Safal Niveshak Stock Analysis Excel Version 3.0

Safal Niveshak Stock Analysis Excel (Ver. 3.www.safalniveshak.com HOW TO USE THIS SPREADSHEET Step 1 - This spreadsheet works only on Screener.in. The first step is to create a free account here - https://www.screener.in/re Step 2 - After creating your account, while you are logged in to Screener.in website, visit this page - https://www.screener.in/ex Step 3 - Visit the home page of Screener.in and choose a company of your choice. Once you do that, you will see details of you financial statement table called "Quarterly Results" and click on "View Consolidated". Now, all data you see for this company wi Step 4 - Scroll back to the top of the page, and you will see a button "Export to Excel" on the right side. Click the button and the the exact format as "Safal Niveshak's Stock Analysis Excel Ver. 3.0". Now onwards, any excel you export for any company on S Step 5 - Email me your love and testimonial for helping you with this excel. :-) 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" figures, which you must update manually from the company's annual reports. Don’t forget to make these changes as these num 3. You may update the sheet and add your own analysis, formulae etc. and then upload again to Screener.in site using the Step "Data 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 (j the 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. Note: All data is sourced from Screener.in Safal Niveshak Stock Warning! Excel can be a wonde the past. But it can be a we Analysis Excel (Ver. 3.0) destruction to predict the future of what you are getting into. He always equal garba www.safalniveshak.com Basic Company Details Parameters Details Company HERO MOTOCORP LTD Current Stock Price (Rs) 3,919 Remember! Focus on decision Face Value (Rs) 2.0 Look for disconfirming evidenc No. of Shares (Crore) 20.0 Market Capitalization (Rs Crore) 78,259 Key Financials - Trend Please! It's your money. Please Parameters Details results of this excel cause you Sales Growth (9-Year CAGR) 11.9% designed this excel to aid your Profit Before Tax Growth (9-Year CAGR) 14.2% you alone are responsible for yo Net Profit Growth (8-Year CAGR) 14.9% live peacefully ever after! I am Average Debt/Equity (5-Years, x) 0.0 wants you to do the hard wo Average Return on Equity (5-Years) 37.1% companies on your own. But I'd compass instead of a map, for Average P/E (5-Years, x) 18.8 map with territory and lose it Latest P/E (x) 23.0 Excel can be a wonderful tool to analyze past. But it can be a weapon of mass on to predict the future! So be very careful you are getting into. Here, garbage in will always equal garbage out. ber! Focus on decisions, not outcomes. disconfirming evidence. Calculate. Pray! t's your money. Please don't blame me if of this excel cause you to lose it all! I've d this excel to aid your own thinking, but are responsible for your actions. I want to acefully ever after! I am not a sadist who you to do the hard work by analyzing es on your own. But I'd rather give you a ss instead of a map, for you can confuse ith territory and lose it all. All the best! Follow! Source .Read. Remember. Buffett Checklist .Buffettology by Mary Buffett & David Clark Parameter Consumer monopoly or commodity? Understand how business works Is the company conservatively financed? Are earnings strong and do they show an upward trend? Does the company stick with what it knows? Has the company been buying back its shares? Have retained earnings been invested well? Is the company’s return on equity above average? Is the company free to adjust prices to inflation? . Does the company need to constantly reinvest in capital? Conclusion Never Forget . provided that profitable opportunities exist. look for companies with gross. operating and net profit margins above industry norms. Such companies will typically have high gross and operating profit margins because of their unique niche.Buffettology by Mary Buffett & David Clark Explanation Seek out companies that have no or less competition. Look for low debt to equity or low debt-burden ratios. Buffett favours shareholder-enhancing maneuvers such as share buybacks. with little need for long-term debt. Of course you can increase the size of the circle. . They should fit within the primary range of operations for the firm. Such companies tend to have strong cash flows. and expanding earnings (profits). you should be able to identify areas of interest. Be cautious of companies that have been very aggressive in acquisitions in the past. don't just go on margins as high margins may simply highlight companies within industries with traditionally high margins. Consider it a positive sign when a company is able to earn above-average (better than competitors) returns on equity without employing much debt. Seek companies where earnings have risen as retained earnings (earnings after paying dividends) have been employed profitably. Like you should stock to your circle of competence. even if the "average" growth has been high. either due to a patent or brand name or similar intangible that makes the product unique. Thus. So exclude companies with volatile earnings growth in the past. Rising earnings serve as a good catalyst for stock prices.your circle of competence. You should "only" consider analyzing those companies that operate in areas that you can clearly grasp . Seeks out companies with conservative financing. While it is difficult to construct a quantitative filter. While we do not screen for this factor. Also look for strong growth in earnings and high return on equity in the past. consistent. Average return on equity for Indian companies over the last 10 years is approximately 16%. Buffett prefers that firms reinvest their earnings within the company. look at the company’s past pattern of acquisitions and new directions. Remember. More important than the rate of growth is the consistency in such growth. To help indicate that earnings growth is still strong. high grow margins.) are able to adjust prices to inflation without the risk of losing significant volume sales. Buffett Checklist . That's what is called "pricing power". but only over time by learning about new industries. Try to invest in industries where you possess some specialized knowledge (where you work) or can more effectively judge a company. Also seek companies that have history of consistently generating positive free cash flows. its industry. seek companies that earn at least this much (16%) or more than this. 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. Seek companies with 5/10 year earnings per share growth greater than 25% (along with safe balance sheets). Again. a company should invest its capital only in those businesses within its circle of competence. low debt etc. look for companies where the last 3-years earnings growth rate is higher than the last 10-years growth rate. which equates to a simple. Before investing in a company. and its competitive environment (simple products you consume). When companies have excess cash flow. More important than the size of the circle is to know its boundaries.Read. Companies with moat (as seen from other screening metrics as suggested above (like high ROE. This is a difficult factor to screen for on a quantitative level. consistency is the key here. Follow! Source . Thus. However. a follow-up examination of a company would reveal if it has a share buyback plan in place. So seek companies with strong. safe balance sheet. the discipline to identify excellent businesses. more than just an absolute assessment. Here. so the lower the amount needed to maintain current operations. Seek companies that consistently generate positive and rising free cash flows.Companies that consistently need capital to grow their sales and profits are like bank savings account. Focus on decisions. its successful implementation is dependent upon your dedication to learn and follow the principles. the better. Seek companies that don't need high capital investments consistently. However. Retained earnings must first go toward maintaining current operations at competitive levels. You will have little trouble understanding this philosophy. and wait for the folly of the market to drive down the value of these businesses to attractive levels. Sensible investing is always about using “folly and discipline” . a comparison against competitors will help a lot. and thus bad for an investor's long term portfolio. and apply them to pick stocks successfully. Look for disconfirming evidence. not outcomes. . 946 3.085 8.074 6.779 -1.367 3. - Other Liabilities 1.886 4.501 8.562 Inventory 317 327 436 525 676 637 670 815 673 656 Cash & Bank** 4.156 1.546 4.649 10.109 -1.890 Other Assets 942 1. .916 3.732 9.560 6.757 Working Capital -1.796 4.8 9.074 6. 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 8.001 4.085 8.523 10.528 12.786 3.154 4.102 10.584 4.649 10.0 0.473 2.645 Total 5.895 9.8 6.631 14.574 1.5 7.913 3.393 2.581 5.218 3.425 2.860 4.2 7.659 4.206 4.892 2.2 0.283 1.618 ** Manually enter this number.1 0.966 5. Convert to Rs Crore if not already done in the Annual Reports.184 -2.3 9.895 9.624 4.190 3.732 9.567 3.2 0.129 3.964 3.9 7.9 6.955 2.890 1.749 3.735 3.396 Capital Work in Progress 408 121 48 50 39 62 854 713 605 465 Investments 2.610 -2.0 0.523 10.071 2.243 2.761 3.5 4.022 2.7 11.080 3.757 Net Block 1.013 -1.0 0.083 4.631 14.528 12.102 10.5 Debt/Equity 0.107 2.006 Total 5.605 3.987 3. .250 4.071 Borrowings 132 78 66 693 719 642 284 .089 3.926 5.369 3.992 7. - 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% .1 .390 1.794 10. Balance Sheet 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 Equity Share Capital 40 40 40 40 40 40 40 40 40 40 Reserves 2.102 -5.302 -238 64 -639 Debtors 297 150 108 131 272 665 921 1.916 4. 1 23.281 1.684 2.960 20. look at employee costs.284 3.579 23.218 21.305 49.635 13.8% 3.364 42.1 106.3% 2.767 34.2% 31.048 % Growth YOY 19% 28% 23% 22% 1% 6% 9% 3% 0% Expenses 9.319 15.867 3.7 17.7 14.533 3.118 2.275 27.662 2.9% 8. 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 10.5 18.2% 98.556 64.232 1.3% 2.232 3. check their material costs etc.398 23.2% 7.840 24.718 % 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 1.928 2.7% Price to Earning 18.982 3.8% 37.378 2.455 4.8% Depreciation 160 181 191 402 1.517 2.5 Check for long term vs short term trends here.310 Net profit 968 1.529 2.332 12.484 21.2 111.7 % Growth YOY 32% 74% -14% 23% -11% 0% 13% 32% 7% Price to earning 15.480 920 810 1.5% 1.109 2. For Employee Cost 3% 3% 3% 3% 3% 3% 4% 4% 5% 5% services firms.5% 1.261 59.781 2.585 28.1 105. Check if the growth over past 3 or 5 years has slowed down / improved compared to long term (7 to 10 years) growth numbers.094 1.198 23.3 169.865 2.561 2.738 Buffett's $1 Test 4.1 170.4% 10.329 4.188 2.387 4.7% 1.5 64.658 4.467 2.758 19.7% 12.107 1.096 16.4% 108.735 24.8 17. For manufacturing Other Mfr.8 19. Selling and Admin Cost 9% 9% 9% 7% 5% 6% 6% 7% 7% 8% Operating Profit 1.865 19.435 4.2% 19.142 1.377 3.443 28.097 1.4 17.832 2.0 17.9% Market Cap 15.846 38.702 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 2.346 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.8 96.282 2.8% 4.5 119.330 1.635 4.107 540 438 493 512 Interest 2 3 2 15 21 12 12 11 5 6 6 Interest Coverage(Times) 706 705 1.410 1.349 160 135 213 244 301 908 771 771 Profit before tax (PBT) 1. Exp 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% firms.8% 1.160 3.386 3.0 18.475 29.8% 56.619 3.941 1.408 % 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 48.919 Dividend Payout 39.219 2.5% 1.8% 1.540 3.5 TRENDS: 10 YEARS 7 YEARS 5 YEARS 3 YEARS Sales Growth 11.9% 13.768 25.296 44.3% 1.405 2.080 30.0% 18.721 2.002 10.6% 50.0 20.0 Price 762 1.2% 17.5 158.2% 14.6% 61.6 18.6% PBT Margin 13.532 Retained Earnings 588 882 35 -169 1.6 119.1% PBT Growth 14.3 21.988 23. .8 19.8% 1.275 1. 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% Common Size Balance Sheet Rs Cr Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Equity Share Capital 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% Reserves 58% 62% 40% 27% 43% 51% 55% 62% 70% 68% Borrowings 3% 1% 1% 6% 7% 7% 3% 0% 0% 0% Other Liabilities 39% 36% 59% 66% 49% 41% 42% 38% 30% 31% Total Liabilities 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Net Block 23% 26% 19% 38% 38% 32% 22% 28% 28% 30% Capital Work in Progress 8% 2% 1% 0% 0% 1% 8% 7% 5% 3% Investments 51% 55% 46% 48% 40% 38% 40% 30% 36% 40% Other Assets 19% 17% 34% 14% 21% 30% 29% 36% 31% 27% Total Assets 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Receivables 6% 2% 1% 1% 3% 7% 9% 13% 10% 11% Inventory 6% 5% 5% 5% 7% 7% 7% 8% 5% 4% Cash & Bank 3% 4% 22% 1% 1% 2% 1% 2% 1% 1% . A common-size financial statement is displays line items as a percentage of one selected or common figure. Using common-size financial statements helps investors spot trends that a raw financial statement may not uncover. Creating common-size financial statements makes it easier to analyze a company over time and compare it with its peers. . 617 12 -2.212 1.028 24.283 2.415 -2.852 Cash from Investing Activity -781 -861 -528 -1.687 2.963 2.790 17.096 -14. Use "Capital expenditure" number shown under "Cash Flow from Investing Activities" segment of Consolidated Cash Flow Statement available in the Annual Reports .044 2.254 2.458 -1.475 1.026 1.939 Net Cash Flow -1 -2 49 -23 -6 101 -69 32 -44 -12 26 CFO/Sales 12% 11% 17% 12% 10% 8% 12% 8% 14% 14% CFO/Net Profit 125% 106% 120% 117% 99% 89% 141% 94% 122% 119% Capex** 375 315 212 364 565 607 937 1156 1638 1238 FCF 837 1.890 1.687 -2.231 -1.944 -9.890 2.206 -1.094 2. Convert to Rs Crore if not already done in the Annual Reports.211 2.032 FCF/Sales 8% 8% 16% 10% 8% 5% 8% 4% 8% 10% FCF/Net Profit 86% 81% 111% 98% 75% 61% 96% 46% 70% 83% ** Manually enter this number.109 -955 -2. Cash Flow 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 Total Cash from Operating Activity (CFO) 1.849 4.250 3.360 1.795 1.359 2.056 -1.888 Cash from Financing Activity -432 -500 -2.322 93 -733 -1.446 Average FCF (3 Years) 2. Subtract Maintenance Capex 5. as per Greenwald's book - 1.768 25.585 28.475 EBIT 2. I deduct 0.107 2.117 2.09 0. I use the actual tax rate calculated from the Income Statement. Divide this Normalized Earnings number by the Discount Rate to arrive at EPV.Earnings power value (EPV) is a technique for valuing stocks by making an assumption about the sustainability of capital but assuming no further growth.142 1. Start with operating earnings.638 1.623 Reported Profit After Tax (B) 2.507 2.541 2.323 4.310 857 32 Total Capex 607 937 1. Calculate current year’s increase in sales 3. After reducing this tax.e.156 1.443 28. EPV formula = Adjusted Earnings / Cost of Capital Company Name HERO MOTOCORP LTD Latest Year Ended Mar-17 Calculation of Normalized Earnings (Rs Crore) Mar/13 Mar/14 Mar/15 Mar/16 Mar/17 Sales 23.051 2.118 2.584 4.440 4.396 Net Sales 23.585 28.382 3.Value Investing: From Graham to Buffett and Beyond by Bruce Greenwald (EPV is explained P Explanation .340 4. I use 12% discount rate/cost of capital.5% of reported EBIT as this adjustment 2. Apply a tax rate to the adjusted EBIT.243 2.641 EBIT Margin'(Adjusted) 11% 11% 12% 16% 16% Tax Rate 16% 26% 28% 29% 28% Earnings After Tax (Adjusted) 2.534 1.675 2.475 PPE/Sales 0.238 Growth Capex 23 182 279 104 4 Maintenance Capex 584 755 877 1.234 Calculating Maintenance Capex.913 3.Adjustment 13 14 17 22 23 EBIT (Adjusted) 2.13 0. Maintenance Capex = Total Capex figure from the cash flow statement minus Growth Capex calculated above .443 28.109 2.234 Earnings After Tax (Normalized.460 2. you arrive at Normalized Earnings 6.879 3. Adjust any one-time charges.665 Less .418 4.045 2.160 3. Multiply PPE/Sales ratio by increase in sales to arrive at Growth Capex 4.148 3.386 3. 3.11 0.13 0.071 2.377 EPV Process (as per Greenwald's book.275 27.534 1.768 25.365 Depreciation 1. Earnings Power Value (Bruce Greenwald) Read the book .107 540 438 493 Maintenance Capex (See Table Below) 584 755 877 1. After these four steps. A) 2. Add back Depreciation 4. Note that Greenwald's process as per his book is slightly more detailed than what I have used here Calculation of Maintenance Capex (Rs Crore) Mar/13 Mar/14 Mar/15 Mar/16 Mar/17 Fixed Assets (PPE) 3. i. 7. slightly modified) - 1.865 3.275 27.15 Change in Sales 189 1. EBIT.528 2. Calculate the Average Gross Property Plant and Equipment (PPE) / Sales ratio over 5-7 years 2. 860 4.259 EPV as % of Market Cap 34% ** Change the "Cash & Bank" number in "Balance Sheet" sheet (Row #19) so that the correct number automatically reflects here 5% of reported EBIT as this adjustment e Income Statement.618 30.(Bruce Greenwald) nd by Bruce Greenwald (EPV is explained Page 93 onwards) king an assumption about the sustainability of current earnings and the cost rmula = Adjusted Earnings / Cost of Capital EPV with Different Cost of Capital Discount Rate EPV Net Cash** Total EPV Per Share 10% 26.106 1.618 22.107 Current Market Cap (Rs Crore) 78.850 1.232 4.488 4.478 1.545 12% 21. at I have used here over 5-7 years owth Capex calculated above .326 15% 17.618 26. we arrive at Adjusted Earnings After Tax use 12% discount rate/cost of capital. After reducing this tax. 086 Year 4-6 10% 1 FY18 2 FY19 2. Cap. This number is your assumption of FCF the business will earn in a normal year. you must use a normalized positive FCF as starting number.717 9 FY26 10 FY27 4.953 PBT 10% 7 FY24 8 FY25 4.618 Year 1-3 15% 0 Excess Cash (Latest) 1 FY18 2.687 2.Higher Range Year FCF (Rs Cr) PV of FCF (Rs Cr) Assumed FCF Growth Year 0 Excess Cash (Latest) 4.831 FCF 9% 8 FY25 9 FY26 4.The Dhandho Investor by Mohnish Pabrai HERO MOTOCORP LTD HERO MOTOCORP LTD Dhandho IV .318 1.618 Intrinsic Value Current Mkt.S. without capex. 78.336 2.160 4 FY21 5 FY22 3.739 2.259 Current Mkt.Lower Range Dhandho IV . Check the his this business while arriving at your assumption.084 Sales 4% 6 FY23 7 FY24 4.090 2.991 16.610 10 FY27 10 49. and use your judgment wisely without twisting the model to fit your version of .761 1. Cap.096 10 Intrinsic Value 40. Premium/(Discount) to IV 93% Premium/(Discount) to IV Note: See explanation of this model here P.142 Year 7-10 5% 2 FY19 3 FY20 3. In case of companies earning negative FCF.999 1. Dhandho Intrinsic Value Calculation Read the book . where this model will not work.199 Discount Rate 12% 3 FY20 4 FY21 3.399 2.122 Last 5-Years' CAGR 5 FY22 6 FY23 4.113 2.534 1. 499 Discount Rate 12% 4.438 2.657 6.873 2.177 Year 4-6 15% 2.332 Year 7-10 10% 3.926 2.705 5.Higher Range FCF (Rs Cr) PV of FCF (Rs Cr) Assumed FCF Growth Excess Cash (Latest) 4.563 7.756 Intrinsic Value 67. Check the history of sting the model to fit your version of reality.511 2. Cap.340 2.107 2.Calculation by Mohnish Pabrai HERO MOTOCORP LTD Dhandho IV .566 4.635 5. without capex.461 2.517 117. .037 2.264 37.609 7.618 Year 1-3 20% 2.818 2. 78.634 Current Mkt.259 Premium/(Discount) to IV 16% ust use a normalized positive FCF as the al year.643 2. Ben Graham Formula (Low Range) Ben Graham Formula (High Range) Company Name HERO MOTOCORP LTD Company Name Year Ended Mar/17 Year Ended Avg 5-Yr Net Profit (Rs Crore) 2.4] / Y Here.5 + 2G) x 4. 8.5 + 2G) Here.465 Ben Graham Value (Rs Crore) Current Market Cap (Rs Crore) 78.0 Avg 5-Yr Net Profit (Rs Crore) PE Ratio at 0% Growth 8. EPS is the trailing 12 month EPS.5 PE Ratio at 0% Growth Long-Term Growth Rate 3.4 is what Graham determined to be his minimum required rate of return.6 Long-Term Growth Rate Ben Graham Value (Rs Crore) 41. At the time of around 1962 when Graham was Note: I have used Graham's original formula in the above calculations .630.259 Current Market Cap (Rs Crore) EXPLANATION Ben Graham's Original Formula: Value = EPS x (8.5 is the P/E ratio of a stock with 0% growth and g is the growth rate for the next 7-10 Ben Graham's Revised Formula: Value = [EPS x (8. 4. 259 g is the growth rate for the next 7-10 years e of around 1962 when Graham was publicizing his works.5 7.0 8.m Formula (High Range) HERO MOTOCORP LTD Mar/17 2.4% but to adjust to the present.630.575 78.3 60. we divide this nu . the risk free interest rate was 4. .e present. we divide this number by today’s AAA corporate bond rate. represented by Y in the formula above. 258 5 4.741 12% 2.319 Final Calculations Terminal Year 7.319 9 6.430 12% 2.086 2 2.142 3 3.087 15% 2.319 8 5.250 Current Market Cap (Rs Cr) 78.259 Years 1-5 6-10 59% FCF Growth Rate 15% 12% Discount Rate 12% Terminal Growth Rate 2% Net Debt Level (Rs Cr) (4.618) Year FCF Growth Present Value 1 2.336 15% 2.319 6 4.577 12% 2.250 78.202 12% 2. Dicounted Cash Flow Valuation HERO MOTOCORP LTD Initial Cash Flow (Rs Cr) 2.346 PV of Year 1-10 Cash Flows 22.259 Note: See explanation of DCF here .599 Terminal Value 23.652 Total PV of Cash Flows 46.199 4 3.032 46.319 7 5.687 15% 2.126 12% 2.319 10 7.553 15% 2.090 15% 2. Valuation LTD DCF Value (As calculated in cell B29) Current Market Cap DCF as % of Current Mkt Cap . 109 Net Profit Margin 9% 10% 14% 10% 10% 9% 8% Return on Equity 32% 34% 64% 65% 55% 42% 38% Calculations (Enter values only in black cells) Estimated CAGR in Net Profit over next 10 years 12% Estimated Net Profit after 10 years (Rs Cr) 10.776 Cost of Capital/Discount Rate 12% Discounted Value (Rs Cr) 67.928 2.118 2. Rs Cr) 209. Expected Returns Model HERO MOTOCORP LTD Particulars Mar/08 Mar/09 Mar/10 Mar/11 Mar/12 Mar/13 Mar/14 Net Profit (Rs Crore) 968 1. Market Cap (10th year from now.542 Current Market Cap (Rs Cr) 78.282 2.378 2.0 Esti. Estimated) 20.2 Exit P/E in the 10th year from now (x.232 1.489 Current P/E (x) 23.259 Note: See explanation of this model here . 160 3.377 15% 7% 9% 11% 12% 36% 36% 33% .el Mar/15 Mar/16 Mar/17 CAGR (9-Yr) CAGR (5-Yr) 2.386 3. Focus on decisions. your calculated "fair value" will be proven wrong in t future.478 only "after" you have answered in "Yes" to these two questio Dhandho 40. Also.259 be your analysis and results. Don't look for perfection. not outcomes. Intrinsic Value Range HERO MOTOCORP LTD Lower Higher Remember! Give importance to a stock's valuations / fair va EPV 26. the more simple.618 67.575 understand this business? DCF 46. Look for disconfirming evidenc .465 60. Great analysis is generally "ba of-the-envelope". so don't invest your savings just because you fall in with it.542 mathematical you are. and useful Current Market Cap. In stock research. sensible.634 (1) Is this business simple to be understood? and (2) Can Ben Graham 41. the less n Expected Return 67.250 Don't try to quantify everything. It is overrated. 78. and useful will and results. Look for disconfirming evidence. the less non- are. sensible. It is overrated. In stock research. . lated "fair value" will be proven wrong in the vest your savings just because you fall in love ook for perfection. importance to a stock's valuations / fair value ave answered in "Yes" to these two questions - ness simple to be understood? and (2) Can I understand this business? fy everything. Great analysis is generally "back- of-the-envelope". the more simple. Focus on outcomes. 972 % Growth YOY 10% 7% 14% -12% -8% 8% Expenses 6.IN Narration Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sales 6.365 6.399 7.863 5.230 1.093 6.285 5.079 958 1.085 939 1.190 1.293 PBT Margin 10% 15% 16% 15% 16% 17% 18% 17% 14% 16% % Growth YOY 74% 18% 28% -2% -21% 5% Tax 209 295 311 313 357 351 396 313 221 379 Net profit 477 748 786 793 833 883 1.809 7.224 7.400 1.106 1.097 1.316 6.369 1.915 7.796 6.004 772 718 914 % Growth YOY 75% 18% 28% -3% -14% 4% OPM 10% 15% 16% 16% 16% 17% 18% 17% 14% 16% .131 1.096 1.958 6.111 5.905 6.676 Operating Profit 683 1.042 1.505 7.169 6.794 6.714 6.189 1.427 5.HERO MOTOCORP LTD SCREENER.296 Other Income 93 104 112 90 117 120 152 132 118 132 Depreciation 90 103 109 114 115 115 119 124 135 133 Interest 1 1 1 1 1 2 2 2 1 2 Profit before tax 686 1.234 1.042 1. 12 15758.33 289.4 499.66 191.10 META Number of shares 19.47 402.88 1281.03 23768.74 1047.2 Tax 442.47 112.62 364.86 Change in Inventory -14.71 2529.94 39.18 1230.79 Other Income 242.7 81.23 1.94 39.19 294.49 164.76 5713.38 Depreciation 160.06 83.57 398.27 1401.68 6092.81 1189.8 Power and Fuel 56.97 Face Value 2 Current Price 3918.10 PLEASE DO NOT MAKE ANY CHA CURRENT VERSION 2.76 2864.11 Raw Material Cost 7391.88 104.55 73.96 109.41 14135.54 5862.84 -32.7 6315.08 BALANCE SHEET Report Date Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Equity Share Capital 39.62 Net profit 476.72 898.66 129.2 PROFIT & LOSS Report Date Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Sales 10331.75 296.21 -5.94 114.9 Market Capitalization 78259.91 Profit before tax 1410.96 Employee Cost 321.18 19397.56 2096.3 11.21 1.05 113.22 1.17 21.18 Other Mfr.29 487.84 1189.37 1392.89 287.1 15.9 2378.24 Interest 0.93 23579.83 Other Income 92.59 1198.3 363.14 18.94 .16 Dividend Amount 379.46 1396.75 Interest 2 2.94 39.2 116.53 747.41 17364.71 Tax 209.32 180.17 17365.76 120.53 2.41 399.72 1042.94 39.99 6168.83 1927.23 1.82 1105.38 1097.33 143.23 833.91 Expenses 6110.59 1155.28 1781.52 820.74 115.22 1096.76 2231.92 Selling and admin 903.69 350.98 1233.13 2118.COMPANY NAME HERO MOTOCORP LTD LATEST VERSION 2.83 187.26 7223.51 7505.38 2196.12 Other Expenses 218.71 437.17 7398.58 1130.12 793.65 113.58 411.75 1.09 Operating Profit 683.54 786.22 10730.94 39.76 6809.84 8760.7 599.34 1141.04 Net profit 967.61 356.37 Depreciation 89.29 883.73 2404.77 280.39 111.5 Profit before tax 685.33 1042 1095.02 473.56 213.87 6904.9 476.68 310.16 370.83 618.95 24.05 100.8 12319.13 Quarters Report Date Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sales 6793. Exp 95.57 529.46 2831.7 312.52 90.86 486.95 735.74 102. 4 524.87 1359.51 3070.16 2359.64 2254.76 Cash & Bank 131.57 6085.98 Receivables 297.57 636.82 181.31 665 Inventory 317.01 -861.41 9648.47 -2.12 4249.97 19.21 71.46 1473.57 1907.83 Other Assets 942 1022.03 693.49 120.54 48.09 1093.14 2890.8 2892.87 2107.71 1658.97 19.14 4001.22 PRICE: 762.83 436.09 Investments 2566.94 108.82 3368.8 4886.59 272.09 219.94 Cash from Financing Activity -432.04 7082.14 8523.44 641.21 9895.58 Other Liabilities 1955.78 1890.3 Borrowings 132 78.75 3925.71 5128.09 10732.57 6085.3 3760.97 19.31 -955.99 1941.19 -528.08 2916.75 3964.28 1517.14 8523.97 19.31 92.52 76.08 Total 5073.97 .17 -1322.Reserves 2946.49 66.16 Total 5073.78 4080.14 49.44 149.9 4992.16 -23.09 10732.26 1573.79 -732.97 19.33 2205.15 DERIVED: Adjusted Equity Shares in Cr 19.96 38.43 Cash from Investing Activity -781.16 -1056.04 No.33 -499.59 101.26 3623.4 1720.98 Capital Work in Progress 408.81 3425. 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 1211.22 2106.93 675.38 -5.03 2686.41 9648.98 Net Block 1156.93 -2109.1 326.35 719.09 49.21 9895.28 3785.84 62.39 130.23 -2458.27 Net Cash Flow -1.89 4966. 88 118.18 1274.64 -8.61 930.53 19783.95 1.56 2162.13 1198.13 112.58 6427.22 772.58 1400.34 2109.55 1.08 396.09 4.17 943.97 437.56 934.28 6364.82 11.99 18221.75 914.94 39.21 313.05 717.4 209.05 2867.74 422.36 29.26 379.43 1085.37 539.23 131.46 158.52 1.25 221.7 119.82 4434.72 18948.3 939.04 1368.93 1396.3 132.67 152.85 1933 2071.94 39.46 758.43 1107.36 131.94 39.85 204.12 599.38 492.2 7971.68 1281.7 28474.94 .42 952.73 11.25 124.64 3160.97 11.51 958.88 -63.87 1315.91 Mar-14 Mar-15 Mar-16 Mar-17 39.48 1.88 19321.41 5285.64 492.47 27585.47 122.43 522.3 5957.17 137.01 1293.04 1172.87 1079.44 613.01 1591.6 6915.DO NOT MAKE ANY CHANGES TO THIS SHEET Mar-14 Mar-15 Mar-16 Mar-17 25275.06 639.3 28442.12 1299.62 232.87 4658.08 2385.56 1295.3 957.36 135.69 446.61 245.89 6.04 1004.01 Sep-16 Dec-16 Mar-17 Jun-17 7796.25 3328.64 6675.19 3377. 8 1561.97 19.63 -68.19 -1943.56 -43.85 2915.94 -1414.97 19.11 712.69 -2095.52 -1686.1 10528.58 14756.88 2982.5 159.02 12.97 3986.42 10102.81 4006.58 14756.55 2218.17 4645.41 2250 3849.22 10102.14 4028.93 6501.97 19.02 -1617.68 3796.05 4088.25 131.39 8794.66 3859.47 10071.25 2912.02 5889. 5559.01 12630.31 117.98 656.35 4395.54 31.43 3231.74 -11.59 1282.52 19.59 854.71 2466.69 3584.87 669.73 199687500 199687500 199690088 199696838 2 2 2 2 Mar-14 Mar-15 Mar-16 Mar-17 2963.08 -2206.58 1389.35 284.55 605.36 136.01 12630.71 920.4 465.97 3748.26 4217.11 4581.1 10528.77 3154.71 2243.97 .49 672.93 -2230.55 815. 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