltd.

Click on the name of Tab to go to the relevant sheet

No. Name of Tab

1

2

3

4

5

6

7

8

9

10

11

12

13

Company Overview

Summary

Profit & Loss A/c

Balance Sheet

Cash Flow Statement

Geographic Revenue

Segment-wise Revenue

Cost Analysis

Debt Schedule

Fixed Asset

Valuation

Beta Calculation

Notes


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Description

Overview of the Company

Financial snapshot of the company

Historical and forecasted income statement

Historical and forecasted balance sheet

Forecasted cash flow statement

Geographic revenue breakup for the historical years as reported by the Company

Segment-wise revenue breakup for the historical years as reported by the Company

Cost Structure

Debt Schedule

Fixed Asset & Depreciation Schedule

DCF Valuation

Beta Calculation of Company relative to Sensex

Notes related to preparation of Financial Statement


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Mindtree Ltd.Company Overview

(Rs. In Lacs, except per share data)

Company Information Company Des

Industry IT Consulting & Software

Sector Software-Medium

Country India

BSE/NSE Code 532819/MINDTREE

Market Index BSE - 500

Year end 31-Mar Products & S

Reporting currency Rs.

Stock Data Per Share Dat

Price as on 22nd Oct 2010 512.7

52 Week High 729.9

52 Week Low 491 EPS diluted

YTD Change -84.95YTD Change % -14.7% EBITDA/sales (

Shares Outstanding 407 Net income/sal

Market Capitalization(Lacs) 208,669 ROE (TTM)

Beta Vs Sensex 1.16 EV/Sales

EV/EBITDA

P/E

P/Sales

P/BV

Geo revenue breakup for 2010

USA 84,209Europe 25,552

India 7,737

APAC / Rest of the World 12,101

Total 129,598

Revenue Forecast

Mindtree Ltd.development. Iengineering (Sproduction supsupply chain m

Internet & EnaApplication Mai

Margin

65%

2

USA Europe India APAC / Rest of the World

10000000%

12000000%

14000000%

16000000%

18000000%

20000000%


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Revenue Data

2010 2011 2012 2013 2014

Total Revenue 129,598 133,358 138,077 145,127 155,286

% y/y Growth 3% 4% 5% 7%

2010 2011 2012 2013 2014 2015E

0%

2000000%

4000000%

6000000%

8000000%


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ription

rvices

a & Key Ratios

2009-10 A 2010-11 E 2011-12 E 2012-13 E

52.79 43.04 45.35 48.35

38% 38% 38% 38%) 19% 19% 19% 19%

s (%) 17% 13% 13% 14%

32% 21% 18% 16%

1.58 1.5 1.5 1.4

16 8 8 7

9.71 11.9 11.3 10.6

1.61 1.6 1.4 1.4

3.18 2.5 2.1 1.7

Segment Revenue Breakup for 2010

IT Services 69,802PE Services 59,796

Total 129,598

imited , formerly is an international information technology (IT) consulting and implementation company. It deliveoperates in two units: production engineering (PE) services and IT services. PE services include research and devel

E). SPE provides full life cycle product engineering, professional services and sustained engineering services. IT Serviceort for customers in manufacturing, financial services, travel and leisure and other industries, in the areas of e-businesnagement, enterprise resource planning (ERP) and maintenance and re-engineering of legacy mainframe applications.

bling Technologies, Data Warehousing /Business Intelligence, Supply Chain Management, ERP, Product Engineering,tenance

%

6%

9%

54%IT Services PE

% y/y Growth

Total Revenue


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2015E 2016E 2017E

166,156 177,787 186,677

7% 7% 5%

016E 2017E


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s business solutions through global softwarelopment (R&D) services and software product

offer consulting and implementation and posts, data warehousing and business intelligence,

Product Assurance & Testing, Web Services.

46%

ervices


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Financial Summary Of M

2007-08A 2008-09A 2009-1A

P&LRevenue 73,384 123,747 129,598

Gross Profit 26,606 54,069 49,773EBITDA 12,580 33,095 24,556

PBT 11,273 6,039 25,467

PAT 10,419 5,231 21,484

Cash FlowCash Flow from operations 9,063 17,980 23,017

Cash Flow from investing (15,003) (22,235) (10,045)

Cash Flow from financing 3,739 2,256 (13,415)

Net Cash Flow (2,214) (1,958) (522)

Capex (21,778) (4,346) (4,573)Free Cash Flow to Firm (12,714) 13,634 18,444

Balance SheetShare Capital 3,792 3,800 3,951

Share Application Money 5 0.03 -

Reserves & Surplus 49,605 51,328 63,112

Total Debt 9,172 17,213 305

62,575 72,340 67,369

Net Fixed Assets 25,897 29,616 28,587

Goodwill - 14,605 1,543

Investments 16,549 10,133 12,725

Deferred tax assets, net 898 1,897 2,136

Net Current Assets 19,230 16,088 22,379

62,575 72,340 67,369

MarginsGross Profit 36% 44% 38%

EBITDA 17% 27% 19%

EBIT 12% 22% 14%

PBT 15% 5% 20%

Net Profit 14% 4% 17%

Per share DataEPS - Basic 27.69 13.84 54.77

EPS - Diluted 26.75 13.70 52.79

Book Value 137 136 161


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indtree

2010-11E 2011-12E 2012-13E

133,358 138,077 145,127

51,217 53,029 55,73725,251 26,145 27,480

20,587 21,690 23,126

17,519 18,457 19,679

23,730 22,193 27,879

(3,655) (3,821) (4,070)

(1,106) (771) (771)

18,969 17,601 23,038

(4,706) (4,872) (5,121)19,025 17,321 22,758

3,951 3,951 3,951

- - -

79,912 97,649 121,554

- - -

83,863 101,601 125,505

27,609 26,975 26,692

1,543 1,543 1,543

12,725 12,725 12,725

2,136 2,136 2,136

39,852 58,222 82,410

83,863 101,601 125,506

38% 38% 38%

19% 19% 19%

15% 15% 15%

15% 16% 16%

13% 13% 14%

44.66 47.05 50.17

43.04 45.35 48.35

202 246 305


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Mindtree Ltd.Profit & Loss Account

(Rs. In Lacs, except per share data) Audited Audited Audited

2007-08 A 2008-09 A 2009-10 A

Revenues 73,384 123,747 129,598

Cost of Revenues (46,778) (69,678) (79,825)

Gross Profit 26,606 54,069 49,773

Selling, General & Administrative expenses (13,875) (20,168) (24,978)

Provision for bad & doubtful debts (151) (806) (239)

Operating profit before interest and depreciation 12,580 33,095 24,556

Interest including finance charges (590) (1,620) (267)

Depreciation (3,493) (5,696) (6,518)

Operating Profit 8,497 25,779 17,771

Foreign exchange gain/(loss) 399 (20,892) 6,734

Other Income 2,377 1,152 962

Profit Before Tax 11,273 6,039 25,467

Provision for taxation including FBT (1,290) (1,386) (3,796)

Deferred tax (charge)/credit 436 681 (288)

MAT Credit Entitlement/(reverse) - 33 101

Share of profits of associates 274 -

Minority interest (410) -

Net profit after tax 10,419 5,231 21,484

EPS Basic 27.69 13.84 54.77

EPS Diluted 26.75 13.70 52.79

Weighted average number of sharesBasic 376.3 378 392

Diluted 389.5 382 407

Growth Analysis - Y/Y

Revenues - 69% 4.7%

EBITDA - 163% -26%

Operating Profit - 203% -31%

Net Profit - -50% 311%

Growth Analysis - Q/Q

Revenues

EBITDA

Operating Profit

Net Profit

Margin Analysis ( as a % of Revenues)

Gross Profit Margin 36% 44% 38%

EBITDA 17% 27% 19%


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EBIT 12% 22% 14%

PBT 15% 5% 20%

Net Profit Margin 14% 4% 17%

Interest Cover 21 20 92

Effective Tax rate 11% 11% 15%

Financial Leverage 1.5 1.3 1.4


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2010-11 E 2011-12 E 2012-13 E

133,358 138,077 145,127

(82,141) (85,047) (89,390)

51,217 53,029 55,737

(25,703) (26,612) (27,971)

(263) (273) (287)

25,251 26,145 27,480

(30) - -

(5,685) (5,506) (5,404)

19,536 20,639 22,075

- - -

1,051 1,051 1,051

20,587 21,690 23,126

(3,069) (3,233) (3,447)

- - -

- - -

- - -

- - -

17,519 18,457 19,679

44.66 47.05 50.17

43.04 45.35 48.35

392 392 392

407 407 407

38% 38% 38%

19% 19% 19%


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15% 15% 15%

15% 16% 16%

13% 13% 14%

15% 15% 15%

1.3 1.3 1.2


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Mindtree Ltd.Balance Sheet

(All Figs in Lacs) Standalone Consolidated Consolidated

Audited Audited Audited

Sources Of Funds 2007-08 A 2008-09 A 2009-10 A

Shareholders Funds

Share Capital ( Face Value of Rs. 10 Each) 3,792 3,800 3,951

Share Application Money 5 0.03 -

Reserves & Surplus 49,605 51,328 63,112

53,403 55,127 67,064

Minority Interest - 3,276

Loan Funds

Secured Loans 9,172 13,757 -

Unsecured Loans - 180 305

Total Shareholders Funds & Liabilities 62,575 72,340 67,369

Application Of Funds

Fixed Asset

Gross Block 34,744 49,409 51,334

Less Accumulated Depreciation (11,176) (21,096) (25,212)

Net Block 23,568 28,313 26,122

Capital Work In Progress 2,329 1,304 2,466

25,897 29,616 28,587

Goodwill - 14,605 1,543

Investments 16,549 10,133 12,725

Deferred tax assets, net 898 1,897 2,136

Current assets, loans and advances

Sundry debtors 17,217 27,923 23,699

Cash and bank balances 5,465 4,876 4,033

Loans and advances 9,927 14,111 20,683

Total Current Assets 32,609 46,910 48,414

Current liabilities and provisions

Current Liabilities 11,153 28,599 21,135Provisions 2,226 2,223 4,900

Total Current Liabilities 13,379 30,822 26,035

Net Current Assets 19,230 16,088 22,379

Total Assets 62,575 72,340 67,369

Check: Assets = Liab + Equity ? - - (0)


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ROE (TTM) 19.51% 9.49% 32.04%

Book Value 137 136 161

Days Sales Outstanding(TTM) 86 82 67

Liquidity Ratio

Current Ratio 2.4 1.5 1.9

Capital Structure Ratio

Debt Equity Ratio(Times) 0.17 0.25 0.005

Debt to Total Funds(%) 15% 20% 0.45%

% of Revenues

Loans and Advances 14% 11% 16%

% of Cost of revenue

Current Liabilities 24% 41% 26%


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2010-11 E 2011-12 E 2012-13 E

3,951 3,951 3,951

- - -

79,912 97,649 121,554

83,863 101,601 125,505

- - -

- - -

- - -

83,863 101,601 125,505

56,040 60,912 66,033

(30,896) (36,402) (41,806)

25,143 24,510 24,227

2,466 2,466 2,466

27,609 26,975 26,692

1,543 1,543 1,543

12,725 12,725 12,725

2,136 2,136 2,136

28,589 29,600 31,112

23,002 40,603 63,641

18,177 18,820 19,781

69,768 89,024 114,534

25,016 25,901 27,224

4,900 4,900 4,900

29,916 30,801 32,124

39,852 58,222 82,410

83,863 101,601 125,506

(0) (0) (0)


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20.89% 18.17% 15.68%

202 246 305

78 78 78

2.3 2.9 3.6

0.000 0.000 0.000

0% 0% 0%

14% 14% 14%

30% 30% 30%


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Mindtree Ltd.Cash Flow Statement

(All Figs in Lacs)

2007-08 A 2008-09 A

Standalone Consolidated

Cash flows from operating activities:

Profit Before Tax 11,273 6,039

Adjustments:

Depreciation 3,493 5,696

Amortization of Stock Compensation 192 100

Interest Expense 589 1,620

Interest / dividend income (1,743) (870)

Loss /(profit) on sale of fixed assets (6) (189)

Profit on sales of investments (253) (58)

Exchange difference on derivatives - 15,229

13 (41)

Operating profit before working capital changes 13,560 27,525

Decrease/(Increase) in sundry debtors (5,501) (3,352)

Decrease/(Increase) in loans and advances (417) (21)

(Decrease)/Increase in current liabilities and provisions 3,270 (3,304)

Income taxes and FBT paid (1,848) (2,869)

Net cash provided by / (used in) operating activities 9,063 17,980

Cash flow from investing activities

Purchase of fixed assets (21,778) (4,346)

Proceeds on sale of fixed assets 75 651

Purchase of business/acquisition - (29,195)

Investment in subsidiaries - -

Interest /dividend received from investments 847 627

Inter-corporate advances granted - -

Purchase of investments (22,918) (80,764)

Sale/maturities of investments 28,770 90,792

Net cash Provided/ (used) in investing activities (15,003) (22,235)

Cash flow from financing activities

Issue of share capital (net of issue expenses paid) (1,193) 56

Receipt of share application money 5 0

Interest paid on loans (591) (1,586)

Proceeds from term loans 9,550 10,180

Repayment of term loans (1,277) (13,691)

Repayment of finance lease obligation (232) (382)

Proceeds/ (repayment) of short term loans, net (1,647) 8,583

Increase/(decrease) in bank overdraft - -

Effect of exchange differences on translation of foreign currency cashand cash equivalents


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Dividends paid (including distribution tax) (877) (904)

Net cash Provided/(used) by financing activities 3,739 2,256

(13) 41

Net increase/(decrease) in cash and cash equivalents (2,214) (1,958)

- -

Cash and cash equivalents at the beginning of the year 7,680 6,834

Cash and cash equivalents at the end of the year 5,465 4,876

Calculation of Free Cash Flow

Operating Cash Flow 9,063 17,980

Capital expenditure (21,778) (4,346)

Free Cash Flow (12,714) 13,634

Cash Flow RatiosOperating Cash Flow / Revenues 0.12 0.15

Free Cash Flow / Operating Cash Flow -140.28% 75.83%

Dividends paid (including distribution tax) % of Share Capital 23% 24%

Effect of exchange differences on translation of foreign currency cashand cash equivalents

Cash and cash equivalents of MindTree Wireless Pvt Ltd as onthe date of acquisition


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2009-10 A 2010-11 E 2011-12 E 2012-13 E

Consolidated

25,468 20,587 21,690 23,126

6,518 5,685 5,506 5,404

51 51 51 51

267 30 - -

(500) (1,051) (1,051) (1,051)

6 - - -

(110) - - -

(11,131) - - -

79 - - -

20,649 25,302 26,196 27,531

4,542 (4,890) (1,012) 1,511

6 2,506 (643) 961

2,181 3,881 885 1,323

(4,360) (3,069) (3,233) (3,447)

23,017 23,730 22,193 27,879

(4,573) (4,706) (4,872) (5,121)

50 - - -

(2,925) - - -

- - - -

500 1,051 1,051 1,051

(615) - - -

(104,479) - - -

101,997 - - -

(10,045) (3,655) (3,821) (4,070)

941 - - -

(0) - - -

(267) (30)

- - - -

(5,157) (305) - -

- - - -

(8,475) - - -

- - - -


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(458) (771) (771) (771)

(13,415) (1,106) (771) (771)

(79)

(522) 18,969 17,601 23,038

764 - - 0

3,791 4,033 23,002 40,603

4,033 23,002 40,603 63,641

23,017 23,730 22,193 27,879

(4,573) (4,706) (4,872) (5,121)

18,444 19,025 17,321 22,758

0.18 0.18 0.16 0.19

80.13% 80.17% 78.05% 81.63%

12% 20% 20% 20%


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Mindtree Ltd.Geographic Revenue Model

(All Figs in Lacs)

2007-08 A

Q1 Jun-08 Q2 Sep-08

Geographic Wise Revenues

USA 48,440 13,511 19,894

Europe 13,486 5,398 6,403India 4,210 1,031 1,664

APAC / Rest of the World 7,247 2,281 3,241

Total 73,383 22,221 31,202

Y/Y (%) Growth in Geographic Revenues

USA - 20% 63%

Europe - 102% 93%

India - 49% 73%

APAC / Rest of the World - 53% 88%

Total - 38% 71%

Q/Q (%) Growth in Geographic Revenues

USA - 3% 47%

Europe - 38% 19%

India - -20% 61%

APAC / Rest of the World - 9% 42%

Total - 9% 40%

Geographic Revenues as % of Total

USA 66% 61% 64%

Europe 18% 24% 21%

India 6% 5% 5%

APAC / Rest of the World 10% 10% 10%

Total 100% 100% 100%

4

Amount In Rs.

31,202 36,380

Q2 Sep-08 Q3 Dec-08

USA 19,894 24,097


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Europe 6,403 7,232

India 1,664 2,425.95

APAC/ ROW 3,241.7 2,625.76

Total 31,202 36,380

------------------------------------------------------------------------------------

3 % Wise Contribution to total Sales

Q2 Sep-08 Q3 Dec-08

USA 64% 66%

Europe 21% 20%

India 5% 7%

APAC/ ROW 10% 7%

Total 100% 100%


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Q3 Dec-08 Q4 Mar-09

2008-09 A

Q1 Jun-09 Q2 Sep-09 Q3 Dec-09

24,097 23,178 80,680 20,507 20,699 21,393

7,231 5,360 24,392 6,034 6,972 6,1052,426 2,697 7,818 1,983 1,456 2,121

2,626 2,571 10,719 1,953 2,371 3,566

36,380 33,806 123,747 30,477 31,498 33,185

103% 77% 67% 52% 4% -11%

102% 37% 81% 12% 9% -16%

92% 109% 86% 92% -12% -13%

36% 23% 48% -14% -27% 36%

95% 66% 69% 37% 1% -9%

21% -4% - -12% 4% -11%

13% -26% - 13% 9% -16%

46% 11% - -26% -12% -13%

-19% -2% - -24% -27% 36%

17% -7% - -10% 3% 5%

66% 69% 65% 67% 66% 64%

20% 16% 20% 20% 22% 18%

7% 8% 6% 7% 5% 6%

7% 8% 9% 6% 8% 11%

100% 100% 100% 100% 100% 100%

33,806

Q4 Mar-09

23,178


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5,360

2,697

2,571

33,806

------------------------

Q4 Mar-09

69%

16%

8%

8%

100%

100000

0

0

0

0

-


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Q4 Mar-10

2009-10 A 2010-11 E 2011-12 E 2012-13 E

21,610 84,209 88,027 92,121 96,514

6,441 25,552 27,180 28,918 30,6292,177 7,737 7,149 6,654 6,085

4,210 12,101 11,003 10,384 11,900

34,438 129,598 133,358 138,077 145,127

-7% 4% 5% 5% 5%

20% 5% 6% 6% 6%

-19% -1% -8% -7% -7%

64% 13% -9% -6% 15%

2% 5% 2.9% 4% 5%

-7% -

20% -

-19% -

64% -

4% -

63% 65% 66% 67% 67%

19% 20% 20% 21% 21%

6% 6% 5% 5% 4%

12% 9% 8% 8% 8%

100% 100% 100% 100% 100%


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Mindtree Ltd.Segment Wise Revenue(All Figs in Lacs)

2007-08 A 2008-09 A

Segment Revenue

R & D Services 16,087 21,934IT Services 57,297 79,247

AztecSoft Business - 22,566PE Services - -

Total 73,384 123,747

Other Income (Excluding Forex Gains/Losses)

Interest on deposits 612 145Profit on sale of investments 253 96

Profit from sale of assets, net 6 163Dividend from investments 1,132 350

Bad debts recovered - -Liabilities no longer required written back - -

Miscellaneous income 376 34Total 2,378 788

Minority interestShare of P&L in Associate - 232Minority interest - (410)

Total Minority Interest - (178)

Sales Growth Analysis - Y-Y

R & D Services - 36%

IT Services - 38%

Aztec Business - -

PE Services - -

Total Sales - 69%

Sales Growth Analysis - Q-Q

R & D Services - -

IT Services - -

Aztec Business - -

PE Services - -

Total Sales - -

Sales Weightage Analysis

R & D Services 22% 18%IT Services 78% 64%


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Aztec Business - 18%

PE Services - -Total 100% 100%

Other Income AnalysisInterest on deposits 612 145

Dividend from investments 1,132 350

As % of Closing Investment

Interest on deposits 3.70% 1.44%Dividend from investments 7% 3.45%


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2009-10 A 2010-11 E 2011-12 E 2012-13 E

-69,802

-59,796

129,598 - - -

143 274 274 274110 - - -

- - - -357 777 777 777

163 - - -143 - - -

46 - - -962 1,051 1,051 1,051

- - -- - -

- - - -

- -

-12%

- - - -

34% - - -

5%

- - - -

- - - -

- - - -

- - - -

- - - -

-54%


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-

46%100% 0% 0% 0%

143 274 274 274

357 777 777 777

1%3%


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Mindtree Ltd.Cost Analysis

(Rs. In Lakhs )

Cost Structure 2007-08 A 2008-09 A 2009-10 A

Cost of Revenues 46,778 69,658 79,825

Selling, General & Administrative expenses 13,875 20,105 24,978

Total Operating Expnese(excluding bad debts) 60,653 89,763 104,803

Provision for bad & doubtful debts 151 806 239

Total Operating Expnese 60,804 90,569 105,042

As % of Revenues

Cost of Revenues 64% 56% 62%

Selling, General & Administrative expenses 19% 16% 19%

Total Operating Expnese(excluding bad debts) 83% 73% 81%

Provision for bad & doubtful debts 0.21% 0.65% 0.18%


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2010-11 E 2011-12 E 2012-13 E

82,141 85,047 89,390

25,703 26,612 27,971

107,844 111,660 117,361

263 273 287

108,107 111,932 117,648

62% 62% 62%

19% 19% 19%

81% 81% 81%

0.20% 0.20% 0.20%


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Mindtree Ltd.Debt Schedule

(Rs. In Lakhs )

2007-08 A 2008-09 A 2009-10 A 2010-11 E

Debt Schedule

Secured Loans

From Banks

Term Loans 8,848 5,157 -

Other Loans - 8,600 -

Finance lease obligation 324 -

Total Secured Loans 9,172 13,757 - -

Unsecured Loans

Council for Scientific and Industrial Research - 180 305 305

Total Unsecured Loan - 180 305 305

Total 9,172 13,937 305 305

Interest Expense (Q Wise) 590 1,620 267 30

Interest Expense Rate (Q wise) 6.43% 11.62% 87.54% 9.89%


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2011-12 E 2012-13 E

-

-

-

- -

-

- -

-

- -

- -

- -


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Mindtree Ltd.

Fixed Asset & Depreciation Schedule

Fixed Assets

Gross Block

Net Block

Capital Work in Progress

Depreciation Schedule

Depreciation

Implied Depreciation Rate

Acquisition of Property and Equipment (Capex)

Capex as % Revenues

Notes

Projected Fixed Assets & Depreciation,

PY=Previous Year, CY=Current Year

1

2

3

4Depreciation = Assuming Company buys new fixed assfor new fixed assets(capex) purchased in C Y.

Less Accumulated Depreciation

Gross Block= PY Gross Block + New Capex

Accumulated Depreciation = PY Accumulated Dep.

Net Block= Gross Block - Accumulated Depreciation

CY Depreciation = Half Dep of New Capex + Full Dep


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2007-08 A 2008-09 A 2009-10 A 2010-11 E 2011-12 E 2012-13 E

34,744 49,409 51,334 56,040 60,912 66,033

(11,176) (21,096) (25,212) (30,896) (36,402) (41,806)

23,568 28,313 26,122 25,143 24,510 24,227

2,329 1,304 2,466 2,466 2,466 2,466

25,897 29,616 28,587 27,609 26,975 26,692

2007-08 A 2008-09 A 2009-10 A 2010-11 E 2011-12 E 2012-13 E

3,493 5,696 6,518 5,685 5,506 5,404

15% 20% 25% 20% 20% 20%

21,778 4,346 4,573 4,706 4,872 5,121

30% 4% 4% 4% 4% 4%

t half-way through the year, so I have taken only half year depreciation

CY Dep

eciation from Net Block Of PY


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Mindtree Ltd.DCF Valuation

(All Figs in Lacs)

Growth Assumptions Enterpsire Value (EV)

Long term IT Industry growth rate 15%

Current Market Price

Diluted Shares

CAPM Assumptions Market Capitalisation

Ke 16.28% Long Term Liabilities

RFR 7.0% Less: Cash & Cash Equivalents

Beta 1.16 Enterprise Value (in lacks)

Rp 8%

Calculation of Free Cash Flow

Explicit Forecast Period

2009-10A 2010-11 E 2011-12 E 2012-13 E

Revenues 129,598 133,358 138,077 145,127

EBITDA 24,556 25,251 26,145 27,480

EBIT 18,038 19,567 20,639 22,075

Tax Expense (3,796) (3,069) (3,233) (3,447)

Net Operating Profit After Tax 14,242 16,498 17,406 18,628

Depreciation & Amortisation 6,518 5,685 5,506 5,404

Working Capital Change 6,729 1,497 (770) 3,795

Operating Cash Flow 14,031 20,686 23,681 20,237

Capex (4,573) (4,706) (4,872) (5,121)

FCF 9,458 15,980 18,809 15,116

Diluted Shares 407 407 407 407

Projection Year 1 2 3

Discount Factor 0.86 0.74 0.64

Present Value of FCF 13,744 13,913 9,617

Y/Y Growth Analysis

Revenues 3% 4% 5%

EBITDA 3% 4% 5%

EBIT 8% 5% 7%

Depreciation & Amortisation -13% -3% -2%

Margin Analysis (As % of Revenues)

EBITDA Margin 19% 19% 19% 19%

EBIT Margin 14% 15% 15% 15%

Depreciation & Amortisation 5% 4% 4% 4%

Capex 4% 4% 4% 4%

Tax Rate (Tax Expense/EBIT) -21% -16% -16% -16%


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Terminal Value Equity Value

Sum of PV of FCF for explicit forecast 73,686 Enterprise Value

WACC 16.27% - Debt

Long term growth in Revenues 5% + Cash

Present Value of terminal value 105,602 Net Debt

Terminal Value as % of Total Value 59% Equity Value

Sensitivity - Varying Terminal Growth Rate

PV of Terminal V

WACC PV of FCF 105,602 2% 3%

10.0% 104,473 10.0% 92,943 99,770

11.0% 100,717 11.0% 76,846 81,885

16.3% 83,921 12.2% 62,204 65,827

13.0% 93,788 13.0% 54,504 57,463

14.0% 90,590 14.0% 46,562 48,895

Sensitivity - EV/EBITDA Exit Multiple

PV of Terminal Value (E

WACC PV of FCF 5.0 5.5

10.0% 104,473 170,046 187,050

11.0% 100,717 169,424 186,366

16.3% 83,921 166,273 182,901

13.0% 93,788 168,204 185,024

14.0% 90,590 167,605 184,365

Recommendation

Mindtree is likely to clock EPS of 45.35 in FY2012 E. By assigning average PE pf IT Industry.i.e.12, we rec

Target Price 544

Industry Avg Pe 12

Forward EPS FY 2012 E 45.35


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Debt Equity Weightage

E/(D+E) @ Enterprise Value 99.85%

513 D/(D+E) @ Enterprise Value 0.15%

407

208,669 Interest Rate (%) 12%

305 Tax Rate (@) 15%

4,033

204,942 WACC Calculation

WACC 16.27%

First Stage of Valuation Second Stage Valuation

2014E 2015E 2016E Terminal Year

155,286 166,156 177,787 186,677

29,403 31,461 33,664 35,347

23,621 25,274 27,043 28,395

(3,688) (3,947) (4,223) (4,434)

27,309 29,221 31,266 32,829

5,782 6,187 6,620 6,951

3,795 3,795 3,795 3,795

29,297 31,613 34,091 35,986

(5,480) (5,863) (6,274) (6,587)

23,817 25,750 27,818 29,398

407 407 407 407

4 5 6

0.55 0.47 0.40

13,033 12,119 11,260 -

7% 7% 7% 5%

7% 7% 7% 5%

7% 7% 7% 5%

7% 7% 7% 5%

19% 19% 19% 19%

15% 15% 15% 15%

4% 4% 4% 4%

4% 4% 4% 4%

-16% -16% -16% -16%


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Intrinsic Value

179,288 Equity Value 183,015

(305) Diluted Shares 407

4,033

3,727 Intrinsic Value 450

183,015

lue Intrinsic Value

3% 2% 3% 3%

107,573 494 511 530

87,553 445 458 472

69,843 368 377 387

60,718 374 381 389

51,441 346 352 358

V/EBITDA) Intrinsic Value

6.0 5 5.5 6

204,055 684 725 767

203,309 673 715 756

199,528 624 665 706

201,844 653 694 736

201,126 644 685 726

ommend a hold position with target price of Rs.544/- in


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I was unable to get current beta of company , hence I calculated beta using bo

Input In Blue

Month Stock R Market R

1 3 0.95 4

2 2 12 3

3 -5 1 -4

4 -4 1 -25 0 4 1

6 -4 -3 -3

7 -2 0 -1

8 11 7 12

9 -9 0 -810 -16 -6 -15

11 7 3 9

12 8 6 9

n 12 -1.02 2.6

Formula Stk R - Stk R

Formula (Mkt R

MindtreeDate Close Return Date

01-Oct-10 525 2.54% 01-Oct-10

01-Sep-10 512 1.75% 01-Sep-10

02-Aug-10 503 -5.35% 02-Aug-10

01-Jul-10 531 -3.50% 01-Jul-10

01-Jun-10 551 0.00% 01-Jun-10

03-May-10 551 -4.24% 03-May-10

01-Apr-10 575 -2.33% 01-Apr-1002-Mar-10 589 10.58% 02-Mar-10

01-Feb-10 533 -8.73% 01-Feb-10

04-Jan-10 583 -16.10% 04-Jan-10

01-Dec-09 695 7.48% 01-Dec-09

Bet

Stk R - StkR

Stk R Mkt R

Covsm

2 m


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03-Nov-09 647 7.67% 03-Nov-09

22-Oct-09 601 0.54% 22-Oct-09

22-Sep-09 598 #DIV/0! 22-Sep-09


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ok method

1.16

-2 -6 3

9 26 88

-2 7 3

-2 4 31 1 2

-6 18 31

-3 3 7

4 51 19

-3 20 7-9 130 74

0 3 0

3 30 12

288 248

x Mkt R - Mkt R 288 26

-1 11

- Mkt R)2 248 23

-1 11

Sensex

20,261 0.95%

20,069 12%

17,971 1%

17,868 1%

17,701 4%

16,945 -3%

17,559 0%17,528 7%

16,430 0%

16,358 -6%

17,465 3%

or Covsm 2 m

Mkt R - MktR Stk R - StkR x Mkt R - MktR (Mkt R - MktR)2


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16,926 6%

15,896 -6%

16,886 #DIV/0!


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Profit & Loss A/c1) Figures for FY 2007-08 are standalone including Audited Balance She

2) For Q1 of 2008-09, I have taken standalone results, and from Q2 all fi

3) I have adjusted Share Count(Basic & Diluted) wherever necessary to

Balance Sheet(BS)

4) 2007-08 figures are standalone, as I have taken standalone figures i5) For 2008-09 Figs. For 3M,6M,9M and 12M I have taken standalone fig

Audited BS is Consolidated.

6) 2009-10 BS is Consolidated

Cash Flow Statement(CFS)

7) I have prepared CFS on yearly basis for simplicity, as I was getting er

Geographic Revenue

8)

as Compnay did not reported consolidated figs. Geographic wise in R

by the Company. I took the Consolidated figs. From the fact sheet of

Segment Revenue9) Upto Q1 of 2008-09, all figs. are standalone, after that all figs. are co

From FY 09-10, Segment R & D Services and AztecSoft Business is gr

Hence, while calculating YoY & QoQ growth in % for 2009-10, I have

Projection Assumptions

11) Share Capital = is projected on as it is/straight line basisDebt = Assumed that it will be paid in 2010-11, hence not shown in

Fixed Asset = Detailed working is in Fixed Asset SheetGoodwill, Investments & Tax Assets = straight line basis

Sundry Debtors = is calculated by ; Avg. Days Sales O/s * (Projected

Cash = linked from Cash Flow St.

Loans & Advances = is calculated by ; Avg % of Loans to Revenues *

Current Liabilities = is calculated by ; Avg % of CL to Cost of Revenu

Provisions = straight line basis

I have done some small calculation, for converting USD* wise Geogra

to that respective quarters.(calculation is below the Geographic reve

* Despite taking exchange rates for calculation, I was not getting the


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2009-10 Annual Report Excerpts

1 As per NASSCOM, Indian IT exports is estimat

2 EBITDA margins on our services business is li

3 effective tax rate based on current taxes is ab

compared to about 11% in the previous year.

4 NiW form part of PE Services

5 Our NIW, business is developing a ready to br

6 On our services business, based on current tr

than industry growth estimates of 13-15%

7 pg 51 for report


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d to grow by 5.5% in FY2010

ely to be stable.

out 15.6% as

nd 3G smart phone and IP in the area of cellular infrastructure. We expect to launc

nds, we expect that we will attain growth rates higher


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ver

were not provided

eported Revenues

09,


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these products to the market in Q3/Q4 of 2010-11. Since this is a new initiative


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, the financial performance of the NIW business would depend onthe success of t


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he products when they are launched.If these initiatives are successful, they will


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reatly enhance our revenues and profitability

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