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Reference Model
MindtreePrepared By: Neerav Koli, Distance Learning , Mumb
Mumbai
IMS Proschool Pvt Ltd,
Maharashtra High School Complex,
Principal N.M Kale Marg, Off Gokhale Rd,
Dadar (W), Mumbai 400028
+91 9372895050
http://proschoolonline.com
Email ID : [email protected]
Tel. No. : 022-65285393/94
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i
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Directions
Mindtree is one of the young IT company of the country which has seen commendable success withidemand in the investment market. This gave us the opportunity to guide our student to come out witat IMS Proschool to hone their financial modeling skills.
This model is being developed by a financial modeling student at IMS Proschool. This is provided asthe objective of the reference model, the formulas and linkages of the model are kept intact.
IMS Proschool provides certificate programs in Financial Modeling. The program grooms the candidanalysis and modeling skills. The program aims to impart the necessary skills required to perform thwith the practical skill sets required to perform financial analysis, modeling and valuation through Ex
please contact the address furnished below. You can also email us at the below mentioned email-id.
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IMS Proschool Pvt Ltd,
Maharashtra High School Complex,
Principal N.M Kale Marg, Off Gokhale Rd,
Dadar (W), Mumbai 400028
+91 9372895050
n a few span of time. A financial model of such a company is in greata financial model on the company. These exercises help the student
reference model and is for information purpose only. Keeping in view
tes for entry level jobs in the finance sector which require financialrole of a Financial Research Analyst. The program equips students
el.For more details,
Tel. No. : 022-65285393/94
Email ID : [email protected]
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Mindtree Ltd.
Click on the name of Tab to go to the relevant sheet
No. Name of Tab
1
2
3
4
5
6
7
8
9
10
11
12
13
Company Overview
Summary
Profit & Loss A/c
Balance Sheet
Cash Flow Statement
Geographic Revenue
Segment-wise Revenue
Cost Analysis
Debt Schedule
Fixed Asset
Valuation
Beta Calculation
Notes
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Description
Overview of the Company
Financial snapshot of the company
Historical and forecasted income statement
Historical and forecasted balance sheet
Forecasted cash flow statement
Geographic revenue breakup for the historical years as reported by the Company
Segment-wise revenue breakup for the historical years as reported by the Company
Cost Structure
Debt Schedule
Fixed Asset & Depreciation Schedule
DCF Valuation
Beta Calculation of Company relative to Sensex
Notes related to preparation of Financial Statement
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Mindtree Ltd.Company Overview
(Rs. In Lacs, except per share data)
Company Information Company Des
Industry IT Consulting & Software
Sector Software-Medium
Country India
BSE/NSE Code 532819/MINDTREE
Market Index BSE - 500
Year end 31-Mar Products & S
Reporting currency Rs.
Stock Data Per Share Dat
Price as on 22nd Oct 2010 512.7
52 Week High 729.9
52 Week Low 491 EPS diluted
YTD Change -84.95YTD Change % -14.7% EBITDA/sales (
Shares Outstanding 407 Net income/sal
Market Capitalization(Lacs) 208,669 ROE (TTM)
Beta Vs Sensex 1.16 EV/Sales
EV/EBITDA
P/E
P/Sales
P/BV
Geo revenue breakup for 2010
USA 84,209Europe 25,552
India 7,737
APAC / Rest of the World 12,101
Total 129,598
Revenue Forecast
Mindtree Ltd.development. Iengineering (Sproduction supsupply chain m
Internet & EnaApplication Mai
Margin
65%
2
USA Europe India APAC / Rest of the World
10000000%
12000000%
14000000%
16000000%
18000000%
20000000%
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Revenue Data
2010 2011 2012 2013 2014
Total Revenue 129,598 133,358 138,077 145,127 155,286
% y/y Growth 3% 4% 5% 7%
2010 2011 2012 2013 2014 2015E
0%
2000000%
4000000%
6000000%
8000000%
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ription
rvices
a & Key Ratios
2009-10 A 2010-11 E 2011-12 E 2012-13 E
52.79 43.04 45.35 48.35
38% 38% 38% 38%) 19% 19% 19% 19%
s (%) 17% 13% 13% 14%
32% 21% 18% 16%
1.58 1.5 1.5 1.4
16 8 8 7
9.71 11.9 11.3 10.6
1.61 1.6 1.4 1.4
3.18 2.5 2.1 1.7
Segment Revenue Breakup for 2010
IT Services 69,802PE Services 59,796
Total 129,598
imited , formerly is an international information technology (IT) consulting and implementation company. It deliveoperates in two units: production engineering (PE) services and IT services. PE services include research and devel
E). SPE provides full life cycle product engineering, professional services and sustained engineering services. IT Serviceort for customers in manufacturing, financial services, travel and leisure and other industries, in the areas of e-businesnagement, enterprise resource planning (ERP) and maintenance and re-engineering of legacy mainframe applications.
bling Technologies, Data Warehousing /Business Intelligence, Supply Chain Management, ERP, Product Engineering,tenance
%
6%
9%
54%IT Services PE
% y/y Growth
Total Revenue
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2015E 2016E 2017E
166,156 177,787 186,677
7% 7% 5%
016E 2017E
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s business solutions through global softwarelopment (R&D) services and software product
offer consulting and implementation and posts, data warehousing and business intelligence,
Product Assurance & Testing, Web Services.
46%
ervices
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Financial Summary Of M
2007-08A 2008-09A 2009-1A
P&LRevenue 73,384 123,747 129,598
Gross Profit 26,606 54,069 49,773EBITDA 12,580 33,095 24,556
PBT 11,273 6,039 25,467
PAT 10,419 5,231 21,484
Cash FlowCash Flow from operations 9,063 17,980 23,017
Cash Flow from investing (15,003) (22,235) (10,045)
Cash Flow from financing 3,739 2,256 (13,415)
Net Cash Flow (2,214) (1,958) (522)
Capex (21,778) (4,346) (4,573)Free Cash Flow to Firm (12,714) 13,634 18,444
Balance SheetShare Capital 3,792 3,800 3,951
Share Application Money 5 0.03 -
Reserves & Surplus 49,605 51,328 63,112
Total Debt 9,172 17,213 305
62,575 72,340 67,369
Net Fixed Assets 25,897 29,616 28,587
Goodwill - 14,605 1,543
Investments 16,549 10,133 12,725
Deferred tax assets, net 898 1,897 2,136
Net Current Assets 19,230 16,088 22,379
62,575 72,340 67,369
MarginsGross Profit 36% 44% 38%
EBITDA 17% 27% 19%
EBIT 12% 22% 14%
PBT 15% 5% 20%
Net Profit 14% 4% 17%
Per share DataEPS - Basic 27.69 13.84 54.77
EPS - Diluted 26.75 13.70 52.79
Book Value 137 136 161
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indtree
2010-11E 2011-12E 2012-13E
133,358 138,077 145,127
51,217 53,029 55,73725,251 26,145 27,480
20,587 21,690 23,126
17,519 18,457 19,679
23,730 22,193 27,879
(3,655) (3,821) (4,070)
(1,106) (771) (771)
18,969 17,601 23,038
(4,706) (4,872) (5,121)19,025 17,321 22,758
3,951 3,951 3,951
- - -
79,912 97,649 121,554
- - -
83,863 101,601 125,505
27,609 26,975 26,692
1,543 1,543 1,543
12,725 12,725 12,725
2,136 2,136 2,136
39,852 58,222 82,410
83,863 101,601 125,506
38% 38% 38%
19% 19% 19%
15% 15% 15%
15% 16% 16%
13% 13% 14%
44.66 47.05 50.17
43.04 45.35 48.35
202 246 305
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Mindtree Ltd.Profit & Loss Account
(Rs. In Lacs, except per share data) Audited Audited Audited
2007-08 A 2008-09 A 2009-10 A
Revenues 73,384 123,747 129,598
Cost of Revenues (46,778) (69,678) (79,825)
Gross Profit 26,606 54,069 49,773
Selling, General & Administrative expenses (13,875) (20,168) (24,978)
Provision for bad & doubtful debts (151) (806) (239)
Operating profit before interest and depreciation 12,580 33,095 24,556
Interest including finance charges (590) (1,620) (267)
Depreciation (3,493) (5,696) (6,518)
Operating Profit 8,497 25,779 17,771
Foreign exchange gain/(loss) 399 (20,892) 6,734
Other Income 2,377 1,152 962
Profit Before Tax 11,273 6,039 25,467
Provision for taxation including FBT (1,290) (1,386) (3,796)
Deferred tax (charge)/credit 436 681 (288)
MAT Credit Entitlement/(reverse) - 33 101
Share of profits of associates 274 -
Minority interest (410) -
Net profit after tax 10,419 5,231 21,484
EPS Basic 27.69 13.84 54.77
EPS Diluted 26.75 13.70 52.79
Weighted average number of sharesBasic 376.3 378 392
Diluted 389.5 382 407
Growth Analysis - Y/Y
Revenues - 69% 4.7%
EBITDA - 163% -26%
Operating Profit - 203% -31%
Net Profit - -50% 311%
Growth Analysis - Q/Q
Revenues
EBITDA
Operating Profit
Net Profit
Margin Analysis ( as a % of Revenues)
Gross Profit Margin 36% 44% 38%
EBITDA 17% 27% 19%
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EBIT 12% 22% 14%
PBT 15% 5% 20%
Net Profit Margin 14% 4% 17%
Interest Cover 21 20 92
Effective Tax rate 11% 11% 15%
Financial Leverage 1.5 1.3 1.4
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2010-11 E 2011-12 E 2012-13 E
133,358 138,077 145,127
(82,141) (85,047) (89,390)
51,217 53,029 55,737
(25,703) (26,612) (27,971)
(263) (273) (287)
25,251 26,145 27,480
(30) - -
(5,685) (5,506) (5,404)
19,536 20,639 22,075
- - -
1,051 1,051 1,051
20,587 21,690 23,126
(3,069) (3,233) (3,447)
- - -
- - -
- - -
- - -
17,519 18,457 19,679
44.66 47.05 50.17
43.04 45.35 48.35
392 392 392
407 407 407
38% 38% 38%
19% 19% 19%
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15% 15% 15%
15% 16% 16%
13% 13% 14%
15% 15% 15%
1.3 1.3 1.2
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Mindtree Ltd.Balance Sheet
(All Figs in Lacs) Standalone Consolidated Consolidated
Audited Audited Audited
Sources Of Funds 2007-08 A 2008-09 A 2009-10 A
Shareholders Funds
Share Capital ( Face Value of Rs. 10 Each) 3,792 3,800 3,951
Share Application Money 5 0.03 -
Reserves & Surplus 49,605 51,328 63,112
53,403 55,127 67,064
Minority Interest - 3,276
Loan Funds
Secured Loans 9,172 13,757 -
Unsecured Loans - 180 305
Total Shareholders Funds & Liabilities 62,575 72,340 67,369
Application Of Funds
Fixed Asset
Gross Block 34,744 49,409 51,334
Less Accumulated Depreciation (11,176) (21,096) (25,212)
Net Block 23,568 28,313 26,122
Capital Work In Progress 2,329 1,304 2,466
25,897 29,616 28,587
Goodwill - 14,605 1,543
Investments 16,549 10,133 12,725
Deferred tax assets, net 898 1,897 2,136
Current assets, loans and advances
Sundry debtors 17,217 27,923 23,699
Cash and bank balances 5,465 4,876 4,033
Loans and advances 9,927 14,111 20,683
Total Current Assets 32,609 46,910 48,414
Current liabilities and provisions
Current Liabilities 11,153 28,599 21,135Provisions 2,226 2,223 4,900
Total Current Liabilities 13,379 30,822 26,035
Net Current Assets 19,230 16,088 22,379
Total Assets 62,575 72,340 67,369
Check: Assets = Liab + Equity ? - - (0)
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ROE (TTM) 19.51% 9.49% 32.04%
Book Value 137 136 161
Days Sales Outstanding(TTM) 86 82 67
Liquidity Ratio
Current Ratio 2.4 1.5 1.9
Capital Structure Ratio
Debt Equity Ratio(Times) 0.17 0.25 0.005
Debt to Total Funds(%) 15% 20% 0.45%
% of Revenues
Loans and Advances 14% 11% 16%
% of Cost of revenue
Current Liabilities 24% 41% 26%
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2010-11 E 2011-12 E 2012-13 E
3,951 3,951 3,951
- - -
79,912 97,649 121,554
83,863 101,601 125,505
- - -
- - -
- - -
83,863 101,601 125,505
56,040 60,912 66,033
(30,896) (36,402) (41,806)
25,143 24,510 24,227
2,466 2,466 2,466
27,609 26,975 26,692
1,543 1,543 1,543
12,725 12,725 12,725
2,136 2,136 2,136
28,589 29,600 31,112
23,002 40,603 63,641
18,177 18,820 19,781
69,768 89,024 114,534
25,016 25,901 27,224
4,900 4,900 4,900
29,916 30,801 32,124
39,852 58,222 82,410
83,863 101,601 125,506
(0) (0) (0)
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20.89% 18.17% 15.68%
202 246 305
78 78 78
2.3 2.9 3.6
0.000 0.000 0.000
0% 0% 0%
14% 14% 14%
30% 30% 30%
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Mindtree Ltd.Cash Flow Statement
(All Figs in Lacs)
2007-08 A 2008-09 A
Standalone Consolidated
Cash flows from operating activities:
Profit Before Tax 11,273 6,039
Adjustments:
Depreciation 3,493 5,696
Amortization of Stock Compensation 192 100
Interest Expense 589 1,620
Interest / dividend income (1,743) (870)
Loss /(profit) on sale of fixed assets (6) (189)
Profit on sales of investments (253) (58)
Exchange difference on derivatives - 15,229
13 (41)
Operating profit before working capital changes 13,560 27,525
Decrease/(Increase) in sundry debtors (5,501) (3,352)
Decrease/(Increase) in loans and advances (417) (21)
(Decrease)/Increase in current liabilities and provisions 3,270 (3,304)
Income taxes and FBT paid (1,848) (2,869)
Net cash provided by / (used in) operating activities 9,063 17,980
Cash flow from investing activities
Purchase of fixed assets (21,778) (4,346)
Proceeds on sale of fixed assets 75 651
Purchase of business/acquisition - (29,195)
Investment in subsidiaries - -
Interest /dividend received from investments 847 627
Inter-corporate advances granted - -
Purchase of investments (22,918) (80,764)
Sale/maturities of investments 28,770 90,792
Net cash Provided/ (used) in investing activities (15,003) (22,235)
Cash flow from financing activities
Issue of share capital (net of issue expenses paid) (1,193) 56
Receipt of share application money 5 0
Interest paid on loans (591) (1,586)
Proceeds from term loans 9,550 10,180
Repayment of term loans (1,277) (13,691)
Repayment of finance lease obligation (232) (382)
Proceeds/ (repayment) of short term loans, net (1,647) 8,583
Increase/(decrease) in bank overdraft - -
Effect of exchange differences on translation of foreign currency cashand cash equivalents
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Dividends paid (including distribution tax) (877) (904)
Net cash Provided/(used) by financing activities 3,739 2,256
(13) 41
Net increase/(decrease) in cash and cash equivalents (2,214) (1,958)
- -
Cash and cash equivalents at the beginning of the year 7,680 6,834
Cash and cash equivalents at the end of the year 5,465 4,876
Calculation of Free Cash Flow
Operating Cash Flow 9,063 17,980
Capital expenditure (21,778) (4,346)
Free Cash Flow (12,714) 13,634
Cash Flow RatiosOperating Cash Flow / Revenues 0.12 0.15
Free Cash Flow / Operating Cash Flow -140.28% 75.83%
Dividends paid (including distribution tax) % of Share Capital 23% 24%
Effect of exchange differences on translation of foreign currency cashand cash equivalents
Cash and cash equivalents of MindTree Wireless Pvt Ltd as onthe date of acquisition
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2009-10 A 2010-11 E 2011-12 E 2012-13 E
Consolidated
25,468 20,587 21,690 23,126
6,518 5,685 5,506 5,404
51 51 51 51
267 30 - -
(500) (1,051) (1,051) (1,051)
6 - - -
(110) - - -
(11,131) - - -
79 - - -
20,649 25,302 26,196 27,531
4,542 (4,890) (1,012) 1,511
6 2,506 (643) 961
2,181 3,881 885 1,323
(4,360) (3,069) (3,233) (3,447)
23,017 23,730 22,193 27,879
(4,573) (4,706) (4,872) (5,121)
50 - - -
(2,925) - - -
- - - -
500 1,051 1,051 1,051
(615) - - -
(104,479) - - -
101,997 - - -
(10,045) (3,655) (3,821) (4,070)
941 - - -
(0) - - -
(267) (30)
- - - -
(5,157) (305) - -
- - - -
(8,475) - - -
- - - -
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(458) (771) (771) (771)
(13,415) (1,106) (771) (771)
(79)
(522) 18,969 17,601 23,038
764 - - 0
3,791 4,033 23,002 40,603
4,033 23,002 40,603 63,641
23,017 23,730 22,193 27,879
(4,573) (4,706) (4,872) (5,121)
18,444 19,025 17,321 22,758
0.18 0.18 0.16 0.19
80.13% 80.17% 78.05% 81.63%
12% 20% 20% 20%
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Mindtree Ltd.Geographic Revenue Model
(All Figs in Lacs)
2007-08 A
Q1 Jun-08 Q2 Sep-08
Geographic Wise Revenues
USA 48,440 13,511 19,894
Europe 13,486 5,398 6,403India 4,210 1,031 1,664
APAC / Rest of the World 7,247 2,281 3,241
Total 73,383 22,221 31,202
Y/Y (%) Growth in Geographic Revenues
USA - 20% 63%
Europe - 102% 93%
India - 49% 73%
APAC / Rest of the World - 53% 88%
Total - 38% 71%
Q/Q (%) Growth in Geographic Revenues
USA - 3% 47%
Europe - 38% 19%
India - -20% 61%
APAC / Rest of the World - 9% 42%
Total - 9% 40%
Geographic Revenues as % of Total
USA 66% 61% 64%
Europe 18% 24% 21%
India 6% 5% 5%
APAC / Rest of the World 10% 10% 10%
Total 100% 100% 100%
4
Amount In Rs.
31,202 36,380
Q2 Sep-08 Q3 Dec-08
USA 19,894 24,097
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Europe 6,403 7,232
India 1,664 2,425.95
APAC/ ROW 3,241.7 2,625.76
Total 31,202 36,380
------------------------------------------------------------------------------------
3 % Wise Contribution to total Sales
Q2 Sep-08 Q3 Dec-08
USA 64% 66%
Europe 21% 20%
India 5% 7%
APAC/ ROW 10% 7%
Total 100% 100%
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Q3 Dec-08 Q4 Mar-09
2008-09 A
Q1 Jun-09 Q2 Sep-09 Q3 Dec-09
24,097 23,178 80,680 20,507 20,699 21,393
7,231 5,360 24,392 6,034 6,972 6,1052,426 2,697 7,818 1,983 1,456 2,121
2,626 2,571 10,719 1,953 2,371 3,566
36,380 33,806 123,747 30,477 31,498 33,185
103% 77% 67% 52% 4% -11%
102% 37% 81% 12% 9% -16%
92% 109% 86% 92% -12% -13%
36% 23% 48% -14% -27% 36%
95% 66% 69% 37% 1% -9%
21% -4% - -12% 4% -11%
13% -26% - 13% 9% -16%
46% 11% - -26% -12% -13%
-19% -2% - -24% -27% 36%
17% -7% - -10% 3% 5%
66% 69% 65% 67% 66% 64%
20% 16% 20% 20% 22% 18%
7% 8% 6% 7% 5% 6%
7% 8% 9% 6% 8% 11%
100% 100% 100% 100% 100% 100%
33,806
Q4 Mar-09
23,178
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5,360
2,697
2,571
33,806
------------------------
Q4 Mar-09
69%
16%
8%
8%
100%
100000
0
0
0
0
-
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Q4 Mar-10
2009-10 A 2010-11 E 2011-12 E 2012-13 E
21,610 84,209 88,027 92,121 96,514
6,441 25,552 27,180 28,918 30,6292,177 7,737 7,149 6,654 6,085
4,210 12,101 11,003 10,384 11,900
34,438 129,598 133,358 138,077 145,127
-7% 4% 5% 5% 5%
20% 5% 6% 6% 6%
-19% -1% -8% -7% -7%
64% 13% -9% -6% 15%
2% 5% 2.9% 4% 5%
-7% -
20% -
-19% -
64% -
4% -
63% 65% 66% 67% 67%
19% 20% 20% 21% 21%
6% 6% 5% 5% 4%
12% 9% 8% 8% 8%
100% 100% 100% 100% 100%
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Mindtree Ltd.Segment Wise Revenue(All Figs in Lacs)
2007-08 A 2008-09 A
Segment Revenue
R & D Services 16,087 21,934IT Services 57,297 79,247
AztecSoft Business - 22,566PE Services - -
Total 73,384 123,747
Other Income (Excluding Forex Gains/Losses)
Interest on deposits 612 145Profit on sale of investments 253 96
Profit from sale of assets, net 6 163Dividend from investments 1,132 350
Bad debts recovered - -Liabilities no longer required written back - -
Miscellaneous income 376 34Total 2,378 788
Minority interestShare of P&L in Associate - 232Minority interest - (410)
Total Minority Interest - (178)
Sales Growth Analysis - Y-Y
R & D Services - 36%
IT Services - 38%
Aztec Business - -
PE Services - -
Total Sales - 69%
Sales Growth Analysis - Q-Q
R & D Services - -
IT Services - -
Aztec Business - -
PE Services - -
Total Sales - -
Sales Weightage Analysis
R & D Services 22% 18%IT Services 78% 64%
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Aztec Business - 18%
PE Services - -Total 100% 100%
Other Income AnalysisInterest on deposits 612 145
Dividend from investments 1,132 350
As % of Closing Investment
Interest on deposits 3.70% 1.44%Dividend from investments 7% 3.45%
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2009-10 A 2010-11 E 2011-12 E 2012-13 E
-69,802
-59,796
129,598 - - -
143 274 274 274110 - - -
- - - -357 777 777 777
163 - - -143 - - -
46 - - -962 1,051 1,051 1,051
- - -- - -
- - - -
- -
-12%
- - - -
34% - - -
5%
- - - -
- - - -
- - - -
- - - -
- - - -
-54%
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-
46%100% 0% 0% 0%
143 274 274 274
357 777 777 777
1%3%
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Mindtree Ltd.Cost Analysis
(Rs. In Lakhs )
Cost Structure 2007-08 A 2008-09 A 2009-10 A
Cost of Revenues 46,778 69,658 79,825
Selling, General & Administrative expenses 13,875 20,105 24,978
Total Operating Expnese(excluding bad debts) 60,653 89,763 104,803
Provision for bad & doubtful debts 151 806 239
Total Operating Expnese 60,804 90,569 105,042
As % of Revenues
Cost of Revenues 64% 56% 62%
Selling, General & Administrative expenses 19% 16% 19%
Total Operating Expnese(excluding bad debts) 83% 73% 81%
Provision for bad & doubtful debts 0.21% 0.65% 0.18%
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2010-11 E 2011-12 E 2012-13 E
82,141 85,047 89,390
25,703 26,612 27,971
107,844 111,660 117,361
263 273 287
108,107 111,932 117,648
62% 62% 62%
19% 19% 19%
81% 81% 81%
0.20% 0.20% 0.20%
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Mindtree Ltd.Debt Schedule
(Rs. In Lakhs )
2007-08 A 2008-09 A 2009-10 A 2010-11 E
Debt Schedule
Secured Loans
From Banks
Term Loans 8,848 5,157 -
Other Loans - 8,600 -
Finance lease obligation 324 -
Total Secured Loans 9,172 13,757 - -
Unsecured Loans
Council for Scientific and Industrial Research - 180 305 305
Total Unsecured Loan - 180 305 305
Total 9,172 13,937 305 305
Interest Expense (Q Wise) 590 1,620 267 30
Interest Expense Rate (Q wise) 6.43% 11.62% 87.54% 9.89%
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2011-12 E 2012-13 E
-
-
-
- -
-
- -
-
- -
- -
- -
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Mindtree Ltd.
Fixed Asset & Depreciation Schedule
Fixed Assets
Gross Block
Net Block
Capital Work in Progress
Depreciation Schedule
Depreciation
Implied Depreciation Rate
Acquisition of Property and Equipment (Capex)
Capex as % Revenues
Notes
Projected Fixed Assets & Depreciation,
PY=Previous Year, CY=Current Year
1
2
3
4Depreciation = Assuming Company buys new fixed assfor new fixed assets(capex) purchased in C Y.
Less Accumulated Depreciation
Gross Block= PY Gross Block + New Capex
Accumulated Depreciation = PY Accumulated Dep.
Net Block= Gross Block - Accumulated Depreciation
CY Depreciation = Half Dep of New Capex + Full Dep
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2007-08 A 2008-09 A 2009-10 A 2010-11 E 2011-12 E 2012-13 E
34,744 49,409 51,334 56,040 60,912 66,033
(11,176) (21,096) (25,212) (30,896) (36,402) (41,806)
23,568 28,313 26,122 25,143 24,510 24,227
2,329 1,304 2,466 2,466 2,466 2,466
25,897 29,616 28,587 27,609 26,975 26,692
2007-08 A 2008-09 A 2009-10 A 2010-11 E 2011-12 E 2012-13 E
3,493 5,696 6,518 5,685 5,506 5,404
15% 20% 25% 20% 20% 20%
21,778 4,346 4,573 4,706 4,872 5,121
30% 4% 4% 4% 4% 4%
t half-way through the year, so I have taken only half year depreciation
CY Dep
eciation from Net Block Of PY
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Mindtree Ltd.DCF Valuation
(All Figs in Lacs)
Growth Assumptions Enterpsire Value (EV)
Long term IT Industry growth rate 15%
Current Market Price
Diluted Shares
CAPM Assumptions Market Capitalisation
Ke 16.28% Long Term Liabilities
RFR 7.0% Less: Cash & Cash Equivalents
Beta 1.16 Enterprise Value (in lacks)
Rp 8%
Calculation of Free Cash Flow
Explicit Forecast Period
2009-10A 2010-11 E 2011-12 E 2012-13 E
Revenues 129,598 133,358 138,077 145,127
EBITDA 24,556 25,251 26,145 27,480
EBIT 18,038 19,567 20,639 22,075
Tax Expense (3,796) (3,069) (3,233) (3,447)
Net Operating Profit After Tax 14,242 16,498 17,406 18,628
Depreciation & Amortisation 6,518 5,685 5,506 5,404
Working Capital Change 6,729 1,497 (770) 3,795
Operating Cash Flow 14,031 20,686 23,681 20,237
Capex (4,573) (4,706) (4,872) (5,121)
FCF 9,458 15,980 18,809 15,116
Diluted Shares 407 407 407 407
Projection Year 1 2 3
Discount Factor 0.86 0.74 0.64
Present Value of FCF 13,744 13,913 9,617
Y/Y Growth Analysis
Revenues 3% 4% 5%
EBITDA 3% 4% 5%
EBIT 8% 5% 7%
Depreciation & Amortisation -13% -3% -2%
Margin Analysis (As % of Revenues)
EBITDA Margin 19% 19% 19% 19%
EBIT Margin 14% 15% 15% 15%
Depreciation & Amortisation 5% 4% 4% 4%
Capex 4% 4% 4% 4%
Tax Rate (Tax Expense/EBIT) -21% -16% -16% -16%
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Terminal Value Equity Value
Sum of PV of FCF for explicit forecast 73,686 Enterprise Value
WACC 16.27% - Debt
Long term growth in Revenues 5% + Cash
Present Value of terminal value 105,602 Net Debt
Terminal Value as % of Total Value 59% Equity Value
Sensitivity - Varying Terminal Growth Rate
PV of Terminal V
WACC PV of FCF 105,602 2% 3%
10.0% 104,473 10.0% 92,943 99,770
11.0% 100,717 11.0% 76,846 81,885
16.3% 83,921 12.2% 62,204 65,827
13.0% 93,788 13.0% 54,504 57,463
14.0% 90,590 14.0% 46,562 48,895
Sensitivity - EV/EBITDA Exit Multiple
PV of Terminal Value (E
WACC PV of FCF 5.0 5.5
10.0% 104,473 170,046 187,050
11.0% 100,717 169,424 186,366
16.3% 83,921 166,273 182,901
13.0% 93,788 168,204 185,024
14.0% 90,590 167,605 184,365
Recommendation
Mindtree is likely to clock EPS of 45.35 in FY2012 E. By assigning average PE pf IT Industry.i.e.12, we rec
Target Price 544
Industry Avg Pe 12
Forward EPS FY 2012 E 45.35
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Debt Equity Weightage
E/(D+E) @ Enterprise Value 99.85%
513 D/(D+E) @ Enterprise Value 0.15%
407
208,669 Interest Rate (%) 12%
305 Tax Rate (@) 15%
4,033
204,942 WACC Calculation
WACC 16.27%
First Stage of Valuation Second Stage Valuation
2014E 2015E 2016E Terminal Year
155,286 166,156 177,787 186,677
29,403 31,461 33,664 35,347
23,621 25,274 27,043 28,395
(3,688) (3,947) (4,223) (4,434)
27,309 29,221 31,266 32,829
5,782 6,187 6,620 6,951
3,795 3,795 3,795 3,795
29,297 31,613 34,091 35,986
(5,480) (5,863) (6,274) (6,587)
23,817 25,750 27,818 29,398
407 407 407 407
4 5 6
0.55 0.47 0.40
13,033 12,119 11,260 -
7% 7% 7% 5%
7% 7% 7% 5%
7% 7% 7% 5%
7% 7% 7% 5%
19% 19% 19% 19%
15% 15% 15% 15%
4% 4% 4% 4%
4% 4% 4% 4%
-16% -16% -16% -16%
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Intrinsic Value
179,288 Equity Value 183,015
(305) Diluted Shares 407
4,033
3,727 Intrinsic Value 450
183,015
lue Intrinsic Value
3% 2% 3% 3%
107,573 494 511 530
87,553 445 458 472
69,843 368 377 387
60,718 374 381 389
51,441 346 352 358
V/EBITDA) Intrinsic Value
6.0 5 5.5 6
204,055 684 725 767
203,309 673 715 756
199,528 624 665 706
201,844 653 694 736
201,126 644 685 726
ommend a hold position with target price of Rs.544/- in
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I was unable to get current beta of company , hence I calculated beta using bo
Input In Blue
Month Stock R Market R
1 3 0.95 4
2 2 12 3
3 -5 1 -4
4 -4 1 -25 0 4 1
6 -4 -3 -3
7 -2 0 -1
8 11 7 12
9 -9 0 -810 -16 -6 -15
11 7 3 9
12 8 6 9
n 12 -1.02 2.6
Formula Stk R - Stk R
Formula (Mkt R
MindtreeDate Close Return Date
01-Oct-10 525 2.54% 01-Oct-10
01-Sep-10 512 1.75% 01-Sep-10
02-Aug-10 503 -5.35% 02-Aug-10
01-Jul-10 531 -3.50% 01-Jul-10
01-Jun-10 551 0.00% 01-Jun-10
03-May-10 551 -4.24% 03-May-10
01-Apr-10 575 -2.33% 01-Apr-1002-Mar-10 589 10.58% 02-Mar-10
01-Feb-10 533 -8.73% 01-Feb-10
04-Jan-10 583 -16.10% 04-Jan-10
01-Dec-09 695 7.48% 01-Dec-09
Bet
Stk R - StkR
Stk R Mkt R
Covsm
2 m
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03-Nov-09 647 7.67% 03-Nov-09
22-Oct-09 601 0.54% 22-Oct-09
22-Sep-09 598 #DIV/0! 22-Sep-09
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ok method
1.16
-2 -6 3
9 26 88
-2 7 3
-2 4 31 1 2
-6 18 31
-3 3 7
4 51 19
-3 20 7-9 130 74
0 3 0
3 30 12
288 248
x Mkt R - Mkt R 288 26
-1 11
- Mkt R)2 248 23
-1 11
Sensex
20,261 0.95%
20,069 12%
17,971 1%
17,868 1%
17,701 4%
16,945 -3%
17,559 0%17,528 7%
16,430 0%
16,358 -6%
17,465 3%
or Covsm 2 m
Mkt R - MktR Stk R - StkR x Mkt R - MktR (Mkt R - MktR)2
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16,926 6%
15,896 -6%
16,886 #DIV/0!
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Profit & Loss A/c1) Figures for FY 2007-08 are standalone including Audited Balance She
2) For Q1 of 2008-09, I have taken standalone results, and from Q2 all fi
3) I have adjusted Share Count(Basic & Diluted) wherever necessary to
Balance Sheet(BS)
4) 2007-08 figures are standalone, as I have taken standalone figures i5) For 2008-09 Figs. For 3M,6M,9M and 12M I have taken standalone fig
Audited BS is Consolidated.
6) 2009-10 BS is Consolidated
Cash Flow Statement(CFS)
7) I have prepared CFS on yearly basis for simplicity, as I was getting er
Geographic Revenue
8)
as Compnay did not reported consolidated figs. Geographic wise in R
by the Company. I took the Consolidated figs. From the fact sheet of
Segment Revenue9) Upto Q1 of 2008-09, all figs. are standalone, after that all figs. are co
From FY 09-10, Segment R & D Services and AztecSoft Business is gr
Hence, while calculating YoY & QoQ growth in % for 2009-10, I have
Projection Assumptions
11) Share Capital = is projected on as it is/straight line basisDebt = Assumed that it will be paid in 2010-11, hence not shown in
Fixed Asset = Detailed working is in Fixed Asset SheetGoodwill, Investments & Tax Assets = straight line basis
Sundry Debtors = is calculated by ; Avg. Days Sales O/s * (Projected
Cash = linked from Cash Flow St.
Loans & Advances = is calculated by ; Avg % of Loans to Revenues *
Current Liabilities = is calculated by ; Avg % of CL to Cost of Revenu
Provisions = straight line basis
I have done some small calculation, for converting USD* wise Geogra
to that respective quarters.(calculation is below the Geographic reve
* Despite taking exchange rates for calculation, I was not getting the
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2009-10 Annual Report Excerpts
1 As per NASSCOM, Indian IT exports is estimat
2 EBITDA margins on our services business is li
3 effective tax rate based on current taxes is ab
compared to about 11% in the previous year.
4 NiW form part of PE Services
5 Our NIW, business is developing a ready to br
6 On our services business, based on current tr
than industry growth estimates of 13-15%
7 pg 51 for report
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d to grow by 5.5% in FY2010
ely to be stable.
out 15.6% as
nd 3G smart phone and IP in the area of cellular infrastructure. We expect to launc
nds, we expect that we will attain growth rates higher
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ver
were not provided
eported Revenues
09,
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these products to the market in Q3/Q4 of 2010-11. Since this is a new initiative
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, the financial performance of the NIW business would depend onthe success of t
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he products when they are launched.If these initiatives are successful, they will
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reatly enhance our revenues and profitability