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Amara Raja Batteries Intrinsic Value Analysis

1) The company generated an NOPAT of Rs. 26,103 Cr in 2021 with a ROIC of 40%. 2) The FCFF for 2021 was Rs. 23,118 Cr and is projected to grow at 5% annually for the next 5 years. 3) Discounting the FCFF flows at 8% yields a firm value of Rs. 369,547 Cr. With a market cap of Rs. 299.84 Cr, the company is undervalued.

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19 views3 pages

Amara Raja Batteries Intrinsic Value Analysis

1) The company generated an NOPAT of Rs. 26,103 Cr in 2021 with a ROIC of 40%. 2) The FCFF for 2021 was Rs. 23,118 Cr and is projected to grow at 5% annually for the next 5 years. 3) Discounting the FCFF flows at 8% yields a firm value of Rs. 369,547 Cr. With a market cap of Rs. 299.84 Cr, the company is undervalued.

Uploaded by

suraj nair
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

Particulars Amount (Rs.

In Cr)
a EBIT or Operating Profit 30,952.43
b Tax 4,849.30
t = b/a Tax ratio (t) 0.16
c = a*(1-t) NOPAT 26,103.13
d Invested Capital 2021 65,273.26

e = c/d ROIC 0.40

Cost of Capital/ Discount Rate (k) -


p CAPEX 2,985.10 ke
K K (CAPM (Ke) = Rf+B*Rm) 0.08
q Changes in working capital -
R = p+q Reinvestment 2,985.10
RR = R/c Reinvestment Rate (RR) 0.11
g = RR*e Growth (g) 0.05
c-R FCFF 23,118.03

1 2
Year
2021 2022
EBITDA 32,367.96 33,848.22
NOPAT (EBITDA * (1-t)) 27,296.89 28,545.24
Reinvestment (NOPAT*RR) 3,121.62 3,264.37

FCFF 24,175.27 25,280.86

Year FCFF PVIF @ 8%

1 24175.2719908704 0.9259
2 25280.864149435 0.8573
3 26437.0176428024 0.7938
4 27646.0447599638 0.7350
5 28910.3635363351 0.6806
Terminal Value 411,663.46 0.6806
Present Value of Free Cash Flow to Firm
Cash and Bank and Balance
Total Value of ITC/ Enterprise Value
Debt Outstanding
Total Value of Equity
No. Of Shares Outstanding
Intrinsic Value of Equity
Market price as on 11.08.2022
Inference
Particulars
Current Assets exlcuding Cash
Current Liabilities + Provision

Risk free rate Beta of ITC Risk Premium Cost of Equity =


Rf+ β (Rm-Rf)
Rf β Rm-Rf ke
0.065 0.66 0.0218 0.08

3 4 5
2023 2024 2025
35,396.18 37,014.93 38,707.71 Terminal Value
29,850.68 31,215.82 32,643.39
3,413.66 3,569.78 3,733.03

26,437.02 27,646.04 28,910.36 411,663.46


G=K*RR 0.009

PVCF

22,384.51
21,674.27
20,986.56
x
19,675.91
280,171.24
364,892.48
4,654.42
369,546.90
-
369,546.90
1,232.5
299.84
220.05
Undervalued
2020 2019
14,246.97 Changes in Working
14,279.68 Capital
9,492.22 10,006.02
4,787.46 4,240.95 546.51

Cost Cost rates Weights

ke 0.08 1
kd 0.02 0
1

Pre tax 0.02

Growth Beyond 5 Years

No of share o/s 1232.5 crs

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