Safal Niveshak Stock Analysis Excel Version 3.0
Safal Niveshak Stock Analysis Excel Version 3.0
Safal Niveshak Stock Analysis Excel Version 3.0
3
www.safalniveshak.com
IMPORTANT INSTRUCTIONS
1. Ensure that the company whose data you are downloading has numbers at least starting from FY08 (March 2008). This is be
from, say, FY10, you will see incorrect data for FY08 and FY09 (which will be of Hero Motocorp on whose financials I have crea
2. All financial data of your chosen company will be automatically updated in the sheet you download, except "Cash and Bank"
which you must update manually from the company's annual reports. Don’t forget to make these changes as these numbers are
3. You may update the sheet and add your own analysis, formulae etc. and then upload again to Screener.in site using the Ste
Sheet" because this will cause errors in your future downloads.
4. DON’T touch any cell except the black ones, where you are required to update the numbers manually from Annual Reports (
growth assumptions etc.
4. I have added Comments and Instructions wherever necessary so as to explain the concepts. Read those carefully before wo
5. This sheet is not a replacement of the work required to read annual reports as part of the analysis process. So please do tha
some discrepancy in numbers (though rare), but you will know this only when you read annual reports.
6. I could not find a bug/errors in this spreadsheet, but if you notice some, please email me at - [email protected] - and
7. I will keep on updating the sheet from time to time and will update the same on the website. I invite you to share your feedba
together.
8. This excel won't work for banking and financial services companies.
Conclusion
Never Forget
Buffett Checklist - Read, Remember, Follow!
Source - Buffettology by Mary Buffett & David Clark
Explanation
Seek out companies that have no or less competition, either due to a patent or brand name or similar intangible that
makes the product unique. Such companies will typically have high gross and operating profit margins because of their
unique niche. However, don't just go on margins as high margins may simply highlight companies within industries with
traditionally high margins. Thus, look for companies with gross, operating and net profit margins above industry norms.
Also look for strong growth in earnings and high return on equity in the past.
Try to invest in industries where you possess some specialized knowledge (where you work) or can more effectively
judge a company, its industry, and its competitive environment (simple products you consume). While it is difficult to
construct a quantitative filter, you should be able to identify areas of interest. You should "only" consider analyzing
those companies that operate in areas that you can clearly grasp - your circle of competence. Of course you can
increase the size of the circle, but only over time by learning about new industries. More important than the size of the
circle is to know its boundaries.
Seeks out companies with conservative financing, which equates to a simple, safe balance sheet. Such companies tend
to have strong cash flows, with little need for long-term debt. Look for low debt to equity or low debt-burden ratios. Also
seek companies that have history of consistently generating positive free cash flows.
Rising earnings serve as a good catalyst for stock prices. So seek companies with strong, consistent, and expanding
earnings (profits). Seek companies with 5/10 year earnings per share growth greater than 25% (along with safe balance
sheets). To help indicate that earnings growth is still strong, look for companies where the last 3-years earnings growth
rate is higher than the last 10-years growth rate. More important than the rate of growth is the consistency in such
growth. So exclude companies with volatile earnings growth in the past, even if the "average" growth has been high.
Like you should stock to your circle of competence, a company should invest its capital only in those businesses within
its circle of competence. This is a difficult factor to screen for on a quantitative level. Before investing in a company, look
at the company’s past pattern of acquisitions and new directions. They should fit within the primary range of operations
for the firm. Be cautious of companies that have been very aggressive in acquisitions in the past.
Buffett prefers that firms reinvest their earnings within the company, provided that profitable opportunities exist. When
companies have excess cash flow, Buffett favours shareholder-enhancing maneuvers such as share buybacks. While
we do not screen for this factor, a follow-up examination of a company would reveal if it has a share buyback plan in
place.
Seek companies where earnings have risen as retained earnings (earnings after paying dividends) have been
employed profitably. A great way to screen for such companies is by looking at those that have had consistent earnings
and strong return on equity in the past.
Consider it a positive sign when a company is able to earn above-average (better than competitors) returns on equity
without employing much debt. Average return on equity for Indian companies over the last 10 years is approximately
16%. Thus, seek companies that earn at least this much (16%) or more than this. Again, consistency is the key here.
That's what is called "pricing power". Companies with moat (as seen from other screening metrics as suggested above
(like high ROE, high grow margins, low debt etc.) are able to adjust prices to inflation without the risk of losing significant
volume sales.
Companies that consistently need capital to grow their sales and profits are like bank savings account, and thus bad for
an investor's long term portfolio. Seek companies that don't need high capital investments consistently. Retained
earnings must first go toward maintaining current operations at competitive levels, so the lower the amount needed to
maintain current operations, the better. Here, more than just an absolute assessment, a comparison against
competitors will help a lot. Seek companies that consistently generate positive and rising free cash flows.
Sensible investing is always about using “folly and discipline” - the discipline to identify excellent businesses, and wait
for the folly of the market to drive down the value of these businesses to attractive levels. You will have little trouble
understanding this philosophy. However, its successful implementation is dependent upon your dedication to learn and
follow the principles, and apply them to pick stocks successfully.
Net Block 1,156 1,574 1,659 4,080 3,786 3,071 2,243 2,913 3,584 4,396
Capital Work in Progress 408 121 48 50 39 62 854 713 605 465
Investments 2,567 3,369 3,926 5,129 3,964 3,624 4,089 3,154 4,581 5,890
Other Assets 942 1,022 2,890 1,473 2,107 2,892 2,916 3,749 3,860 4,006
Total 5,074 6,085 8,523 10,732 9,895 9,649 10,102 10,528 12,631 14,757
Working Capital -1,013 -1,184 -2,102 -5,610 -2,779 -1,109 -1,302 -238 64 -639
Debtors 297 150 108 131 272 665 921 1,390 1,283 1,562
Inventory 317 327 436 525 676 637 670 815 673 656
Cash & Bank** 4,735 3,367 3,190 3,393 2,605 3,546 4,618
** Manually enter this number; Convert to Rs Crore if not already done in the Annual Reports; Use Cash+Bank+Current Investments from Consolidated Balance Sheet in Annual Reports
Debtor Days 11 4 3 2 4 10 13 18 16 20
Inventory Turnover 33 38 36 37 35 37 38 34 42 43
Fixed Asset Turnover 8.9 7.8 9.5 4.8 6.2 7.7 11.3 9.5 7.9 6.5
Debt/Equity 0.0 0.0 0.0 0.2 0.2 0.1 0.1 - - -
Return on Equity 32% 34% 64% 65% 55% 42% 38% 36% 36% 33%
Return on Capital Employed 509% 257% 202% 88% 178% 71% 75% 76%
Profit & Loss Account / Income Statement
HERO MOTOCORP LTD
Rs Cr Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Trailing
Sales 10,332 12,319 15,758 19,398 23,579 23,768 25,275 27,585 28,443 28,475 29,048
% Growth YOY 19% 28% 23% 22% 1% 6% 9% 3% 0%
Expenses 9,002 10,635 13,096 16,865 19,960 20,484 21,735 24,198 23,988 23,840 24,346
Material Cost (% of Sales) 72% 71% 68% 73% 74% 73% 72% 72% 68% 67% Check for wide fluctuations in key
Power and Fuel 1% 1% 1% 1% 0% 1% 1% 1% 0% 0% expense items. For manufacturing firms,
Other Mfr. Exp 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% check their material costs etc. For
Employee Cost 3% 3% 3% 3% 3% 3% 4% 4% 5% 5% services firms, look at employee costs.
Selling and Admin Cost 9% 9% 9% 7% 5% 6% 6% 7% 7% 8%
Operating Profit 1,330 1,684 2,662 2,533 3,619 3,284 3,540 3,387 4,455 4,635 4,702
Operating Profit Margin 13% 14% 17% 13% 15% 14% 14% 12% 16% 16% 16%
Other Income 243 280 363 290 365 398 446 493 422 522 534
Other Income as % of Sales 2.3% 2.3% 2.3% 1.5% 1.5% 1.7% 1.8% 1.8% 1.5% 1.8% 1.8%
Depreciation 160 181 191 402 1,097 1,142 1,107 540 438 493 512
Interest 2 3 2 15 21 12 12 11 5 6 6
Interest Coverage(Times) 706 705 1,349 160 135 213 244 301 908 771 771
Profit before tax (PBT) 1,410 1,781 2,832 2,405 2,865 2,529 2,867 3,329 4,435 4,658 4,718
% Growth YOY 26% 59% -15% 19% -12% 13% 16% 33% 5%
PBT Margin 14% 14% 18% 12% 12% 11% 11% 12% 16% 16% 16%
Tax 442 500 600 477 487 411 758 943 1,275 1,281 1,310
Net profit 968 1,282 2,232 1,928 2,378 2,118 2,109 2,386 3,160 3,377 3,408
% Growth YOY 32% 74% -14% 23% -11% 0% 13% 32% 7%
Net Profit Margin 9% 10% 14% 10% 10% 9% 8% 9% 11% 12% 12%
EPS 48.5 64.2 111.8 96.5 119.1 106.1 105.6 119.5 158.3 169.1 170.7
% Growth YOY 32% 74% -14% 23% -11% 0% 13% 32% 7%
Price to earning 15.7 17.0 17.4 17.8 17.7 14.3 21.0 20.6 18.8 19.1 23.0
Price 762 1,094 1,941 1,721 2,107 1,517 2,219 2,467 2,982 3,232 3,919
Dividend Payout 39.2% 31.2% 98.4% 108.8% 37.8% 56.6% 61.6% 50.2% 19.0% 18.9%
Market Cap 15,218 21,846 38,767 34,364 42,080 30,296 44,305 49,261 59,556 64,532
Retained Earnings 588 882 35 -169 1,480 920 810 1,188 2,561 2,738
Buffett's $1 Test 4.5
Check for long term vs short term trends here. Check if the growth over
past 3 or 5 years has slowed down / improved compared to long term (7 to
10 years) growth numbers.
Common Size P&L
Rs Cr Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Raw Material Cost 72% 71% 68% 73% 74% 73% 72% 72% 68% 67%
Change in Inventory 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Power and Fuel 1% 1% 1% 1% 0% 1% 1% 1% 0% 0%
Other Mfr. Exp 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
Employee Cost 3% 3% 3% 3% 3% 3% 4% 4% 5% 5%
Selling and Admin Cost 9% 9% 9% 7% 5% 6% 6% 7% 7% 8%
Other Expenses 2% 2% 2% 2% 2% 2% 2% 3% 3% 3%
Operating Profit 13% 13% 17% 13% 15% 14% 14% 12% 16% 17%
Other Income 2% 2% 2% 1% 2% 2% 2% 2% 1% 2%
Depreciation 2% 1% 1% 2% 5% 5% 4% 2% 2% 2%
Interest 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Profit Before Tax 14% 14% 18% 12% 12% 11% 11% 12% 16% 16%
Tax 4% 4% 4% 2% 2% 2% 3% 3% 4% 4%
Net Profit 9% 10% 14% 10% 10% 9% 8% 9% 11% 12%
Dividend Amount 4% 3% 14% 11% 4% 5% 5% 4% 2% 2%
er 5-7 years
P.S. In case of companies earning negative FCF, where this model will not work, you must use a normalized positive FCF as th
number. This number is your assumption of FCF the business will earn in a normal year, without capex. Check the history
business while arriving at your assumption, and use your judgment wisely without twisting the model to fit your version of r
Calculation
by Mohnish Pabrai
Avg 5-Yr Net Profit (Rs Crore) 2,630.0 Avg 5-Yr Net Profit (Rs Crore)
PE Ratio at 0% Growth 8.5 PE Ratio at 0% Growth
Long-Term Growth Rate 3.6 Long-Term Growth Rate
Ben Graham Value (Rs Crore) 41,465 Ben Graham Value (Rs Crore)
Current Market Cap (Rs Crore) 78,259 Current Market Cap (Rs Crore)
EXPLANATION
Ben Graham's Original Formula: Value = EPS x (8.5 + 2G)
Here, EPS is the trailing 12 month EPS, 8.5 is the P/E ratio of a stock with 0% growth and g is the growth rate for the next 7-10
2,630.0
8.5
7.3
60,575
78,259
of around 1962 when Graham was publicizing his works, the risk free interest rate was 4.4% but to adjust to the present, we divide this num
resent, we divide this number by today’s AAA corporate bond rate, represented by Y in the formula above.
Dicounted Cash Flow Valuation
HERO MOTOCORP LTD
Final Calculations
Terminal Year 7,346
PV of Year 1-10 Cash Flows 22,599
Terminal Value 23,652
Total PV of Cash Flows 46,250
Current Market Cap (Rs Cr) 78,259
META
Number of shares 19.97
Face Value 2
Current Price 3918.9
Market Capitalization 78259.2
Quarters
Report Date Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
Sales 6793.87 6904.76 6809.26 7223.51 7505.17 7398.91
Expenses 6110.54 5862.76 5713.68 6092.7 6315.99 6168.83
Other Income 92.88 104.39 111.52 90.2 116.76 120.37
Depreciation 89.74 102.96 109.05 113.94 114.74 115.24
Interest 0.75 1.21 1.23 1.23 1.22 1.50
Profit before tax 685.72 1042.22 1096.82 1105.84 1189.98 1233.71
Tax 209.19 294.68 310.7 312.61 356.69 350.62
Net profit 476.53 747.54 786.12 793.23 833.29 883.09
Operating Profit 683.33 1042 1095.58 1130.81 1189.18 1230.08
BALANCE SHEET
Report Date Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
Equity Share Capital 39.94 39.94 39.94 39.94 39.94 39.94
Reserves 2946.3 3760.81 3425.08 2916.12 4249.89 4966.3
Borrowings 132.00 78.49 66.03 693.35 719.44 641.58
Other Liabilities 1955.33 2205.9 4992.04 7082.8 4886.14 4001.16
Total 5073.57 6085.14 8523.09 10732.21 9895.41 9648.98
Net Block 1156.26 1573.71 1658.78 4080.28 3785.51 3070.98
Capital Work in Progress 408.49 120.54 48.14 49.96 38.84 62.09
Investments 2566.82 3,368.75 3925.71 5128.75 3964.26 3623.83
Other Assets 942 1022.14 2890.46 1473.22 2106.8 2892.08
Total 5073.57 6085.14 8523.09 10732.21 9895.41 9648.98
Receivables 297.44 149.94 108.39 130.59 272.31 665
Inventory 317.10 326.83 436.40 524.93 675.57 636.76
Cash & Bank 131.09 219.57 1907.21 71.52 76.82 181.04
No. of Equity Shares 199687500 199687500 199687500 199687500 199687500 199687500
New Bonus Shares
Face value 2 2 2 2 2 2
CASH FLOW:
Report Date Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
Cash from Operating Activity 1211.87 1359.03 2686.64 2254.16 2359.78 1890.43
Cash from Investing Activity -781.01 -861.19 -528.17 -1322.31 92.79 -732.94
Cash from Financing Activity -432.33 -499.93 -2109.31 -955.23 -2458.16 -1056.27
Net Cash Flow -1.47 -2.09 49.16 -23.38 -5.59 101.22
DERIVED:
Adjusted Equity Shares in Cr 19.97 19.97 19.97 19.97 19.97 19.97
DO NOT MAKE ANY CHANGES TO THIS SHEET
2 2 2 2
TESTING:
This is a testing feature currently.
You can report any formula errors on the worksheet at: [email protected]
… do ANYTHING.
dalal-street.in