amit stock analysis excel

8/10/2019 Amit Stock Analysis Excel

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Warning!Excel can be a wonderful tool to analyze the past. But it can be a wea

mass destruction to predict the future! So be very careful of what yo

getting into. Here, garbage in will always equal garbage out.

Remember!Focus on decisions, not outcomes. Look for disconfirming evidence. C

Pray!

Please! It'

money. Please don't blame me if results of this excel cause you to lose idesigned this excel to aid your own thinking, but you alone are respon

your actions. I want to live peacefully ever after! :-) I

sadist who wants you to do the hard work by analyzing companies on y

But I'd rather give you a compass instead of a map, for you can confu

with territory and lose it all! All the best!


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Parameter

Consumer monopoly or commodity?

Understand how business works

Is the company conservatively financed?

Are earnings strong and do they show an upward trend?

Does the company stick with what it knows?

Has the company been buying back its shares?

Have retained earnings been invested well?

Is the companys return on equity above average?

Is the company free to adjust prices to inflation?

Buffett CheckSource


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Does the company need to constantly reinvest in capital?

Conclusion

Never Forget


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ExplanationSeek out companies that have no or less competition, either due to a patent or brand name or

similar intangible that makes the product unique. Such companies will typically have high gross

and operating profit margins because of their unique niche. However, don't just go on margins as

high margins may simply highlight companies within industries with traditionally high margins.Thus, look for companies with gross, operating and net profit margins above industry norms. Also

Try to invest in industries where you possess some specialized knowledge (where you work) or

can more effectively judge a company, its industry, and its competitive environment (simple

products you consume). While it is difficult to construct a quantitative filter, you should be able to

identify areas of interest. You should "only" consider analyzing those companies that operate in

areas that you can clearly grasp - your circle of competence. Of course you can increase the size

of the circle, but only over time by learning about new industries. More important than the size of

Seeks out companies with conservative financing, which equates to a simple, safe balance sheet.

Such companies tend to have strong cash flows, with little need for long-term debt. Look for lowdebt to equity or low debt-burden ratios. Also seek companies that have history of consistently

Rising earnings serve as a good catalyst for stock prices. So seek companies with strong,

consistent, and expanding earnings (profits). Seek companies with 5/10 year earnings per share

growth greater than 25% (alongwith safe balance sheets). To help indicate that earnings growth is

still strong, look for companies where the last 3-years earnings growth rate is higher than the last

10-years growth rate. More important than the rate of growth is the consistency in such growth.

So exclude companies with volatile earnings growth in the past, even if the "average" growth has

Like you should stock to your circle of competence, a company should invest its capital only in

those businesses within its circle of competence. This is a difficult factor to screen for on aquantitative level. Before investing in a company, look at the companys past pattern of

acquisitions and new directions. They should fit within the primary range of operations for the firm.

Buffett prefers that firms reinvest their earnings within the company, provided that profitable

opportunities exist. When companies have excess cash flow, Buffett favours shareholder-

enhancing maneuvers such as share buybacks. While we do not screen for this factor, a follow-up

examination of a company would reveal if it has a share buyback plan in place.

Seek companies where earnings have risen as retained earnings (earnings after paying

dividends) have been employed profitably. A great way to screen for such companies is by looking

at those that have had consistent earnings and strong return on equity in the past.

Consider it a positive sign when a company is able to earn above-average (better than

competitors) returns on equity without employing much debt. Average return on equity for Indian

companies over the last 10 years is approximately 16%. Thus, seek companies that earn atleast

That's what is called "pricing power". Companies with moat (as seen from other screening metrics

as suggested above (like high ROE, high grow margins, low debt etc.) are able to adjust prices to

inflation without the risk of losing significant volume sales.

ist - Read, Remember, Follow! Buffettology by Mary Buffett & David Clark


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Companies that consistently need capital to grow their sales and profits are like bank savings

account, and thus bad for an investor's long term portfolio. Seek companies that don't need high

capital investments consistently. Retained earnings must first go toward maintaining current

operations at competitive levels, so the lower the amount needed to maintain current operations,

the better. Here, more than just an absolute assessment, a comparison against competitors will

Sensible investing is always about using folly and discipline - the discipline to identify excellentbusinesses, and wait for the folly of the market to drive down the value of these businesses to

attractive levels. You will have little trouble understanding this philosophy. However, its successful

implementation is dependent upon your dedication to learn and follow the principles, and apply

Focus on decisions, not outcomes. Look for disconfirming evidence. Pray!


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Year / Rs Crore L-9 L-8 L-7 L-6

SOURCES OF FUNDS / EQUITY & LIABILITIES

Share Capital 64 96 96 96

Reserves & Surplus 413 434 471 550

Shareholder's Funds / Equity 478 529 567 646

Minority Interest 75 70 64 60

Non-Current Liabilities

Long-Term Borrowings 197 160 240 261

Current Liabilities 514 581 618 705

Short-Term Borrowings - 9 - -

Trade Payables 232 272 295 330

Other Current Liabilities 177 163 206 249

Short-Term Provisions 105 136 117 126

APPLICATION OF FUNDS / ASSETS

Non-Current Assets 35 34 37 41

Tangible Assets 20 22 24 27

Intangible Assets 5 6 6 7

Capital Work-in-Progress 5 1 1 1

Non-Current Investments 5 6 6 7

Current Assets 737 772 950 1,120

Current Investments - 12 27 75

Inventories 322 318 455 489

Trade Receivables 256 265 296 348Cash and Bank Balance 68 70 61 73

Short-Term Loans and Advances 55 76 80 74

Other Current Assets 35 31 32 61

Asian Paints - Balance Sh(Enter values only in red cells)


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L-5 L-4 L-3 L-2 L-1 L

96 96 96 96 96 96

682 886 1,107 1,614 2,092 2,653

778 982 1,203 1,710 2,187 2,749

60 57 76 94 110 137

180 179 152 104 147 148

979 1,248 2,517 3,315 2,081 2,771

126 96 157 125 - -

449 572 554 718 1,087 1,297

339 414 461 661 703 1,107

66 166 1,345 1,810 290 367

45 49 54 59 65 72

29 32 35 39 43 47

7 8 9 10 11 12

1 1 1 1 1 1

7 8 9 10 11 12

1,406 1,692 2,966 3,871 3,068 3,560

114 198 - 532 367 285

598 714 769 956 1,305 1,599

421 460 572 543 573 781105 111 210 106 626 624

98 153 1,365 1,670 106 186

69 56 50 65 90 84

et


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Year / Rs Crore L-9 L-8 L-7 L-6 L-5

Net Sales 1,817 2,373 2,574 3,021 3,670

Expenditure

Increase/Decrease in Stock (38) 2 (61) (10) (70)Raw Material Consumed 975 1,290 1,563 1,803 2,269

Employee Cost 120 183 199 219 257

Other Manufacturing Expenses 66 74 86 96 112

General and Administration Expenses 60 84 87 99 122

Selling and Distribution Expenses 301 358 297 345 411

Miscellaneous Expenses 56 85 68 79 85

Total Expenditure 1,540 2,076 2,239 2,630 3,187

Gross Profit 815 1,007 985 1,133 1,358

Operating Profit / EBITDA 278 297 335 391 483

Other Income 11 27 32 32 40Depreciation 49 71 69 68 61

Profit Before Interest & Tax (PBIT) 240 253 298 354 462

Interest 14 15 11 11 24

Exceptional Income / Expenses - - - - (8)

Profit Before Tax 226 238 287 343 430

Provision for Tax 86 94 106 132 147

Profit After Tax 140 144 181 211 283

Minority Interest (1) (3) (7) 2 (2)

Share of Associate - 4 0 (1) (0)

Consolidated Profit After Tax (PAT) 139 145 174 212 281

Diluted EPS (Rs) 14.5 15.1 18.1 22.1 29.3

Interim Equity Dividend 29 34 38 67 115

Proposed Equity Dividend 42 48 53 53 10

Total Equity Dividend 70 82 91 120 125

Asian Paints - P&L Account(Enter values only in red cells)


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L-4 L-3 L-2 L-1 L CAGR

4,407 5,464 6,681 7,722 9,632 20.4%

(36) (27) (102) (151) (173)2,613 2,866 3,227 3,906 5,099

301 365 433 454 526

122 682 797 922 1,073

145 167 200 206 269

535 646 801 969 1,207

63 91 89 85 120

3,743 4,790 5,445 6,391 8,122 20.3%

1,708 1,943 2,758 3,045 3,633 18.1%

664 674 1,236 1,331 1,510 20.7%

60 51 141 68 10859 74 84 113 121

665 651 1,293 1,286 1,497 22.6%

26 32 37 26 43

(7) (1) 1 - -

631 617 1,257 1,260 1,454 23.0%

203 197 373 378 434

428 419 884 881 1,021 24.7%

(19) (22) (48) (38) (32)

- - - - -

409 398 836 843 98924.4%42.7 41.5 87.1 87.9 103.1

62 62 82 82 91

101 106 177 225 293

163 168 259 307 384 20.8%


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Year / Rs Crore L-9 L-8 L-7

Net cash (used in) / generated from operating activities 154 249 111

Payment for purchase of fixed assets (40) (44) (97)

Free Cash Flow 114 205 14

Net cash (used in) / generated from investing activities (70) (113) (74)Net cash (used in) / generated from financing activities (59) (134) (42)

Net increase in cash and cash equivalents 24 2 (5)

Asian Paints - Cash Flow Stat(Enter values only in red cells)

MINUS

Sample Cash Flow State


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L-6 L-5 L-4 L-3 L-2 L-1 L

179 258 480 389 1,063 762 826

(87) (82) (308) (310) (395) (156) (673)

92 176 172 79 668 606 153

(125) (109) (335) (270) (299) (440) (512)(42) (111) (134) (230) (332) (334) (327)

12 38 11 (111) 432 (12) (12)

ment

Cash flow,

ment (from Annual Report)


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Remember!not reported earnings, is what determines

a company's long-term value.


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Operational & Financial Ratios L-9 L-8 L-7 L-6 L-5 L-4

Diluted Earnings Per Share (Rs) 14.5 15.1 18.1 22.1 29.3 42.7

Diluted Book Value Per Share (Rs) 49.8 55.2 59.1 67.4 81.1 102.4

Tax Rate (%) 38% 40% 37% 39% 34% 32%

Dividend Per Share (Rs) 7.3 8.5 9.5 12.5 13.0 17.0Dividend Pay Out Ratio (%) 50% 56% 52% 57% 44% 40%

Profitability Ratios L-9 L-8 L-7 L-6 L-5 L-4

Gross Margin (%) 45% 42% 38% 38% 37% 39%

EBITDA Margin (%) 15% 13% 13% 13% 13% 15%

EBIT Margin (%) 13% 11% 12% 12% 13% 15%

Net Profit Margin (%) 8% 6% 7% 7% 8% 9%

Performance Ratios L-9 L-8 L-7 L-6 L-5 L-4

Return on Equity (%) 29% 27% 31% 33% 36% 42%

Return on Capital Employed (%) 60% 70% 52% 49% 66% 93%Return on Invested Capital (%) 24% 25% 26% 29% 35% 47%

Sales/Working Capital (x) 8.2 12.4 7.8 7.3 8.6 9.9

Efficiency Ratios L-9 L-8 L-7 L-6 L-5 L-4

Receivable Days 51 41 42 42 42 38

Inventory Days 65 49 64 59 59 59

Payable Days 47 42 42 40 45 47

Growth Ratios L-9 L-8 L-7 L-6 L-5 L-4

Net Sales Growth (%) 31% 8% 17% 21% 20%

EBITDA Growth (%) 7% 13% 17% 24% 37%PBIT Growth (%) 6% 18% 19% 30% 44%

PAT Growth (%) 4% 20% 22% 32% 46%

Financial Stability Ratios L-9 L-8 L-7 L-6 L-5 L-4

Total Debt/Equity (x) 0.4 0.3 0.4 0.4 0.4 0.3

Debt Burden (x) 1.7 0.8 16.7 2.8 1.0 1.0

Current Ratio (x) 1.4 1.3 1.5 1.6 1.4 1.4

Quick Ratio (x) 0.8 0.8 0.8 0.9 0.8 0.8

Interest Cover (x) 17.5 16.6 27.5 31.0 19.3 25.2

Asian Paints - Key Ratios(Don't touch any cell on this sheet, as all are calculated figure


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L-3 L-2 L-1 L

41.5 87.1 87.9 103.1

125.4 178.3 228.0 286.5

32% 30% 30% 30%

17.5 27.0 32.0 40.042% 31% 36% 39%

L-3 L-2 L-1 L

36% 41% 39% 38%

12% 18% 17% 16%

12% 19% 17% 16%

7% 13% 11% 10%

L-3 L-2 L-1 L

33% 49% 39% 36%

90% 150% 86% 124%34% 70% 67% 53%

12.2 12.0 7.8 12.2

L-3 L-2 L-1 L

38 30 27 30

51 52 62 61

37 39 51 49

L-3 L-2 L-1 L

24% 22% 16% 25%

1% 83% 8% 13%-2% 99% -1% 16%

-3% 110% 1% 17%

L-3 L-2 L-1 L

0.3 0.1 0.1 0.1

1.9 0.2 0.2 1.0

1.2 1.2 1.5 1.3

0.9 0.9 0.8 0.7

20.0 35.2 49.5 34.5

Remember!counts in the long run is t

share value", not overall

busines

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Initial Cash Flow 476

Years 1-5 6-10

FCF Growth Rate 15% 12%

Discount Rate 12%

Terminal Growth Rate 2%

Shares Outstanding (Crore) 10

Net Debt Level (762)

Year FCF Growth Present Value

1 547 15% 489

2 629 15% 502

3 724 15% 5154 832 15% 529

5 957 15% 543

6 1,072 12% 543

7 1,200 12% 543

8 1,345 12% 543

9 1,506 12% 543

10 1,687 12% 543

Terminal Year 1,720

PV of Year 1-10 Cash Flows 5,292

Terminal Value 5,539

Total PV of Cash Flows 10,831

Number of Shares 10

DCF Value / Share (Rs) 1,209

Asian Paints: 2-Stage DCF

Final Calculations

Figures in Rs Crore | Enter values only in red cells


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Why DCF?The value of a business is simply the

present value of cash that investors

can take out of the business over its

lifetime.


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Date of Analysis: 30/Oct/14

Price: 4,665.0 Return on Equity:

EPS: 103.1 Payout Ratio:

DPS: 40.0 P/E Ratio-High:

BVPS: 286.5 P/E Ratio-Low:

P/E: 45.3 P/E Ratio:

Earnings Yield: 2.2% Sustainable Growth

Dividend Yield: 0.9%

P/BV: 16.3

Govt. Bond Yield: 8.0%

Historical Company Data

Year EPS DPS BVPS High Low High

L-9 14.5 7.3 49.8 324 221 22.4

L-8 15.1 8.5 55.2 361 225 23.9

L-7 18.1 9.5 59.1 471 327 26.0

L-6 22.1 12.5 67.4 862 449 39.0

L-5 29.3 13.0 81.1 972 683 33.2

L-4 42.7 17.0 102.4 1,316 1,043 30.8L-3 41.5 17.5 125.4 1,264 715 30.5

L-2 87.1 27.0 178.3 2,545 1,640 29.2

L-1 87.9 32.0 228.0 3,017 2,040 34.3

L 103.1 40.0 286.5 3,762 2,802 36.5

Annually Compounded Rates of GrowthFactor EPS DPS BVPS High Price Low Price

10-Year Growth 24.4% 20.8% 21.5% 31.3% 32.6%

5-Year Growth 28.6% 25.2% 28.7% 31.1% 32.6%

Projected Company Data Using Historical Earnings Growth RateYear EPS DPS

L (Current) 103.1 46.2 911.5 Earnings after 10 y

L+1 128.2 57.5 1,896.4 Sum of dividends p

L+2 159.4 71.4

L+3 198.2 88.8 23,170 Projected price (Av

L+4 246.5 110.5 25,066 Total gain (Projecte

10-Year Avera

Asian Paints - Buffett Valuation Spreadsheet

P/EPrice

Source - Buffettology by Mary Buffett & David Clark | (Enter values only i

Current Stock Data


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L+5 306.5 137.4

L+6 381.2 170.8 18.3% Projected return us

L+7 474.0 212.5 [(Total Gain / Curre

L+8 589.5 264.2

L+9 733.0 328.5

L+10 911.5 408.5

Projected Company Data Using Sustainable Growth RateYear BVPS EPS DPS

L (Current) 286.5 101.5 45.5 605.2 Earnings after 10 y

L+1 342.6 121.3 54.4 1,426.1 Sum of dividends p

L+2 409.5 145.1 65.0

L+3 489.6 173.4 77.7 15,383 Projected price (Av

L+4 585.2 207.3 92.9 16,809 Total gain (Projecte

L+5 699.6 247.8 111.1

L+6 836.4 296.3 132.8 13.7% Projected return us

L+7 999.9 354.2 158.8

L+8 1,195.3 423.4 189.8

L+9 1,429.0 506.2 226.9

L+10 1,708.3 605.2 271.2


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35.4%

44.8%

30.6

20.3

25.4

19.5%

Low ROE ayout Ratio

15.2 29.1% 50.5%

14.9 27.4% 56.3%

18.0 30.7% 52.3%

20.3 32.8% 56.5%

23.3 36.1% 44.4%

24.4 41.7% 39.8%17.2 33.1% 42.2%

18.8 48.9% 31.0%

23.2 38.5% 36.4%

27.2 36.0% 38.8%

ars

id over 10 years

rage P/E * EPS)

d Price + Dividends)

Warning!no predictor of the future. So be

numbers in this sheet - that are

numbers - into your fair value calcu

past can give some indications of t

future is never always th

es

atio

red cells)


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ng historical EPS growth rate

t Price) ^ (1/10)] - 1

ars (BVPS * ROE)

id over 10 years

rage P/E * EPS)

d Price + Dividends)

ng sustainable growth rate


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Past is

careful using

ased on past

ations. Of course

e future, but the

same.


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Year L-9 L-8 L-7 L-6 L-5 L-4 L-3

Diluted EPS (Rs) 14.5 15.1 18.1 22.1 29.3 42.7 41.5

Stock Price - High (Rs) 324 361 471 862 972 1,316 1,264

High P/E (x) 22.4 23.9 26.0 39.0 33.2 30.8 30.5

Stock Price - Low (Rs) 221 225 327 449 683 1,043 715Low P/E (x) 15.2 14.9 18.0 20.3 23.3 24.4 17.2

Average P/E (x) 18.8 19.4 22.0 29.6 28.2 27.6 23.9

Graham Number 773

Avg P/E Ratio Valuation 2,356

EPV 859

DCF 1,209

Historical Earnings Growth 7,460Sustainable Earnings Growth 4,953

High End 2,935

Low End 1,578

Margin of Safety (MoS) 50%

Fair Value after MoS 1,128

Current Mkt. Price (CMP, Rs) 4,665

Premium / (Discount) 313.5%

Fair Value Range (Rs/Share)

Valuation - Different Methods (Rs)

Asian Paints - Fair Value Calculation(Enter values only in red cells)

Give importance to a s

in "Yes" to these tw

understood? a

Don't try to quantifmathematical you ar

your analysis and re

Also, your calculated "

don't invest your sav

look for perfection. It i

Look f


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L-2 L-1 L

87.1 87.9 103.1

2,545 3,017 3,762

29.2 34.3 36.5

1,640 2,040 2,80218.8 23.2 27.2

24.0 28.8 31.8

Remember!ock's fair value only "after" you have answered

questions - (1) Is this business simple to be

nd (2) Can I understand this business?

everything. In stock research, the less non-, the more simple, sensible, and useful will be

ults. Great analysis is generally "back-of-the-

envelope".

air value" will be proven wrong in the future, so

ngs just because you fall in love with it. Don't

overrated. Focus on decisions, not outcomes.

r disconfirming evidence. Pray!

amit stock analysis excel

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