Financial modelling and Valuation of Godrej Industries

By:
Garima Gupta
Nikita Aggarwal
Shivani Joshi
Sparsh Gupta
INDEX

Contents
INDEX………………………………………………………………………………………………….1
BACKGROUND AND MOTIVATION……………………………………………………………….2
PROJECT OBJECTIVES………………………………………………………………………………3
LIST OF FIGURES…………………………………………………………………………………….4
ACKNOWLEDGEMENT……………………………………………………………………………...5
LITERATURE REVIEW AND RESEARCH METHODOLOGY……………………………….....6-7
INDIAN ECONOMY OVERVIEW…………………………………………………………………8-9
SECTOR OVERVIEW……………………………………………………………………………10-12
COMPANY OVERVIEW-GODREJ INDUSTRIES………………………………………………13-14
VALUATION AND DISCOUNTED CASHFLOW OF GODREJ AGROVET………………… .15-21
VALUATION AND DISCOUNTED CASHFLOW OF GODREJ PROPERTIES……………….22-29
VALUATION AND DISCOUNTED CASHFLOW OF GODREJ INDUSTRIES….……………30-38
GODREJ PROPERTIES AND INDUSTRIES BETA TABLE…………………………………...39-44
REREFERENCE……………………………………………………………………………………....45

1
BACKGROUND AND MOTIVATION

Valuation of companies is the stepping stone towards the setting of goals for the business and its
investors. It becomes essential to carry out this exercise every year to note the source and path of growth
for the future and figure out the room for improvement.

Knowing what a business and its components are worth is invaluable information and can aid the
stakeholders in innumerable ways. This is why understanding valuation determination processes is
crucial and motivated us to take it up as our project.

The aim of valuation of the business is arriving at a fair market value which is, sic. “The price at which
the property will change hands between a willing buyer and a willing seller, neither being under any
compulsion to buy or to sell and both having a reasonable knowledge or relevant facts.”

Thus, we need to arrive at a clear and supportable estimate of what the fair market value of the business
is, the methods being varying with the nature of business as follows:

Capitalization of earnings - The annual earnings over one or more years is divided earnings by a “cap
rate” that signifies the cost of capital and the risk of the company.

Discounted cash flow - This method is frequently used to value new businesses or companies with
volatile earnings, begins by forecasting future earnings over several years. To account for the time value
of money, a discount rate is then applied to each year of forecasted earnings.

Comparable Sales and Discounts – Under this, some appraisers modify their estimates of value based
on an analysis of recent sales of companies in the same market or industry that are comparable.

2
PROJECT OBJECTIVES

 Our main objective is to valuate the business of Godrej Group and project their revenues, costs
and ultimately market price for the next 5 years using financial modelling
 For this, we had to segregate and then bundle the businesses in the sub-groups within the Godrej
Group to arrive at the accurate valuation of Godrej
 The method used for valuation may using discounted cash flow method
 This needed us to gauge the future prospects from the current financial statements and market
presence of the functional areas of the Godrej Group across the following sub-groups:
o Godrej Consumer Private Limited: Consumer products
o Godrej Properties: Real Estate developer and services
o Godrej Agrovet: Indian animal feed and agribusiness company
 Hence, we have tried to compile the information about the business and used appropriate
methodology : to determine the closest valuation
 The following encompasses various objectives of our project:
o Noting the assets, liabilities, revenue, expenses from the official financial statements of
the company
o To predict the company's future performance based on macroeconomic factors, industry
prospects and company performance in recent past
o Explore the income, market or asset based approach for the best method of the valuation
of Godrej
o Futher analysis involving quantitative analysis of financial metrics for arriving at
projections and proceeding at financial modelling

3
LIST OF FIGURES:
1. India’s real GDP growth rate (Source: ibef.org)……………………………………………........10
2. Percent Contribution towards Real Estate Industry(Source:
https://www.slideshare.net/surabhi786/real-estate-sector-of-india................................................12
3. Average commercial rental value trend (Source: http://www.grantthornton.in/globalassets/1.-
member-
firms/india/assets/pdfs/realestate_annual_handbook_2018.pdf)...................................................13
4. Agribusiness growth till 2020 (Source: datamonitor agricultural products in India, India Brand
Equity Foundation, WEC, RBI and BCG reports)………………………………………………14
5. Business structure of Godrej (Source: https://www.dsij.in/article-details/ArticleID/5748/Godrej-
Industries-Awesome-Indeed).........................................................................................................15

4
LIST OF TABLES:
1. Feed Industry (Source: Industry Notes, YBL Research)……………………………………………………………………….11
2. Valuation of Godrej Agrovet using EV/EBITDA and PE ratio: Competition………………………………………………15
3. Valuation of Godrej Agrovet using EV/EBITDA and PE ratio: Ratios………..………………………………………………15
4. Valuation of Godrej Agrovet using EV/EBITDA and PE ratio: Expected market price calculation…………….16
5. Godrej Agrovet –Valuation as per DCF model………………………………………………………………………………………..17
6. Godrej Agrovet-Existing and Projected Balance Sheet………………………………………………………………………18-19
7. Calculations for discounted cashflows……………………………………………………………………………………………………20
8. Combined expected price………………………………………………………………………………………………………………………21
9. Valuation of Godrej Properties using EV/EBITDA and PE ratio: Competition…………………………..………..……22
10. Valuation of Godrej Properties using EV/EBITDA and PE ratio: Industry Ratios….……..……………………………22
11. Valuation of Godrej Properties using EV/EBITDA and PE ratio: Expected market price calculation….…….23
12. Godrej Properties –Valuation as per DCF model…………………....……………………………………………………………..24
13. Godrej Properties-Existing and Projected Balance Sheet………………………………………………………..………..25-27
14. Calculation for discounted cashflows………………………………………………………………………………………………......28
15. Combined Expected price……………………………………………………………………………………………………………………..29
16. Valuation of Godrej Industries using EV/EBITDA and PE ratio: Competition…………………………..………..……30
17. Valuation of Godrej Industries using EV/EBITDA and PE ratio: Ratios….……..…………………………………………30
18. Valuation of Godrej Industries using EV/EBITDA and PE ratio: Expected market price calculation….……..31
19. Income statement and estimated projection of Godrej Industries(Standalone)....………………………………...32
20. Balance Sheet actual and projected of Godrej Industries………………………………………………………………….33-35
21. Discounted Cashflow for Industries (Standalone)…….…………………………………………………………………......36-37
22. Combined Expected price……………………………………………………………………………………………………………………..38

5
ACKNOWLEDGEMENT
First and foremost, we are indebted to the FMS Scholastic council for giving us the opportunity to
undertake this fulfilling and enligtening project.
This project has enabled us to understand the very crucial concept and mechanism of determining the
valuation of a conglomerate, which was a complex problem but evermore challenging and exciting to
execute.

We would also want to acknowledge our mentor Ajay Agarwal whose guidance and knowedge endowed
us with the financial intellect of taking the right steps in form of the methodology, sources and
methodology at the right time without compromising with our course of learning and growing during the
course of our project “Financial modelling and valuation of Godrej Group”.
He endowed us with the concepts of valuation and the valuation methods. We will be grateful to him for
guiding us to the successful completion of our project.

Last, but not the least, we are thankful for the team memebrs who put their relentless effort in executing
this project a success for all of us.

6
LITERATURE REVIEW AND RESEARCH METHODOLOGY
The aim of this research project is to gain an understanding of the valuation of the conglomerate –
Godrej Industries. The company is engaged in business of manufacturing and marketing of oleo-
chemicals, and it has a strong presence in Consumer goods, Real estate, Chemicals and agricultural
products.
Godrej Industries Limited is engaged in chemicals business and is the holding company of Godrej
Consumer Products Limited, Godrej Agrovet, Godrej Properties and Godrej Nature’s Basket.

Hence, the valuation of such a diverse range of business together needs proper exploration and
synthesis. For a conglomerate having business in different sectors like Godrej Group, ‘Sum of the parts’
method is followed.
‘Sum of the parts’ method
1. ‘Sum of parts’ is a break-up analysis of a company to segregate the diverse entities within a
business group for proper valuation of the business as a whole, since the various entities have
different equity investments and industry trajectory
2. The business group is broken down into individual units
3. For each of the individual units valuation is done by calculating value for a business by
combining discounted cash-flow method with any of the asset or market based valuation and
then combined together to get the overall equity value of the company
4. After adding non-operating assets and deducting non-operating liabilities 7 debt from this, we get
the implied market capitalization
5. This is compared to the actual market capitalization to calculate the discount for the
conglomerate/business group
There are three approaches for calculating the Valuation of any company:

1. Income based
2. Market based
3. Asset based

Each of these approaches is for different types of businesses and for each of these approaches, different
methods are used and then a value is arrived at for the business. None of the valuation approaches
suggested can be used to perform the valuation comprehensively. In the end, a value is obtained after
proper analysis of the solutions obtained from the different selected approaches, based on the nature of
the business.
Market Approach:
1. In this approach, we refer to the market place for indication of the business value

7
 2. Usually, Key financial statistics related to comparable business (peers/competitors) are studied to
collect evidence that can be used to estimate the value of the business. This is known as
Comparable companies Analysis.
3. After this we calculate the comparable company’s Enterprise value using Equity and Debt value.
4. Then, the ratio of company’s value to the particular financial statistic (sales, earnings, etc.) is
used to compute our target company’s value.
Income approach:
1. This approach of business valuation is based on the economic principles of future expected
income to value a business.
2. We make an assumption of the future possible stream of cash flows for the business and
calculate its value on the basis of this assumption.
3. We estimate that the cash flows would grow at a certain rate which we decide on the basis of its
CAGR of past few years, industry and market trends and any other expected happenings, etc.
4. These returns are discounted using Weighted average cost of capital, which is a combination of
both cost of equity and cost of debt. This is known as Discounted cash flow analysis.
5. For calculating Cost of equity, we need ‘Beta’ of our company which we calculate with the help
of regression, on the basis of our company’s performance with respect to market index (Sensex
or Nifty).
Asset Approach:

1. Asset approach is the most basic approach for valuating a business

2. This method is based entirely on the tangible assets of the business and is carried out by
calculating their value and deducting the debts of the business.
3. The drawback is that this method considers only assets for valuation and not the future cash
flows
4. Another drawback is that this method doe not account for the ‘Goodwill’ of the business, which
is a great factor and value-addition to many companies

Thus, this method basically calculates the lowest possible value of the business among the 3 different
approaches, since “Goodwill” is a factor that is substantial in determination of value of enterprises as a
whole.
Discounted Cash flow Method

1. This method calculates works on the determination of present value of the cashflow over the
stipulated period of investment
2. The credibility of the Discounted cash-flow method is based on the profit and revenues that we
can assume the investment can give us and the reliability of the estimates that we use to predict
the cash flow.

8
INDIAN ECONOMY OVERVIEW
Uncertainty over 2019 Elections

 India’s 2019 general elections pose a serious risk to the political stability of the country. The
strong and stable Modi government faces threat of a coalition government
 A coalition government at centre will slow down the pace of reforms as it happened during the
UPA I & UPA II.

Medium and Long Term Effects of GST

 GST the biggest tax reform in India has been implemented with the intent of transforming the
existing base of indirect taxation in India
 In the short term, GST has created cost of compliance especially for small scale manufacturers
and traders
 In long term, GST would be based on minimum tax slabs and minimum tax rate. Inflation will
drop due to elimination of cascading effect of tax is eliminated
 The revenue of government is expected to increase with extended tax net, boosting the economy
and increasing the buyers’ power

Fastest growing economy

 As per the Economic Survey 2018-19 and Asian Development Bank, India continues to hold its
position as the fastest growing economy
 The Indian economy is expected to grow at 7.4% in 2018-19 and 7.8% in 2019-20 as per the IMF
Economic Outlook report
 The Indian economy growth is supported by strong private consumption, steady flow of FDI,
recovery in exports as well as the implementation of National Goods and Services tax
GDP Growth Rate as compared

India’s real GDP growth rate

12
10.09
to last year (in %)

10
7.9 7.6
8 7.1 7.4
6.9
6.4
5.88 5.9
6 4.9

0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Year

Figure 1: (Source: www.ibef.org)

9
Increased FDI Inflow
India achieved rank 11th in the Global FDI Confidence Index 2018. This makes it the 2nd highest ranked
emerging market for FDI in world. FDI inflows US$ 35.84 billion during the year 2017-18. The current
government’s claims of India being the most open economy might not be true. However, India has
improved significantly in terms of fewer restrictions in manufacturing, infrastructure development,
retail, technology and other critical sectors.

Rising NPAs and implementation of Insolvency and Bankruptcy Code (IBC)

The gross non-performing assets of banks stood at ₹ 10.25 lakh crore as on 31st March, 2018.In the light
of growing NPAs, government of India brought in amendment to the existing insolvency and bankruptcy
Code during 2017-18. It is aimed at solving the twin balance sheet (TBS) problem faced by the
economy. The major factor behind the effectiveness of the new IBC code has been the adjudication by
the judiciary as it makes sure speedy redressal of cases within 180 days. It also prevents promoters from
participating in the auction process and reclaiming the company at lower prices. The government has
planned recapitalization of ₹2.11 trillion capital of NPA laden public sector banks.

10
SECTOR OVERVIEW
Company: Godrej Properties
Sector: Real estate
The Real Estate contributes 24% to the Construction GDP whereas the rest is by of infrastructure. The
real estate sector consists of the following segments:

Percent Contribution towards Real Estate Industry

9% 9% Commercial/Retail

Residential

SEZ
82%

This sector has undergone a paradigm shift in the recent years with a slew of government measures and
economic drivers.
The 4 major developments with long term implications on the economy are:

 RERA: Real estate regulation act has led to a paradigm shift in the way real estate development
industry works, but the discord in implementation across states might be a problem for the
industry
 Goods and service Tax of 12% slab for real estate
 Affordable housing by the Government under the “Housing for All by 2022” mission
 Emergence and development of smart cities
Future Trends:
As residential real estate sector is recovering from the shocks of demonetization and support of the
RERA act, the residential sales volume is expected to regain the momentum by increasing over 25%,
although the major cities like Bangalore, Chennai, etc faced a reduction in sales at the end of 2017.

11
Company: Godrej Agrovet
Sector: Feed Industry and Agribusiness (Chemicals)

 The chemicals division of Godrej Industries is a significant player in the business of Oleo
chemicals, surfactants. More than 25% of the revenue comes from its export business
A growth of 16% was experienced with the division. The sales of the division included sales of
Fatty acids, Fatty Alcohol Surfactants and Glycerin.
 The company focuses on using energy saving technology. More than 40% of the energy
requirements were met by way of renewable sources
 Godrej Industries (Chemicals) bagged ‘Trishul Award’ for Outstanding Export Performance. As
on 31 March, 2018 there were 1,129 persons were employed
 The company also participated in IPO of Godrej Agrovet Limited as a promoter to reduce its
stake in the business. Around 24% of the shares of Godrej group are held by trusts
 It is not only involved in conserving forests but also in supporting a hospital to provide health
care services at affordable costs

Functional domain of Agrovet, the Indian feed industry is distributed across 4 major segments,
estimations of the markets for which are as follows:

Sector Feed Consumption Potential Feed Volume Requirements (2017-18) Feed Consumption
Estimated Future Annual (million tonnes) Growth rate (%)
Broiler 9.4 10.4 8
Cattle 2-3 11.6 5-6
Aqua 7.5 67 6
Layer 1 7 9
Animal feed industry can be mainly divided into poultry, cattle and aqua feed sectors. Of this, about 11 percent
of cattle feed, 14 percent of aqua feed and 55 percent of poultry feed requirements are met through compound
feed, creating room for many other players to grab the opportunity of the potential market.
12
On the other hand, agri-business is the new development in the agricultural world with the Indian economy has
gone beyond the $2 Tn benchmark.

The growing population and expanding markets are a good market for retail chains and burgeoning food
suppliers, calling for immediate action for agribusiness initiatives and bolstered by the farmer-friendly initiatives
by the givernemnt.

Godrej Agrovet is a recent acquisition of Godrej in the agribusiness world with the hopes of tapping into the
potential of the industry.

Estimated growth in the Agribusiness Industry till 2020

13
COMPANY OVERVIEW

Godrej portrays itself as a 120 year young company.

It was established in the year 1897 by the two brothers, Ardeshir Godrej and Pirojsha Godrej. Godrej
caters to 4 different segments in its business. These relates to:

 Fast Moving Consumer Goods

 Industrial engineering and Appliances
 Furniture and Durable products
 Real Estate
 Information Technology
 Agricultural Products
 Chemicals
The headquarters of the group is located in Mumbai. It functions by way of using subsidiary or associate
companies. Company also functions in the Joint venture and partnership formats. The company has
presence in various countries and continents.

The FMCG business is controlled by Godrej Consumers Products Limited. It is a listed company but has
many private limited companies as subsidiaries. Godrej and Boyce caters to the needs of consumers with
respect to durable goods by manufacturing furniture, washing machines, air conditioners, home security

14
systems and audio visual solutions, access control systems, perimeter office solutions etc. for its
institutional buyers.
The IT business was looked after by Godrej InfoTech Limited. It started as a department of Godrej &
Boyce and in 1999 a new company for providing IT solutions came into the picture.
Godrej Properties limited controls the real-estate arm of the company.

The group is not only involved to cater to the needs of industries and consumers but also to the
requirements of farmers. Godrej Agrovet Limited is a major player in animal feed and agribusiness.
Godrej Industries Limited is the parent company of the above mentioned subsidiaries. It is a
manufacturer of oleo-chemicals, edible oils, and vanaspati& bakery fats.
GCPL, Godrej Agrovet, Godrej Properties and Godrej Industries are listed companies among the group.

Godrej Industries

 120 year Young Group

 23% holding in trust
 1918: World’s first vegetable soap
 1994: First acquisition of Translektra and entered into the segment of mosquito killing
 100+ chemicals used in 24 industries
 2 plants : Gujarat and Maharashtra
 Exported to 80 countries
 Green Company: Reduced specific energy consumption by 30% and CO2 consumption
according to 20%, Water consumption by 25%

GCPL

 Asia Africa Latin America

 No 7 in Best Places to work in India 2018
 Power Brands : Good Knight, No.1 , Cinthol, Pro:Voke,

15
Valuation of Godrej Agrovet using EV/EBITDA and PE ratio

Calculation and assumptions:

1. Top companies as per market reports are used to calculate industry representing EV/EBITDA
and PE Ratios.
2. Median is used as a measure of central tendency for selecting ratios.

Competition
Name Last Market Cap. Sales(in ₹cr) Net Profit Total Assets Enterprise EBITDA EPS
Price Value

Insecticides India 731.6 1512.06 1073.25 83.97 652.64 134.01 151.06 40.63
PI Industries 809.7 11166.36 2277.09 366.55 1958.56 12170.67 552.05 26.55
GSFC 111.35 4439.04 6270.57 475.73 7328.53 5909.79 661.32 11.94
Zuari Agro Chemicals 361.45 1520.19 4647.57 41.95 3505.15 5939.96 622.27 30.67
Coromandel
International 408.85 11955.34 10943.11 659.41 5902.57 17498.85 1278.02 22.5

Ratios
Company EV/EBITDA P/E
Insecticides India 0.89 18.01
PI Industries 22.05 30.50
Gujarat State Fertilisers and
Chemicals 8.94 9.33
Zuari Agro Chemicals 9.55 11.79
Coromandel International 13.69 18.17
Median 9.55 18.01

EV/EBITDA P/E
40.00 100.00
EV/EBITDA

30.00 80.00
20.00 60.00
P/E

10.00 40.00
0.00
20.00
0.00
HUL Dabur Marico P & G Emami
India
Companies Companies

16
Expected market price calculation:

Sensitivity Sensitivity
Particulars +10% -10%
Estimated Enterprise Value(from
EV/EBITDA)
Industry Ratios 10.50 8.59
EBITDA 474.86 474.86
Enterprise Value 4986.12 4079.55
Debt 402.8 402.8
Non current Investments 195.23 195.23
Cash 31.82 31.82
Market Capitalization 4810.37 3903.80
Number of shares 19.2 19.2
Estimated Prices 250.54 203.32

Particulars
Estimated Enterprise value from
P/E
Industry Ratios 19.81 16.21
EPS 12.24 12.24
Estimated Price 242.44 198.36

17
Godrej Agrovet - Valuation as per DCF Model
Existing and projected Income Statement

Particulars Mar'2016 Mar'2017 Mar'2018 Mar'2019E Mar'2020E Mar'2021E Mar'2022E Mar'2023E

INCOME
Total Revenue 3,814.11 4,970.09 5,217.34 5,963.36 6,828.05 7,784.62 8,836.67 9,985.44
EXPENSES
Cost Of Materials Consumed 2,857.28 3,619.65 3,790.47 4,359.04 4,991.10 5,689.86 6,457.99 7,297.52
Purchase Of Stock-In Trade 173.51 183.63 170.81 196.43 224.91 256.40 291.02 328.85
Changes In Inventories Of
FG,WIP And Stock-In Trade (85.54) (12.77) (7.66) (8.81) (10.09) (11.50) (13.05) (14.75)
Employee Benefit Expenses 155.68 232.75 276.34 317.79 363.87 414.81 470.81 532.02
Finance Costs 97.67 86.34 45.31 52.11 59.66 68.01 77.20 87.23
Depreciation And
Amortization Expenses 52.37 74.66 85.92 84.33 92.61 101.73 110.55 120.14
Other Expenses 349.70 449.81 512.52 589.40 674.86 769.34 873.20 986.72
Total Expenses 3,600.67 4,634.07 4,873.71 5,590.29 6,396.94 7,288.66 8,267.72 9,337.73
Profit/Loss Before
Exceptional items 213.44 336.02 343.63 373.07 431.11 495.96 568.96 647.71
Exceptional Items 88.51 20.00 12.05 - - - - -
Profit/Loss Before Tax 301.95 356.02 355.68 373.07 431.11 495.96 568.96 647.71
Total Tax Expenses 73.39 101.64 120.71 111.92 129.33 148.79 170.69 194.31
Profit/Loss For The Period 228.56 254.38 234.97 261.15 301.78 347.17 398.27 453.40
EARNINGS PER SHARE
Basic EPS (Rs.) 24.69 13.74 12.24 13.60 15.72 18.08 20.74 23.61
Equity Share Dividend 41.13 - 83.31 91.40 105.62 121.51 139.39 158.69
Tax On Dividend 8.44 - 17.65 18.28 21.12 24.30 27.88 31.74
Retained Earnings 178.99 254.38 134.01 151.47 175.03 201.36 231.00 262.97

18
 Existing and Projected Balance Sheet

Particulars Mar'2016 Mar'2017 Mar'2018 Mar'2019E Mar'2020E Mar'2021E Mar'2022E Mar'2023E

EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS
Equity Share Capital 92.57 185.13 192.03 192.03 192.03 192.03 192.03 192.03
Reserves and Surplus 690.51 823.65 1,219.34 1,370.81 1,545.84 1,747.20 1,978.19 2,241.16
Non-Controlling Interest 232.90 254.07 269.28 273.86 266.89 214.56 141.03 44.90
Total Shareholder’s
Funds 1,015.98 1,262.85 1,680.65 1,836.70 2,004.76 2,153.79 2,311.25 2,478.09
NON-CURRENT
LIABILITIES
Long Term Borrowings 20.77 20.56 14.14 14.38 14.01 11.27 7.41 2.36
Deferred Tax Liabilities
[Net] 144.79 166.34 173.03 169.31 165.00 132.65 87.19 27.76
Long Term Provisions 3.25 5.02 6.44 6.55 6.38 5.13 3.37 1.07
Other Non-Current
Liabilities 53.64 50.56 14.05 14.29 13.93 11.19 7.36 2.34
Total Non-Current
Liabilities 222.45 242.48 207.66 204.53 199.33 160.24 105.32 33.53
CURRENT
LIABILITIES
Short Term Borrowings 1,260.49 639.25 388.66 444.23 508.65 579.91 658.28 743.85
Trade Payables 336.74 840.85 955.01 1,091.57 1,249.84 1,424.94 1,617.51 1,827.79
Other Current Liabilities 271.38 203.27 288.47 329.72 377.53 430.42 488.59 552.10
Short Term Provisions 17.36 25.74 32.02 36.60 41.91 47.78 54.23 61.28
Total Current
Liabilities 1,885.97 1,709.11 1,664.16 1,902.12 2,177.92 2,483.04 2,818.61 3,185.03
Total Capital And 3,124.40 3,214.44 3,552.47 3,943.35 4,382.01 4,797.07 5,235.18 5,696.65
19
Liabilities
ASSETS
NON-CURRENT
ASSETS
Tangible Assets 1,098.72 1,222.05 1,247.55 1,370.09 1,505.00 1,635.48 1,777.28 1,931.37
Intangible Assets 253.69 250.74 244.40 268.41 294.83 320.40 348.18 378.36
Capital Work-In-Progress 62.02 50.21 189.85 208.50 229.03 248.88 270.46 293.91
Intangible Assets under
development 1.81 0.23 0.56 0.62 0.68 0.73 0.80 0.87
Biological Assets other
than bearer plants 8.86 4.67 4.26 4.68 5.14 5.58 6.07 6.60
Fixed Assets 1,425.10 1,527.90 1,686.62 1,852.29 2,034.67 2,211.08 2,402.78 2,611.10
Non-Current Investments 155.17 175.46 195.23 198.55 193.50 155.56 102.24 32.55
Deferred Tax Assets
[Net] 11.71 6.78 6.55 - - - - -
Long Term Loans And
Advances 13.01 14.98 13.77 14.00 13.65 10.97 7.21 2.30
Other Non-Current Assets 52.32 67.60 61.70 62.75 61.15 49.16 32.31 10.29
Total Non-Current
Assets 1,657.31 1,792.72 1,963.87 2,127.60 2,302.98 2,426.77 2,544.55 2,656.24
CURRENT ASSETS
Inventories 666.53 738.07 762.86 871.94 998.37 1,138.24 1,292.07 1,460.03
Trade Receivables 454.51 521.95 631.52 721.82 826.48 942.27 1,069.61 1,208.66
Cash And Cash
Equivalents 41.96 62.30 31.82 36.37 41.64 47.48 53.89 60.90
Short Term Loans And
Advances 197.70 22.85 14.69 16.79 19.23 21.92 24.88 28.12
Other Current Assets 106.38 76.55 147.71 168.83 193.31 220.39 250.18 282.70
Total Current Assets 1,467.08 1,421.72 1,588.60 1,815.75 2,079.04 2,370.30 2,690.63 3,040.41
Total Assets 3,124.39 3,214.44 3,552.47 3,943.35 4,382.01 4,797.07 5,235.18 5,696.65
20
Calculations for Discounted Cash Flows
Calculations and assumptions:
1. We have assumed that after 2023 FCFF will grow at a constant rate of 6.5% (approximately @GDP).
2. Beta is calcuated as 0.28 using covariance method for every day for last 1 year.
3. WACC is calculated using CAPM method as 9.06%
Particulars Mar'2019E Mar'2020E Mar'2021E Mar'2022E Mar'2023E
Total Revenue 5,963.36 6,828.05 7,784.62 8,836.67 9,985.44
EBITDA 596.34 682.80 778.46 883.67 998.54
Depreciation And Amortization Expenses 84.33 92.61 101.73 110.55 120.14
EBIT 512.00 590.19 676.73 773.11 878.41
Tax 174.08 200.66 230.09 262.86 298.66
Depreciation And Amortization Expenses 84.33 92.61 101.73 110.55 120.14
Cash Flow after tax 422.25 482.14 548.37 620.81 699.89
CAPEX 250.00 275.00 278.14 302.25 328.46
Change in Working capital (10.80) (12.52) (13.85) (15.24) (16.64)
Free Cash Flow after tax 183.06 219.66 284.09 333.79 388.06
Free Cash Flow after tax for Mar'2024 413.29
Terminal value 16,127.88
Free Cash Flow after tax 183.06 219.66 284.09 333.79 16,515.94
PV @9.06% 167.85 184.67 218.99 235.92 10,703.47
Sum of PV (Enterprise value) 11,510.91
Debt 402.80
Cash 31.82
Non-Current Investments 195.23
Value of Shares 11,335.16
Number of Shares 19.20
Value per share 590.28

21
Combined Expected Price

Particulars High Low Average Weights

DCF 590.28 590.28 590.28 0.7 413.20
EV/EBITDA 250.54 203.32 226.93 0.15 34.04
P/E Ratio 242.44 198.36 220.4 0.15 33.06

Final Value of Share 480.30

Expected value of a share of Godrej Agrovet Limited is Rs. 480.30. According to our calculations and the prevalent market situations,
we conclude with reasonable certainity that the stock of Godrej Agrovet is overvalued and an investor should go short on this stock. It
is a good selling opportunity.

22
Valuation of Godrej Properties using EV/EBITDA and PE Ratio
Calculation and assumptions:
1. Top companies as per market reports are used to calculate industry representing EV/EBITDA
and PE Ratios.
2. Median is used as a measure of central tendency for selecting ratios.
Overview of competitors:
Name Last Market Sales(in Net Total Enterpris EBITDA EPS
Price Cap. ₹cr) Profit Assets e Value
DLF 190.5 33,986.82 3,055.90 365.2 22,442.70 33,372.99 1,555.37 3.34
12.2
480.35 17,465.63 974.19 417.16 5,336.78 18093.77 524.04
Oberoi Realty 8
Delta Corp 238.4 6,380.54 375.80 104.56 997.95 4,214.35 76.39 2.28
Indiabulls
155.1 7,393.31 82.36 -19.75 8,721.94 6599.98 344.73 0.34
Real
Sunteck 25.1
407.9 5,968.19 175.73 123.59 1,077.84 2588.8 144.29
Realty 5

Industry Ratios

Company P/E EV/EBITDA

DLF 57.03593 21.456624
Oberoi
Realty 39.11645 34.52746
Delta Corp 104.5614 55.16887
Indiabulls
Real 456.1765 19.14536
Sunteck
Realty 16.21869 17.941645
Median 57.03593 21.456624

23
 EV/EBITDA P/E
60
50 500
EV/EBITDA

40 400

P/E Ratio
30
20 300
10 200
0
100
0
DLF Oberoi Delta Indiabulls Sunteck
Realty Corp Real Realty
Companies
Companies

Expected market price calculation:

Sensitivity Sensitivity
Particulars +10% -10%

Estimated Enterprise
Value(from EV/EBITDA)
Industry Ratios 23.60 19.31
EBITDA 783.59 783.59
Enterprise Value 18494.52 15131.88
Debt 3702.86 3702.86
Cash 314.73 314.73
Market Capitalization 15106.39 11743.75
Number of shares 21.63 21.63
Estimated Prices 698.40 542.94

Particulars
Estimated Enterprise value from
P/E
Industry Ratios 62.74 51.33
EPS 11 11
Estimated Price 690.13 564.66

24
 Godrej Properties – Valuation as per DCF Model
Existing and projected Income Statement

Particulars Mar'2014 Mar'2015 Mar'2016 Mar'2017 Mar'2018 Mar'2019 Mar'2020 Mar'2021 Mar'2022 Mar'2023
INCOME
Total Revenue 1,254.22 1,926.56 2,252.06 1,701.38 2,390.67 2,653.64 2,958.81 3,313.87 3,728.10 4,212.76
EXPENSES
Operating And
Direct Expenses 838.08 1,486.41 1,734.16 1,080.90 1,468.66 1,630.21 1,817.69 2,035.81 2,290.29 2,588.02
Employee
Benefit
Expenses 25.30 35.48 44.98 92.84 138.42 153.65 171.32 191.87 215.86 243.92
Finance Costs 4.48 4.73 40.57 103.82 150.13 166.64 185.81 208.11 234.12 264.55
Depreciation
And
Amortization
Expenses 5.77 10.01 14.19 14.50 16.13 20.61 22.68 24.95 27.46 30.22
Other Expenses 33.21 63.96 206.83 156.50 286.52 318.04 354.61 397.16 446.81 504.90
Total
Expenses 906.84 1,600.59 2,040.73 1,448.56 2,059.86 2,289.15 2,552.10 2,857.91 3,214.53 3,631.61
Profit/Loss
Before Tax 347.38 325.97 211.33 252.82 330.81 364.49 406.71 455.96 513.57 581.15
Total Tax
Expenses 111.09 90.39 67.91 77.70 101.87 123.93 138.28 155.03 174.61 197.59
Profit/Loss
For The Period 236.29 235.58 143.42 175.12 228.94 240.57 268.43 300.94 338.96 383.56
EARNINGS
PER SHARE
Basic EPS (Rs.) 9.00 10.00 8.00 10.00 11.00 11.11 12.40 13.90 15.66 17.72

25
 Existing and Projected Balance Sheet

Particulars Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS
Equity Share Capital 99.12 99.68 108.13 108.18 108.24 108.24 108.24 108.24 108.24 108.24
Reserves and Surplus 1,694.28 1,747.19 1,656.69 1,895.55 2,132.05 2,360.99 2,601.56 2,869.99 3,170.92 3,509.88
Total Shareholder’s
Funds 1,793.40 1,846.87 1,764.82 2,003.73 2,240.29 2,469.23 2,709.80 2,978.23 3,279.16 3,618.12
NON-CURRENT
LIABILITIES
Long Term Borrowings 286.09 567.06 500.00 474.76 500.00 545.65 584.37 623.37 662.48 701.44
Deferred Tax
Liabilities [Net] - - - 0.20 0.59 0.64 0.69 0.74 0.78 0.83
Other Long Term
Liabilities 1.12 1.42 662.55 - - - - - - -
Long Term Provisions 2.88 4.59 5.49 6.54 11.33 12.36 13.24 14.13 15.01 15.89
Total Non-Current
Liabilities 290.08 573.07 1,168.04 481.50 511.92 558.66 598.30 638.23 678.27 718.17
CURRENT
LIABILITIES
Short Term
Borrowings 2,142.94 2,722.73 2,617.46 3,505.65 3,202.86 3,555.17 3,964.02 4,439.70 4,994.66 5,643.97

Trade Payables 704.30 713.55 594.89 517.06 312.63 347.02 386.93 433.36 487.53 550.91
Other Current
Liabilities 956.86 1,218.89 433.11 672.58 851.03 944.64 1,053.28 1,179.67 1,327.13 1,499.66
Short Term Provisions 56.08 60.04 0.14 0.34 3.46 3.84 4.28 4.80 5.40 6.10
Total Current 3,860.17 4,715.21 3,645.60 4,695.63 4,369.98 4,850.68 5,408.51 6,057.53 6,814.72 7,700.63
26
Liabilities
Total Capital And
Liabilities 6,146.72 7,363.05 6,578.46 7,180.86 7,122.19 7,878.57 8,716.61 9,673.98 10,772.15 12,036.92
ASSETS
NON-CURRENT
ASSETS
Tangible Assets 12.61 12.24 77.77 74.79 87.30 96.06 105.71 116.32 128.00 140.85
Intangible Assets 51.13 105.01 28.92 27.23 25.29 27.83 30.62 33.70 37.08 40.80
Capital Work-In-
Progress 59.85 72.41 0.21 0.01 71.37 78.54 86.42 95.10 104.64 115.15
Intangible Assets
Under Development 1.94 0.10 0.32 0.02 0.12 0.13 0.15 0.16 0.18 0.19
Fixed Assets 125.53 189.76 107.22 102.05 184.08 202.56 222.90 245.28 269.90 297.00
Non-Current
Investments - - 297.43 393.75 976.87 1,066.07 1,141.71 1,217.90 1,294.31 1,370.44
Deferred Tax Assets
[Net] 2.15 4.48 122.26 159.26 160.82 175.50 187.96 200.50 213.08 225.61
Long Term Loans And
Advances 127.26 170.34 97.09 76.42 83.81 91.46 97.95 104.49 111.04 117.58
Other Non-Current
Assets 3.38 28.29 101.05 140.58 131.69 143.71 153.91 164.18 174.48 184.75
Total Non-Current
Assets 258.33 392.87 725.05 872.10 1,537.31 1,679.31 1,804.43 1,932.35 2,062.82 2,195.37
CURRENT ASSETS
Current Investments - - 366.51 366.26 543.84 603.66 673.08 753.85 848.09 958.34
Inventories 3,726.79 4,727.11 3,923.08 3,966.12 2,343.69 2,601.50 2,900.67 3,248.75 3,654.84 4,129.97
Trade Receivables 159.96 169.68 171.88 230.84 192.48 213.65 238.22 266.81 300.16 339.18
Cash And Cash
Equivalents 871.01 695.41 105.64 110.42 314.73 349.35 389.53 436.27 490.80 554.61
Short Term Loans And
Advances 836.42 831.25 525.79 719.84 1,081.85 1,200.85 1,338.95 1,499.63 1,687.08 1,906.40
27
Other Current Assets 294.23 546.73 760.51 915.28 1,108.29 1,230.20 1,371.68 1,536.28 1,728.31 1,952.99
Total Current Assets 5,888.39 6,970.18 5,853.41 6,308.76 5,584.88 6,199.22 6,912.13 7,741.58 8,709.28 9,841.49
Total Assets 6,146.72 7,363.05 6,578.46 7,180.86 7,122.19 7,878.53 8,716.56 9,673.93 10,772.10 12,036.86

28
Calculations for Discounted Cash Flows
Calculations and assumptions:
1. We have assumed that after 2023 FCFF will grow at a constant rate of 6.5% (approximately @GDP).
2. Beta is calcuated as 1.52 using covariance for every day for last 1 year.
3. WACC is calculated using CAPM method as 8.91%

Particulars Mar'2019E Mar'2020E Mar'2021E Mar'2022E Mar'2023E

Total Revenue 2,653.64 2,958.81 3,313.87 3,728.10 4,212.76
EBITDA 869.78 969.81 1,086.19 1,221.96 1,380.82
Depreciation And Amortization Expenses 20.61 22.68 24.95 27.46 30.22
EBIT 849.18 947.13 1,061.23 1,194.50 1,350.60
Tax 288.72 322.03 360.82 406.13 459.20
Depreciation And Amortization Expenses 20.61 22.68 24.95 27.46 30.22
Cash Flow after tax 581.06 647.79 725.37 815.83 921.61
CAPEX 39.09 43.01 47.33 52.09 57.32
Change in Working capital 133.64 155.08 180.43 210.51 246.29
Free Cash Flow after tax 408.34 449.69 497.60 553.24 618.00
Free Cash Flow after tax for Mar'2024 658.17
Terminal value 27,325.43
Free Cash Flow after tax 408.34 449.69 497.60 553.24 28,601.67
PV 374.93 379.13 385.21 393.24 18,667.21
Sum of PV (Enterprise value) 20,199.73
Debt 3,702.86
Cash 314.73
Non-Current Investments 976.87
Value of Shares 17,788.47
Number of Shares 21.65
Value per share 821.71
29
Combined Expected Price

Particulars High Low Average Weights

DCF 821.71 821.71 821.71 0.7 575.20
EV/EBITDA 698.4 542.94 620.67 0.15 93.10
P/E Ratio 690.13 564.66 627.395 0.15 94.11
Final Value of Share 762.41

Expected value of a share of Godrej Properties Limited is Rs. 762.41. According to our calculations and the prevalent market
situations, we conclude with reasonable certainity that the stock of Godrej Properties is undervalued and an investor should go long on
this stock. It is a good buying opportunity.

30
Valuation of Godrej Industries using EV/EBITDA and PE ratio
Calculation and assumptions:
1. Top companies as per market reports are used to calculate industry representing EV/EBITDA
and PE Ratios.
2. Median is used as a measure of central tendency for selecting ratios.

Overview of Competitors
Name Last Market Sales(in Net Total Enterprise EBITDA EPS
Price Cap. ₹cr) Profit Assets Value
HUL 1659 359112.8 34,525.00 5,237.00 7,075.00 2,85,181.40 7,367.00 24.00
Dabur
India 386 68,177.81 5,609.06 1,072.05 4,513.39 57,800.56 1,409.56 6.06
Marico 361.15 46,619.57 5,170.41 718.23 3,163.57 42,157.82 1,065.28 5.57
P&G 10556.6 34,267.50 2,320.40 432.73 526.12 26,001.30 682.19 133.31
Emami 566.65 25,722.24 2,353.99 309.52 2,250.61 24,498.00 422.41 13.64

Ratios
Company P/E EV/EBITDA
HUL 69.13 38.71
Dabur
India 63.70 41.01
Marico 64.84 39.57
P&G 79.19 38.11
Emami 41.54 58.00
Median 64.84 39.57

31
 P/E EV/EBITDA
90.00 70.00
80.00
60.00
70.00
50.00
60.00

EV/EBITDA
50.00 40.00
P/E

40.00 30.00
30.00
20.00
20.00
10.00 10.00

0.00 0.00
HUL Dabur Marico P&G Emami HUL Dabur Marico P&G Emami
India India
Companies Companies

Expected market price calculation:

Sensitivity Sensitivity
Particulars +10% -10%

Estimated Enterprise
Value(from EV/EBITDA)
Industry Ratios 43.53 35.62
EBITDA 558.18 558.18
Enterprise Value 24298.60 19880.68
Debt 6263 6263
Cash 473.14 473.14
Market Capitalization 18508.74 14090.82
Number of shares 33.63 33.63
Estimated Prices 550.36 419.00

Particulars
Estimated Enterprise value
from P/E
Industry Ratios 71.32 58.35
EPS 12.53 12.53
Estimated Price 893.67 731.18

32
Income Statement Actual and Estimated of Godrej Industries (Standalone)
Particulars Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
INCOME
Total Revenue 1,494.32 1,492.26 1,337.74 1,558.20 1,991.76 2,267.09 2,602.76 3,014.22 3,494.08 4,053.89
EXPENSES
Cost Of Materials Consumed 984.4 942.41 828.81 1,111.86 1,278.94 1,470.78 1,706.11 1,996.14 2,323.81 2,718.86
Purchase Of Stock-In Trade 3.7 3.39 1.73 18.68 7.81 8.08 9.38 10.97 12.84 15.02
Changes In Inventories Of
FG,WIP And Stock-In Trade -53.62 26.13 -7.05 -46.05 13.29 15.28 17.73 20.74 24.27 28.39
Employee Benefit Expenses 112.33 127.6 140.56 116.25 133.55 151.82 165.54 182.43 203.15 223.88
Finance Costs 94.84 147.74 191.98 207.86 212.43 244.29 283.38 331.56 387.92 453.87
Depreciation And Amortization
Expenses 24.61 28.59 44.37 52.43 68.58 76.52 85.59 95.77 107.19 119.99
Other Expenses 307.39 283.84 256.08 231.29 287.89 324.45 359.80 412.55 458.55 536.50
Total Expenses 1,473.65 1,559.70 1,456.48 1,692.32 2,002.49 2,291.23 2,627.53 3,050.16 3,517.73 4,096.51
Profit/Loss Before Exceptional
Items and tax
20.67 -67.44 -118.74 -134.12 -10.73 -24.15 -24.77 -35.94 -23.65 -42.62
Exceptional Items 104.21 199.61 268.98 0 267.38 0.00 0.00 0.00 0.00 0.00
Profit before tax 124.88 132.17 150.24 -134.12 256.65 -24.15 -24.77 -35.94 -23.65 -42.62
Total Tax Expenses 5.19 -16.64 -7.06 -0.11 15.25 - - - - -
Profit/Loss For The Period
(PAT) 119.69 148.81 157.30 -134.01 241.40 -24.15 -24.77 -35.94 -23.65 -42.62

33
Balance Sheet actual and projected of Godrej Industries (Standalone)

Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS
Equity Share Capital
33.12 33.59 33.60 33.61 33.63 33.65 33.67 33.69 33.71 33.73
Reserves and Surplus
1,401.81 1,624.69 1,725.88 1,581.82 1,766.93 1,702.57 1,658.21 1,630.35 1,643.43 1,672.41
Total Shareholders
Funds 1,434.93 1,658.28 1,759.48 1,615.43 1,800.56 1,736.22 1,691.88 1,664.04 1,677.14 1,706.14
NON-CURRENT
LIABILITIES
Long Term
Borrowings 663.26 1,012.78 1,019.66 985.28 405.49 350.00 150.00 - - -
Deferred Tax
Liabilities [Net] 39.48 17.02 - - - - - - - -
Long Term
Provisions 7.23 8.30 5.76 5.15 7.04 8.10 9.39 10.99 12.86 15.04
Total Non-Current
Liabilities 709.97 1,038.10 1,025.42 990.43 412.53 358.10 159.39 10.99 12.86 15.04

CURRENT
LIABILITIES
Short Term
Borrowings 675.94 782.37 1,311.03 1,437.41 1,682.75 1,884.68 2,167.38 2,449.14 2,576.50 2,911.44
Trade Payables
553.49 397.13 148.05 311.97 352.21 425.29 547.61 679.14 794.60 920.38

34
Other Current
Liabilities 180.28 317.63 440.84 517.21 717.33 866.18 1,055.00 1,246.70 1,487.81 1,566.66
Short Term
Provisions 73.05 77.26 5.04 4.83 4.83 4.93 5.03 5.13 5.33 5.44
Total Current
Liabilities 1,482.76 1,574.39 1,904.96 2,271.42 2,757.12 3,181.08 3,775.02 4,380.11 4,864.23 5,403.92
Total Capital And
Liabilities 3,627.66 4,270.77 4,689.86 4,877.28 4,970.21 5,275.39 5,626.29 6,055.14 6,554.23 7,125.10
ASSETS
NON-CURRENT
32% 15% 2% -2% 10% 11% 11% 12% 12%
ASSETS
Tangible Assets
613.85 647.13 1,300.09 1,399.37 1,360.08 1,523.29 1,706.08 1,910.81 2,140.11 2,396.93
Intangible Assets
0.78 0.67 0.70 0.90 1.78 1.42 1.14 0.91 0.73 0.58
Capital Work-In-
Progress 382.00 666.96 209.72 10.01 7.66 - - - - -
Other Assets
- - - 126.20 132.02 132.02 137.83 145.13 152.83 160.93
Fixed Assets
996.63 1,314.76 1,510.51 1,536.48 1,501.54 1,656.73 1,845.05 2,056.86 2,293.67 2,558.43
Non-Current
Investments 2,048.26 2,377.78 2,494.54 2,785.29 2,828.22 2,969.63 3,118.11 3,274.02 3,437.72 3,609.61
Deferred Tax Assets
[Net] - - - 2.65 0.87 - - - - -
Long Term Loans
And Advances 55.45 52.96 36.50 3.18 3.74 3.74 3.74 3.74 3.74 3.74
Other Non-Current
Assets 3.69 0.10 - 41.05 39.57 41.55 43.63 45.81 48.10 50.50
Total Non-Current
Assets 3,104.03 3,745.60 4,041.55 4,368.65 4,373.94 4,671.65 5,010.53 5,380.43 5,783.22 6,222.28

35
CURRENT
ASSETS
Inventories
232.17 166.34 226.47 296.62 299.91 284.63 266.90 246.15 221.89 193.49
Trade Receivables
103.66 104.30 205.45 121.71 117.89 122.02 127.38 152.02 181.42 214.39
Cash And Cash
Equivalents 64.86 107.30 11.63 15.07 61.79 63.11 66.05 94.69 154.93 246.02
Short Term Loans
And Advances 102.04 122.16 73.52 0.17 0.17 - - - - -
Other Current Assets
20.90 25.07 131.24 75.06 116.51 133.99 155.42 181.85 212.76 248.93
Total Current
Assets 523.63 525.17 648.31 508.63 596.27 603.74 615.76 674.71 771.00 902.82
Total Assets
4,624.29 5,585.53 6,200.37 6,413.76 6,471.75 5,275.39 5,626.29 6,055.14 6,554.23 7,125.10

36
Income Statement Actual and Estimated of Godrej Industries (Standalone)
Particulars Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
INCOME
Total Revenue 1,494.32 1,492.26 1,337.74 1,558.20 1,991.76 2,267.09 2,602.76 3,014.22 3,494.08 4,053.89
EXPENSES
Cost Of Materials Consumed 984.4 942.41 828.81 1,111.86 1,278.94 1,470.78 1,706.11 1,996.14 2,323.81 2,718.86
Purchase Of Stock-In Trade 3.7 3.39 1.73 18.68 7.81 8.08 9.38 10.97 12.84 15.02
Changes In Inventories Of
FG,WIP And Stock-In Trade -53.62 26.13 -7.05 -46.05 13.29 15.28 17.73 20.74 24.27 28.39
Employee Benefit Expenses 112.33 127.6 140.56 116.25 133.55 151.82 165.54 182.43 203.15 223.88
Finance Costs 94.84 147.74 191.98 207.86 212.43 244.29 283.38 331.56 387.92 453.87
Depreciation And Amortisation
Expenses 24.61 28.59 44.37 52.43 68.58 76.52 85.59 95.77 107.19 119.99
Other Expenses 307.39 283.84 256.08 231.29 287.89 324.45 359.80 412.55 458.55 536.50
Total Expenses 1,473.65 1,559.70 1,456.48 1,692.32 2,002.49 2,291.23 2,627.53 3,050.16 3,517.73 4,096.51
Profit/Loss Before Exceptional
Items and tax
20.67 -67.44 -118.74 -134.12 -10.73 -24.15 -24.77 -35.94 -23.65 -42.62
Exceptional Items 104.21 199.61 268.98 0 267.38 0.00 0.00 0.00 0.00 0.00
Profit before tax 124.88 132.17 150.24 -134.12 256.65 -24.15 -24.77 -35.94 -23.65 -42.62
Total Tax Expenses 5.19 -16.64 -7.06 -0.11 15.25 - - - - -
Profit/Loss For The Period
(PAT) 119.69 148.81 157.30 -134.01 241.40 -24.15 -24.77 -35.94 -23.65 -42.62

37
Balance Sheet actual and projected of Godrej Industries (Standalone)

Particulars Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS
Equity Share Capital 33.12 33.59 33.60 33.61 33.63 33.65 33.67 33.69 33.71 33.73
Reserves and Surplus 1,401.81 1,624.69 1,725.88 1,581.82 1,766.93 1,742.78 1,718.01 1,682.07 1,658.42 1,615.80

Total Shareholders Funds 1,434.93 1,658.28 1,759.48 1,615.43 1,800.56 1,776.43 1,751.68 1,715.76 1,692.13 1,649.53

NON-CURRENT
LIABILITIES

Long Term Borrowings 663.26 1,012.78 1,019.66 985.28 405.49 350.00 150.00 - - -

Deferred Tax Liabilities

39.48 17.02 - - - - - - - -
[Net]
Long Term Provisions 7.23 8.30 5.76 5.15 7.04 8.10 9.39 10.99 12.86 15.04
Total Non-Current
709.97 1,038.10 1,025.42 990.43 412.53 358.10 159.39 10.99 12.86 15.04
Liabilities
CURRENT
LIABILITIES

Short Term Borrowings 675.94 782.37 1,311.03 1,437.41 1,682.75 1,884.68 2,167.38 2,449.14 2,576.50 2,911.44
Trade Payables 553.49 397.13 148.05 311.97 352.21 369.82 410.50 435.13 435.13 430.78
Other Current Liabilities 180.28 317.63 440.84 517.21 717.33 753.20 790.86 798.76 814.74 733.27

38
Short Term Provisions 73.05 77.26 5.04 4.83 4.83 4.93 5.03 5.13 5.33 5.44

Total Current Liabilities 1,482.76 1,574.39 1,904.96 2,271.42 2,757.12 3,012.62 3,373.76 3,688.16 3,831.70 4,080.92

Total Capital And

3,627.66 4,270.77 4,689.86 4,877.28 4,970.21 5,147.15 5,284.84 5,414.91 5,536.68 5,745.50
Liabilities
ASSETS
NON-CURRENT
ASSETS
Tangible Assets 613.85 647.13 1,300.09 1,399.37 1,360.08 1,523.29 1,706.08 1,910.81 2,140.11 2,396.93
Intangible Assets 0.78 0.67 0.70 0.90 1.78 1.42 1.14 0.91 0.73 0.58
Capital Work-In-Progress 382.00 666.96 209.72 10.01 7.66 - - - - -
Other Assets - - - 126.20 132.02 132.02 118.82 106.94 96.24 86.62
Fixed Assets 996.63 1,314.76 1,510.51 1,536.48 1,501.54 1,656.73 1,826.04 2,018.66 2,237.08 2,484.13
Non-Current Investments 2,048.26 2,377.78 2,494.54 2,785.29 2,828.22 2,969.63 3,118.11 3,274.02 3,437.72 3,609.61

Deferred Tax Assets [Net] - - - 2.65 0.87 - - - - -

Long Term Loans And

55.45 52.96 36.50 3.18 3.74 3.74 3.74 3.74 3.74 3.74
Advances

Other Non-Current Assets 3.69 0.10 - 41.05 39.57 41.55 43.63 45.81 48.10 50.50

Total Non-Current Assets 3,104.03 3,745.60 4,041.55 4,368.65 4,373.94 4,671.65 4,991.52 5,342.23 5,726.64 6,147.97

CURRENT ASSETS
Inventories 232.17 166.34 226.47 296.62 299.91 (1,170.87) (2,876.98) (4,873.12) (7,196.93) (9,915.79)
Trade Receivables 103.66 104.30 205.45 121.71 117.89 122.02 127.38 152.02 181.42 214.39

39
Cash And Cash Equivalents 64.86 107.30 11.63 15.07 61.79 1,390.37 2,887.48 4,611.93 6,612.79 9,050.00

Short Term Loans And

102.04 122.16 73.52 0.17 0.17 - - - - -
Advances
Other Current Assets 20.90 25.07 131.24 75.06 116.51 133.99 155.42 181.85 212.76 248.93

Total Current Assets 523.63 525.17 648.31 508.63 596.27 475.50 293.32 72.68 (189.96) (402.48)
Total Assets 4,624.29 5,585.53 6,200.37 6,413.76 6,471.75 5,147.15 5,284.84 5,414.91 5,536.68 5,745.50

40
Discount Cash Flow model for Godrej Industries (Standalone)
Calculations and assumptions:
1. We have assumed that after 2023 FCFF will grow at a constant rate of 5.08%.
2. Beta is calcuated as 1.54 using covariance method for every day for last 1 year.
3. WACC is calculated using weighted average method of Cost of Debt and Cost of Equity (by CAPM method) as 17.16%
Particulars Mar-19E Mar-20E Mar-21E Mar-22E Mar-23E
INCOME
Total Operating Revenue 1,982.58 2,299.79 2,690.75 3,148.18 3,683.37
EBITDA Margin 0.01 0.02 0.03 0.04 0.04
EBITDA 12.16 41.23 67.91 125.56 160.72
Depreciation And Amortization Expenses 76.52 85.59 95.77 107.19 119.99
Operating Profit -64.36 -44.36 -27.85 18.37 40.73
Other income 246.07 258.37 271.29 284.85 299.1
Profit 181.7 214.01 243.44 303.23 339.83
Tax - - - -5.3 -11.75
Operating Profit after tax 181.7 214.01 243.44 308.53 351.57
Depreciation And Amortization Expenses 76.52 85.59 95.77 107.19 119.99
Cash Flow after tax 258.22 299.6 339.2 415.71 471.56
CAPEX -155.19 -188.32 -211.81 -236.81 -264.77
Change in Working capital 416.49 581.92 546.13 387.84 407.87
Free Cash Flow after tax 519.52 693.2 673.53 566.74 614.67
Terminal Value 5086.85
PV @ 17.16% 0.8535 0.7285 0.6218 0.5307 0.4529
Present Value of Cash Flows 443.42 504.98 418.77 300.76 3,164.83
Sum of PV (Enterprise Value) 4832.76
Debt 2088.24
Cash 61.79
41
Non-Current Investment (other than significant subsidiary) 1775.78
Value of Shares 4582.09
Number of Shares 33.63
Value per share 136.25

42
Combined Expected Price
Number
of Shares
Value of held by Total Value (In
Particulars
Share Holding crores)
Company
(in crores)
Valuation of Godrej Industries
(Standalone) 136.25 33.63 4,581.72
Add: Fair Value of Investments
Godrej Properties 762.41 12.27 9,353.33
Godrej Agrovet 480.3 11.14 5,348.49

Value of Godrej Industries

(Consolidated) 19,283.53
Number of Equity shares 33.63
Value per share 573.45

Particulars High Low Average Weights

DCF 573.45 573.45 573.45 0.7 401.42
EV/EBITDA 550.36 419 484.68 0.15 72.70
P/E Ratio 893 731.18 812.09 0.15 121.81
Final Value of Share 595.93

Expected value of a share of Godrej Industries Limited is Rs. 595.93. According to our calculations and the prevalent market
situations, we conclude with reasonable certainity that the stock of Godrej Industries is slightly overvalued and an investor should go
short on this stock. It is a good selling opportunity.

43
Godrej Industries
Calculation of Beta of stock

Close Price of Close Value of % Change in % Change in

Date x y xy
Stock Index Nifty stock in 7 days index in 7 days
5=3- 6=4-
1 2 3 4 7 = 5*6
average average
3-Aug-17 654.45 10013.65 -
14-Aug-17 576.3 9794.15 (0.119413) (0.021920) (0.119713) (0.025518) 0.002624
24-Aug-17 604.65 9857.05 0.049193 0.006422 0.048893 0.002824 0.000314
5-Sep-17 615.55 9952.2 0.018027 0.009653 0.017727 0.006055 0.000171
14-Sep-17 635.95 10086.6 0.033141 0.013505 0.032841 0.009907 0.000444
25-Sep-17 575.95 9872.6 (0.094347) (0.021216) (0.094647) (0.024814) 0.002008
5-Oct-17 585.8 9888.7 0.017102 0.001631 0.016802 (0.001967) 0.000027
16-Oct-17 611.8 10230.85 0.044384 0.034600 0.044084 0.031002 0.001525
26-Oct-17 570.7 10343.8 (0.067179) 0.011040 (0.067479) 0.007442 (0.000745)
6-Nov-17 579.6 10451.8 0.015595 0.010441 0.015295 0.006843 0.000160
15-Nov-17 538.55 10118.05 (0.070825) (0.031932) (0.071125) (0.035530) 0.002271
24-Nov-17 562.6 10389.7 0.044657 0.026848 0.044357 0.023250 0.001191
5-Dec-17 572.95 10118.25 0.018397 (0.026127) 0.018097 (0.029725) (0.000473)
14-Dec-17 594.75 10252.1 0.038049 0.013229 0.037749 0.009631 0.000499
26-Dec-17 607.15 10531.5 0.020849 0.027253 0.020549 0.023655 0.000560
4-Jan-18 612.45 10504.8 0.008729 (0.002535) 0.008429 (0.006133) (0.000021)
15-Jan-18 618.75 10741.55 0.010287 0.022537 0.009986 0.018939 0.000225
24-Jan-18 625.2 11086 0.010424 0.032067 0.010124 0.028469 0.000325
5-Feb-18 557 10666.55 (0.109085) (0.037836) (0.109385) (0.041434) 0.004139
15-Feb-18 542.6 10545.5 (0.025853) (0.011349) (0.026153) (0.014947) 0.000297
26-Feb-18 551.15 10582.6 0.015757 0.003518 0.015457 (0.000080) 0.000054
8-Mar-18 550.45 10242.65 (0.001270) (0.032123) (0.001570) (0.035722) 0.000050
44
19-Mar-18 540.95 10094.25 (0.017259) (0.014488) (0.017559) (0.018086) 0.000254
28-Mar-18 549.9 10113.7 0.016545 0.001927 0.016245 (0.001671) 0.000031
10-Apr-18 562.45 10402.25 0.022822 0.028531 0.022522 0.024933 0.000643
19-Apr-18 599.6 10565.3 0.066050 0.015674 0.065750 0.012076 0.001031
30-Apr-18 599.6 10739.35 - 0.016474 (0.000300) 0.012876 (0.000005)
10-May-
581 10716.55 (0.031021) (0.002123) (0.031321) (0.005721) 0.000066
18
21-May-
560.5 10516.7 (0.035284) (0.018649) (0.035584) (0.022247) 0.000664
18
30-May-
580.55 10614.35 0.035772 0.009285 0.035471 0.005687 0.000329
18
8-Jun-18 597.35 10767.65 0.028938 0.014443 0.028638 0.010845 0.000414
19-Jun-18 596.85 10710.45 (0.000837) (0.005312) (0.001137) (0.008910) 0.000006
28-Jun-18 594.75 10589.1 (0.003518) (0.011330) (0.003819) (0.014928) 0.000043
9-Jul-18 594.55 10852.9 (0.000336) 0.024912 (0.000636) 0.021314 (0.000016)
18-Jul-18 598.1 10980.45 0.005971 0.011753 0.005671 0.008155 0.000067
27-Jul-18 637.6 11278.35 0.066042 0.027130 0.065742 0.023532 0.001784

Average 0.03% 0.36% Variance 0.000398716

Beta = Covariance 0.020956/34 0.000616359 = 1.545862031

Variance 0.000398716 0.000398716

45
Godrej Properties
Calculation of Beta of stock

X= % Y= %
Close Price of Close Value of Change in Change in x=X- y=Y-
xy
Stock Index Stock in 7 index in 7 Mean Mean
Date days days
5=3- 6=4-
1 2 3 4 7 = 5*6
average average
3-Aug-17 499.9 10013.65
14-Aug-17 509.85 9794.15 1.99% -2.19% 0.89% -2.55% -0.02%
24-Aug-17 519.6 9857.05 1.91% 0.64% 0.82% 0.28% 0.00%
5-Sep-17 607.35 9952.2 16.89% 0.97% 15.79% 0.61% 0.10%
14-Sep-17 626.1 10086.6 3.09% 1.35% 1.99% 0.99% 0.02%
25-Sep-17 596.4 9872.6 -4.74% -2.12% -5.84% -2.48% 0.14%
5-Oct-17 624.35 9888.7 4.69% 0.16% 3.59% -0.20% -0.01%
16-Oct-17 640.55 10230.85 2.59% 3.46% 1.50% 3.10% 0.05%
26-Oct-17 676.95 10343.8 5.68% 1.10% 4.59% 0.74% 0.03%
6-Nov-17 719.9 10451.8 6.34% 1.04% 5.25% 0.68% 0.04%
15-Nov-17 672.65 10118.05 -6.56% -3.19% -7.66% -3.55% 0.27%
24-Nov-17 712.85 10389.7 5.98% 2.68% 4.88% 2.33% 0.11%
5-Dec-17 709.15 10118.25 -0.52% -2.61% -1.61% -2.97% 0.05%
14-Dec-17 701.3 10252.1 -1.11% 1.32% -2.20% 0.96% -0.02%
26-Dec-17 703.95 10531.5 0.38% 2.73% -0.72% 2.37% -0.02%
4-Jan-18 714.75 10504.8 1.53% -0.25% 0.44% -0.61% 0.00%
15-Jan-18 833 10741.55 16.54% 2.25% 15.45% 1.89% 0.29%
24-Jan-18 837.8 11086 0.58% 3.21% -0.52% 2.85% -0.01%
5-Feb-18 780.8 10666.55 -6.80% -3.78% -7.90% -4.14% 0.33%
15-Feb-18 803.8 10545.5 2.95% -1.13% 1.85% -1.49% -0.03%
26-Feb-18 783 10582.6 -2.59% 0.35% -3.68% -0.01% 0.00%
46
 8-Mar-18 751.6 10242.65 -4.01% -3.21% -5.11% -3.57% 0.18%
19-Mar-18 735.75 10094.25 -2.11% -1.45% -3.20% -1.81% 0.06%
28-Mar-18 722.9 10113.7 -1.75% 0.19% -2.84% -0.17% 0.00%
10-Apr-18 717.3 10402.25 -0.77% 2.85% -1.87% 2.49% -0.05%
19-Apr-18 789.6 10565.3 10.08% 1.57% 8.98% 1.21% 0.11%
30-Apr-18 805.25 10739.35 1.98% 1.65% 0.89% 1.29% 0.01%
10-May-18 865.75 10716.55 7.51% -0.21% 6.42% -0.57% -0.04%
21-May-18 747.55 10516.7 -13.65% -1.86% -14.75% -2.22% 0.33%
30-May-18 743.05 10614.35 -0.60% 0.93% -1.70% 0.57% -0.01%
8-Jun-18 789.9 10767.65 6.31% 1.44% 5.21% 1.08% 0.06%
19-Jun-18 734.85 10710.45 -6.97% -0.53% -8.06% -0.89% 0.07%
28-Jun-18 711.4 10589.1 -3.19% -1.13% -4.29% -1.49% 0.06%
9-Jul-18 708.35 10852.9 -0.43% 2.49% -1.52% 2.13% -0.03%
18-Jul-18 670.9 10980.45 -5.29% 1.18% -6.38% 0.82% -0.05%
27-Jul-18 687.1 11278.35 2.41% 2.71% 1.32% 2.35% 0.03%

Average 1.10% 0.36% Variance 0.000398716

Beta = Covariance 0.020586/34 0.000605471 = 1.518554269

Variance 0.000398716 0.000398716

47
Godrej Agrovet Limited
Calculation of Beta of Stock

Opening X= % Change Y= % Change

Opening Price x=X- y=Y-
Date Value of in Stock in 7 in index in 7 xy
of Stock Mean Mean
Index days days
5=3- 6=4-
1 2 3 4 7 = 5*6
average average
16-Oct-17 615.6 10207.4
26-Oct-17 562.95 10291.8 -8.55% 0.83% -0.0889 0.0047 (0.0004)
6-Nov-17 546 10431.75 -3.01% 1.36% -0.0335 0.01 (0.0003)
15-Nov-17 530.8 10171.95 -2.78% -2.49% -0.0312 -0.0285 0.0009
24-Nov-17 549 10366.8 3.43% 1.92% 0.0309 0.0156 0.0005
5-Dec-17 553.7 10118.25 0.86% -2.40% 0.0052 -0.0276 (0.0001)
14-Dec-17 553.9 10229.3 0.04% 1.10% -0.003 0.0074 (0.0000)
26-Dec-17 573 10512.3 3.45% 2.77% 0.0311 0.0241 0.0007
4-Jan-18 615.4 10469.4 7.40% -0.41% 0.0706 -0.0077 (0.0005)
15-Jan-18 624.9 10718.5 1.54% 2.38% 0.012 0.0202 0.0002
24-Jan-18 596.95 11069.35 -4.47% 3.27% -0.0481 0.0291 (0.0014)
5-Feb-18 585 10604.3 -2.00% -4.20% -0.0234 -0.0456 0.0011
15-Feb-18 594.6 10537.9 1.64% -0.63% 0.013 -0.0099 (0.0001)
26-Feb-18 587 10526.55 -1.28% -0.11% -0.0162 -0.0047 0.0001
8-Mar-18 660 10216.25 12.44% -2.95% 0.121 -0.0331 (0.0040)
19-Mar-18 673.7 10215.35 2.08% -0.01% 0.0174 -0.0037 (0.0001)
28-Mar-18 646.3 10143.6 -4.07% -0.70% -0.0441 -0.0106 0.0005
10-Apr-18 718.4 10412.9 11.16% 2.65% 0.1082 0.023 0.0025
19-Apr-18 695 10563.65 -3.26% 1.45% -0.036 0.0109 (0.0004)
30-Apr-18 706 10705.75 1.58% 1.35% 0.0124 0.0099 0.0001

48
10-May-18 681.55 10779.65 -3.46% 0.69% -0.038 0.0033 (0.0001)
21-May-18 614.8 10616.7 -9.79% -1.51% -0.1013 -0.0187 0.0019
30-May-18 641 10579 4.26% -0.36% 0.0392 -0.0071 (0.0003)
8-Jun-18 657.9 10736.4 2.64% 1.49% 0.023 0.0113 0.0003
19-Jun-18 663 10789.45 0.78% 0.49% 0.0044 0.0013 0.0000
28-Jun-18 612 10660.8 -7.69% -1.19% -0.0803 -0.0155 0.0012
9-Jul-18 616 10838.3 0.65% 1.66% 0.0031 0.0131 0.0000
18-Jul-18 607.3 11060.2 -1.41% 2.05% -0.0175 0.0169 (0.0003)
27-Jul-18 652 11232.75 7.36% 1.56% 0.0702 0.012 0.0008

Average 0.34% 0.36% Variance 0.000349554 0.0027

Beta = Covariance
0.0027/27 0.000101 0.2883
Variance 0.00035 0.000349554

49
REFERENCES
1. https://www.moneycontrol.com/
2. https://www.ibef.org/
3. http://www.godrejindustries.com/annual-reports.aspx
4. http://www.godrejcp.com/
5. http://www.godrejindustries.com/chemicals/
6. https://www.bloomberg.com/
7. Annual Report of Godrej Industries, Godrej Agrovet and Godrej Properties
8. http://media-publications.bcg.com/Indian-Agribusiness.pdf

9. https://www.nseindia.com/products/content/equities/equities/eq_security.htm
10. http://www.stockfry.com

50