Mindtree Valuation

8/6/2019 Mindtree Valuation

http://slidepdf.com/reader/full/mindtree-valuation 1/74

FY ends on March 30

All figures in million Rs 2008 2009 2010 2011E 2012E 2013E

Profit and Loss Acount

Sales Growth (YoY %) 67.3% 4.7% 22.0% 22.0% 20.0%

Cost of Goods Sold (% Sales) 63.9% 56.3% 61.6% 65.0% 61.0% 59.0%

SG&A (% Sales) 19.2% 33.8% 19.5% 20.0% 19.5% 19.0%

Depreciation (% of Net PPE) 20.1% 25.0% 25.0% 25.0% 25.0%

Interest Expense (59) (162) (27) (3) - -

Other Income 279 115 770 188 188 188Effective Tax Rate 7.6% 11.1% 15.6% 16.0% 16.0% 16.0%

Basic Sharess Outstanding 38 38 39 39 39 39

Diluted Sharess Outstanding 39 38 41 41 41 41

Dividend Per Share Growth Rate (50.0)% ### (5.0)% 10.0% 10.0%

Minority Interest - (14) - -

Balance Sheet

Cash and Bank balances 3.1% 3.1% 3.1% 3.1% 3.1%

Debtors collection period (Sales) 86.6 82.4 66.7 65.0 65.0 65.0

Loans and advances (% sales) 12.8% 12.3% 16.0% 12.0% 12.0% 12.0%

Capital Expenditure (% Sales) 3.5% 5.8% 6.0% 6.0% 6.0%

Capital WIP (% of sales) 1.1% 1.9% 1.5% 1.5% 1.5%

Goodwill (US$) 1,460 154 154 154 154Current Investments 18.9% 8.1% 9.8% 10.0% 10.0% 10.0%

Deferred tax assets 190 214 202 208 205

Creditors payment period (Sales) 6.4 3.6 5.0 5.0 5.0

Other Current Liabilities (% Sales) 13.0% 21.4% 15.3% 15.0% 15.0% 15.0%

Provisions (% sales) 2.3% 1.8% 3.8% 3.0% 3.0% 3.0%

Dividend payment tax 17.0% 17.0% 17.0% 17.0% 17.0%

Share Issuance/(Repurchases) - - -

Debt Schedule

Long term debt 1,393.7 30.5 45 - -



2014E 2015E

16.0% 14.0%

58.5% 57.5%

19.0% 19.0%

25.0% 25.0%

- -

188 18816.0% 16.0%

39 39

41 41

10.0% 10.0%

3.1% 3.1%

65.0 65.0

12.0% 12.0%

6.0% 6.0%

1.5% 1.5%

154 15410.0% 10.0%

206 205

5.0 5.0

15.0% 15.0%

3.0% 3.0%

17.0% 17.0%

- -

- -



2008 2009 2010 2011E 2012E 2013E

Profit and Loss Acount

Revenue 7,398 12,375 12,960 15,811 19,289 23,147

Software development expenses (4,725) (6,968) (7,982) (10,277) (11,760) (13,657)

Gross Profit 2,673 5,407 4,977 5,534 7,529 9,490

SG&A (1,419) (4,187) (2,522) (3,162) (3,761) (4,398)

EBIT 1,254 1,220 2,456 2,372 3,768 5,092

Depreciation 356 570 652 653 727 835

EBITDA 1,610 1,790 3,107 3,025 4,495 5,927

Other Income 279 115 770 188 188 188

Interest Expense (59) (162) (27) (3) - -

Profit Before Tax 1,118 604 2,547 1,904 3,229 4,446

Tax (129) (139) (380) (305) (517) (711)

Non Recurring Tax 43 71 (19)

Profit After Tax 1,033 537 2,149 1,599 2,712 3,735

Minority Interest (14) - - - -

Net Income 1,033 523 2,149 1,599 2,712 3,735

Dividends (76) (38) (118) (112) (124) (136)

Shareholder Information

Basic Sharess Outstanding 38 38 39 39 39 39

Diluted Sharess Outstanding 39 38 41 41 41 41

Basic EPS 27.45 13.84 54.77 40.76 69.13 95.19

Diluted EPS 26.52 13.70 52.79 39.29 66.64 91.76

Dividend Per Share 2.01 1.01 3.01 2.86 3.15 3.46



2014E 2015E

26,851 30,610

(15,708) (17,601)

11,143 13,009

(5,102) (5,816)

6,041 7,193

973 1,133

7,015 8,326 21,172.82

188 188

- -

5,256 6,249

(841) (1,000)

4,415 5,249

- -

4,415 5,249

(149) (164)

39 39

41 41

112.54 133.79

108.49 128.97

3.81 4.19



2008 2009 2010 2011E 2012E

Assets

Cash and bank balances 379 403 1,483 2,807

Sundry debtors ### 2,792 2,370 2,816 3,435

Loans and advances ### 1,520 2,068 1,897 2,315

Short Term Investments ### 1,007 1,266 1,581 1,929

Total Current Assets 5,698 6,107 7,777 10,486

PPE (net) 2,831 2,612 2,908 3,338Capital WIP 130 247 234 285

Goodwill 1,460 154 154 154

Long term investments 0 7 7 7 7

Deferred tax assets (net) 190 214 202 208

Total Non Current Assets 4,619 3,233 3,504 3,992

Total Assets 10,316 9,340 11,282 14,478

Liability and Equity

Sundry Creditors 216 127 217 264

Other current liabilities ### 2,644 1,987 2,372 2,893

Provisions ### 222 490 474 579

Short Term Debt - - -Total Current Liabilities 3,082 2,604 3,063 3,736

Long Term Debt 1,394 31 45 -

Total Non Current Liabilities 1,394 31 45 -

Equity 5,840 6,706 8,174 10,742

Total Liability and Equity 10,316 9,340 11,282 14,478

BALANCE CHECK OK OK CHECK CHECK

DIFFERENCE - - 0.0 0.0



2013E 2014E 2015E

4,986 7,775 11,305

4,122 4,782 5,451

2,778 3,222 3,673

2,315 2,685 3,061

14,201 18,464 23,490

3,892 4,530 5,234342 397 452

154 154 154

7 7 7

205 206 205

4,600 5,294 6,053

18,801 23,759 29,543

317 368 419

3,472 4,028 4,591

694 806 918

- - -4,484 5,201 5,929

- - -

- - -

14,317 18,558 23,614

18,801 23,759 29,543

CHECK CHECK CHECK

0.0 0.0 0.0



2008 2009 2010 2011E 2012E 2013E

Operating Cash Flow

Net Income 1,599 2,712 3,735

Depreciation 653 727 835

(Inc) Dec in Operating Working Capital (131) (711) (788)

(Inc) Dec in Capital WIP 13 (51) (57)

(Inc) Dec in Deferred tax assets (net) 12 (6) 3

Operating Cash Flow 2,146 2,671 3,727

Investing Cash Flow

Capex (949) (1,157) (1,389)

Investing Cash Flow (949) (1,157) (1,389)

Financing Cash Flow

Inc (Dec) in Long Term Debt 14 (45) -

Dividends (112) (124) (136)

Dividend payment tax (19) (21) (23)

Share Issuance/(Repurchase) - - -

Financing Cash Flow (117) (190) (159)

Net Cash Flow 1,080 1,324 2,179

Cash and Bank Balances ### 1,483 2,807 4,986



2014E 2015E

4,415 5,249

973 1,133

(757) (768)

(55) (56)

(1) 1

4,575 5,558

(1,611) (1,837)

(1,611) (1,837)

- -

(149) (164)

(25) (28)

- -

(175) (192)

2,789 3,529

7,775 11,305



2008 2009 2010 2011E 2012E

Property, Plant and Equipment

Beginning Balance 2,612 2,908

Capex 949 1,157

Depreciation (653) (727)

Ending Balance 2,612 2,908 3,338

Equity

Beginning Balance 6,706 8,174

Net Income 1,599 2,712

Dividends (112) (124)

Dividend payment tax (6) (20) (19) (21)

Share Issuance/(Repurchases) - -

Ending Balance 6,706 8,174 10,742

Operating Working Capital

Sundry Debtors 2,370 2,816 3,435

Loans and Advances 2,068 1,897 2,315

Short Term Investments 1,266 1,581 1,929

Total Operating Current Asset 5,704 6,294 7,679

Sundry Creditors 127 217 264

Other Current Liabilities 1,987 2,372 2,893

Provisions 490 474 579

Total Operating Current Liabilities 2,604 3,063 3,736

Operating Working Capital 3,100 3,232 3,942

EV



2013E 2014E 2015E

3,338 3,892 4,530

1,389 1,611 1,837

(835) (973) (1,133)

3,892 4,530 5,234

10,742 14,317 18,558

3,735 4,415 5,249

(136) (149) (164)

(23) (25) (28)

- - -

14,317 18,558 23,614

4,122 4,782 5,451

2,778 3,222 3,673

2,315 2,685 3,061

9,215 10,689 12,185

317 368 419

3,472 4,028 4,591

694 806 918

4,484 5,201 5,929

4,731 5,488 6,256



2008 2009 2010 2011E 2012E

Free Cash Flow

EBIT 2,372 3,768

Tax on EBIT (305) (517)

Profit After Tax 2,067 3,251

Depreciation 653 727

(Inc) Dec in Capital WIP 13 (51)

Inc (Dec) in Defrred Tax 12 (6)

(Inc) Dec in Operating Working Capital (131) (711)

Capital Expenditure (949) (1,157)

Free Cash Flow 1,665 2,052

Weighted Average Capital Cost

Effective tax rate 16.0%

Indian Government 10 Yr bond yield 8.2%

Market Risk Premium 7.3%

Levered Beta 1.30

Equity Cost 17.6%

Credit Rating (Long Term Capital Structure) A+Credit Spread Over Risk Free 0.2%

Debt Cost Pre Tax 8.4%

Debt Cost Post Tax 7.0%

Comp A

Share Price 542.90 As of 21.01.

Shares Outstanding (Diluted) 41

Market Capitalization 22,095

Total Debt ETC 45

Total Capital 22,140

EV 21,736

Capital Structure (% Equity) 99.8%Capital Structure (% Debt) 0.2%

WACC 17.6%

Terminal Growth rate 1.75%

Discounting Model

Year Count 1.0 2.0

PV of FCF 1,416 1,485

Terminal Value ###

NPV 22,115

Intrinsic value 543.41



2013E 2014E 2015E

5,092 6,041 7,193

(711) (841) (1,000)

4,381 5,200 6,194

835 973 1,133

(57) (55) (56)

3 (1) 1

(788) (757) (768)

(1,389) (1,611) (1,837)

2,984 3,749 4,666

011

3.0 4.0 5.0

1,836 1,961 2,076



DCF 543.41

Beta Sensitivity and Terminal Growth Rate

0.8 0.9 1 1.1 1.2

0.50% 683.6 642.9 606.3 573.2 543.1

0.75% 693.2 651.3 613.7 579.7 548.91.00% 703.1 660.0 621.3 586.5 554.9

1.25% 713.4 669.0 629.2 593.5 561.2

1.50% 724.1 678.3 637.4 600.7 567.6

1.75% 735.3 688.0 645.9 608.2 574.2

Case 36

Beta TGR

1.3 0.0Beta TGR

1 0.8 0.50%

2 0.8 0.75%

3 0.8 1.00%

4 0.8 1.25%

5 0.8 1.50%

6 0.8 1.75%

7 0.9 0.50%

8 0.9 0.75%

9 0.9 1.00%

10 0.9 1.25%

11 0.9 1.50%12 0.9 1.75%

13 1 0.50%

14 1 0.75%

15 1 1.00%

16 1 1.25%

17 1 1.50%

18 1 1.75%

19 1.1 0.50%

20 1.1 0.75%

21 1.1 1.00%

22 1.1 1.25%

23 1.1 1.50%24 1.1 1.75%

25 1.2 0.50%

26 1.2 0.75%

27 1.2 1.00%

28 1.2 1.25%

29 1.2 1.50%

30 1.2 1.75%

31 1.3 0.50%

32 1.3 0.75%

Terminal Growth rate/Beta



33 1.3 1.00%

34 1.3 1.25%

35 1.3 1.50%

36 1.3 1.75%



1.3

515.7

520.9526.3

531.8

537.5

543.4



#N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A



#N/A #N/A #N/A #N/A #N/A



Recent acquisitions in the IT space

Target Acquiror P/E V/EBITDA

Patni I Gate 10 6.5

Range of Target price (per share)Low High

586.5 629.2 Average share price for the last 30 days

Premium/(Disc) 10% 18% 532.93

Market cap 23,868.3 25,608.0

EV 22,430.0 24,169.6

P/E 8.8 9.4

EV/EBITDA 5.0 5.4

Mindtree Valuation

Documents

Transcript of Mindtree Valuation