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    DCF Model

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    Sai Dinesh Bille
    This document summarizes the free cash flow to firm (FCFF) model for valuing a company using discounted cash flow analysis. It includes a case study valuing Manish Detergents with projections of revenue, expenses, investments, and FCFF over 5 years. It calculates the weighted average cost of capital (WACC) of 13% to discount the projected FCFF. It sums the present value of the projected FCFF and terminal value to estimate an enterprise value and per share value for Manish Detergents of Rs. 162.90. The document also outlines the dividend discount model to value Aurobindo Pharma and provides a sensitivity analysis highlighting key valuation drivers.

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    DCF Model

    Uploaded by

    Sai Dinesh Bille
    666 views7 pages
    This document summarizes the free cash flow to firm (FCFF) model for valuing a company using discounted cash flow analysis. It includes a case study valuing Manish Detergents with projections of revenue, expenses, investments, and FCFF over 5 years. It calculates the weighted average cost of capital (WACC) of 13% to discount the projected FCFF. It sums the present value of the projected FCFF and terminal value to estimate an enterprise value and per share value for Manish Detergents of Rs. 162.90. The document also outlines the dividend discount model to value Aurobindo Pharma and provides a sensitivity analysis highlighting key valuation drivers.

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    DCF model

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    This document summarizes the free cash flow to firm (FCFF) model for valuing a company using discounted cash flow analysis. It includes a case study valuing Manish Detergents with projections of revenue, expenses, investments, and FCFF over 5 years. It calculates the weighted average cost of capital (WACC) of 13% to discount the projected FCFF. It sums the present value of the projected FCFF and terminal value to estimate an enterprise value and per share value for Manish Detergents of Rs. 162.90. The document also outlines the dividend discount model to value Aurobindo Pharma and provides a sensitivity analysis highlighting key valuation drivers.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    666 views7 pages

    DCF Model

    Uploaded by

    Sai Dinesh Bille
    This document summarizes the free cash flow to firm (FCFF) model for valuing a company using discounted cash flow analysis. It includes a case study valuing Manish Detergents with projections of revenue, expenses, investments, and FCFF over 5 years. It calculates the weighted average cost of capital (WACC) of 13% to discount the projected FCFF. It sums the present value of the projected FCFF and terminal value to estimate an enterprise value and per share value for Manish Detergents of Rs. 162.90. The document also outlines the dividend discount model to value Aurobindo Pharma and provides a sensitivity analysis highlighting key valuation drivers.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 7
    At a glance
    Powered by AI
    The key financial details and valuation of Aurobindo Pharma using FCFF and DDM models

    Aurobindo Pharma is a pharmaceutical company with sales growing at a CAGR of around 0.19% between 2014-2018.

    FCFF is calculated as cash from operations - capex. Capex details and FCFF calculation is given for Aurobindo Pharma for the years 2014 to 2018.

    Free cashflows to firms( FCFF) Model

    (EBIT(1-tax)+Dep&Ammo-Change in working capital)- capex

    Cash flow from operating activities after wc changes and tax

    Discounted rate= Coast of capital/WACC

    Vt/(1+k)^t Terminal value

    0.842975207
    0.7
    0.3528
    1.195775207

    Manish detergents case Study


    1 2 3 4 5
    Revenue 950 1000 1200 1450 1660
    PBIT 140 115 130 222 245
    tax @ 35% 49 40.25 45.5 77.7 85.75
    PAT 91 74.75 84.5 144.3 159.25
    Depri 55 85 80 83 85
    NOPAT 146 159.75 164.5 227.3 244.25
    Gross Investments(Capex) 100 250 85 100 105
    Investments in current assets 10 15 70 70 70
    FCFF 36 -105.25 9.5 57.3 69.25

    WACC weights
    Cost of debt 0.078 0.4 0.0312
    Cost of Equity 0.1648 0.6 0.09888
    0.13008 Discount rate

    PV of FCFF
    Years PVIF@13%
    1 36 0.884893105 31.85615178
    2 -105.25 0.783035807 -82.4145187
    3 9.5 0.692902987 6.582578373
    4 57.3 0.613145075 35.13321281
    5 69.25 0.542567849 37.57282357
    6 99.55 0.480114549 47.79540334
    76.52565117 PV of cfs during projection
    PV of cashflow during exolicit forecast period
    3650.166667 FCFF6(1+g)/WACC-g
    PV of terminal value ₹ 1,752.50

    Enterprise value ₹ 1,829.02


    Free Cash Flow to Equity ₹ 1,629.02
    Value per share ₹ 162.90 Fair value of share today

    Fair Value of company by projecting 6 years


    6
    1770
    287
    100.45
    186.55
    87
    273.55
    120
    54
    99.55
    AUROBINDO PHARMA
    Op after WC Direct Tax
    2014 990.23 -343.95
    2015 1732.4 -495.59
    2016 2152.39 -732.63
    2017 4052.28 -773.7
    2018 2653.08 -698.56

    SALES Growth Rate


    2014 8259.16
    2015 12272.53 1.485929562
    2016 13955.22 1.137110278
    2017 15089.86 1.081305777
    2018 16499.83 1.093438243

    CAGR 0.188874187

    This is a zero debt company because


    So only cost of equity

    FCFF cash from operating - capex(net capex)


    FCFE FCFF-Intrest(1-t)-Net increase income in debt

    0.206400138
    FCFE
    FCFF interest*(1-t)
    272.23 245.0264 27.2036
    490.91 126.2973 364.6127
    90.51 202.793 -112.283
    1593.97 52.7088 1541.2612
    713.89 61.3988 652.4912

    1) DDM Model
    EPS 40.36
    DPS 2.5
    Payout ratio 0.061942517
    ROE 0.735146622
    b 0.938057483
    growth=ROE*b 0.68960979
    FCFF before CAPEX Purchase Sales Net CAPEX FCFF HPR
    646.28 -390.48 16.43 -374.05 272.23
    1236.81 -768.29 22.39 -745.9 490.91 1.8032913345
    1419.76 -1447.46 118.21 -1329.25 90.51 0.1843718808
    3278.58 -1694.15 9.54 -1684.61 1593.97 17.6109822119
    1954.52 -1529.92 289.29 -1240.63 713.89 0.4478691569

    CAGR 0.2725469923

    2019 906.6403
    2020 1151.433181
    2021 1462.32013987
    2022 1857.14657763
    2023 2358.5761536

    Termnal Value
    Treasury bill yield 6.50%
    Market risk pre 7.27%
    Growth rate 0.055
    is is a zero debt company because all the term loans are for working capital
    only cost of equity

    breakup of net cash used in financial activities


    Net Debt
    267.46 294.6636
    340.77 705.3827 2.393857606
    603.32 491.037 0.696128499
    -1727.91 -186.6488 -0.38011148
    1202.22 1854.7112 -9.93690396
    27% WACC 0.141335 STEPS:
    PVIF@14% 1
    906.6403 0.8771929825 795.2985088 2
    1151.433181 0.7694675285 885.990444 3
    1462.32014 0.6749715162 987.024442 4
    1857.146578 0.5920802774 1099.579861 5
    2358.576154 0.5193686644 1224.970547

    4992.863802
    29274.09226 15204.0461971 15204.0462
    20196.91
    Intrinsic Value 344.715992

    SENSITIVITY ANALYSIS
    CAGR OF FCFF
    Forecasting 5 Years
    WACC
    PVIF
    Terminal Value

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