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Enterprise Valuation

The document provides financial information for a company over the next 5 years including annual EBIT growth of 12%, depreciation to EBIT ratio of 20%, tax to EBIT ratio of 25%, and CAPEX to depreciation ratio of 125%. It then calculates the enterprise value of Rs. 2,073,207.38 by discounting the cash flows for the explicit period of 5 years at a WACC of 10% and adding the terminal value.

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Parth Malik
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136 views3 pages

Enterprise Valuation

The document provides financial information for a company over the next 5 years including annual EBIT growth of 12%, depreciation to EBIT ratio of 20%, tax to EBIT ratio of 25%, and CAPEX to depreciation ratio of 125%. It then calculates the enterprise value of Rs. 2,073,207.38 by discounting the cash flows for the explicit period of 5 years at a WACC of 10% and adding the terminal value.

Uploaded by

Parth Malik
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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CURRENT YEAR DATA:

EBIT 180000

FORECAST FOR NEXT 5 YEARS (YEAR 1 TO 5):


ANNUAL GROWTH IN EBIT 12%
DEPRECIATION / EBIT RATIO 20%
CHANGE IN WORKING CAPITAL / CHANGE IN EBIT 10%
INCOME TAX / EBIT 25%
CAPEX / DEPRECIATION RATIO 125%

FURTHER INFORMATION:
RISK FREE RATE 6.00%
EQUITY RISK PREMIUM 4.00%
BETA 1.25
DEBT:EQUITY 50%
COST OF DEBT (PRE-TAX) 12%
EV/EBITDA MULTIPLE 6

CALCULATING ENTERPRISE VALUE:


PV of cash flow in explicit period ₹ 655,026.38
PV of terminal value ₹ 1,418,181.00
Enterprise value ₹ 2,073,207.38
Less debt -₹ 300,000.00
Value of equity ₹ 1,773,207.38
No of shares 10,000
Target value per share ₹ 177.32
Year 0 Year 1 Year 2 Year 3
EBIT ₹ 180,000.00 ₹ 201,600.00 ₹ 225,792.00 ₹ 252,887.04
Add: Depreciation ₹ 36,000.00 ₹ 40,320.00 ₹ 45,158.40 ₹ 50,577.41
EBITDA ₹ 216,000.00 ₹ 241,920.00 ₹ 270,950.40 ₹ 303,464.45
Change in WC ₹ 18,000.00 ₹ -2,160.00 ₹ -2,419.20 ₹ -2,709.50
Net Operating CF ₹ 234,000.00 ₹ 239,760.00 ₹ 268,531.20 ₹ 300,754.94
Less: Tax Payment ₹ -45,000.00 ₹ -50,400.00 ₹ -56,448.00 ₹ -63,221.76
₹ 189,000.00 ₹ 189,360.00 ₹ 212,083.20 ₹ 237,533.18
Less:Capex ₹ -45,000.00 ₹ -50,400.00 ₹ -56,448.00 ₹ -63,221.76
Free Cash Flow ₹ 144,000.00 ₹ 138,960.00 ₹ 155,635.20 ₹ 174,311.42
PVF 0.90909091 0.82644628 0.75131480
PV ₹ 126,327.27 ₹ 128,624.13 ₹ 130,962.75

Terminal Value in 5th Year

WACC Calculation
Ke by CAPM 11%
Cost of Debt after TAX 9%
WACC (Discount Rate) 10.0%
Year 4 Year 5
₹ 283,233.48 ₹ 317,221.50
₹ 56,646.70 ₹ 63,444.30
₹ 339,880.18 ₹ 380,665.80
₹ -3,034.64 ₹ -3,398.80
₹ 336,845.54 ₹ 377,267.00
₹ -70,808.37 ₹ -79,305.38
₹ 266,037.17 ₹ 297,961.63
₹ -70,808.37 ₹ -79,305.38
₹ 195,228.79 ₹ 218,656.25
0.68301346 0.62092132
₹ 133,343.89 ₹ 135,768.33

₹ 2,283,994.82

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