‭TABLE OF CONTENTS‬

‭1.‬ ‭OVERVIEW‬
‭2.‬ ‭COMPANY PROFILE & ASSUMPTIONS‬
‭3.‬ ‭PROFIT & LOSS A/C INPUT‬
‭4.‬ ‭BALANCE SHEET INPUT‬
‭5.‬ ‭COMMON SIZING‬
‭6.‬ ‭REVENUE BUILD-UP‬
‭7.‬ ‭COST BUILDUP‬
‭8.‬ ‭FIXED ASSETS SCHEDULE (FAS)‬
‭9.‬ ‭BALANCE SHEET ITEMS‬
‭10.‬ ‭WORKING CAPITAL‬
‭11.‬ ‭INCOME STATEMENT‬
‭12.‬ ‭BALANCE SHEET‬
‭13.‬ ‭CASH FLOW STATEMENT‬
‭14.‬ ‭RATIO ANALYSIS‬
‭15.‬ ‭STANDARD INCOME STATEMENT‬
‭16.‬ ‭CHARTS‬
‭17.‬ ‭EQUITY BETA‬
‭18.‬ ‭MARKET DATA‬
‭19.‬ ‭DCF VALUATION‬
‭20.‬ ‭DISCLAIMER‬
 ‭OVERVIEW‬

‭ Discounted Cash Flow (DCF) valuation model is a powerful tool used to estimate‬
A
‭the intrinsic value of a company based on its future cash flows.‬

‭ he model is structured into various sections, each playing a critical role in building‬
T
‭an accurate forecast and valuation. Each sheet serves a specific purpose, from‬
‭inputting financial data to conducting detailed analysis and generating key financial‬
‭ratios.‬

‭ he model is designed to assess financial health, provide insights into revenue‬

T
‭generation, and cost structure and estimate market valuation through a Discounted‬
‭Cash Flow (DCF) approach.‬

‭ ere’s an overview of the key components and tabs often included in a DCF‬
H
‭model:‬
 ‭COMPANY PROFILE & ASSUMPTIONS‬

‭●‬ ‭Purpose:‬
‭ he assumptions sheet is foundational to the model as it sets the key inputs that drive‬
T
‭calculations across other sheets. These inputs can include growth rates, discount‬
‭rates, tax rates, and cost assumptions.‬

‭●‬ ‭Basis:‬
‭Contains company-specific details, such as its name, industry, sector, website, and‬
‭market price.‬

‭●‬ ‭Calculations:‬
‭- Contains the key financial and macroeconomic assumptions such as growth rates,‬
‭inflation rates, and discount rates, which are crucial for forecasting HPCL’s future‬
‭financial performance.‬
‭- This sheet is primarily reference-based; it doesn’t contain formulas but lists values‬
‭and descriptions that may be referenced across other sheets for model consistency.‬
 ‭PROFIT & LOSS A/C INPUT‬

‭●‬ P
‭ urpose:‬
‭This sheet contains raw data for creating the Profit & Loss (P&L) statement,‬
‭including revenues, expenses, and profits over different periods and the Key‬
‭Performance Indicators (KPIs) that are essential to understanding the‬
‭company's financial performance and health.‬

‭●‬ B
‭ asis:‬
‭It is organized by years (e.g., 2018-19 to 2022-23) and includes core revenue‬
‭and expense items.‬

‭●‬ C
‭ alculations:‬
‭Data includes line items like revenue from operations, total income, and costs.‬
‭This input data will likely feed into further calculations on income statements‬
‭and possibly projections in later sheets.‬
‭-‬ K ‭ PIs (Key Performance Indicators):‬‭These KPIs are calculated using‬
‭simple formulas within the model-‬
‭❖‬ ‭Revenue % (y-o-y)‬‭:‬
‭Formula:‬
‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬‭‬‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬ = ‭𝐶𝑢𝑟𝑟𝑒𝑛𝑡‬‭‭𝑌
‬ 𝑒𝑎𝑟‬‭‬ ÷ ‭𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠‬‭‭𝑌
‬ 𝑒𝑎𝑟‬‭‬‭‭𝑅
‬ 𝑒𝑣𝑒𝑛𝑢𝑒‬ − ‭1​‬‭‬

‭❖‬ G
‭ P% (Gross Profit Margin):‬
‭Formula:‬
= ‭‬‭𝐺𝑟𝑜𝑠𝑠‬‭‭𝑃
‬ 𝑟𝑜𝑓𝑖𝑡‬ ÷ ‭‬‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬ × ‭‭1
‬ 00‬

‭❖‬ E
‭ BITDA% (Earnings Before Interest, Taxes, Depreciation, and‬
‭Amortization Margin):‬
‭Formula:‬
= ‭‬‭𝐸𝐵𝐼𝑇𝐷𝐴‬‭‬ ÷ ‭‬‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬ × ‭100‬

‭❖‬ ‭EBIT% (Earnings Before Interest and Taxes Margin):‬

‭Formula:‬
= ‭‬‭𝐸𝐵𝐼𝑇‬‭‬ ÷ ‭‭𝑅
‬ 𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬ × ‭‬‭100‬

‭❖‬ N
‭ P% (Net Profit Margin):‬
‭Formula:‬
= ‭‬‭𝑁𝑒𝑡‬‭‬‭𝑃𝑟𝑜𝑓𝑖𝑡‬‭‬ ÷ ‭‬‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬ × ‭‭1
‬ 00‬

‭❖‬ R
‭ OA (Return on Assets):‬
‭Formula:‬
= ‭‬‭𝑁𝑒𝑡‬‭‬‭𝐼𝑛𝑐𝑜𝑚𝑒‬‭‬ ÷ ‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐴𝑠𝑠𝑒𝑡𝑠‬‭‬ × ‭100‬‭‬

‭❖‬ A
‭ sset Turnover‬‭:‬
‭Formula:‬
= ‭‬‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬ ÷ ‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‭𝐴
‬ 𝑠𝑠𝑒𝑡𝑠‬

‭❖‬ A
‭ ssets / Equity:‬
‭Formula:‬
= ‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐴𝑠𝑠𝑒𝑡𝑠‬‭‬ ÷ ‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‭𝐸
‬ 𝑞𝑢𝑖𝑡𝑦‬‭‬ × ‭‬‭100‬

‭❖‬ R
‭ OE (Return on Equity):‬
‭Formula:‬
= ‭‬‭𝑁𝑒𝑡‬‭‬‭𝐼𝑛𝑐𝑜𝑚𝑒‬‭‬ ÷ ‭‬‭𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟‬‭'‬‭𝑠‭‬‬‭𝐸𝑞𝑢𝑖𝑡𝑦‬‭‬ × ‭‬‭100‬
 ‭BALANCE SHEET INPUT‬

‭●‬ P
‭ urpose:‬
‭Records historical balance sheet information, vital for understanding the‬
‭company's financial position.‬

‭●‬ B
‭ asis:‬
‭Segregated by assets (e.g., Non-Current Assets, PPE, Capital‬
‭Work-in-Progress) and liabilities, it provides a structured view of the balance‬
‭sheet.‬
‭●‬ C
‭ alculations:‬
‭Similar to the P&L Input, this sheet likely serves as a static input with no‬
‭internal calculations. The values, however, may be used in the calculation of‬
‭ratios, working capital, and financial health indicators in other sheets.‬

‭-‬ ‭KPIs (Key Performance Indicators):‬‭These KPIs are‬‭calculated using‬

‭simple formulas within the model-‬

‭➔‬ ‭LIQUIDITY RATIOS:‬

‭❖‬ C
‭ urrent Ratio‬‭:‬
‭Formula:‬
‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬‭‬‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬ = ‭𝐶𝑢𝑟𝑟𝑒𝑛𝑡‬‭‭𝐴
‬ 𝑠𝑠𝑒𝑡𝑠‬ ÷ ‭𝐶𝑢𝑟𝑟𝑒𝑛𝑡‬‭‬‭𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠‬‭​‬‬

‭❖‬ Q
‭ uick Ratio::‬
‭Formula:‬
= (‭𝐶𝑢𝑟𝑟𝑒𝑛𝑡‬‭‬‭𝐴𝑠𝑠𝑒𝑡𝑠‬ − ‭‬‭𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠‬) ÷ ‭𝐶𝑢𝑟𝑟𝑒𝑛𝑡‬‭‬‭𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠‬‭​‬‬

‭➔‬ ‭SOLVENCY RATIOS:‬

‭❖‬ D
‭ ebt Ratio:‬
‭Formula:‬
= ‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐷𝑒𝑏𝑡‬ ÷ ‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‭𝐴
‬ 𝑠𝑠𝑒𝑡𝑠‬

‭❖‬ ‭Debt-Equity Ratio:‬

‭Formula:‬
= ‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐷𝑒𝑏𝑡‬ ÷ ‭‬‭𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟‬‭'‬‭𝑠‭‬‬‭𝐸𝑞𝑢𝑖𝑡𝑦‬

‭❖‬ I‭ nterest Coverage Ratio:‬

‭Formula:‬
= ‭‬‭𝐸𝐵𝐼𝑇‬ ÷ ‭‬‭𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡‬‭‬‭𝐸𝑥𝑝𝑒𝑛𝑠𝑒‬

‭❖‬ D
‭ ebt-Service Coverage Ratio (DSCR):‬
‭Formula:‬
= ‭‬‭𝑁𝑒𝑡‬‭‬‭𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔‬‭‬‭𝐼𝑛𝑐𝑜𝑚𝑒‬‭‬ ÷ ‭𝐷𝑒𝑏𝑡‬‭‬‭𝑆𝑒𝑟𝑣𝑖𝑐𝑒‬‭‬
 ‭COMMON SIZING‬

‭●‬ ‭Purpose:‬
‭ ommon sizing is used to express each‬
C
‭line item in the income statement as a‬
‭percentage of revenue. This allows for‬
‭easier comparison of margins and cost‬
‭structures.‬

‭●‬ ‭Basis:‬
‭Historical financials, usually from the income statement and balance sheet. This‬
‭approach makes it easier to analyze cost and profit changes over time as a function of‬
‭total revenue.‬

‭●‬ ‭Calculations:‬
‭Common Size Formula:‬
‭➔‬ ‭For P&L items-‬ ➔‬ F‭ or Balance Sheet Items-‬
= ‭‬‭𝐿𝑖𝑛𝑒‬‭‭𝐼‬ 𝑡𝑒𝑚‬‭‬‭𝑉𝑎𝑙𝑢𝑒‬‭​‬ ÷ ‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬ × ‭‬‭100‬ ❖‬ ‭Assets -‬
= ‭‬‭𝐿𝑖𝑛𝑒‬‭‭𝐼‬ 𝑡𝑒𝑚‬‭‬‭𝑉𝑎𝑙𝑢𝑒‬‭‬ ÷ ‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐴𝑠𝑠𝑒𝑡𝑠‬‭‬ × ‭‬‭100‬
❖‬ ‭Liabilities -‬
= ‭‬‭𝐿𝑖𝑛𝑒‬‭‬‭𝐼𝑡𝑒𝑚‬‭‬‭𝑉𝑎𝑙𝑢𝑒‬‭‬ ÷ ‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠‬‭‬ × ‭‬‭100‬
 ‭REVENUE BUILD-UP‬

‭●‬ P
‭ urpose:‬
‭This section is designed to forecast future revenues based on historical data and‬
‭business assumptions.‬

‭●‬ B
‭ asis:‬
‭The sheet typically includes:‬
‭➔‬ ‭Volumes‬‭(e.g., production or sales volume)‬
‭➔‬ ‭Pricing‬‭(e.g., price per unit)‬
‭➔‬ ‭Revenue Growth Rates‬
‭➔‬ ‭Other Income‬‭(e.g., profits from investments, JV/associates)‬

‭●‬ ‭Calculations:‬
‭➔‬ ‭Revenue Calculation Formula:‬
‭Formula:‬
‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬‭‬‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬ = ‭𝑆𝑎𝑙𝑒𝑠‬‭‭𝑉‬ 𝑜𝑙𝑢𝑚𝑒‬‭‬‭×‭‬‬‭𝑃𝑟𝑖𝑐𝑒‬‭‬‭𝑝𝑒𝑟‬‭‭𝑈
‬ 𝑛𝑖𝑡‬
‭➔‬ ‭Other Income:‬
‭Formula:‬
‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬‭‬‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬ = ‭𝐽𝑉‬‭/‭𝐴
‬ 𝑠𝑠𝑜𝑐𝑖𝑎𝑡𝑒𝑠‬‭‬‭𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛‬‭‬‭×‭‬‭𝑃 ‬ 𝑟𝑜𝑓𝑖𝑡‬‭‬‭𝑆ℎ𝑎𝑟𝑒‬‭‭%
‬ ‬
‭ inancial models often incorporate‬‭multiple scenarios‬‭to reflect varying assumptions‬
F
‭about future performance. The common scenarios in the Revenue Build-Up sheet‬
‭include:‬

‭●‬ B
‭ ase Case Scenario:‬‭This is the most realistic or‬‭expected scenario, where the‬
‭assumptions are based on the company’s historical performance and moderate‬
‭growth expectations. The base case assumes the most likely revenue trends‬
‭based on steady production and market conditions.‬

‭●‬ B
‭ est Case Scenario:‬‭This scenario assumes favorable conditions, such as‬
‭higher-than-expected production volumes, price increases, or market‬
‭expansion. It shows the potential upside of the company’s revenue generation.‬
‭For instance, if post-pandemic recovery is strong, the revenue might be‬
‭expected to grow at a higher rate.‬

‭○‬ E
‭ xample: If the company estimates a‬‭4% annual growth‬‭rate‬‭for revenue‬
‭per unit due to strong demand or price hikes, it is incorporated in this‬
‭scenario.‬

‭●‬ W
‭ orst Case Scenario:‬‭This assumes unfavorable market conditions, such as a‬
‭downturn in demand, price drops, or operational challenges. It's useful for‬
‭understanding the downside risks.‬

‭○‬ E
‭ xample: The company assumes a‬‭negative growth rate‬‭or a flat growth‬
‭due to market contractions or poor demand, which will result in lower‬
‭revenue projections.‬
 ‭COST BUILDUP‬

‭●‬ ‭Purpose:‬
‭ he primary goal of the Cost Build-up sheet is to estimate future costs related to‬
T
‭production, operations, and financing, providing a clear outlook on how these costs‬
‭will impact the company's profitability over time.‬

‭●‬ B‭ asis:‬
‭➔‬ ‭Historical Cost Data‬‭: Many of the costs are projected‬‭as a percentage of the previous‬
‭year's actuals or revenue. This approach ensures that the model remains consistent‬
‭with past performance while incorporating future changes.‬
‭➔‬ ‭Percentage of Revenue Method‬‭: Costs are often estimated‬‭as a proportion of revenue‬
‭or production. For instance, production costs or selling expenses might be forecasted‬
‭as a percentage of sales revenue.‬

‭●‬ ‭Calculations:‬
‭In the‬‭Cost Build-up sheet‬‭, costs such as‬
‭➔‬ ‭Cost of Materials Consumed‬ ‭➔‬ ‭Employee Benefit Expenses‬
‭➔‬ ‭Purchases‬ ‭➔‬ ‭Other Expenses‬‭,‬
‭➔‬ ‭Excise Duty‬ ‭➔‬ ‭Finance Costs‬
‭are projected using an‬‭Average of previous years’‬‭data‬‭.‬
‭This method smoothens out any fluctuations in costs and provides a stable estimate‬
‭for future projections.‬
‭➔‬ ‭Tax Rate‬‭: The tax rate is assumed to increase by‬‭1% every two years‬‭.‬
 ‭FIXED ASSETS SCHEDULE (FAS)‬

‭●‬ ‭Purpose:‬
‭ he FAS sheet outlines the movement of fixed assets, tracking their acquisition,‬
T
‭depreciation, and disposal, which helps assess the company's long-term investment‬
‭and resource allocation.‬

‭●‬ ‭Basis:‬
‭Depreciation is calculated using the historical average method, with asset lives and‬
‭CAPEX projections based on past trends, while CWIP is forecasted to increase based on‬
‭expected asset growth and completion timelines.‬

‭●‬ ‭Calculations:‬
‭For each block of assets, Calculations are done as‬
‭➔‬ ‭Opening Balance‬‭: Carries over the prior year's closing‬‭balance.‬
‭➔‬ ‭Additions‬‭: Represents new assets added, based on CAPEX‬‭forecasts.‬
‭➔‬ ‭Disposals‬‭: Deduct assets removed from service or sold.‬
‭➔‬ ‭Depreciation‬‭: Calculated annually, typically on a‬‭straight-line basis, by dividing the‬
‭asset's cost by its useful life.‬
‭➔‬ ‭Accumulated Depreciation‬‭: Adds up yearly depreciation‬‭to show total expenses to‬
‭date.‬
‭➔‬ ‭Net Book Value (NBV)‬‭: Calculated as the opening balance‬‭plus additions minus‬
‭disposals and accumulated depreciation.‬
‭➔‬ ‭Closing Balance‬‭: Final value of assets after adjustments for the year, used as the‬
‭opening balance for the next year.‬
 ‭BALANCE SHEET ITEMS‬

‭●‬ ‭Purpose:‬
‭ ocuses on line items for Balance Sheet forecasting, mainly working capital‬
F
‭components.‬

‭●‬ ‭Basis:‬
‭Uses turnover ratios and days outstanding values from Assumptions.‬

‭●‬ ‭Calculations:‬
‭Forecasted values by calculating averages based on historical data from previous‬
‭years’ wherever trends or seasonality made this approach appropriate. For items‬
‭where past data patterns did not apply or additional insights were needed, use an‬
‭assumption sheet that contained specific projections, industry benchmarks, and‬
‭expert input to provide a more accurate forecast. This approach ensured that the‬
‭forecasting model was both data-driven and adaptable to unique scenarios or‬
‭external factors.‬
 ‭WORKING CAPITAL‬

‭●‬ ‭Purpose:‬
‭ his sheet calculates the company’s working capital, which is a measure of how much‬
T
‭cash it has to cover its day-to-day expenses.‬

‭●‬ ‭Basis:‬
‭Information from the Balance Sheet (current assets and current liabilities).‬

‭●‬ ‭Calculations:‬
‭Key metrics derived from this analysis include Days Sales Outstanding (DSO), Days‬
‭Inventory Outstanding (DIO), and Days Payable Outstanding (DPO), which help‬
‭measure the company’s efficiency in managing its cash conversion cycle.‬

‭-‬ ‭Key Metrics:‬

‭❖‬ D
‭ ays Sales Outstanding (DSO)‬‭:‬
‭Formula:‬
‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬‭‬‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬ = (‭𝑇𝑟𝑎𝑑𝑒‬‭‬‭𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠‬‭‬ ÷ ‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬)‭‬ × ‭360​‭‬‬

‭❖‬ D
‭ ays Inventory Outstanding (DIO):‬
‭Formula:‬
‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬‭‬‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬ = (‭𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠‬‭‬ ÷ ‭𝐶𝑂𝐺𝑆‬)‭‬ × ‭360‬

‭❖‬ D
‭ ays Payable Outstanding (DPO):‬
‭Formula:‬
‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬‭‬‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬ = (‭𝑇𝑟𝑎𝑑𝑒‬‭‬‭𝑃𝑎𝑦𝑎𝑏𝑙𝑒‬ ÷ ‭𝐶𝑂𝐺𝑆‬)‭‬ × ‭360​‭‬‬
 ‭❖‬ N
‭ et Trade Cycle:‬
‭Formula:‬
‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬‭‬‭‬‭‬‭‭‬‬‭‬‭‬‭‭‬‬ = ‭𝐷𝑆𝑂‬‭‬ + ‭‭𝐷
‬ 𝐼𝑂‬‭‬ − ‭𝐷𝑃𝑂‬‭​‬‬

‭ or‬‭forecasted years‬‭, these metrics (DSO, DIO, DPO)‬‭are often based on historical‬
F
‭averages or trends and used to project the cash flow impact of working capital. Here’s‬
‭how each term influences forecasts:‬

‭❖‬ T
‭ rade Receivables (using DSO)‬‭:‬
‭Instead of directly calculating forecasted receivables based only on DSO,‬
‭each year’s Trade Receivable is increased by a growth rate (e.g., 1.06 or‬
‭6%) to reflect the anticipated rise in sales and customer credit. This‬
‭multiplier reflects expected changes in credit policy or sales volume‬
‭growth.‬

‭❖‬ I‭ nventories (using DIO):‬

‭Inventory levels for future years are adjusted with a 1.05 or 5 % growth‬
‭rate, indicating an expected increase in inventory to match higher‬
‭projected demand or production needs. This growth helps maintain‬
‭sufficient stock as sales grow, ensuring no supply shortages.‬

‭❖‬ T
‭ rade Payables (using DPO):‬
‭Future payables are also multiplied by 1.05 or a 5% growth factor,‬
‭showing anticipated increases in purchases or extended credit terms‬
‭with suppliers, supporting operational scaling. This multiplier indicates‬
‭expected expenses in line with COGS growth or adjustments in payment‬
‭policies.‬
 ‭INCOME STATEMENT‬

‭●‬ ‭Purpose:‬
‭ he income statement pulls together the revenue and cost buildup sheets to calculate‬
T
‭profits.‬

‭●‬ ‭Basis:‬
‭Uses forecasted revenue and cost data.‬

‭●‬ ‭Calculations:‬
‭1.‬ ‭Interlinking Key Financial Sheets‬‭: Revenue Buildup,‬‭Cost Buildup, and FAS‬
‭sheets are interlinked to ensure cohesive financial forecasting. Each sheet‬
‭provides foundational data that supports the overall forecast model,‬
‭integrating revenues and costs with key metrics for more accurate predictions.‬
‭2.‬ ‭Forecasting Comprehensive Income, Dividends, and Scenario-Based‬
‭Projections‬‭:‬ ‭Projecting other comprehensive income‬‭historical averages from‬
‭prior years provides a stable, data-driven foundation, reducing reliance on‬
‭single-year outliers and minimizing volatility.‬
‭Additionally, the dividend is forecasted using scenario-specific assumptions‬
‭from the assumptions sheet, allowing the model to adapt dynamically to‬
‭different cases and produce realistic, context-sensitive projections.‬
 ‭BALANCE SHEET‬

‭●‬ ‭Purpose:‬
‭ he projected balance sheet shows the company’s financial position at a specific point‬
T
‭in time. It includes assets, liabilities, and equity, and helps in understanding how the‬
‭company’s capital structure evolves over the forecast period.‬

‭●‬ ‭Basis:‬
‭Data from the BS items, FAS and Working Capital.‬

‭●‬ ‭Calculations:‬
‭BS items, FAS and Working Capital sheets are interlinked to ensure cohesive financial‬
‭forecasting.‬
 ‭CASH FLOW STATEMENT‬

‭●‬ ‭Purpose:‬
‭ racks cash inflows and outflows, categorizing them into operational, investing, and‬
T
‭financing activities. This helps analyze the cash generation capability.‬

‭●‬ ‭Basis:‬
‭Uses data from both the Income Statement and Balance Sheet.‬

‭●‬ ‭Calculations:‬
‭The sheet calculates cash from three main activities: Operating, Investing and‬
‭Financing.‬

‭1.‬ O ‭ perating Activities‬‭: Start with Net Income, add Depreciation, and adjust for‬
‭changes in Working Capital like Trade Receivables, Inventory and Trade‬
‭Payables.‬
‭2.‬ ‭Investing Activities‬‭: Subtract CAPEX (difference in‬‭PPE plus Depreciation) and‬
‭add any asset sale proceeds.‬
‭3.‬ ‭Financing Activities‬‭: Include changes in Debt and‬‭equity transactions‬
‭(issuance/repurchase) and subtract Dividends Paid.‬
‭4.‬ ‭Net Cash Flow‬‭: Sum Operating, Investing, and Financing‬‭Cash Flows.‬
‭5.‬ ‭Ending Cash‬‭: Calculate as‬= ‭𝐵𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔‬‭‬‭𝐶𝑎𝑠ℎ‬‭‬ + ‭‬‭𝑁𝑒𝑡‬‭‬‭𝐶𝑎𝑠ℎ‬‭‭𝐹
‬ 𝑙𝑜𝑤‬‭.‬

‭This gives the closing cash balance.‬

 ‭RATIO ANALYSIS‬

‭●‬ ‭Purpose:‬
‭ ontains financial ratios that help assess the company’s performance, such as‬
C
‭profitability, liquidity, and efficiency.‬

‭●‬ ‭Basis:‬
‭Data from financial statements.‬

‭●‬ ‭Calculations:‬

‭➔‬ ‭Profitability Ratios:‬

‭❖‬ ‭Gross Margin‬
‭Formula‬= ‭𝐺𝑟𝑜𝑠𝑠‬‭‬‭𝑃𝑟𝑜𝑓𝑖𝑡‬‭‬‭/‭‬‬‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬ * ‭‭1
‬ 00‬
‭❖‬ ‭EBITDA Margin‬
‭Formula‬= ‭𝐸𝐵𝐼𝑇𝐷𝐴‬‭‬‭/‭‬‬‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬ * ‭‬‭100‬
‭❖‬ ‭Operating Margin‬
‭Formula‬= ‭𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔‬‭‬‭/‭‬‬‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬ * ‭‬‭100‬
‭❖‬ ‭Pretax Margin‬
‭Formula‬= ‭𝐸𝐵𝑇‬‭‬‭/‭‬‬‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬ * ‭‬‭100‬
 ‭❖‬ ‭Effective Tax Rate‬
‭Formula‬= ‭𝑇𝑎𝑥‬‭‬‭𝐸𝑥𝑝𝑒𝑛𝑠𝑒‬‭‬‭/‭‬‬‭𝐸𝐵𝑇‬ * ‭‬‭100‬
‭❖‬ ‭Net Margin‬
‭Formula‬= ‭𝑁𝑒𝑡‬‭‬‭𝐼𝑛𝑐𝑜𝑚𝑒‬‭‬‭/‭‬‬‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬ * ‭‭1
‬ 00‬

‭➔‬ ‭DuPont/ Earning Power Ratios:‬

‭❖‬ ‭Asset Turnover‬
‭Formula‬= ‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭/‭‬‬‭𝐴𝑣𝑒𝑟𝑎𝑔𝑒‬‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐴𝑠𝑠𝑒𝑡𝑠‬ * ‭‬‭100‬
‭❖‬ ‭Pretax ROA‬
‭Formula‬= ‭𝐸𝐵𝐼𝑇‬‭/‭‬‬‭𝐴𝑣𝑒𝑟𝑎𝑔𝑒‬‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐴𝑠𝑠𝑒𝑡𝑠‬ * ‭‬‭100‬
‭❖‬ ‭Pretax ROE‬
‭Formula‬= ‭𝐸𝐵𝑇‬‭/‬‭‭𝐴
‬ 𝑣𝑒𝑟𝑎𝑔𝑒‬‭‭𝑆
‬ ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠‬‭'‬‭‬‭𝐸𝑞𝑢𝑖𝑡𝑦‬ * ‭‭1
‬ 00‬
‭❖‬ ‭Tax Complement‬
‭Formula‬= ‭1‬ − ‭‬‭𝐸𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒‬‭‬‭𝑇𝑎𝑥‬‭‬‭𝑅𝑎𝑡𝑒‬
‭❖‬ ‭ROE‬
‭Formula‬= ‭𝑁𝑒𝑡‬‭‬‭𝐼𝑛𝑐𝑜𝑚𝑒‬‭‬‭/‭‬‬‭𝐴𝑣𝑒𝑟𝑎𝑔𝑒‬‭‬‭𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟‬‭'‬‭𝑠‭‬‬‭𝐸𝑞𝑢𝑖𝑡𝑦‬ * ‭‭1
‬ 00‬
‭❖‬ ‭Equity Retention‬
‭Formula‬= ‭1‬ − ‭‬‭𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑‬‭‬‭𝑃𝑎𝑦𝑜𝑢𝑡‬‭‬‭𝑅𝑎𝑡𝑖𝑜‬
‭❖‬ ‭Reinvestment Rate‬
‭Formula‬= ‭𝑅𝑂𝐸‬‭/‬‭‬‭𝐸𝑞𝑢𝑖𝑡𝑦‬‭‬‭𝑅𝑒𝑡𝑒𝑛𝑡𝑖𝑜𝑛‬

‭➔‬ ‭Liquidity Ratios:‬

‭❖‬ Q ‭ uick Ratio‬

‭Formula =‬(‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐶𝑢𝑟𝑟𝑒𝑛𝑡‬‭‭𝐴 ‬ 𝑠𝑠𝑒𝑡𝑠‬‭‬ − ‭‬‭𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠‬)‭‬‭/‬‭‭𝑇
‬ 𝑜𝑡𝑎𝑙‬‭‭‬‬‭𝐶𝑢𝑟𝑟𝑒𝑛𝑡‬‭‬‭𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠‬
‭❖‬ ‭Current Ratio‬‭=‬
‭Formula =‬‭‬‭𝐶𝑢𝑟𝑟𝑒𝑛𝑡‬‭‬‭𝐴𝑠𝑠𝑒𝑡𝑠‬‭‬‭/‬‭‭𝐶 ‬ 𝑢𝑟𝑟𝑒𝑛𝑡‬‭‭𝐿 ‬ 𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠‬
‭❖‬ ‭Cash Cycle (Days)‬
‭Formula =‬‭‬‭𝐴𝑣𝑔‬. ‭‬‭𝐴‭/‬ ‬‭𝑅‬‭‬‭𝐷𝑎𝑦𝑠‬‭‬ + ‭‬‭𝐴𝑣𝑔‬. ‭‬‭𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦‬‭‭𝐷
‬ 𝑎𝑦𝑠‬‭‬ − ‭‭𝐴
‬ 𝑣𝑔‬. ‭‭𝐴
‬ ‬‭/‭𝑃
‬ ‬‭‬‭𝐷𝑎𝑦𝑠‬

‭➔‬ ‭Leverage Ratios‬

‭❖‬ ‭Asset/Equity‬
‭Formula =‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐴𝑠𝑠𝑒𝑡𝑠‬‭‭/‬ ‬‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‭𝐸
‬ 𝑞𝑢𝑖𝑡𝑦‬
‭❖‬ ‭Debt/Equity‬
‭Formula =‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐷𝑒𝑏𝑡‬‭‬‭/‭‬‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐸𝑞𝑢𝑖𝑡𝑦‬
‭❖‬ ‭% LT Debt to Total Capital‬
‭Formula =‬‭𝐿𝑜𝑛𝑔‬ − ‭𝑇𝑒𝑟𝑚‬‭‬‭𝐷𝑒𝑏𝑡‬‭‬‭/‬‭‬‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐶𝑎𝑝𝑖𝑡𝑎𝑙‬‭‬ * ‭‬‭100‬
‭❖‬ ‭Interest Coverage Ratio‬
‭Formula =‬‭𝐸𝐵𝐼𝑇‬‭‬‭/‬‭‬‭𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡‬‭‬‭𝐸𝑥𝑝𝑒𝑛𝑠𝑒‬
‭➔‬ ‭Operating Ratios‬

‭❖‬ ‭A/R Turnover‬

‭Formula =‬‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬‭/‬‭‭𝐴 ‬ 𝑣𝑒𝑟𝑎𝑔𝑒‬‭‬‭𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠‬‭‬‭𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒‬
‭❖‬ ‭Avg. A/R Days‬
‭Formula =‬‭365‬‭‬‭/‬‭‬‭𝐴‭/‬ ‬‭𝑅‬‭‬‭𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟‬
‭❖‬ ‭Inventory Turnover‬
‭Formula =‬‭𝐶𝑜𝑠𝑡‬‭‬‭𝑜𝑓‬‭‬‭𝐺𝑜𝑜𝑑𝑠‬‭‬‭𝑆𝑜𝑙𝑑‬‭‭/‬ ‬‭‬‭𝐴𝑣𝑒𝑟𝑎𝑔𝑒‬‭‭𝐼‬ 𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦‬
‭❖‬ ‭Avg. Inventory Days‬
‭Formula =‬‭365‬‭‬‭/‬‭‬‭𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦‬‭‬‭𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟‬
‭❖‬ ‭A/P Turnover‬
‭Formula =‬‭𝐶𝑜𝑠𝑡‬‭‬‭𝑜𝑓‬‭‬‭𝐺𝑜𝑜𝑑𝑠‬‭‬‭𝑆𝑜𝑙𝑑‬‭‭/‬ ‬‭‬‭𝐴𝑣𝑒𝑟𝑎𝑔𝑒‬‭‭𝐴 ‬ 𝑐𝑐𝑜𝑢𝑛𝑡𝑠‬‭‭𝑃
‬ 𝑎𝑦𝑎𝑏𝑙𝑒‬
‭❖‬ ‭Avg. A/P Days‬
‭Formula =‬‭365‬‭‬‭/‬‭‬‭𝐴‭/‬ ‬‭𝑃‬‭‭𝑇 ‬ 𝑢𝑟𝑛𝑜𝑣𝑒𝑟‬
‭❖‬ ‭Fixed Asset Turnover‬
‭Formula =‬‭𝑅𝑒𝑣𝑒𝑛𝑢𝑒‬‭‬‭/‬‭‭𝐴 ‬ 𝑣𝑒𝑟𝑎𝑔𝑒‬‭‬‭𝑁𝑒𝑡‬‭‬‭𝐹𝑖𝑥𝑒𝑑‬‭‬‭𝐴𝑠𝑠𝑒𝑡𝑠‬
‭❖‬ ‭WC / Sales Growth‬
‭Formula =‬‭𝐶ℎ𝑎𝑛𝑔𝑒‬‭‬‭𝑖𝑛‬‭‬‭𝑊𝑜𝑟𝑘𝑖𝑛𝑔‬‭‬‭𝐶𝑎𝑝𝑖𝑡𝑎𝑙‬‭‭/‬ ‬‭‬‭𝑆𝑎𝑙𝑒𝑠‬‭‬‭𝐺𝑟𝑜𝑤𝑡ℎ‬
‭❖‬ ‭ROCE‬
‭Formula =‬‭‬‭𝐸𝐵𝐼𝑇‬‭‬‭/‬‭‭𝑇‬ 𝑜𝑡𝑎𝑙‬‭‬‭𝐶𝑎𝑝𝑖𝑡𝑎𝑙‬‭‭𝐸 ‬ 𝑚𝑝𝑙𝑜𝑦𝑒𝑑‬‭‬ * ‭‬‭100‬
 ‭STANDARD INCOME STATEMENT‬

‭●‬ ‭Purpose:‬
‭ his is a simplified version of the Income Statement for easy comparison across‬
T
‭different periods.‬

‭●‬ ‭Basis:‬
‭Data from the Income Statement sheet.‬

‭●‬ ‭Calculations:‬
‭Interlinking is conducted through the income statement sheet. Year-over-year‬
‭growth is calculated as previously described. This ensures consistency and clarity in‬
‭financial analysis.‬
 ‭CHARTS‬

‭●‬ ‭Purpose:‬
‭Provides visual representations of the company’s financial data.‬

‭●‬ ‭Basis:‬
‭Data from the Income Statement, Balance Sheet, and other key sheets.‬

‭●‬ ‭Charts:‬
‭❖‬ ‭Revenue & YoY Growth:‬
‭Chart Type -‬‭Combo (Revenue From Operations - Clustered‬
‭Column and YoY Growth - Line with Markers)‬

‭❖‬ ‭EBITDA vs Net Profit:‬

‭Chart Type -‬‭3-D Clustered Column‬

‭❖‬ ‭Industry vs Company Sales Growth:‬

‭Chart Type -‬‭Line with Markers‬

‭❖‬ ‭ROE vs ROCE:‬

‭Chart Type -‬‭Combo (ROE - Clustered Column and ROCE‬‭- Stacked‬
‭Line with Markers)‬
 ‭EQUITY BETA‬

‭●‬ ‭Purpose:‬
‭ eta measures the stock’s volatility relative to the market. It’s a crucial input in‬
B
‭calculating the cost of equity, which is part of the discount rate used in the DCF‬
‭calculation.‬

‭●‬ ‭Basis:‬
‭Stock market data.‬

‭●‬ ‭Calculations:‬
‭❖‬ ‭Covariance‬‭-The function is used to calculate the sample‬‭covariance between‬
‭two sets of values. The syntax is‬= ‭‬‭𝐶𝑜𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒‬. ‭𝑆‬(‭𝑎𝑟𝑟𝑎𝑦‬‭1,‬ ‭‬‭𝑎𝑟𝑟𝑎𝑦‬‭2‬)

‭❖‬ V
‭ ariance‬‭-The function is used to calculate the sample‬‭variance. The syntax is‬
= ‭‬‭𝑉𝑎𝑟‬. ‭𝑆‬(‭𝐶𝑒𝑙𝑙‬: ‭𝐶𝑒𝑙𝑙‬)

‭❖‬ ‭Beta -‬‭Formula‬= ‭‬‭𝐶𝑜𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒‬ ÷ ‭‬‭𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒‬

 ‭MARKET DATA‬

‭●‬ ‭Purpose:‬
‭ ontains data on the broader market, such as stock prices, interest rates, and‬
C
‭economic indicators.‬

‭●‬ ‭Basis:‬
‭Data from the market, such as the stock exchange.‬

‭●‬ ‭Calculations:‬
‭Data is taken from NSE site from 2019 to 2024 and at the end calculated Market return‬
‭by using the formula in Excel “RATE(nper, pmt, pv, [fv])”‬
 ‭DCF VALUATION‬

‭●‬ ‭Purpose:‬
‭ his is the heart of the model. The DCF valuation sheet calculates the company’s‬
T
‭intrinsic value by discounting future cash flows back to their present value using the‬
‭discount rate.‬
‭It answers the key question:‬‭What is the company worth today based on its future‬
‭cash-generating potential?‬

‭●‬ ‭Basis:‬
‭Projections of unlevered free cash flow, assumptions like the cost of equity, discount‬
‭rate (WACC), terminal value, intrinsic value and sensitivity analysis.‬
‭●‬ ‭Calculations:‬
‭❖‬ ‭Unlevered FCFF‬‭:‬
‭Formula‬
= ‭‬‭𝐸𝐵𝐼𝑇‬‭‬ − ‭‭𝑇
‬ 𝑎𝑥𝑒𝑠‬‭‬ + ‭‬‭𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛‬‭‬‭&‬‭‬‭𝐴𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛‬‭‬ − ‭‬‭𝐶𝑎𝑝𝑒𝑥‬‭‬ − ‭‭𝐶
‬ ℎ𝑎𝑛𝑔𝑒‬‭‭𝑖‬ 𝑛‬‭‬‭𝑊𝑜𝑟𝑘𝑖𝑛𝑔‬‭‭𝐶
‬ 𝑎𝑝𝑖𝑡𝑎𝑙‬

‭❖‬ C
‭ ost of Equity (CAPM):‬
‭Formula‬= ‭‬‭𝑅𝑓‬‭‬ + ‭‬[β × (‭𝑅𝑚‬‭‬ − ‭‬‭𝑅𝑓‬)]
‭Here,‬
‭ 𝑓‬‭i.e.‬‭Risk-Free Return‬‭is taken from the‬
𝑅
‭Assumptions Sheet (10 year Bond yield rate)‬
β ‭i.e‬‭Beta‬‭is taken from the Equity Beta Sheet‬
‭ 𝑚‬‭‬‭i.e‬‭Market Return‬‭is taken from the Market‬
𝑅
‭Data Sheet‬

‭❖‬ D
‭ iscount rate (WACC)‬‭:‬
‭Formula‬
= ‭‬((‭𝐶𝑜𝑠𝑡‬‭‬‭𝑜𝑓‬‭‬‭𝐸𝑞𝑢𝑖𝑡𝑦‬‭‬ × ‭‬‭%‬‭‬‭𝑃𝑟𝑜𝑝𝑜𝑟𝑡𝑖𝑜𝑛‬‭‬‭𝑜𝑓‬‭‭𝐸
‬ 𝑞𝑢𝑖𝑡𝑦‬) + ‭‬
(‭𝐶𝑜𝑠𝑡‬‭‬‭𝑜𝑓‬‭‭𝐷
‬ 𝑒𝑏𝑡‬‭‬(‭𝑎𝑓𝑡𝑒𝑟‬‭‬‭𝑡𝑎𝑥‬) × ‭‭%
‬ ‬‭‬‭𝑃𝑟𝑜𝑝𝑜𝑟𝑡𝑖𝑜𝑛‬‭‬‭𝑜𝑓‬‭‭𝐷
‬ 𝑒𝑏𝑡‬)
‭➔‬ E‭ quity‬‭is taken from the Cost of Equity‬
‭calculated above‬
‭➔‬ D
‭ ebt (after tax)‬‭is taken from the‬
‭Assumptions Sheet (Interest Rate)‬
‭➔‬ ‭Weightage‬‭is calculated as‬
‭●‬ ‭Equity‬= ‭‬‭𝐸𝑞𝑢𝑖𝑡𝑦‬‭‭𝑉‬ 𝑎𝑙𝑢𝑒‬‭‬ ÷ ‭‬‭𝑀𝑎𝑟𝑘𝑒𝑡‬‭‬‭𝑉𝑎𝑙𝑢𝑒‬
‭●‬ ‭Debt‬= ‭‬‭𝐷𝑒𝑏𝑡‬‭‭𝑉
‬ 𝑎𝑙𝑢𝑒‬‭‬ ÷ ‭‬‭𝑀𝑎𝑟𝑘𝑒𝑡‬‭‬‭𝑉𝑎𝑙𝑢𝑒‬
‭➔‬ ‭Equity Value‬‭is taken from the Assumptions Sheet (Market‬‭Capitalization)‬
‭➔‬ D
‭ ebt Value‬‭is taken from the Balance Sheet (Non-Current‬‭Financial Liabilities‬
‭Borrowings of 2022-23)‬
‭➔‬ ‭Market Value‬= ‭‬‭𝐸𝑞𝑢𝑖𝑡𝑦‬‭‭𝑉
‬ 𝑎𝑙𝑢𝑒‬‭‬ + ‭‬‭𝐷𝑒𝑏𝑡‬‭‭𝑉
‬ 𝑎𝑙𝑢𝑒‬

‭❖‬ ‭Terminal Value‬‭:‬

‭➔‬ P
‭ erpetual Growth rate‬‭is taken from the‬
‭Assumptions Sheet (Perpetual Growth rate)‬
‭➔‬ ‭Terminal Value‬
= ‭‬(‭𝐹𝑖𝑛𝑎𝑙‬‭‬‭𝑌𝑒𝑎𝑟‬‭‬‭𝐹𝐶𝐹𝐹‬ × (‭1‬ + ‭𝑃𝑒𝑟𝑝𝑒𝑡𝑢𝑎𝑙‬‭𝐺𝑟𝑜𝑤𝑡ℎ‬‭𝑅𝑎𝑡𝑒‬))
÷ (‭𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡‬‭‬‭𝑟𝑎𝑡𝑒‬‭‬ − ‭𝑃𝑒𝑟𝑝𝑒𝑡𝑢𝑎𝑙‬‭‬‭𝐺𝑟𝑜𝑤𝑡ℎ‬‭‬‭𝑅𝑎𝑡𝑒‬)

‭❖‬ ‭Intrinsic Value per share‬‭:‬

‭Formula‬= ‭‬‭𝐸𝑞𝑢𝑖𝑡𝑦‬‭‭𝑉
‬ 𝑎𝑙𝑢𝑒‬‭‬ ÷ ‭‬‭𝑁𝑜‬. ‭‬‭𝑜𝑓‬‭‬‭𝑠ℎ𝑎𝑟𝑒𝑠‬‭‬‭𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔‬
‭➔‬ ‭Equity Value‬
= ‭‬‭𝐸𝑛𝑡𝑒𝑟𝑝𝑟𝑖𝑠𝑒‬‭‬‭𝑉𝑎𝑙𝑢𝑒‬ + ‭𝐶𝑎𝑠ℎ‬‭‬‭&‭‬‬‭𝐶𝑎𝑠ℎ‬‭‬‭𝐸𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡𝑠‬
− ‭𝑇𝑜𝑡𝑎𝑙‬‭‬‭𝐷𝑒𝑏𝑡‬ − ‭𝑁𝐶𝐼‬ − ‭𝑃𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑‬‭‬‭𝑆𝑡𝑜𝑐𝑘‬
 ‭➔‬ ‭Enterprise Value‬
= ‭𝑆𝑢𝑚‬‭‬‭𝑜𝑓‬‭‬‭𝑃𝑉‬‭‬‭𝑜𝑓‬‭‬‭𝐶𝑎𝑠ℎ‬‭‬‭𝐹𝑙𝑜𝑤𝑠‬ + ‭𝑃𝑉‬‭‬‭𝑜𝑓‬‭‬‭𝑇𝑒𝑟𝑚𝑖𝑛𝑎𝑙‬‭‬‭𝑉𝑎𝑙𝑢𝑒‬

‭➔‬ ‭Sum of PV of Cash Flows‬

= ‭𝑁𝑃𝑉‬(‭𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡‬‭‬‭𝑅𝑎𝑡𝑒‬, Σ‭𝑈𝑛𝑙𝑒𝑣𝑒𝑟𝑒𝑑‬‭‬‭𝐹𝐶𝐹𝐹‬

‭➔‬ ‭PV of Terminal Value‬

= ‭𝑃𝑉‬(‭𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡‬‭‬‭𝑅𝑎𝑡𝑒‬, ‭𝑛𝑜‬. ‭‬‭𝑜𝑓‬‭‬‭𝑦𝑒𝑎𝑟𝑠‬‭‬‭𝑡𝑒𝑟𝑚𝑖𝑛𝑎𝑙‬‭‬‭𝑣𝑎𝑙𝑢𝑒‬‭‬‭𝑖𝑠‬‭‬‭𝑟𝑒𝑎𝑙𝑖𝑧𝑒𝑑‬, ‭0‬, ‭‬‭𝑇𝑒𝑟𝑚𝑖𝑛𝑎𝑙‬‭‬‭𝑉𝑎𝑙𝑢𝑒‬)

‭❖‬ C
‭ urrent Market Price‬‭:‬
‭Taken from the Assumptions Sheet‬

‭❖‬ U
‭ pside potential‬‭:‬
‭Formula‬= ‭‬(‭𝐼𝑛𝑡𝑟𝑖𝑛𝑠𝑖𝑐‬‭‭𝑣
‬ 𝑎𝑙𝑢𝑒‬‭‭𝑝
‬ 𝑒𝑟‬‭‭𝑠‬ ℎ𝑎𝑟𝑒‬‭‬ − ‭‬‭𝐶𝑢𝑟𝑟𝑒𝑛𝑡‬‭‭𝑀
‬ 𝑎𝑟𝑘𝑒𝑡‬‭‭𝑃
‬ 𝑟𝑖𝑐𝑒‬)‭‬ ÷ ‭𝐶𝑢𝑟𝑟𝑒𝑛𝑡‬‭‭𝑀
‬ 𝑎𝑟𝑘𝑒𝑡‬‭‭𝑃
‬ 𝑟𝑖𝑐𝑒‬‭‬

‭❖‬ ‭Sensitivity Analysis‬‭:‬

‭ ensitivity analysis, also known as what-if analysis, is a tool in Excel that helps users‬
S
‭determine how changes to input variables affect the outputs of a model.‬

‭Steps for Sensitivity Analysis:‬

‭❖‬ I‭ dentify Key Variables‬‭: Determine the key variables‬‭to analyze, such as the‬
‭discount rate and terminal growth rate in this sheet.‬

‭❖‬ S
‭ et Variable Ranges‬‭: Define a range of values for each variable (e.g., discount‬
‭rates from 11% to 15% and terminal growth rates from 2% to 6%).‬

‭❖‬ C
‭ reate a Sensitivity Table‬‭: Create a table with discount rates as rows and‬
‭terminal growth rates as columns.‬
 ‭❖‬ I‭ nput Base Case Model‬‭: Ensure a base case intrinsic value model is ready,‬
‭referencing the identified variables.‬

‭❖‬ C
‭ alculate Values‬‭: In the intersection cells of the table, input formulas to‬
‭calculate intrinsic value based on the corresponding discount rate and terminal‬
‭growth rate.‬

‭❖‬ F
‭ ill the Table‬‭: Use Excel’s fill handle to copy the‬‭formulas across all cells to‬
‭compute values for all combinations.‬

‭❖‬ F
‭ ormat the Table‬‭: Apply formatting for clarity, such‬‭as borders and conditional‬
‭formatting to highlight significant results.‬

‭❖‬ A
‭ nalyze Results‬‭: Review the table to understand how‬‭changes in the variables‬
‭affect intrinsic value, identifying trends and sensitivities.‬

‭Summary‬

‭ ollowing these steps allows for an effective sensitivity analysis, providing insights‬
F
‭into how different assumptions impact the valuation model.‬
 ‭DISCLAIMER‬

‭ his assignment, prepared under the mentorship of Nikhil Sir during the internship at‬
T
‭ProCapitas, presents a summary of the DCF (Discounted Cash Flow) valuation model‬
‭for HPCL (Hindustan Petroleum Corporation Limited). The content includes‬
‭screenshots of the Excel workbook; however, these images are only glimpses of the‬
‭individual sheets and do not represent the complete data or analysis contained within‬
‭the model.‬

‭ lease note that the steps outlined in this summary may not be universally applicable‬
P
‭to all types of financial models, as methodologies can vary based on specific‬
‭circumstances, data availability, and analytical frameworks. Users of this document‬
‭should consider the unique requirements and context of their own models when‬
‭applying any concepts or methodologies discussed herein.‬

‭ his summary is intended for educational purposes and reflects the work completed‬
T
‭during the internship. All rights to the original data and models remain with the‬
‭respective authors and stakeholders.‬