Assumptions

1.USL is expected to grow at a very good rate but slowdown in economy coupled with entry of foreign players who are active
prompts us to gradually reduce growth by .5% every year. Terminal growth rate is assumed to be 4%
2. COGS is assumed to be a constant proportion of net sales value
3. Depreciation and capital expenditure as a % of sales have assumed to be constant throughout
4. Operating expenses are assumed to decrease by .2% per annum due to realization of cost synergies with time

5. Diageo has assumed a discount rate of 12% for calculating firm value but we believe that it should be somewhere around 9
Since its a market leader and its ratios and fundamentals are good,this discount rate is further justified.
Excel Representation
We have considered 2 separate cases for valuation depending upon discount rate chosen by diaego and our assumption

oreign players who are actively seeking indian market,

e 4%

nergies with time

hould be somewhere around 9.85%-10% based on rating of A2+ and comparables.

ustified.

ego and our assumption

* in Rs millions
Revenue from Operations
Less: Excise Duty
Other Operating Income
Other Income
Net Sales
Expenses
Cost of Materials Consumed
Purchase of Traded Goods
Change in inventories of Finished Goods,Work-in-Progress and Stock-in-trade
Employee Benefits expense
Finance Costs
Depreciation and Amortisation Expense
Other expenses
Profit before Exceptional items and Taxation
Exceptional items
Profit before Taxation
Tax Expense:
Current Tax
Deferred Tax Charge / (Credit)
Profit for the year
Basic / Diluted Earnings Per Share (Face value of Rs.10 each)

2013
188,762.27
103,665.50
85,096.77
754.234
1,248.15
87,099.15
42,578.62
7,251.09
1,704.76
4,764.45
6,561.72
718.268
18,463.78
82,042.70
5,056.45
-216.481
4,839.97
1,671.00
-38.992
3,207.96
24.53

2012
160,464.33
85,037.59
75,426.74
379.066
1,827.59
77,633.40
38,261.48
8,592.73
-1,798.21
4,210.08
5,943.45
608.453
16,668.36
72,486.35
5,147.06
-108.163
5,038.89
1,695.00
-84.049
3,427.94
26.21

* in Rs millions
2013

Rs. Million
2012

1,307.95
62,611.66

1,307.95
57,476.92

9,986.31
620.733
376.258

13,991.88
200.184
388.033

Equity and Liabilities

Shareholders' Funds
Share Capital
Reserves and Surplus
Non-current Liabilities
Long term borrowings
Other Long-term liabilities
Long term provisions
Current Liabilities
Short-term borrowings
Trade Payables
Other Current Liabilities
Short-term provisions

23,572.40 20,456.49
16,156.42 13,899.10
15,150.23 12,584.54
734.58
712.148
130,516.54 121,017.25

Assets
Non-current Assets
Fixed Assets
Tangible Assets
Intangible Assets
Capital Work in Progress
Non Current Investments
Deferred Tax Assets (net)
Long term Loans and advances
Other Non Current Assets

11,557.54
17.056
341.974
16,004.63
325.777
61,998.31
380.119

11,237.14
21.152
567.179
16,104.44
286.785
53,765.56
198.002

Current Assets
Current Investments
Inventories
Trade Receivables
Cash and Bank balance
Short term Loans and Advances
Other Current Assets

17.351
188.776
13,214.59 14,522.36
17,686.91 12,828.00
1,456.06
2,639.00
7,514.88
8,657.51
1.347
1.346
130,516.54 121,017.25

* in Rs millions
Apr-13
59.99%
21.20%
1.08%
0.82%

Apr-14
13.00%
59.99%
21.00%
1.08%
0.82%

Apr-15
12.50%
59.99%
20.80%
1.08%
0.82%

Apr-16
12.00%
59.99%
20.60%
1.08%
0.82%

Net Sales
Total cost of revenues
Gross Profit
Other Operating expense
Operating Profit/(Loss)
Finance Costs/Employee Benefit Expense
Tax @34%
Net Income
Capex
Depreciation
Changes in NWC

87,099.15
52,252.75
34846.402
18,463.78
16,382.62
11,326.17
1719.19266
3,337.26
941.463
718.268
1293.818

98422.037
59045.60
39376.434
20667.232
18,709.20
12458.786
2125.1416
4,125.27
1063.8532
811.64284
1462.0143

110724.79
66426.30
44298.489
23029.186
21,269.30
13642.371
2593.1568
5,033.77
1196.8348
913.0982
1644.7661

124011.77
74397.46
49614.307
25544.665
24,069.64
14870.184
3127.8158
6,071.64
1340.455
1022.67
1842.1381

Free Cash Flow

Terminal Value

9295.51488 10633.849 12109.237 13726.041

Revenue Growth
Cost of revenues
Other Operating expense
Capex
Depreciation

Discount rate
NPV
Value of Debt
No of shares(millions)
Price/Share

12.00%
Rs. 202,192.88
61,998.31
130.78
1,072.01

Apr-17
11.50%
59.99%
20.40%
1.08%
0.82%

Apr-18
11.00%
59.99%
20.20%
1.08%
0.82%

Apr-19
10.50%
59.99%
20.00%
1.08%
0.82%

Apr-20
10.00%
59.99%
19.80%
1.08%
0.82%

Apr-21
9.50%
59.99%
19.60%
1.08%
0.82%

Apr-22
9.00%
59.99%
19.40%
1.08%
0.82%

Apr-23
8.50%
59.99%
19.20%
1.08%
0.82%

Apr-24
8.00%
59.99%
19.00%
1.08%
0.82%

138273.1201
82953.17
55319.95249
28205.7553
27,114.20
16134.14954
3733.216201
7,246.83
1494.607347
1140.277026
2053.983946

153483.16
92078.02
61405.147
31001.422
30,403.73
17424.882
4412.8069
8,566.04
1659.0142
1265.7075
2279.9222

169598.9
101746.21
67852.688
33917.374
33,935.31
18731.748
5169.2126
10,034.35
1833.2106
1398.6068
2519.314

186558.79
111920.83
74637.957
36935.993
37,701.96
20042.97
6004.0577
11,654.94
2016.5317
1538.4675
2771.2454

204281.87
122553.31
81728.562
40036.349
41,692.21
21345.763
6917.7931
13,428.66
2208.1022
1684.6219
3034.5137

222667.24
133583.10
89084.133
43194.286
45,889.85
22626.509
7909.535
15,353.80
2406.8314
1836.2378
3307.62

241593.95
144937.67
96656.284
46382.612
50,273.67
23870.967
8976.9198
17,425.79
2611.4121
1992.3181
3588.7677

260921.47
156532.68
104388.79
49571.378
54,817.41
25064.515
10115.984
19,636.91
2820.3251
2151.7035
3875.8691

15487.05588

17393.23 19443.389 21633.986 23958.867 26409.086 28972.762 31634.999

387063.52

* in Rs millions
Apr-13
59.99%
21.20%
1.08%
0.82%

Apr-14
13.00%
59.99%
21.00%
1.08%
0.82%

Apr-15
12.50%
59.99%
20.80%
1.08%
0.82%

Apr-16
12.00%
59.99%
20.60%
1.08%
0.82%

Net Sales
Total cost of revenues
Gross Profit
Other Operating expense
Operating Profit/(Loss)
Finance Costs/Employee Benefit Expense
Tax @34%
Net Income
Capex
Depreciation
Changes in NWC

87,099.15
52,252.75
34846.402
18,463.78
16,382.62
11,326.17
1719.19266
3,337.26
941.463
718.268
1293.818

98422.037
59045.60
39376.434
20667.232
18,709.20
12458.786
2125.1416
4,125.27
1063.8532
811.64284
1462.0143

110724.79
66426.30
44298.489
23029.186
21,269.30
13642.371
2593.1568
5,033.77
1196.8348
913.0982
1644.7661

124011.77
74397.46
49614.307
25544.665
24,069.64
14870.184
3127.8158
6,071.64
1340.455
1022.67
1842.1381

Free Cash Flow

Terminal Value

9295.51488 10633.849 12109.237 13726.041

Revenue Growth
Cost of revenues
Other Operating expense
Capex
Depreciation

Discount rate
NPV
Value of Debt
No of shares(millions)
Price/Share

9.85%
Rs. 242,222.53
61,998.31
130.78
1,378.10

Apr-17
11.50%
59.99%
20.40%
1.08%
0.82%

Apr-18
11.00%
59.99%
20.20%
1.08%
0.82%

Apr-19
10.50%
59.99%
20.00%
1.08%
0.82%

Apr-20
10.00%
59.99%
19.80%
1.08%
0.82%

Apr-21
9.50%
59.99%
19.60%
1.08%
0.82%

Apr-22
9.00%
59.99%
19.40%
1.08%
0.82%

Apr-23
8.50%
59.99%
19.20%
1.08%
0.82%

Apr-24
8.00%
59.99%
19.00%
1.08%
0.82%

138273.1201
82953.17
55319.95249
28205.7553
27,114.20
16134.14954
3733.216201
7,246.83
1494.607347
1140.277026
2053.983946

153483.16
92078.02
61405.147
31001.422
30,403.73
17424.882
4412.8069
8,566.04
1659.0142
1265.7075
2279.9222

169598.9
101746.21
67852.688
33917.374
33,935.31
18731.748
5169.2126
10,034.35
1833.2106
1398.6068
2519.314

186558.79
111920.83
74637.957
36935.993
37,701.96
20042.97
6004.0577
11,654.94
2016.5317
1538.4675
2771.2454

204281.87
122553.31
81728.562
40036.349
41,692.21
21345.763
6917.7931
13,428.66
2208.1022
1684.6219
3034.5137

222667.24
133583.10
89084.133
43194.286
45,889.85
22626.509
7909.535
15,353.80
2406.8314
1836.2378
3307.62

241593.95
144937.67
96656.284
46382.612
50,273.67
23870.967
8976.9198
17,425.79
2611.4121
1992.3181
3588.7677

260921.47
156532.68
104388.79
49571.378
54,817.41
25064.515
10115.984
19,636.91
2820.3251
2151.7035
3875.8691

15487.05588

17393.23 19443.389 21633.986 23958.867 26409.086 28972.762 31634.999

387063.52