ITC Valuation Sheet (Without Solution)

8/4/2019 ITC Valuation Sheet (Without Solution)

1/42

CB Research & Analytics

Balance Sheet (In million)

FY 08 FY 09 FY 10 FY 11E FY 12E

Liabilities

Share Capital 3,769 3,774 3,818

Reserves 116,808 133,576 136,826

Shareholders Funds 120,577 137,351 140,644

Borrowed Funds

Secured

Cash Credit Facilities 56 116 -

Unsecured

Short Term Loans 863 500 -

Long Term Loans

Other loan from Bank 318 252 160

Sales tax deferrment loan 907 908 917

Total Borrowed Funds 2,144 1,776 1,077

Def Tax Liab 5,451 8,672 7,850

Total liabilities 128,172 147,798 149,571

Assets

Intangible Assets

Addition to Intangibles

Less:AmortizationNet Intangible assets 1,236

Fixed Assets

Gross Block 89,597 105,587 119,679

Less:Depreciation 27,909 32,867 38,255

Net Fixed Assets 61,688 72,719 81,424

CWIP 11,268 12,141 10,090

Total Fixed Assets 72,957 84,860 91,514

Investments

Trade Investments 582 419 3,920

Quoted 26 26 3,899

Unquoted 556 393 21

Subsidiary Companies 8,141 8,772 10,242

Quoted - - -

Unquoted 8,141 8,772 10,242

Deposits & other investments 1 1 24

Quoted 1 1 1

Unquoted 0 0 24

Total Long Term Investments 8,723 9,191 14,186

Quoted 26 26 3,900

Unquoted 8,697 9,164 10,287

Current Investments 20,890 19,454 43,700

Other investments(Unquoted) 20,890 19,454 43,700

Total Investments 29,613 28,645 57,886

Less Provision for long term investments 268 268 618

Historical Forecast


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Cash Flow Statement (In million)

FY 08 FY 09 FY 10 FY 11E FY 12E FY 13E

PBT 45,718 48,257 60,153

Add: Depreciation & Amortization 4,385 5,494 6,087

Less: Other Income (3,405) (3,520) (2,289)

Add: Interest Paid (1,018) (201) (659)

Less: Taxes paid (14,135) (14,266) (19,898)

Cashflow before working capital changes 31,545 35,765 43,394

(Increase)/decrease in inventories (6,965) (5,492) 507

(Increase) /decrease in debtors (1,944) (818) (2,909)

Increase/(decrease) in creditors 4,593 3,336 5,315

Exceptional Items

Change in WC

Net cashflow from operating activities 27,230 32,790 46,306

(Increase)/decrease in fixed assets (22,461) (16,997) (10,945)

(Increase)/decrease in CWIP(Increase)/decrease in intangibles

Proceeds from the sale of fixed assets 36 56 29

Proceeds from other income 5,056 4,334 (24,400)

Investments

Net cashflow from investing activities (17,368) (12,607) (35,316)

Cash Flow for Financing 9,861 20,182 10,990

Increase / (decrease) in Equity 446 448 7,207

Divident paid (13,572) (15,354) (16,333)

Change in provisions

Increase / (decrease) in Long-term Debt (59) (109) (82)

Increase / (decrease) in Short-term Debt 194 (260) (500)

Cash credit facility (116)

Interest paid (171) (286) (335)

Others(Net increase in Statutory Restricted Accounts balances) 60

Net cash flow from financing activities (13,161) (15,561) (10,099)

Cash taken over on amalgamation

Net cash inflow/(outflow) (3,300) 4,621 892

Opening cash 9,002 5,703 10,324

Closing cash 5,702 10,324 11,263

Actual closing cash 5,703 10,324

Check (1) (0)

Historical Forecast


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Income Statement (In million)


Gross Sales: 213,559 231,435 262,596

Less : Sales tax/Value added tax (74,084) (75,316) (81,064)

Net Sales 139,475 156,119 181,532

COGS (60,167) (59,579) (69,714)

Gross Profit 79,308 96,541 111,818

Cost of Services and Manufacturi (35,269) (47,955) (51,078)

EBITDA 44 039 48 585 60 740

Dep & Amort (4,385) (5,494) (6,087)

EBIT 39,655 43,091 54,653

Interest (46) (183) (534)

EBT (core operations) 39,609 42,908 54,119

Other Income 6,109 5,349 6,034

EBT (including other income) 45,718 48,257 60,153

Taxes paid (14,517) (15,622) (19,543)

Other extraordinar items - - -

Net Profit (PAT) 31,201 32,636 40,610

Dividends 15,432 16,339 44,523

Ordinary Dividend 15,432 16,339 20,036

S ecial Centenar Dividend - - 24 488

Basic Weighted Average Shares (mn) 3,741 3,744 3,750

Diluted Weighted Average Shares (milli 3,747 3,750 3,794

EPS(Basic) 8.3 8.7 10.8

EPS(Diluted) 8.3 8.7 10.7

Horizontal Analysis FY 08 FY 09 FY 10 FY 11E FY 12E FY 13E

Gross Sales:

% yoy

Less : Sales tax/Value added tax

% yoy

Net Sales

% yoy

COGS

% yoy

Gross Profit

% yoy

SGA Expense

% yoy

EBITDA

% yoy

Depreciation

Historical Forecast


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CB Research & Analytics ITC Model

Cost Analysis

Unit of Quantity FY 08 FY 09 FY 10

Unmanufactured tobacco Tonne

Qty (tonnes) 146,912.0 148,021.0 173,203.0

Cost (Rs million) 8,082.8 11,281.8 18,346.8

Per unit cost 55018.0 76217.6 105926.6Growth (%) 3.5% 38.5% 39.0%

Qty growth (%) 11.0% 0.8% 17.0%

Waste Paper and Pulp Tonne

Qty (tonnes) 274,438.00 225,936.0 236,936.0

Cost (Rs million) 4,444.5 4,341.7 4,600.8

Per unit cost 16,194.9 19,216.5 19,417.9

Growth (%) 9.0% 18.7% 1.0%

Qty growth (%) 3.4% -17.7% 4.9%

Hardwood and Bamboo BDT

Qty (tonnes) 301,812.0 534,067.0 638,841.0

Cost (Rs million) 1,332.1 2,412.4 2,821.9

Per unit cost 4,413.7 4,517.0 4,417.2

Growth (%) 12.3% 2.3% -2.2%

Qty growth (%) 9.9% 77.0% 19.6%

Soya Seeds Tonne

Qty (tonnes) 319,538.0 72,717.0 36,519.0

Cost (Rs million) 5,075.4 1,896.3 927.2

Per unit cost 15,883.6 26,077.8 25,389.5Growth (%) 35.1% 64.2% -2.6%

Qty growth (%) -24.6% -77.2% -49.8%

Wheat Tonne

Qty (tonnes) 827,913.0 573,714.0 505,357.0

Cost (Rs million) 8,254.6 6,520.7 6,257.5

Per unit cost 9,970.4 11,365.8 12,382.3

Growth (%) 12.0% 14.0% 8.9%

Qty growth (%) 35.3% -30.7% -11.9%

Coffee Tonne

Qty (tonnes) 16,444.0 9,614.0

Cost (Rs million) 1,152.6 668.3

Per unit cost 70,092.4 69,513.2

Growth (%) -0.8%

Qty growth (%) -41.5%

Board Tonne

Qty (tonnes) 10,475.0 11,114.0 10,527.0

Historical


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Cost (Rs million) 1,023.1 1,261.2 752.6

Per unit cost 97,670.6 113,478.5 71,492.4

Growth (%) 13.8% 16.2% -37.0%

Qty growth (%) 2.2% 6.1% -5.3%

Filter Rods Million

Qty (Million) 11,475.0 14,366.0 13,591.0Cost (Rs million) 1,230.3 1,660.4 1,830.3

Per unit cost 107,215.7 115,578.4 134,670.0

Growth (%) -2.5% 7.8% 16.5%

Qty growth (%) 1.2% 25.2% -5.4%

Aluminium Foil/Metallised Paper Bobbin

Qty (tonnes) 653,446.0 707,698.0 640,808.0

Cost (Rs million) 569.3 632.9 568.0

Per unit cost 871.2 894.3 886.4

Growth (%) 4.0% 2.6% -0.9%

Qty growth (%) -3.5% 8.3% -9.5%

Film and Laminates Tonne

Qty (tonnes) 2,028.0 12,109.0 14,293.0

Cost (Rs million) 329.5 1,825.2 1,743.2

Per unit cost 162,475.3 150,730.9 121,961.8

Growth (%) -10.1% -7.2% -19.1%

Qty growth (%) 0.0% 497.1% 18.0%

Wheat Flour/Maida TonneQty (tonnes) 25,907.0 23,061.0 127,159.0

Cost (Rs million) 333.2 323.1 1,977.6

Per unit cost 12,861.4 14,010.7 15,552.2

Growth (%) 5.3% 8.9% 11.0%

Qty growth (%) 5.9% -11.0% 451.4%

Sugar Tonne

Qty (tonnes) 59,217.0 60,027.0 70,165.0

Cost (Rs million) 976.1 955.6 1,958.4

Per unit cost 16,483.4 15,919.5 27,911.4

Growth (%) -5.7% -3.4% 75.3%

Qty growth (%) 41.1% 1.4% 16.9%

Hydrogenated Vegetable Oil Tonne

Qty (tonnes) 25,386.0 28,804.0 33,729.0

Cost (Rs million) 1,064.6 1,514.3 1,455.4

Per unit cost 41,936.5 52,572.6 43,149.8

Growth (%) -0.4% 25.4% -17.9%

Qty growth (%) 50.0% 13.5% 17.1%


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Surfactants Tonne

Qty (tonnes) 19,158.0 38,335.0

Cost (Rs million) 976.6 1,701.2

Per unit cost 50,976.1 44,377.2

Growth (%) -12.9%

Qty growth (%) 100.1%

Inks, Solvents and Adhesives Various

Cost (Rs million) 1,078.8 1,186.1

Growth (%) 9.95%

Chemicals and Fragrances Various

Cost (Rs million) 3,315.7 3,603.9

Growth (%) 8.7%

Packing Materials Various

Cost (Rs million) 1,601.7 1,703.9

Growth (%) 6.4%

Others Various

Cost (Rs million) 12,057.7 7,254.3 7,276.8

Growth (%) 23.5% -39.8% 0.3%

Total Raw Material cost 44,773.2 50,005.3 59,379.9


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FY 11E FY 12E FY 13E

Forecast


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Revenue Forecast

Cigarettes Sales FY 08 FY 09 FY 10 FY 11E FY 12E

Cigarettes Sales (Rs million) 138,155 151,009 172,779

yoy % growth in Sales volume 7.7% 9.3% 14.4%

No. of cigarretes sold (million) 80,723 78,370 84,040

yoy % growth in units -0.7% -2.9% 7.2%Price per unit 1.7 1.9 2.1

yoy % growth in per unit price 8.5% 12.6% 6.7%

Revenues for Cigarretes 138,155 151,009 172,779

Segmental Revenues FY 08 FY 09 FY 10

Cigarretes 138,155 151,009 172,779

yoy % growth 8% 9% 14%

FMCG 25,111 30,140 36,417

yoy % growth 49% 20% 21%

Hotels 11,002 10,203 9,108

yoy % growth 12% -7% -11%

Agri 38,684 38,460 38,621

yoy % growth 10% -1% 0%

Paper 23,643 28,220 32,336

yoy % growth 13% 19% 15%

Total Revenue 236,597 258,032 289,262

12% 9% 12%

Intersegment Revenue 23137 26738 26717

Intersegment Revenue as % of Total S 10% 10% 9%

Gross Sales 213,460 231,294 262,545

ForecastHistorical


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FY 13E


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Working Capital Schedule

FY 08 FY 09 FY 10 FY 11E

Net Sales 139,475 156,119 181,532

Raw material cost (60,167) (59,579) (69,714)

Manufacturing and other expenses (35,269) (47,955) (51,078)

Working Capital Balances

Accounts Receivable, net 7,369 6,687 8,588

Inventory 40,505 45,997 45,491

Loans and Advances 15,155 16,450 13,045

Other Current Assets 126 120 64

Deposits 1,334 2,034 2,820

Total Non Cash Current Assets 64,490 71,287 70,008

Accounts Payable 27,414 29,265 34,462

Other Current Liabilities 456 380 521

Total Non-Debt Current Liabilities 27,870 29,645 34,983

Net Working Capital/ (Deficit) 36,621 41,642 35,025

(Increase)/ Decrease in Working Capital (6,572) (5,022) 6,617

Provisions 16,453 17,405 45,499

Ratios & Assumptions

Sundry Debtors, net (Collection period in days) 0.0 0.0 0.0Inventories (Days outstanding) 0.0 0.0 0.0

Loans and Advances % of net sales 11% 11% 7%

Other Current Assets as % of NET SALES 0% 0% 0%

Deposits as % of Net Sales 1% 1% 2%

Creditors (Days Payable) 0.00 0.00 0.00

Other Current Liabilities as % of COGS 1% 1% 1%

Provisions as % of Net Sales 12% 11% 25%

Cash conversion cycle - - -

Cash Flow from Individual Line Items

Accounts Receivable, net (1,002) 683 (1,901)

Inventory (6,965) (5,492) 507

Loans and Advances (2,997) (1,295) 3,404

Other Current Assets 416 7 55

Deposits (46) (700) (786)

Historical


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Accounts Payable 3,952 1,852 5,196

Other Current Liabilities 70 (76) 141

(Increase)/ Decrease in Working Capital (6,572) (5,022) 6,617

Provisions 1,725 952 28,095


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FY 12E FY 13E

Forecast


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Depreciation Schedule

Net Sales

Capital Expenditures

Capital Expenditures as % of Net Sales

Capital Work-in -Progress

CWIP as % of Net Sales

Beginning Net PP&E

Capital Expenditures(Excluding CWIP)

(Depreciation Expense)

(Asset Sales )

Ending Net PP&E(Excluding CWIP)

Ending Net PP&E (Including CWIP)

Actual

PPE (Break-up for 2010) Amount

Land 8,020.3 NA

Capital Work in progress 10,089.9 NA

Building 19,097.8 42

Building Improvements 235.9 7

Leasehold Properties 1,871.1 75

Machinery 46,605.5 10

Equipments 1,377.5 8

Furniture & Fittings 2,484.9 12Automobiles 491.7 10

Railway Sidings 3.7 NM

Total 90,278.3

Total Capex

Breakup

Land

Capital Work in progress

Building

Building Improvements

Leasehold Properties

Machinery

Equipments

Furniture & Fittings

Automobiles

Remaining useful life

Historical


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Building - Straight Line Method

Useful Life 42.0 Years

Building 19,098

Depreciation Expense (existing)

Capex Useful Life2011 - 42 Years

2012 -

2013 -

Depreciation (Building)

Building Improvements - Straight Line Method


Building Improvement 236


Capex Useful Life

2011 - 7 Years

2012 - 7

2013 - 7

Depreciation (Building Improvements)

Leasehold PropertiesUseful Life 75.0 Years

Leasehold Properties 1,871.1


Capex Useful Life

2011 - 75.0 Years

2012 -

2013 -

Total Depreciation (Leasehold Properties)

Machinery


Machinery & Equipments 46,605.5


Capex Useful Life


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2011 - 10.0 Years

2012 - 10.0

2013 - 10.0

Total Depreciation (Machinery & Equipments)

Equipments


Equipments 1,377.5


Capex

2011 0.0 8 Years

2012 0.0

2013 0.0

Total Depreciation (Equipments)

Furniture & Fittings


Furniture & Fittings 2,484.9


Capex Useful Life

2011 0.0 12 Years

2012 0.0 122013 0.0 12

Total Depreciation (Furniture & Fittings)

Automobiles & Trucks


Automobiles & Trucks 491.7


Capex Useful Life

2011 0.0 10

2012 0.0 10

2013 0.0 10

Total Depreciation (Automobiles & Trucks)

Useful Life


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Total Depreciation Expense (3,128.7) (3,323.4) (3,629.2)


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139,475 156,119 181,532

21,232 17,397 12,741

15% 11% 7%

11,268 12,141 10,090

8% 8% 6%

- 16,847 28,751

21,232 17,397 12,741

(4,385) (5,494) (6,087)

- - -

16,847 28,751 35,405

72,957 84,860 91,514

Proportion of Assets

8.9%

11.2%

21.2%

0.3%

2.1%

51.6%

1.5%

2.8%0.5%

0.0%

100.0%


Forecast


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22/42

(4,384.6) (5,494.1) (6,087.1)


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Asset Dep for the year Av asset value Estimated Useful Life

Building 436 20000 46

Building Improvements 55 390 7

Leasehold Properties 21 1600 76

Machinery 4445 70000 16

Equipments 452 3750 8

Furniture & Fittings 328 4100 13Automobiles 62 660 11


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Amortization Schedule

Net Sales

Addition to intangibles

Intangibles as % of Net Sales

Beginning Net Intangibles

Addition to intangibles

(Amortization Expense)

(Asset Sales )

Ending Net Intangibles

Actual

Intangible Assets (Break-up for 2010) Amount

Trademarks & Goodwill 12.4 10

Know-how, Business and Commercial Rights 210.7

A Type 78% 165.25 10

B Type 8% 17.35 4

C Type 13% 28.10 5

Capitalised Software 1,012.5 5

Total 1,235.6

Total addition to Intangibles

Breakup

Trademarks & Goodwill

Know-how, Business and Commercial Rights

A

B

C

Capitalised Software

Trademarks & Goodwill


Trademarks & Goodwill 12


Capex Useful Life

Historical

Remaining useful life


25/42

2011 10 Years

2012

2013

Total Amortization (Trademarks & Goodwill)


Useful Life, A Type 10.0 Years



Capex Useful Life

2011 10.0 Years

2012

2013

Total Amortization


Useful Life, B Type 4.0 Years



Capex Useful Life

2011 4.0 Years

20122013

Total Amortization


Useful Life,C Type 5.0 Years



Capex Useful Life

2011 5.0 Years

2012

2013

Total Amortization


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Capitalised Software


Capitalised Software 10.0

Depreciation Expense (existing) 1012.5

Capex Useful Life

2011 5 Years2012

2013

Total Amortization (Capitalised Software)

Total Amortization Expense


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139,475 156,119 181,532

379 261 515

0.3% 0.2% 0.3%

1,236

Proportion of Assets

1.0%

17.1%

78%

8%

13%

81.9%

100.0%



Forecast


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Shareholder's Equity Schedule

Beginning Equity Balance

Net Income

Issuance/ (Repurchase) of Equity

Dividends Paid / AnnouncedOption Proceeds

Ending Equity Balance

Actual

Projected Share Price

Current Year EPS

Average closing price

Implied PE multiple

New Shares from Exercised Options

Number of Options Exercised during the year

New Shares from Exercised Options (in million)

Average Strike Price (in Rs) - calculate

Option Proceeds (in million)

Dividend Assumptions

Total Dividends Paid

Net Income

Dividend Payout Ratio

Options Table

2010-11 -

Exercise Price Granted Exercised

2004 880.5 1074422 1074422

2005 1,531.7 1377495 1360568

2006 1,814.0 5164746 2906596

2007 1,661.0 4782423 551282

2008 1,896.0 5322009 112642

2009 2,180.0 4294210 0

2011-12 Projected Share Price -

Projected Share Price


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2004 880.45 1074422 1074422

2005 1531.65 1377495 1377495

2006 1,814.00 5164746 2906596

2007 1661 4782423 4782423

2008 1896 5322009 112642

2009 2180 4294210 0

2012-13 Projected Share Price -


2004 880.45 1074422 1074422

2005 1531.65 1377495 1377495

2006 1,814.00 5164746 2906596

2007 1661 4782423 4782423

2008 1896 5322009 112642

2009 2180 4294210 0


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- 16,216 32,960

31,201 32,636 40,610

0 0 0

(15,432) (16,339) (44,523)446 448 7,207

16,216 32,960 36,254

120,577 137,351 140,644

104,361 104,391 104,390

8.3 8.7 10.7

89.3 92.7 115.7

10.7 10.7 10.8

638,727 578,951 4,377,723

6.4 5.8 43.8

698.7 772.9 1646.4

446.3 447.5 7,207.3

15,432 16,339 44523.3

31,201 32,636 40610

49% 50% 110%

Left Exercised in 201 Option Proceeds

0 0 -

16927 0 -

2258150 0 -

4231141 0 -

5209367 0 -

4294210 0 -

0 -

Number of shar 0

ForecastHistorical


33/42


0 0 0

0 0 0

2258150 0 0

0 0 0

5209367 0 0

4294210 0 00 0

Number of shar 0


0 0 0

0 0 0

2258150 0 0

0 0 0

5209367 0 0

4294210 0 0

0 0

Number of shar 0


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Shares Outstanding Schedule

FY 08 FY 09 FY 10 FY 11E FY 12E

Beginning Balance - Basic (actual) 3,741 3,747 3,753

Shares Issued 0 0 0

Bonus Issue

Issue of shares on AmalgamationShares Repurchased - - -

Ending Balance - Basic (actual) 3,741 3,747 3,753

Basic Weighted Average Shares 3,741 3,744 3,750

Effects of Options and Dilutive Securities 6.4 5.8 43.8

Diluted Weighted Average Shares 3,747 3,750 3,794

ForecastHistorical


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FY 13E


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Debt Schedule

FY 08 FY 09 FY 10

Cash Flow Available for Financing Activities 9,861 20,182 10,990

Proceeds from/ (Repurchase of) Equity

DividendsOption Proceeds

+ Beginning Cash Balance

- Minimum Cash Balance

Cash Available for Debt Repayment

Long Term Debt Issuance

Long Term Debt (Repayments)

Interest paid

Cash Available for Revolving Credit Facility

Revolving Credit Facility

Beginning Balance

Discretionary (Paydown)/ Borrowings

Ending Balance -

Long Term Debt

Beginning Balance 2,009 2,144 1,776

Issuance (59) (109) (82)

(Repayment/ Amortization) 194 (260) (500)

Ending Balance 2,144 1,776 1,077

Revolving Credit Facility Average Balanc

Interest Rate

Interest Expens

Long Term Debt Average Balanc

Interest Rate

Interest Expens

Total Interest Expense

Cash Balances Average Balanc

Interest Rate

Interest Incom

Total Interest Income/(Expense)

Historical


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e

e

e

e

e

Forecast


38/42


WACC Calculation

Debt

Tax Rate

Cost Of Debt

Beta

Equity

Risk free Rate

Expected Market Return

Cost Of Equity

WACC


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Valuation Sheet


Projecting Free Cash Flow to Firm

1 2 3 4

Free Cash Flow to Firm

EBITFree Cash Flow to Firm

EBIT x (1-t)

Add: Depreciation

Less: Capex

Less: Change in working capital

FCFF

Cost of capital

Free cash flow to firm of explicit period (2011E to 2013E)

Date 2012 2012 2013

Cash Flows

NPV of explicit period

Terminal Value

Terminal value @ perpetual growth (2013)

Infinite growth rate 4.5%

Terminal value as of 31/12/2013

NPV of terminal value

DCF Valuation Summary

DCF calculation as of

NPV of explicit periodNPV of terminal value

Enterprise Value

Less: Debt

Less: Minority Interest

Add: Cash

Add: Liquid Investments

Equity value

No. of shares outstanding(in million)


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Share Price (Fair/Intrinsic value)in Rs


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Documents

ITC Valuation Sheet (Without Solution)