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ONGC Business Valuation

Profit and Loss Account


(Rs in millions)
Income
Net Sales
EBDITA
Depreciation
EBIT
Interest
PBT
Tax
PAT
NOPAT
Balance Sheet
Fixed Assets

2007

2008

2009

2010

2011

608526.31
351131.74
98196.21
252935.53
589.62
252345.91
85329.44
167016.47
167606.09
2007
136642.13

647390.06
351132.84
98196.21
252936.63
589.62
252347.01
85330.54
167016.47
167606.09
2008
175924.76

688145.01
360538
119541.97
240996.03
1189.17
239806.86
78544.17
161262.69
162451.86
2009
221108.3

641729.63
396414.54
146431.88
249982.66
144.23
249838.43
82162.87
167675.56
167819.79
2010
258898.56

717457.67
435697.3
159256.53
276440.77
251.07
276189.7
86949.68
189240.02
189491.09
2011
326711.14

Net Producing Property


Exploratory Well
Investments
Advances for Investment
Current Assets
Accrued Interest
Inventories
Sundry Debtors
Cash Balance
Other Current Assets
Loans and Advances
Sub-Total
Current Liabilities
Net Current Assets
Misc Expdt

295684.67 301873.62 361579.94 402822.12 435756.57


34005.98
38927.99
50687.37 55496.83 77472.12
57020.51 58994.98 50903.21 57720.33 53328.38

Total Assets

835557.36

Share Capital
Reserves and Surplus
Net Worth
Borrowings
Def Tax Liability
Total

7268.63
30337.58
27594.4
192807.94
0.35
185945.25
443954.15
136890.72
307063.43
5140.64

13254.8
34806.37
43603.66
224176.55
182467.09
22.93
498331.4
176082.67
322248.73
6739.02

40606.71
40838.04
190962.12
13548.86
260043.83
545999.56
211050.98
334948.58
6506.1

46785.72
30586.37
182310.35
6333.05
271697.74
537713.23
194999.65
342713.58
8413.16

41189.84
38458.98
224465.52
8755.18
273566.54
586436.06
237473.72
348962.34
7960.25

904709.1 1025733.5 1126064.6 1250190.8


42777.59
932266.72
975044.31
99503.94
175642.55
1250191

Est.
1st Year

Time 0

Business Income

5th Year

Net Revenues
EBIT
Tax
NOPAT
Add:Depn
Less Cha. in WC
Less :Cap. Exp.
Less:Cha. In
Other Assets
Free Cash Flows
WACC
Disc Factor
Present Values

Est.
Est.
2nd Year 3rd Year

Est.
4th Year

717457.67 782028.86 852411.46 929128.49 1012750.1


276440.77

301472.13

328604.62

358179.03

390415.15

86949.68

96471.08

105153.48

114617.29

124932.85

189491.09

218968.08

238675.21

260155.98

283570.01

159256.53

5818.29

6341.94

6912.72

7534.86

6248.00

7820.29

8524.11

9291.28

10127.50

100474.00

70382.60

76717.03

83621.56

91147.50

242025.62

146583.49

159776.00

174155.84

189829.87

0.1453 1.14534078

1.31

1.50

1.72

0.87310259

0.8731

0.7623

0.6656

0.5811

211313.19

127982.42

121798.55

115913.46

110312.73

ONGC Basic Data


Market Capitalization

Rs in Crs

233137.11
Calculating Enterprise Value

Book Value

Rs

113.97
Market Value of Equity

EPS

26.43
Add:Net Debt

Price to Book Value

2.39
Total

Face Value

5
EBDITA Muliples

Industry PE

12.22

EBIT Multiples
Dividend Yield(%)

Divident Yield

6.42

Dividend(%)

350

Market Price pershare(Rs)

280

Debt /Total Capital


Debt to Market Capital

Total No of Shares

8555.518

P/E Multiples

Part III

Valuation Calculations

Average
4.2028 660649.736
60.7279 378982.884
12.8498

124324.56

2.2464 254658.324
-19.2197

552.742

2.2828 254105.582
0.4714

83663.34

PV of Cash Flows
PV of Terminal Value
Add:Cash and M Securities
Total Value of the Firm
Value of Debt
Value of Equity
Shares Out standing in no
in of
Nomillions
of Crores
Intrinsic Share Price

3.1724 170442.242
3.1157 170994.984

Part I-Cost of Capital Inputs


Assumptions
Growth Rate of Revenue
Growth Rate in Term Value
Growth in Years
EBIT as % of Revenue
Tax as % of EBIT
NOPAT as % of Revenue
Depn as % of Revenue
WC as percentage of Sales
Capital Expdt of Sales
WACC

Part II
Terminal Value
FCF
3008618.7
Discount Rate
5.00
Present Value
601723.73

Actual/
Average
Assumed
4.20
0.09
0.03
11.00
0.39
0.39
0.33
0.32
0.26
0.28
0.19
0.01
0.01
0.01
0.15
0.09
0.14534

0.15

NetWorth
Borrowings
Def Tax Liability
Tax Rate
Cost of Equity
Cost of Debt(before tax)
Cost of Debt(after tax)
Capital Structure(%) Equity
Capital Structure (% )Equity
Base WACC

Est.
5th Year

Est.
6th Year

Est.
7th Year

Est.
8th Year

Est.
9th Year

1103897.6 1203248.3 1311540.7 1429579.4 1558241.5

Est.
10th Year

Est.
11th Year
Terminal
1698483.226 1851346.7

425552.51

463852.23

505598.94

551102.84

600702.10

654765.28

713694.16

136176.80

148432.71

161791.66

176352.91

192224.67

209524.89

228382.13

309091.32

336909.53

367231.39

400282.22

436307.62

475575.30

518377.08

8213.00

8952.17

9757.86

10636.07

11593.32

12636.72

13774.02

11038.98

12032.48

13115.41

14295.79

15582.41

16984.83

18513.47

99350.78

108292.35

118038.66

128662.14

140241.73

152863.49

166621.20

206914.56

225536.87

245835.19

267960.35

292076.79

318363.70

347016.43

1.97

2.26

2.59

2.96

3.39

3.88

4.45

0.5074

0.4430

0.3868

0.3377

0.2948

0.2574

0.2248

104982.62

99910.05

95082.58

90488.37

86116.13

81955.16

676215.58

Rs in Crores

Break up of Net Debt


Total Debt

2395545.04

less:Cash & Equivalent

Rs in Crores
99503.94
224465.52

add:Prefernce Shares
-124961.58

Add:Non Controlling Interest

2270583.46

Net Debt

5.21
8.21
0.059
0.080
0.044
10.59

-124961.58

Rs in Crs
Total Share Capital(Rs in Crs)
ONGC shares Rs 5 each

1034542.1 No of Shares
676216
277793.9
1988552
22755
1965797
8555.518
229.77

8555.518
-98.96751

Part I-Cost of Capital Inputs

Def Tax Liability

Cost of Equity
Cost of Debt(before tax)
Cost of Debt(after tax)
Capital Structure(%) Equity
Capital Structure (% )Equity
Debt

Base WACC

42777.59

Computation of WACC
Tax Rate

975044.3
99503.94
175642.6
0.3285
0.16
0.002523
0.001694
0.907399
0.092601
0.14534

Equity
Debt
Total

975044.31 0.9073993
99503.94 0.0926007
1074548.3

0.3285

Cost

Total Cost
0.16

0.1451839

0.0016943

0.0001569
0.1453408