Valuation Of ASHOK LEYLAND

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<ul><li><p>Valuation Of ASHOK LEYLAND </p><p>Particulars Mar-21(F) Mar-20(F) Mar-19(F) Mar-18(F) Mar-17(F) Mar-16 Mar-15 Mar-14 Mar-13 Mar-12 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 </p><p>Total Operating Revenues </p><p>107035.3517 73817.484 52726.77 36363.29 26350.21 18,821.58 13,562.18 9,943.43 12,481.20 12,841.99 11,177.11 7,436.18 6,168.99 7,972.52 7,358.88 </p><p>YoY % 45% 40% 45% 38% 40% 39% 36% -20% -3% 15% 50% 21% -23% 8% #DIV/0! </p><p>Total Expenses </p><p>103824.2911 72341.134 52726.77 34545.13 24505.7 17,372.82 13,345.39 10,606.83 12,362.40 12,193.96 10,419.76 6,984.02 6,045.10 7,442.26 6,868.48 </p><p>YoY % 44% 37% 53% 41% 41% 30% 26% -14% 1% 17% 49% 16% -19% 8% #DIV/0! </p><p>Expense to sales 97% 98% 100% 95% 93% 92% 98% 107% 99% 95% 93% 94% 98% 93% 93% </p><p>Depreciation And Amortisation Expenses </p><p>631.89 550.32 652.1 497.2 502.11 </p><p>443.67 416.34 377.04 380.78 352.81 267.43 204.11 178.41 177.36 150.57 </p><p>YoY % 15% -16% 31% -1% 13% 7% 10% -1% 8% 32% 31% 14% 1% 18% #DIV/0! </p><p>Dep to fixed asset 9% 8% 10% 8% 9% 9% 8% 6% 6% 6% 5% 4% 4% 8% 9% </p><p>Finance Costs 410 350 375 400 350 273.54 393.51 452.92 376.89 255.25 188.92 101.85 157.3 83.63 31.82 </p><p>YoY % 17% -7% -6% 14% 28% -30% -13% 20% 48% 35% 85% -35% 88% 163% #DIV/0! </p><p>Operating Cost 102,782.40 71,440.81 51,699.67 33,647.93 23,653.59 16,655.61 12,535.54 9,776.87 11,604.73 11,585.90 9,963.41 6,678.06 5,709.39 7,181.27 6,686.09 </p><p>YoY % 44% 38% 54% 42% 42% 33% 28% -16% 0% 16% 49% 17% -20% 7% #DIV/0! </p><p>EBITDA 4,252.95 2,376.67 1,027.10 2,715.36 2,696.62 2,165.97 1,026.64 166.56 876.47 1,256.09 1,213.70 758.12 459.60 791.25 672.79 </p><p>YoY % 79% 131% -62% 1% 24% 111% 516% -81% -30% 3% 60% 65% -42% 18% #DIV/0! </p><p>EBITDA TO SALES 4% 3% 2% 7% 10% 12% 8% 2% 7% 10% 11% 10% 7% 10% 9% </p><p>Total Tax Expenses 1233.355659 689.23421 297.859 787.4557 782.0212 447.43 107.39 -120.6 37 124 170.5 121.1 18.45 168.84 163.22 </p><p>YoY % 79% 131% -62% 1% 75% 317% -189% -426% -70% -27% 41% 556% -89% 3% #DIV/0! </p><p>TAX TO EBITDA 29% 29% 29% 29% 29% 21% 10% -72% 4% 10% 14% 16% 4% 21% 24% </p><p>Profit/Loss For The Period </p><p>6422.121099 5167.2239 2636.339 2181.798 1317.511 721.78 334.81 29.38 433.71 565.98 631.3 423.67 190.25 469.31 444.25 </p><p>YoY % 24% 96% 21% 66% 83% 116% 1040% -93% -23% -10% 49% 123% -59% 6% #DIV/0! </p><p>PAT - SALES 6% 7% 5% 6% 5% 4% 2% 0% 3% 4% 6% 6% 3% 6% 6% </p><p>Fixed Assets 7021 6879 6521 6215 5579 5,129.35 5,375.70 5,841.39 5,970.81 5,461.72 4,991.76 4,869.26 4,442.31 2,186.63 1,714.74 </p><p>YoY % 2% 5% 5% 11% 9% -5% -8% -2% 9% 9% 3% 10% 103% 28% #DIV/0! </p><p>Fixed Assets 27% 40% 59% 48% 43% 45% 65% 72% 27% 23% </p></li><li><p>- SALES Margin </p><p>Total Current Liabilities </p><p>37462.37308 28050.644 18454.37 13454.42 8695.57 5,209.86 5,035.52 4,586.60 5,296.10 4,843.70 3,759.87 2,960.76 2,136.95 2,275.95 1,922.61 </p><p>YoY % 34% 52% 37% 55% 67% 3% 10% -13% 9% 29% 27% 39% -6% 18% #DIV/0! </p><p>CL to Sales 35% 38% 35% 37% 33% 28% 37% 46% 42% 38% 34% 40% 35% 29% 26% </p><p>Total Current Assets </p><p>40673.43363 29526.994 18981.64 14545.32 9222.574 5,290.61 4,693.00 3,855.44 4,296.53 4,303.89 3,983.77 4,081.45 3,120.71 2,743.42 2,527.50 </p><p>YoY % 38% 56% 31% 58% 74% 13% 22% -10% 0% 8% -2% 31% 14% 9% #DIV/0! </p><p>CA to Sales 38% 40% 36% 40% 35% 28% 35% 39% 34% 34% 36% 55% 51% 34% 34% </p><p>Working Capital 3,211.06 1,476.35 527.27 1,090.90 527.00 80.75 -342.52 -731.16 -999.57 -539.81 223.90 1,120.69 983.76 467.47 604.89 </p><p>change in WC 1,734.71 949.08 -563.63 563.89 446.25 423.27 388.64 268.41 -459.76 -763.71 -896.79 136.93 516.29 -137.42 604.89 </p><p>CAPEX -489.89 -192.32 -346.10 138.80 -52.46 -690.02 -882.03 -506.46 128.31 117.15 -144.93 222.84 2,077.27 294.53 1,564.17 </p><p>FCFF(revenue model) 1,774.77 930.67 1,638.97 1,225.21 1,520.81 1,985.29 1,412.64 525.21 1,170.92 1,778.65 2,084.92 277.25 </p><p>-2,152.41 465.30 ######## </p><p>Total Assets 23,166.77 20,870.96 18,634.79 16,490.96 14,991.78 13,385.52 13,311.49 12,808.00 13,096.70 11,915.75 10,593.31 9,308.12 7,911.26 5,578.20 4,505.17 </p><p>YoY % 11% 12% 13% 10% 12% 1% 4% -2% 10% 12% 14% 18% 42% 24% #DIV/0! </p><p>Cost Of Materials Consumed </p><p>73,694.46 52,638.90 35,566.82 24,871.91 17,765.65 12,252.17 8,626.64 5,909.69 7,539.42 9,121.48 8,064.50 5,333.83 4,390.59 5,834.61 5,491.44 </p><p>YoY % 40% 48% 43% 40% 45% 42% 46% -22% -17% 13% 51% 21% -25% 6% #DIV/0! </p><p>Purchase Of Stock-In Trade </p><p>3,595.57 2,663.38 2,315.99 1,852.79 1,684.35 1,531.23 1,391.19 1,269.03 1,311.74 507.37 273.37 244.88 202.19 163.53 124.18 </p><p>YoY % 35% 15% 25% 10% 10% 10% 10% -3% 159% 86% 12% 21% 24% 32% #DIV/0! </p><p>Operating And Direct Expenses </p><p>0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 0 45.51 50.3 57.48 41.7 </p><p>YoY % #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! -100% -10% -12% 38% #DIV/0! </p><p>Changes In Inventories Of FG,WIP And Stock-In Trade </p><p>200 -350 200 400 -300 </p><p>-521.44 -52.61 423.87 271.98 -167.01 -165.22 -251.85 -1.05 -97.48 -48.98 </p><p>YoY % 891% -112% 56% -263% 1% -34% 23886% -99% 99% #DIV/0! </p><p>COGS 77,490.03 54,952.28 38,082.81 27,124.69 19,150.00 13,261.96 9,965.22 7,602.59 9,123.14 9,461.84 8,172.65 5,326.86 4,591.73 5,900.66 5,566.64 </p><p>Total Shareholders Funds </p><p>7,805.46 7,227.28 6,691.93 6,254.14 5,844.99 5,514.14 5,118.69 4,447.88 4,455.10 4,208.17 3,962.96 3,656.31 3,473.90 2,148.98 1,894.57 </p><p>YoY % 8% 8% 7% 7% 6% 8% 15% 0% 6% 6% 8% 5% 62% 13% #DIV/0! </p><p>Total Capital And Liabilities </p><p>23,166.77 20,870.96 18,634.79 16,490.96 14,991.78 13,385.52 13,311.49 12,808.00 13,096.70 11,915.75 10,593.31 9,308.12 7,911.26 5,578.20 4,505.17 </p></li><li><p>YoY % 11% 12% 13% 10% 12% 1% 4% -2% 10% 12% 14% 18% 42% 24% #DIV/0! </p><p>Inventories 7,119.45 5,234.89 3,766.11 2,789.71 2,249.77 1,730.59 1,398.53 1,188.70 1,896.02 2,230.63 2,208.90 1,638.24 1,330.01 1,223.91 1,070.32 </p><p>YoY % 36% 39% 35% 24% 30% 24% 18% -37% -15% 1% 35% 23% 9% 14% #DIV/0! </p><p>Cash And Cash Equivalents </p><p>65,905.32 33,797.60 16,094.09 7,450.97 3,371.48 1,568.13 751.29 11.69 13.94 32.56 179.53 518.92 88.08 451.37 434.94 </p><p>YoY % 95% 110% 116% 121% 115% 109% 6327% -16% -57% -82% -65% 489% -80% 4% #DIV/0! </p><p>Current Investments </p><p>0.00 0.00 0.00 0.00 0.00 0 408.45 384.37 0 0 </p><p>YoY % #DIV/0! #DIV/0! </p><p>Trade Receivables </p><p>1,414.06 1,400.06 1,372.60 1,307.24 1,188.40 1,250.95 1,257.69 1,299.01 1,419.41 1,230.25 1,164.50 1,022.06 957.97 375.84 522.88 </p><p>YoY % 1% 2% 5% 10% -5% -1% -3% -8% 15% 6% 14% 7% 155% -28% #DIV/0! </p><p>Trade Payables </p><p>4,065.22 3,534.97 3,213.61 3,382.75 3,075.23 2,562.69 2,828.32 2,214.15 2,485.37 2,772.46 2,308.51 2,331.68 1,771.29 1,735.11 1,433.69 </p><p>YoY % 15% 10% -5% 10% 20% -9% 28% -11% -10% 20% -1% 32% 2% 21% #DIV/0! </p><p>EBIT 3,621.06 1,826.35 375.00 2,218.16 2,194.51 1,722.30 610.30 -210.48 495.69 903.28 946.27 554.01 281.19 613.89 522.22 </p><p>Basic EPS (Rs.) 22.57 18.16 9.26 7.67 4.63 2.54 1.18 0.11 1.63 2.13 4.75 3.18 1.43 3.53 3.36 </p><p>CURRENT MARKET PRICE AS ON 31 MAR 2016 108.55 108.55 108.55 108.55 108.55 108.55 108.55 108.55 108.55 108.55 108.55 108.55 108.55 108.55 108.55 </p><p>Equity Share Capital 284.59 284.59 284.59 284.59 284.59 284.59 284.59 266.07 266.07 266.07 133.03 133.03 133.03 133.03 132.39 </p><p>Profit/Loss Before Tax 7,655.48 5,856.46 2,934.20 2,969.25 2,099.53 1,169.21 442.20 -91.22 470.71 689.98 801.80 544.77 208.70 638.15 607.47 </p><p>YoY % 31% 100% -1% 41% 80% 164% -585% -119% -32% -14% 47% 161% -67% 5% #DIV/0! </p></li><li><p>DCF ANALYSIS </p><p>Particulars Mar-21 Mar-20 Mar-19 Mar-18 Mar-17 </p><p>Mar-16 Mar-15 </p><p>Mar-14 Mar-13 </p><p>Mar-12 Mar-11 Mar-10 Mar-09 </p><p>Dec-07 </p><p>Dec-06 </p><p>FCFF (EBITDA Formula) 1958.0221 1090.27 1828.08 1369.4 1666.42 2076.9 1456.19 252.21 1186.995 1813.5 2122.49 309.854 -2145.25 503.15 </p><p>WACC 9% 9% 9% 9% 9% </p><p>Years (t) 5 4 3 2 1 </p><p>Discounted FCFF 1273 772 1412 1153 1529 </p><p>Sum of Discounted FCFF 6138 </p><p>Terminal Value (Growth 5%) 51398 </p><p>Dicsounted Terminal Value (t=5) 33405 </p><p>Value of company (Sum of Discounted FCFF+Discounted Terminal Value) </p><p>39543 </p><p>Shares Outstanding 284.59 </p><p>FCFF per share 138.94802 Current Market Price (As on </p><p>12 Aug 2016) 89 Upside 56% </p><p>BUY CALL </p></li><li><p>Forecasting Financial Ratios Profitability Ratios Profitability Ratios Mar-21 Mar-20 Mar-19 Mar-18 Mar-17 Mar-16 Mar-15 Mar-14 Mar-13 Mar-12 Mar-11 Mar-10 Mar-09 Dec-07 Dec-06 </p><p>Gross Profit Ratio </p><p>((Total Operating Revenues-COGS)/Total Operating Revenues) 28% 26% 28% 25% 27% 30% 27% 24% 27% 26% 27% 28% 26% 26% 24% </p><p>Return on Sales </p><p>[PAT/Total Operating Revenues) 6% 7% 5% 6% 5% 4% 2% 0% 3% 4% 6% 6% 3% 6% 6% </p><p>Return on Assets </p><p>[PAT/ Average Total Assets] 28% 25% 14% 13% 9% 5% 3% 0% 3% 5% 6% 5% 2% 8% 10% </p><p>Return on Equity </p><p>[PAT / Average Stockholders' Equity] 82% 71% 39% 35% 23% 13% 7% 1% 10% 13% 16% 12% 5% 22% 23% </p><p>Net Profit Ratio </p><p>[PAT/Total Operating Revenue] 6% 7% 5% 6% 5% 4% 2% 0% 3% 4% 6% 6% 3% 6% 6% </p><p>Liquidity Ratios Liquidity Ratios </p><p>Current Ratio [Current Assets / Current Liabilities] 1.085714 1.0526316 1.0285714 1.0810811 1.060606 1.015499 0.931979 0.840588 0.811263 0.888554 1.05955 1.378514 1.4603571 1.205396 1.314619 </p><p>Quick Ratio </p><p>[(Current Assets-Inventory) / Current Liabilities] 0.895671 0.8660087 0.8244946 0.8737357 0.80188 0.683324 0.654246 0.58142 0.45326 0.428032 0.47206 0.825197 0.83797 0.667638 0.757918 </p><p>Cash Ratio </p><p>[(Cash and cash equi. + current investment) / Current Liabilities] 1.75924 1.2048778 0.872102 0.5537935 0.387724 0.300993 0.230312 0.086352 0.002632 0.006722 0.04775 0.175266 0.0412176 0.198322 0.226224 </p><p>Net Working Capital </p><p>[Current Assets - Current Liabilities] 3211.061 1476.3497 527.26774 1090.8988 527.0042 80.75 -342.52 -731.16 -999.57 -539.81 223.9 1120.69 983.76 467.47 604.89 </p><p>Management Efficiency Ratios </p><p>Management Efficiency Ratios </p><p>Receivable Turnover </p><p>[Sales / Accounts Receivable] 75.69377 52.724628 38.413658 27.816787 22.1728 15.04583 10.7834 7.654622 8.793231 10.43852 9.59821 7.275679 6.4396484 21.21254 14.07375 </p><p>Day Sales Outstanding </p><p>[365*( Trade Receivables/Sales)] 4.822061 6.922761 9.5018288 13.121573 16.46161 24.25921 33.84831 47.68361 41.5092 34.96664 38.0279 50.16714 56.680113 17.20681 25.93482 </p><p>Inventory Turnover (COGS/Avg. Inventory) 10.88427 10.497308 10.111975 9.7231192 8.511992 7.663259 7.125496 6.395718 4.811732 4.241779 3.69987 3.251575 3.4524026 4.821155 5.200912 </p><p>Days Inventory Outstanding </p><p>[365*( Inventory/ COGS)] 33.53465 34.770819 36.095817 37.539394 42.88068 47.62986 51.2245 57.06943 75.85626 86.0488 98.652 112.2533 105.72347 75.708 70.18 </p></li><li><p>Accounts Payable Turnover </p><p>(COGS / Accounts Payable) 19.0617 15.545312 11.850464 8.0185314 6.22718 5.175015 3.523371 3.433638 3.670737 3.412796 3.54023 2.284559 2.5923084 3.400741 3.882736 </p><p>Days Payable Outstanding </p><p>[365*(Accounts Payable/COGS)] 19.14834 23.479747 30.800481 45.519558 58.61401 70.53119 103.594 106.3012 99.43507 106.9504 103.101 159.7683 140.80115 107.3295 94.00587 </p><p>Operating Cycle </p><p>[Days Inventory+Days Sales] 38.35671 41.69358 45.597646 50.660967 59.34229 71.88908 85.07281 104.753 117.3655 121.0154 136.68 162.4204 162.40359 92.9148 96.11482 </p><p>Cash Conversion Cycle </p><p>[Day Sales O/S+Days Inventory O/S-Days Payable O/S] 19.20837 18.213833 14.797165 5.1414093 0.72828 1.357886 </p><p>-18.52117 -1.5482 17.9304 14.065 33.5792 2.652171 21.602441 </p><p>-14.41474 2.108945 </p><p>Total Asset Turnover [Sales/ Total Assets] 4.620211 3.5368514 2.8294811 2.2050439 1.757644 1.406115 1.018833 0.776345 0.953003 1.077732 1.05511 0.798892 0.7797734 1.429228 1.63343 </p><p>Leverage Ratios Leverage Ratios </p><p>Debt Ratio [Total Liabilities/Total Assets] 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 </p><p>Equity Ratio [Total Equity / Total Assets] 0.336925 0.3462841 0.3591094 0.3792464 0.389879 0.411948 0.384532 0.347274 0.34017 0.35316 0.3741 0.392809 0.4391083 0.385246 0.420532 </p><p>Debt-Equity Ratio </p><p>[Total Liabilities / Total Equity] 2.968019 2.8878023 2.7846665 2.6368081 2.564895 2.42749 2.600566 2.879574 2.93971 2.831575 2.67308 2.545769 2.2773425 2.595743 2.377938 </p><p>Times Interest Earned </p><p>[(PBT+Finance Cost) / Finance Cost] 19.67189 17.732737 8.8245272 8.4231332 6.998662 5.274366 2.123733 0.798596 2.248932 3.703154 5.24412 6.348748 2.3267641 8.630635 20.09082 </p><p>Valuation Growth Ratios </p><p>EPS [PAT/NO. Of Share] 22.56622 18.15673 9.2636379 7.666459 4.629504 2.53621 1.176464 0.110422 1.63006 2.127185 4.74555 3.18477 1.4301285 3.527851 3.355616 </p><p>Price-Earnings Ratio </p><p>[Current Market Price/EPS] 4.810287 5.9784993 11.717859 14.159079 23.44744 42.80008 92.26799 983.0462 66.59265 51.02989 22.8741 34.08409 75.902268 30.76944 32.34876 </p><p>Book Value per Share </p><p>[Shareholder's Funds/No Of Share] 27.42705 25.395416 23.514274 21.975957 20.53828 19.37573 17.98619 16.71695 16.74409 15.81603 29.79 27.48485 26.113659 16.1541 14.31052 </p><p>PB Ratio [Current Market Price/BV] 3.957772 4.2743935 4.616345 4.9394891 5.285253 5.602369 6.035186 6.493408 6.482884 6.863292 3.64384 3.949448 4.1568285 6.719656 7.585328 </p></li><li><p>Valuation Ratios </p><p>DATA Required 2016 </p><p>CMP ON 31 MARCH 2016 108.55 P/E 42.80008382 </p><p>EPS ON 31 MARCH 2016 2.536209986 P/B 5.602368547 </p><p>REVENUE ON 31 MARCH 2016 18,821.58 P/SALES RATIO 1.641320468 </p><p>NO . O/S SHARE 285 PRICE TO CASH FLOW 18.43641689 </p><p>NET WORTH 5,514.14 PRICE TO EARNING GROWTH RATIO 5.887803507 </p><p>ANNUAL DIVIDEND 45.00 DIVIDEND YIELD 0.414555504 </p><p>CASH FLOW FROM OPERATION 1675.61 MARKET CAP 30892.2445 </p><p>EPS GROWTH 116% ENTERPRISE VALUE 30475.9945 </p><p>SHORT TERM BORROWING 0 NET DEBT 416.25 </p><p>LONG TERM BORROWING 1,984.38 EV/EBITDA 14.07036778 </p><p>CASH &amp; CASH EQUIVALENT 1,568.13 EV/SALES 1.619204897 </p><p>EBITDA 2,165.97 EV/EBIT 17.69493962 </p><p>Net Debt= SHORT TERM BORROWING+LONG TERM BORROWING-CASH &amp; CASH EQUIVALENT </p></li><li><p>Analysis </p><p>Company Profiles: </p><p>Company : Ashok Leyland: Ashok Leyland is an Indian automobile manufacturing company based in Chennai, India. Founded in 1948, it is the 2nd largest </p><p>commercial vehicle manufacturer in India, 4th largest manufacturer of buses in the world and 16th largest manufacturer of trucks globally. Operating six </p><p>plants, Ashok Leyland also makes spare parts and engines for industrial and marine applications. With a joint venture with Nissan Motors of Japan the company </p><p>made its presence in the Light Commercial Vehicle (LCV) segment (</p></li><li><p>Adjusted Risk free Rate 5.0% </p><p>Annual inflation rate 9.0% </p><p>Country Risk Premium 1.5% </p><p>Risk free Rate 8.0% </p><p>Unlevered Beta 1.82 </p><p>Market Premium 4.0% </p><p>4. Terminal Growth Rate Assumption: T growth rate is taken 5 % assumption for all the three companies. </p><p>5. After calculating the value of the company the following recommendation can be given for each of the companies: </p><p>Name of the Company FCFF/ Share (Rs) </p><p>Current Market Price (Rs) Upside (%) </p><p>Recommendation </p><p>Ashok Leyland 138.9480213 89 (As on 12 Aug 2016) 56% BUY </p><p>This report has been prepared by Aakash Singh, MBA Finance Student (SIBM HYD) only for the learning purpose. It includes research analysis, projections, forecasts and other </p><p>predictive statements providing a basis for investment decisions. The views expressed therein are based solely on information available publicly/internal data/other reliable </p><p>sources believed to be true. The information is provided merely as a complementary service and do not constitute an offer, solicitation for the purchase or sale of any financial </p><p>instruments or neither me nor anyone responsible for the risk held by the investor. </p></li></ul>