2-STAGE FCFF VALUATION MODEL Note :
LTI MINDTREE 1. All the cells Marked red are pre-set values that are
[Link] Must only fill the cells which are grey coloure
INPUTS
EBIT 6,271.00 EBIT = Profit Before Exceptional items & tax(or if not given, Prof
Effective Tax Rate 24.20% Effective Tax Rate = Total Tax Expense / Profit Before Exception
Marginal Tax Rate 25.17%
Length of High Growth Period 7 Based On Assumptions* MD&A
Cash and Cash Equivalents 2,816.00
Perpetual ROC 23.00% Based On Assumptions* Formula
Debt
Book Value of Debt 3,565.00 Bv Of Debt = Short Term Borrowings + Long Term Borrowings +
Interest Expenses 222.00 28.25 Interest coverage ratio
Marginal Tax Rate 25.17%
Ratings based Default Spread 0.69%
Pre-Tax Cost of Debt 6.23%
Average Maturity of Debt 4 (short term debt/total debt *1)+long tern debt/total debt *10
Risk Free Rate
10Y Government Bond Yield 7.47%
Country Default Spread 1.87% Database
Risk Free Rate 5.60%
Equity
Current Market Price 5,562.00
Shares Outstanding (in Cr) 29.00
Mature Market ERP 4.24%
Country / Region ERP Revenue Weight Weight*ERP
0.00% 0.00%
RoW( Includes India) 19.60% 4,212.30 11.86% 2.32%
Europe 16.60% 5,299.00 14.92% 2.48%
North America 17.10% 26,005.70 73.22% 12.52%
Unlevered Bottom Up Beta 1.40
d are pre-set values that are provided by Aswath Damodaran
cells which are grey coloured , the white cells will automatically get filled
s & tax(or if not given, Profit Before Tax ) + Finance Costs( Also known as Interest Expenses)
e / Profit Before Exceptional items & tax(or if not given, Profit Before Tax )
+ Long Term Borrowings + Lease Liabilities (Long/Short Term) + Trade Payables(Long/Short Term)
n debt/total debt *10
WEIGHTED AVERAGE COST OF CAPITAL
LTI MINDTREE
Market Values
Market Value of Equity ###
Market Value of Debt 3,750.50
Market Value of Capital ###
Cost of Equity 30.27%
Risk Free Rate 5.60%
Equity Risk Premium 17.32%
Levered Beta 1.42
Small Cap Premium 0.00%
Cost of Debt 4.66%
Pre-Tax Cost of Debt 6.23%
Marginal Tax Rate 25.17%
WACC 29.69%
Weight of Equity 97.73%
Weight of Debt 2.27%
R&D EXPENSES
LTI MINDTREE
INPUTS
R&D Expenses
Expected Life of R&D 5
Current Year R&D Expense
Year -1 -2 -3 -4 -5
R&D Expenses
OUTPUT
Year Current -1 -2 -3 -4
R&D Expense - - - - -
Unamortized Portion
Unamortized Portion (in Figures) - - - - -
Amortization for the Year - - - - -
Value of Research Asset -
Amortization on Research Asset - NOT RELEVANT
Tax Benefit on R&D -
Adjustment to EBIT -
0 0 0 0 0
-5 0 0 0 0 0
- - - - - -
- - - - - -
- - - - - -
- - - - - -
GROWTH AND REINVESTMENT Figures In INR Crores
LTI MINDTREE
INPUTS
Return on Capital
Particulars 2020 2021 2022
EBIT 2,086.00 2,667.00 5,417.00
EBIT (1-t) 1,560.95 1,995.72 4,053.54
BV of Equity 5404 7304 14288
BV of Debt 1,607.00 1,626.00 1,583.00
Cash and Marketable Securities 525.00 759.00 1,837.00
BV of Capital 6,486.00 8,171.00 ###
Return on Capital 24.07% 24.42% 28.88%
Reinvestment Rate
Particulars 2019 2020 2021 2022
Current Assets 3,567.00 4,092.00 4,245.00 8,711.00
Cash and Cash Equivalents 415.00 525.00 759.00 1,837.00
Current Liabilities 1,770.00 2,499.00 2,604.00 6,027.00
Short Term Borrowings - 32.00 41.00 52.00
Working Capital 1,382.00 1,100.00 923.00 899.00
Changes in Working Capital (282.00) (177.00) (24.00)
Particulars 2020 2021 2022
Capital Expenditure 246.00 272.00 1,057.00
Adjuested Capital Expenditure 246.00 272.00 1,057.00
Depreciation 273.00 332.00 597.00
Adjusted Depreciation 273.00 332.00 597.00
Net Capital Expenditure (27.00) (60.00) 460.00
Particulars 2020 2021 2022
Reinvestment (309.00) (237.00) 436.00
Reinvestment Rate -19.80% -11.88% 10.76%
OUTPUT
Return on Capital 25.39%
2023 2024 Reinvestment Rate 4.39%
5,942.00 6,271.00 EBIT Growth Rate 1.11%
4,446.40 4,692.59
16592 20018 Target Reinvestment Rate 5.00%
2,835.00 3,565.00 Target ROC 23.00%
2,932.00 2,816.00
### ###
26.96% 22.60%
Very Important
2023 2024 *Please Refer to the Company's Consolidated Financia
10,510.00 10,813.00
2,932.00 2,816.00
5,438.00 5,456.00
125.00 41.00
2,265.00 2,582.00
1,366.00 317.00
2023 2024
939.30 843.20 Capital Expenditure can be found in Cash flows Under the heading - Purcha
939.30 843.20
723.00 819.00
723.00 819.00
216.30 24.20
2023 2024
1,582.30 341.20
35.59% 7.27%
25.15% 24.91% 24.67% 24.43%
4.54% 4.69% 4.85% 5.00%
1.14% 1.17% 1.20% 1.22%
Based On Assumptions*
5 Year Historical Reinvestment Rate
Formula
Current Year
Consolidated Financial Statements , found in the company's Annual Report
er the heading - Purchase of property, plant and equipment, including capital work-in-progress
VALUATION
LTI MINDTREE
Summary
High Growth
Length of Growth Period 7
EBIT Growth Rate 1.11%
Effective Tax Rate 24.20%
Marginal Tax Rate 25.17%
Reinvestment Rate 4.39%
Cost of Capital 29.69%
Stable Growth
Perpetual Return on Capital 23.00%
Perpetual Cost of Capital 29.69%
Perpetual Growth Rate 5.60%
Perpetual Reinvestment Rate 24.35%
OUTPUT
Year Current 1 2
EBIT Growth Rate 1.11% 1.14%
EBIT 6,271.00 6,340.86 6,413.27
Tax Rate 24.20% 24.30% 24.39%
Tax (1,517.58) (1,540.64) (1,564.45)
After-Tax EBIT 4,753.42 4,800.22 4,848.82
Reinvestment Rate 4.39% 4.39% 4.54%
Reinvestment (208.60) (210.65) (220.20)
FCFF 4,544.82 4,589.57 4,628.62
Terminal Value - -
Cost of Capital 29.69% 29.69%
Cumulative Cost of Capital 129.69% 168.20%
PV of FCFF 3,538.86 2,751.91
PV of Terminal Value - -
PV of FCFF 12,988.14
PV of Terminal Value 3,900.06
Cash and Cash Equivalents 2,816.00
Firm Value 19,704.20
Firm Value 19,704.20
Market Value of Debt (3,750.50)
Equity Value 15,953.70
Valuation Summary
Current Market Price 5,562.00
Intrinsic Value 550.13
Premium / (Discount) 911.04%
Price Target 1 2 3
Intrinsic Value 550.13 716.67 933.62
Total Shareholder Returns 166.54 216.95 282.63
Expected Dividend - - -
Price Appreciation 166.54 383.49 666.12
1Y Price Target 716.67 933.62 1,216.25
Upside -87.11% -83.21% -78.13%
3 4 5 6 7 -
1.17% 1.20% 1.22% 3.41% 5.60% 0.00%
6,488.26 6,565.84 6,646.05 6,872.73 7,257.61 -
24.49% 24.59% 24.69% 24.78% 24.88% 0.00%
(1,589.04) (1,614.41) (1,640.58) (1,703.20) (1,805.62) -
4,899.22 4,951.43 5,005.47 5,169.53 5,451.99 -
4.69% 4.85% 5.00% 14.67% 24.35% 0.00%
(229.98) (240.00) (250.27) (758.57) (1,327.44) -
4,669.24 4,711.43 4,755.20 4,410.96 4,124.55 -
- - - - 24,067.51 -
29.69% 29.69% 29.69% 29.69% 29.69% 0.00%
218.14% 282.90% 366.90% 475.83% 617.11% 0.00%
2,140.53 1,665.40 1,296.06 927.01 668.37 -
- - - - 3,900.06 -
4 5
1,216.25 1,584.44
368.19 479.65
- -
1,034.31 1,513.96
1,584.44 2,064.09
-71.51% -62.89%
- -
0.00% 0.00%
- -
0.00% 0.00%
- -
- -
0.00% 0.00%
- -
- - FCFF*(1+g) / (WACC-g)
- -
0.00% 0.00%
0.00% 0.00%
- -
- -