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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 - -
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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%
- -
- -
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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33 1.3 1.00%
34 1.3 1.25%
35 1.3 1.50%
36 1.3 1.75%
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1.3
515.7
520.9526.3
531.8
537.5
543.4
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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
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