MAS Financial Services Ltd IPO Message Board (Page 47)

Where did you check ? Pls share link of RHP

Same here working with data for the first time
Comparison of MAS and Godrej
CAGR.............MAS*........Godrej
Top line........20.27.........12.28
Bottom Line.41.69.........23.15

Bottom line of both is growing faster then top line
Expected Listing premium from upper band
MAS FINANCIALS 200-210
GODREJ AGRO 90-100

*Based on half year data
Please correct if i have done miscalculation

@Ankiyxyz
I hope RKB done all the calculations from DRHP as I did ☺

Godrej Agrovet

Top Line [(36692/27719)^(1/4)]-1=7.26%
Bottom line [(2067/972)^(1/4)]-1=20.75%

Godrej Agrovet On consolidated Basis

Top Line [(49832/27715)^(1/4)]-1=15.79%
Bottom Line [(2735/966)^(1/4)]-1= 29.71%

I have not considered other income in top line

Applying the same formula

MAS Standalone Consolidated
Top Line ........ 25.12 ...... ..26.17
Bottom Line........... 26.25 .... 25.85

CAGR during 2013 to 2017*

*Based on annualized revenue & PAT

I think other income is also included in CAGR calculation

Absolutely correct

In case of MAS,we will have to wait for RHP for calculating exact CAGR.

I think instead of 1/4 we should apply 1/5 as no of years are 5 not 4

1/4 is correct and no. of years 5 is also correct,

but here Ankit I tend to differ in calculation of bottomline of Godrej in your calculation i.e. ~ 29% , if we look at 4 year CAGR it is ~20% , FY13 data paints a rosy picture, I didn''t considered it and hence bottomline growth looks lesser to me

       Last Year''s PAT.........      Applying CAGR@29.71
2014      966*      .........................1253
2015      1253......................      1625
2016      1625.................      2108
2017      2108................      2734 (equals PAT of 2017)

*PAT 2013
..................
I agree with JUJU. There is a jump of 62% in PAT of 2014 & then It has increased at steady growth of around 20% from 2014 to 2017. So If you exclude PAT of 2013, then what he has calculated is correct. i.e 20%

There is sharp decrease in freight cost
#276 RHP
32.278 cr 2013
8.526 cr 2014
6.68 cr 2015
Then again increased
25.30 cr 2016
27.28 cr 2017
and 9.96 cr for first quarter of 2018

this exp head is very volatile

Nice Calculations
Good Keep going on

@AHK

I totally agree with you. That is why 20% CAGR should be taken on a conservative basis. what JUJU has calculated is the real growth rate.

[(2735/1565)^(1/3)]-1=20.45%

Last yr PAt ................PAT@20.45 CAGR
2015........1565*....................1885
2016......1885......................2271
2017.......2271....................2735

*PAT 2014

CAGR~20%

@Ankitxyz
So finally what would be the expected EPs of 18 and 19 and according to you at what PE these stock should be valued


In case of sudden jump in PAT of Godrej during 2014 and then after its become normal my opinion is that we should leave year 2013. It seems that profits were exceptionally low that is why increase in PAT% of 2014 is looking as abnormal whereas years after 2014 incremental PAT% are normal

rajkumar bhuj,

for banks and NBFC''s PE isn''t a good indicator. we have to see price to book -PB

I agree with Sonal here for MAS Financial , for banks and finance companies P/B is given more priority, though PE is also given consideration, in order to gauge growth, which is great here, with 459 INR P/B comes to be ~7 which makes it fully priced one rather peers have lesser ratio value.But again one metric is not enough, I expect it to be in INR 600 soon

I agree with Sonal here for MAS Financial , for banks and finance companies P/B is given more priority, though PE is also given consideration, in order to gauge growth, which is great here, with 459 INR P/B comes to be ~7 which makes it fully priced one rather peers have lesser ratio value.But again one metric is not enough, I expect it to be in INR 600 soon

                        
Godrej Agrovet

                        
Top Line CAGR 2014-2017       17%                  
Bottom Line CAGR 2014-2017      20%                  
                        
                        
Initial Cash Flow      2740                  
                        
Terminal Growth Rate      5%            Discount Rate      10
No Shares Outstanding                        
Year      Cashflows      Growth      Discount @10%      Value
1      3288      20      ..............0.909      ............................2989
2      3913      19................      0.826.................................      3234
3      4617      18      ..............0.751...............................      3469
4      5402      17..............      0.683...............................      3690
5      6266      16.............      0.621...............................      3891
6      7206      15.............      0.564      ...............................4068
7      8215      14.............      0.513..................................      4216
8      9283      13      ................0.467      ................................4331
9      10397      12.............      0.424      ................................4409
10      11437      10..............      0.386      ................................4409
                        
                        
                        
      PV of Year 1-10 Cashflows      38704            
      Terminal Value.................      88186            
      Total Value      .......................126890            
                        
      No of shares (In million)      192            
                        
      intrinsic Value      662      INR      
      Margin of safety      497      INR      
                        
Let me know if there is any change in no of shares post issue.

You have used correct number of shares
Pre Issue no. of shares = 185323777
Post- Issue no. of shares = 192066494

A question for learning purposes, why did you used PAT as Initial Cash flow here

Ankitxyz
PAT can''t be used For FCFF Valuation Approach
You should use Free cash flow from firm
FCF=NOPAT-Net Investment
Nopat=EBIT*(1-tax rate)
Net Inv.=capital spending+change in WC- Dep.

@Jain Sahab

For example .. For FY 2016-17

EBIT 100
Tax 50%
Increase in wc 5
Dep 10
Capital Expenditure- 500

Calculate FCF

@Jain Sahab

Your answer is in negative. So how can you take a negative figure for estimating future cashflows.

@ JUJU

Same problem will also arise if you take actual cashflow from RHP as initial cashflow.So taking PAT as initial cash flow is the only practical & reliable method for estimating future cashflows. If you have any alternate method then pls suggest.

& also CAGR is calculated for PAT & not for cashflows

@JUJU

If no shares post issue is correct then why my PE calculation differs from Dilip davda''s calculation. He has mentioned 30 times in his opinion section.

Post Issue EPS -2745/192.066=14.29

Post Issue PE-460/14.29=32.19

I think he must have rounded off to 30. Pls check

I don''t know about Dilip Davda sir, but my own calculation is like this,

I always base it on future estimates, so in this case it is based on FY18 estimate , which makes EPS=15.52, (3.88*4) 3.88 for Q1FY18 as per Page 53 RHP

then PE= 460/15.52 =29.64 = ~30

"If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 30." - excerpt from Dilip Davda Review of Godrej agrovet

Even sir did the same as above

Ok my mistake. I did not read his opinion properly. He has calculated PE for 2017-18. I thought that it was for 2016-17

Ankitxyz
Don''t use such a hypothetical figures
I have calculated fcf for fy17 is appx 1196 mn

jain Sahab , if you don''t mind, can you share the calculations?

Ohho my figures are hypothetical. Ok fine. Explain your random number with calculations

@Ankitxyz and juju
Sorry I wrongly calculated.I admit my mistake...
Regret...
Godrej Agrovet
I am not an expert.I am just a student
My calculate might be wrong
My calculation...
First I calculated Nopat based on fy 17 standalone statement of P/L
EBIT=36693.09-26389.15-1836.05-74.19-1647-488.37-2988.93=3269.40
Nopat=3269.40-720.93=2548.47
I have used actual tax but a avg tax rate should be used .
Change in WC
WC in 2016=-4643
WC in 2017=-2877.93
Change=1765.07
Capital spending=appx 807

Ankitxyz and juju
Your valuation is correct
I was just trying
Sorry if I hurted you...

Its okay Jain Sahab. Your formula is not wrong but its practical application is very difficult. Further it considers only operating profits & ignores non-operating items like interest costs.Interest cost is also a cash expense & therefore it should also be considered for valuation purpose of a business unlike goodwill calculation where only operating profits are considered.

Godrej Agrovet
.....................................................................

Top Line CAGR 2014-2017      ........17                        
Bottom Line CAGR 2014-2017      20                        
                              
                              
Initial Cash Flow      2740                        
                              
Terminal Growth Rate      5%            Discount Rate      10      
                              
Year      Cashflows      Growth      Discount@10%      Value      
1      3288      ................20      0.909...............      2989      
2      3913      ...............19      0.826................      3234      
3      4617      ...............18      0.751................      3469      
4      5402      ...............17      0.683      ................3690      
5      6266      ...............16      0.621      ................3891      
6      7206      ...............15      0.564      ................4068      
7      8215      ...............14      0.513      ................4216      
8      9283      ...............13      0.467      ................4331      
9      10397      ...............12      0.424      ................4409      
10      11437      ................10      0.386      .................4409      
                              
                              
                              
PV of Year 1-10 Cashflows      38704                  
Terminal Value      .........................88186                  
Total Value........................      126890                  
                              
No of shares (In million)      ..........192      
            
Interinsic Value (IV)............      662      INR            
Margin of safety (MS)      ........497      INR            
                              
                              
Expected Listing Price      ..........579      IV+MS/2            
                              
Subscription Estimates                         
      ........................QIBs      70                  
      .........................NII.........      208                  
      .........................RII      5.75      Assuming 16L forms