Valuation Workbook

8/10/2019 Valuation Workbook

1/48

Key: Input DataValuation Calculations

2004 2005 2006 2007 2008Book Value per Share (BV) 1.36 1.41 1.48 1.59 1.72Earnings per Share (EPS) 0.11 0.07 0.12 0.17 0.20Dividends per Share 0.05 0.02 0.05 0.05 0.05Shares Out (Millions) 2600.5 2600.5 2600.5 2600.5 2600.5Price-Earnings Ratio (P/E) - high 61.4 19.8 29.6 33.4Price-Earnings Ratio (P/E) - low 26.0 10.0 8.2 5.5Revenue 141 138 165 180 176Net Income 3 2 3 4 5Shareholder Equity 26 26 26 26 26

2004 2005 2006 2007 2008Book Yield (per Share) 8.1% 5.0% 8.1% 10.7% 11.6%Book Yield (Return On Equity-ROE) 10.6% 7.2% 11.8% 16.8% 19.7%Payout Ratio 45.5% 28.6% 41.7% 29.4% 25.0%Retention Ratio 54.5% 71.4% 58.3% 70.6% 75.0%

Growth in Book Value (BV) 23.59%Return On Equity (ROE) 26.21%

Percent Earnings Return 90.02%Payout Ratio 9.98%

Estimated Estimated Estimated Estimated

2015 2016 2017 2018Book Value per Share (BV) 47.25 58.40 72.18 89.21Earnings per Share (EPS) 12.38 15.31 18.92 23.38

Low Avg. Median HighP/E P/E P/E P/E

Future P/E 3.0 18.1 7.7 100.1Future Price per Share 245.96 1504.27 639.84 8344.21

Estimated Estimated Estimated Estimated

2015 2016 2017 2018Common Dividends 1.24 1.53 1.89 2.33

Current Price per Share 41.00

Today's Estimated Estimated Estimated Estimated

Cash Flows Price 2015 2016 2017 2018

The Buffet Approa

STEP 1:

ST

STEPS 3

STEP 5: Esti

STEP 6: Calc


2/48

Low P/E Assumption Return -41.00 1.24 1.53 1.89 2.33Average P/E Assumption Return -41.00 1.24 1.53 1.89 2.33Median P/E Assumption Return -41.00 1.24 1.53 1.89 2.33High P/E Assumption Return -41.00 1.24 1.53 1.89 2.33

30.7% 4 6 87% 6.4% 10.0% 12.7%8% 7.3% 11.0% 13.6%9% 8.3% 11.9% 14.6%

10% 9.2% 12.8% 15.6%11% 10.1% 13.8% 16.5%12% 11.0% 14.7% 17.5%13% 11.9% 15.7% 18.5%14% 12.8% 16.6% 19.4%15% 13.7% 17.5% 20.4%

0.00016148 0.033954272 0.059131952GrowthinBookValue


3/48

10-YearAverage2009 2010 2011 2012 2013 2014 Growth

1.85 2.20 2.52 2.97 36.93 38.23 39.60%0.19 0.41 0.35 0.40 8.42 10.02 57.02%0.05 0.05 0.05 0.07 1.00 1.00 82.06%

2600.5 2600.5 4823 4823 4823 6813 10.11%13.9 6.3 8.6 100.1 7.1 5.575.4 4.0 5.1 4.9 3.0 3.0

229 309 377 456 664 910 20.49%5 11 17 19 41 59 35.86%26 26 48 48 48 68 10.11%

2009 2010 2011 2012 2013 2014 Median10.3% 18.6% 13.9% 13.5% 22.8% 26.2% 11.6%18.5% 40.9% 35.0% 40.2% 84.2% 86.5% 19.7%26.3% 12.2% 14.3% 17.5% 11.9% 10.0% 25.0%73.7% 87.8% 85.7% 82.5% 88.1% 90.0% 75.0%

Estimated Estimated Estimated Estimated Estimated Estimated

2019 2020 2021 2022 2023 2024110.25 136.27 168.42 208.15 257.27 317.9728.90 35.72 44.14 54.56 67.43 83.34

Estimated Estimated Estimated Estimated Estimated Estimated

2019 2020 2021 2022 2023 20242.88 3.56 4.41 5.44 6.73 8.32

Estimated Estimated Estimated Estimated Estimated Estimated Expected

2019 2020 2021 2022 2023 2024 Price

h to Valuing Stocks: Arvind Remedies

et up spreadsheet with raw data

EP 2: Calculate book yield

& 4: Estimate future BV and EPS

ate future P/E ratio and stock price

ulate expected return on investment


4/48

2.88 3.56 4.41 5.44 6.73 8.32 245.962.88 3.56 4.41 5.44 6.73 8.32 1504.272.88 3.56 4.41 5.44 6.73 8.32 639.842.88 3.56 4.41 5.44 6.73 8.32 8344.21

10 12 14 16 18 2014.8% 16.6% 18.2% 19.5% 20.8% 21.9%15.8% 17.6% 19.2% 20.6% 21.8% 22.9%16.8% 18.6% 20.2% 21.6% 22.8% 23.9%17.8% 19.6% 21.2% 22.6% 23.9% 25.0%18.7% 20.6% 22.2% 23.6% 24.9% 26.0%19.7% 21.6% 23.2% 24.6% 25.9% 27.1%20.7% 22.6% 24.2% 25.6% 26.9% 28.1%21.7% 23.6% 25.2% 26.7% 28.0% 29.1%22.7% 24.6% 26.2% 27.7% 29.0% 30.2%

0.079327501 0.096252975 0.110857814 0.123725675 0.13524201 0.145675205

TEP 7: Interpret results

P/E Ratio 10 Years from Today


5/48

10-YearCumulativeGrowth Median2711.03%9009.09%1900.00%

161.99%16.9

5.3545.14%

2041.82%161.99%

AnnualExpected

Rate of

Return


6/48

21.1%40.5%30.7%63.2%


7/48

Name Arvind Remedies

Industry Pharmaceuticals

Market Cap (Cr) 318.15Exchange BSE

Sr. No. Competitor Price EPS PE ratio1 100 10 1023456789

101112

1314151617181920

Average 10

100

96100Result Reasonable

CurrentCurrent

Price Based on PE ratio

Price Based on PS ratioPrice Based on PBV ratio

CurrentCurr


8/48

20010 208 25

10 20

Sales, Cr. Shares, Cr Sales / Share PS ratio BV / share PBV Ratio100 12 8.3 12 10 10

12 10

Current PE ratio ales/share Current PS ratio

BV/share Current PBV ratio

arket Pricent EPS


9/48

Ticker AAPL

Company infoNameIndustry

Market Cap (Cr)Exchange

Score

75 out of 100 $272P/E Valuation

Fundamentals Judgement Points WeightReturn on Equity Good 9.09 5 Average estimateDebt/Equity Good 9.09 5 The estimate is

Conservative PEG ratio Good 1.82 1 Current share priceP/E ratio Good 3.64 2 UndervaluedNet margin Good 5.45 3 Max purchase priceBookvalue per share Good 9.09 5Growth rate next 5yr Relatively low 0.00 1FCF yield Low 0.00 1Asset turnover change Good 7.27 4Current ratio Bad 0.00 5Altman Z Score Bad 0.00 3Accrual profit Reasonable 5.45 3Defensive profit Positive & increasing 5.45 3Enterprising profit Bad 0.00 4

Debt Repayment Period Good 18.18 10 Tutorials:55 Support:

Creation date:

Pharmaceuticals

1. Click File > Make a copy.. to get your own version of this spreadsheet

Arvind Remedies

8/31/2014 10:33:00

$318BSE

Intrinsic value estimates

Price info


10/48


11/48


12/48


13/48


14/48


15/48

In Millions of USD (except for per share items)

52 weeks ending

2013-09-28

52 weeks ending

2012-09-29

Revenue 911.11 664.26Other Revenue, Total 0.47 0.59Total Revenue 911.57 664.85Cost of Revenue, Total 702.51 509.38Gross Profit 209.06 155.47Selling/General/Admin. Expenses, Total 0 0Research & Development 0 0Depreciation/Amortization 13.9 12.59Interest Expense(Income) - Net Operating 0 0Unusual Expense (Income) - -Other Operating Expenses, Total 31.66 21.15Total Operating Expense 45.56 33.74Operating Income 163.5 121.73

Interest Income(Expense), Net Non-Operating 77.1 59.19Gain (Loss) on Sale of Assets - -Other, Net - -Income Before Tax 86.4 62.54Income After Tax 58.84 40.62Minority Interest - -Equity In Affiliates - -Net Income Before Extra. Items 58.84 40.62Accounting Change 0.06 0Discontinued Operations - -Extraordinary Item - -Net Income 58.9 40.62

Preferred Dividends - -Income Available to Common Excl. Extra Items 58.9 40.62Income Available to Common Incl. Extra Items 58.9 40.62Basic Weighted Average Shares 4 3Basic EPS Excluding Extraordinary Items 8.65 8.42Basic EPS Including Extraordinary Items 8.65 8.42Dilution Adjustment 0 -Diluted Weighted Average Shares 4.3498 2.5639Diluted EPS Excluding Extraordinary Items 8.65 8.42Diluted EPS Including Extraordinary Items - -

Dividends per Share - Common Stock Primary Issue - -Gross Dividends - Common Stock - -Net Income after Stock Based Comp. Expense - -Basic EPS after Stock Based Comp. Expense - -Diluted EPS after Stock Based Comp. Expense - -

Depreciation, Supplemental - -Total Special Items - -Normalized Income Before Taxes - -Effect of Special Items on Income Taxes - -Income Taxes Ex. Impact of Special Items - -Normalized Income After Taxes - -

Income statement


16/48

Normalized Income Avail to Common - -Basic Normalized EPS - -Diluted Normalized EPS 8.65 8.42


17/48

52 weeks ending

2011-09-24

52 weeks ending

2010-09-25

436.63 362.550.39 0.34

437.02 362.9351.15 311.99

85.87 50.910 00 0

3.24 2.430 0

- -17.69 9.3120.93 11.7464.94 39.17

27.72 16.39- -- -

37.22 22.7819.41 16.89

- -- -

19.41 16.890 0.02

- -- -

19.41 16.9

- -19.41 16.919.41 16.9

27 260.4 0.350.4 0.35

- -26.8918 26.0865

0.4 0.35- -

- -- -- -- -- -

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


18/48

- -- -

0.4 0.35


19/48

In Millions of USD (except for per share

items) As of 2013-09-28 As of 2012-09-29 As of 2011-09-24

Cash & Equivalents 23.7 21.95 13.81Short Term Investments 165.04 29.69 31.52Cash and Short Term Investments 188.74 51.64 45.33Accounts Receivable - Trade, Net 241.53 169.88 134.54Receivables - Other 0 0 0Total Receivables, Net 241.53 169.88 134.54Total Inventory 121.13 87.72 57.11Prepaid Expenses - - -Other Current Assets, Total 165.04 29.69 24.54Total Current Assets 386.36 279.55 205.46Property/Plant/Equipment, Total - Gross 277.77 258.07 57.98Accumulated Depreciation, Total 26.92 15.64 13.22Goodwill, Net 0 0 0

Intangibles, Net 4179 4224 3536Long Term Investments 106215 92122 55618Other Long Term Assets, Total 5146 5478 3556Total Assets 207000 176064 116371Accounts Payable 22367 21175 14632Accrued Expenses 4782 3283 2428Notes Payable/Short Term Debt 0 0 0Current Port. of LT Debt/Capital Leases - - -Other Current liabilities, Total 16509 14084 10910Total Current Liabilities 43658 38542 27970Long Term Debt 16960 - -Capital Lease Obligations - - -

Total Long Term Debt 16960 0 0Total Debt 16960 0 0Deferred Income Tax 16489 13847 8159Minority Interest - - -Other Liabilities, Total 6344 5465 3627Total Liabilities 83451 57854 39756Redeemable Preferred Stock, Total - - -Preferred Stock - Non Redeemable, Net - - -Common Stock, Total 19764 16422 13331Additional Paid-In Capital - - -

Retained Earnings (Accumulated Deficit) 104256 101289 62841Treasury Stock - Common - - -Other Equity, Total -191 731 130Total Equity 123549 118210 76615Total Liabilities & Shareholders' Equity 207000 176064 116371

Shares Outs - Common Stock Primary Issue - - -Total Common Shares Outstanding 6294.37 6574.46 6504.94

Balance sheet


20/48


21/48

As of 2010-09-25

In Millions of USD (except for per share

items)

52 weeks ending

2013-09-28

7.24 Net Income/Starting Line 3703735.3 Depreciation/Depletion 6757

42.54 Amortization -106.54 Deferred Taxes 1141

0 Non-Cash Items 2253106.54 Changes in Working Capital 6478

45.71 Cash from Operating Activities 53666- Capital Expenditures -9076

27.46 Other Investing Cash Flow Items, Total -24698159.49 Cash from Investing Activities -33774

48.02 Financing Cash Flow Items -38112.06 Total Cash Dividends Paid -10564

0 Issuance (Retirement) of Stock, Net -22330

342 Issuance (Retirement) of Debt, Net 1689625391 Cash from Financing Activities -163792263 Foreign Exchange Effects -

75183 Net Change in Cash 351312015 Cash Interest Paid, Supplemental -1593 Cash Taxes Paid, Supplemental 9128

0-

711420722

--

00

4300-

237027392

--

10668-

37169-

1714779175183

-6411.79

Cash flow statement


22/48


23/48

52 weeks ending

2012-09-29

52 weeks ending

2011-09-24

52 weeks ending

2010-09-25

41733 25922 140133277 1814 1027

- - -4405 2868 14401740 1168 903-299 5757 1212

50856 37529 18595-9402 -7452 -2121

-38825 -32967 -11733-48227 -40419 -13854

125 613 345-2488 0 -

665 831 912

- - --1698 1444 1257

- - -931 -1446 5998

- - -7682 3338 2697


24/48


25/48

20% annualy

25%9%

5%12

$47.00$ 10.052.13%

0.9431.00%21.00%27.56%

4.35

$24$13

$0

Enterprise Value $17,254.45

Month AVG P/E PRICE/ SALES PRICE/ BOOKNET PROFITMARGIN (%)

9/4/2014 54.6 1.8 3.0 3.39/5/2014 34.4 3.3 6.0 9.69/6/2014 34.0 3.5 6.6 10.3

9/7/2014 39.1 5.7 9.2 14.69/8/2014 21.2 3.2 4.5 14.99/9/2014 20.4 3.9 5.3 19.2

9/10/2014 18.7 4.0 5.4 21.59/11/2014 13.8 3.3 4.6 23.99/12/2014 15.1 4.0 5.3 26.79/13/2014 12.0 2.6 3.5 21.7

Growth decline rate

Conservatism inputsDesired return on investmentMargin of SafetyDiscount rate

Shares outstanding (Cr)

Year 10 FCF multiplier

Valuation inputsPriceEPSDividend YieldCurrent ratioPast 5 years EPS growth per yearNext 5 years EPS growth per yearSustainable Growth Rate

Cash and Short Term InvestmentsCash from Operating ActivitiesCapital Expenditures

There is a known bug with the dates in the two tables above. It should be read as M/Y/D.


26/48

BOOKVALUE/SHARE

DEBT/EQUITY

9/4/2014 0.9 NA9/5/2014 1.3 NA9/6/2014 1.7 NA

9/7/2014 2.4 NA9/8/2014 3.6 NA9/9/2014 5.0 NA

9/10/2014 7.5 NA9/11/2014 11.8 NA9/12/2014 18.0 NA9/13/2014 19.6 0.1

There is a known bug with the dates in the two tables above. It should


27/48

RETURN ON EQUITY(%)

RETURN ON

ASSETS

(%)

INTERESTCOVERAGE

5.9 3.7 NA21.3 13.6 NA22.8 13.8 NA

28.5 16.4 NA27.2 14.9 NA31.3 18.9 NA35.3 22.8 NA41.7 27.1 NA42.8 28.5 NA30.6 19.3 369.8

be read as M/Y/D.


28/48

Variable Value JudgementReturn on Equity 30.6 Good

Debt/Equity 0.14 Good

Conservative PEG ratio 0.40 Good

P/E ratio 4.68 Good

Net margin Stable/Increasing Good

Bookvalue per share Stable/Increasing Good

Next 5yr EPS growth rate 21.00% Relatively low

FCF yield 0.08% Low

Asset turnover change 16.62% GoodCurrent ratio 0.94 Bad

Altman Z Score -0.24 Bad

Accrual profit $8.65 Reasonable

Defensive profit $7.08 Positive & increasingEnterprising profit 0.06% Bad

Debt Repayment Period 0.38 Good

Value versus PriceAvg intrinsic value estimate $143,817.67 ReasonableCurrent price $47.00

Undervalued 305895.05%Max purchase price $88,928.00

#REF!


29/48


30/48


31/48

0.0

10.0

20.0

30.0

40.0

50.0

60.0

AverageP/E

Average P/E

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Price/Book

Time >

Price/Book

0.1

0.2

Debt/Equity


32/48

0.0

0.0

0.0

0.0

0.1

0.1

0.1

0.1

Bookvaluepershare

Time >


33/48

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Price/Sales

Time >

Price/Sales

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Netmargin(%)

Time >

Net margin (%)

25.0

Book value per share


34/48

0.0

5.0

10.0

15.0

20.0

De

bt/Equity

Time >


35/48

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

ReturnonEquity

Time >

Return on Equity

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

ReturnonAssets

Time >

Return on Assets


36/48


37/48


38/48


39/48

$272InputsPrice 47

EPS 10.05

Median historical P/E 20.82Expected growth rate 21.00%

Margin of Safety 0.25

Conservative growth rate 15.75%

Growth decline rate 0.05Discount rate 0.09

CalculationsYear EPS*Growth rate

1 $11.632 $13.473 $15.484 $17.685 $20.07

Value in 5 years $417.81Present value $271.55

P/E valuation


40/48


41/48

-$3,796InputsTotal cash (mil $) $23.70

Free cash flow (mil $) $13.28

Shares outstanding (mil) 4.35Expected growth rate 21.00%

Margin of Safety 25.00%

Conservative growth rate 15.75%

Growth decline rate 5.00%Discount rate 9.00%Valuation last FCF 12

CalculationsYear FCF * Growth rate NPV FCF

1 $ 15.37 $ 15.372 $ 17.67 $ 16.213 $ 20.18 $ 16.994 $ 22.91 $ 17.695 $ 25.85 $ 18.316 $ 29.00 $ 18.857 $ 32.36 $ 19.298 $ 35.91 $ 19.659 $ 39.67 $ 19.91

10 $ 43.60 $ 20.08

Total NPV FCF $ 182.34

Year 10 FCF value $ 240.92Cash on Hand $ 23.70Total Debt $ 16,960.00

Company value: -$ 16,513.04

DCF valuation


42/48


43/48

#####InputsShareholders equity $123,549.00

Return on Equity (avg) 36.34%

Shares outstanding 4.35Dividend Yield 2.13%

Dividend payout ratio 9.95%

Margin of Safety 25.00%

Conservative growth rate 24.54%Discount rate 9.00%

Calculations (per share)Year Shareholders equity Dividend NPV dividends

1 $ 35,374.43 $ 1.25 $ 1.252 $ 44,056.40 $ 1.55 $ 1.423 $ 54,869.19 $ 1.93 $ 1.634 $ 68,335.77 $ 2.41 $ 1.865 $ 85,107.45 $ 3.00 $ 2.126 $ 105,995.43 $ 3.73 $ 2.437 $ 132,009.95 $ 4.65 $ 2.778 $ 164,409.23 $ 5.79 $ 3.179 $ 204,760.28 $ 7.21 $ 3.62

10 $ 255,014.72 $ 8.98 $ 4.13

Year 10 net income $ 92,672.35

Required value $ 1,029,692.78

NPV required value $ 434,953.36NPV dividends $ 24.39 '+

Intrinsic value: $ 434,977.75

ROE valuation


44/48


45/48

Earnings Power

Year 2013 2012 2011Accrual profit $8.65 $8.42 $0.40Defensive profit $7.08 $6.31 $4.62Enterprising profit 0.06% 0.05% 0.05%

Debt Repayment Period 0.38 0.00 0.00

http://www.valuespreadsheet.com/value-investing-blog/earnings-manipulation-detect-value-trap

Learn more about Earnings Power here:

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

Quality of Profits

Accrual profit Defensive profit Enterprising profit


46/48

2010$0.35$2.57

0.05%

0.00

-hewitt-heiserman*Slightly different from the original Earnings Power Chart

0.00%

0.01%

0.02%

0.03%

0.04%

0.05%

0.06%

0.07%

$0.00 $2.00 $4.00 $6.00 $8.00

Enterprisingpro

fits

Defensive profits

Earnings Power chart*


47/48

Altman Z Score -0.24

InputsWorking capital -$43,271.64Total assets $207,000.00Retained earnings $39.37EBIT $195.16Sales $911.57Market value of equity $318.15Total liabilities $83,451.00

Learn more about the Altman-Z score here:http://www.investopedia.com/terms/a/altman.asp


48/48

Valuation Workbook

Documents

Transcript of Valuation Workbook