Reference Model

Mindtree
Prepared By: Neerav Koli, Distance Learning , Mumbai

http://proschoolonline.com
Email ID : mumbai@proschoolonline.com
Mumbai
IMS Proschool Pvt Ltd,
Maharashtra High School Complex,
Principal N.M Kale Marg, Off Gokhale Rd,
Dadar (W), Mumbai 400028
Tel. No. : 022-65285393/94
+91 9372895050

Directions

Mindtree is one of the young IT company of the country which has seen commendable success within a few span of time. A fina
of such a company is in great demand in the investment market. This gave us the opportunity to guide our student to come out w
financial model on the company. These exercises help the student at IMS Proschool to hone their financial modeling skills.
This model is being developed by a financial modeling student at IMS Proschool. This is provided as reference model and is for
purpose only. Keeping in view the 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 candidates for entry level jobs in th
sector which require financial analysis and modeling skills. The program aims to impart the necessary skills required to perform
Financial Research Analyst. The program equips students with the practical skill sets required to perform financial analysis, mod
valuation through Excel.
For more details, please contact the address furnished below. You can also email us at the below mentioned email-id.

IMS Proschool Pvt Ltd,

Maharashtra High School Complex,
Principal N.M Kale Marg, Off Gokhale
Dadar (W), Mumbai 400028
Tel. No. : 022-65285393/94
+91 9372895050

Email ID : mumbai@proschoolonl

ss within a few span of time. A financial model

to guide our student to come out with a
heir financial modeling skills.

ded as reference model and is for information

s of the model are kept intact.

candidates for entry level jobs in the finance

ecessary skills required to perform the role of a
d to perform financial analysis, modeling and

elow mentioned email-id.

IMS Proschool Pvt Ltd,

Maharashtra High School Complex,
Principal N.M Kale Marg, Off Gokhale Rd,
Dadar (W), Mumbai 400028
Tel. No. : 022-65285393/94
+91 9372895050

Email ID : mumbai@proschoolonline.com

Mindtree Ltd.
Click on the name of Tab to go to the relevant sheet

No.

Name of Tab

Company Overview

Summary

Profit & Loss A/c

Balance Sheet

Cash Flow Statement

Geographic Revenue

Segment-wise Revenue

Cost Analysis

Debt Schedule

10

Fixed Asset

11

Valuation

12

Beta Calculation

13

Notes

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

Mindtree Ltd.
Company Overview
(Rs. In Lacs, except per share data)
Company Information
Industry
Sector
Country
BSE/NSE Code
Market Index
Year end
Reporting currency

Company Description
Mindtree Ltd. Limited , formerly is an international information
development. It operates in two units: production engineering (P
engineering (SPE). SPE provides full life cycle product engineering,
production support for customers in manufacturing, financial servi
supply chain management, enterprise resource planning (ERP) and m
Products & Services
Internet & Enabling Technologies, Data Warehousing /Business I
Application Maintenance

IT Consulting & Software

Software-Medium
India
532819/MINDTREE
BSE - 500
31-Mar
Rs.

Stock Data
Price as on 22nd Oct 2010
52 Week High
52 Week Low
YTD Change
YTD Change %
Shares Outstanding
Market Capitalization(Lacs)
Beta Vs Sensex

Per Share Data & Key Ratios

512.7
729.9
491
-84.95
-14.7%
407
208,669
1.16

EPS diluted
Gross Profit
EBITDA/sales (%)
Net income/sales (%)
ROE (TTM)
EV/Sales
EV/EBITDA
P/E
P/Sales
P/BV

Geo revenue breakup for 2010

USA
Europe
India
APAC / Rest of the World
Total

84,209
25,552
7,737
12,101
129,598

20%
6%
9%

65%

USA

Europe

India

APAC / Rest of the World

Revenue Forecast

200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
-

% y/y Growth
Total Revenue

2010

2011

2012

2013

2014

2015E

2016E

2017E

Revenue Data
Total Revenue
% y/y Growth

2010
129,598

2011
133,358
3%

2012
138,077
4%

2013
145,127
5%

2014
155,286
7%

2015E
166,156
7%

ormerly is an international information technology (IT) consulting and implementation company. It delivers business solutions through global software
in two units: production engineering (PE) services and IT services. PE services include research and development (R&D) services and software product
ovides full life cycle product engineering, professional services and sustained engineering services. IT Services offer consulting and implementation and post
ustomers in manufacturing, financial services, travel and leisure and other industries, in the areas of e-business, data warehousing and business intelligence,
t, enterprise resource planning (ERP) and maintenance and re-engineering of legacy mainframe applications.

hnologies, Data Warehousing /Business Intelligence, Supply Chain Management, ERP, Product Engineering, Product Assurance & Testing, Web Services.

% y/y Growth

Total Revenue

2009-10 A
52.79
38%
19%
17%
32%
1.58
16
9.71
1.61
3.18

2010-11 E
43.04
38%
19%
13%
21%
1.5
8
11.9
1.6
2.5

2011-12 E

2012-13 E

45.35
38%
19%
13%
18%
1.5
8
11.3
1.4
2.1

48.35
38%
19%
14%
16%
1.4
7
10.6
1.4
1.7

Segment Revenue Breakup for 2010

IT Services
PE Services
Total

69,802
59,796
129,598

46%

54%
IT Services

PE Services

2016E
177,787
7%

2017E
186,677
5%

Financial Summary Of Mindtree

2007-08A

2008-09A

2009-1A

2010-11E

73,384
26,606
12,580
11,273
10,419

123,747
54,069
33,095
6,039
5,231

129,598
49,773
24,556
25,467
21,484

133,358
51,217
25,251
20,587
17,519

Cash Flow
Cash Flow from operations
Cash Flow from investing
Cash Flow from financing

9,063
(15,003)
3,739

17,980
(22,235)
2,256

23,017
(10,045)
(13,415)

23,730
(3,655)
(1,106)

Net Cash Flow

Capex
Free Cash Flow to Firm

(2,214)
(21,778)
(12,714)

(1,958)
(4,346)
13,634

(522)
(4,573)
18,444

18,969
(4,706)
19,025

3,792
5
49,605
9,172
62,575

3,800
0.03
51,328
17,213
72,340

3,951
63,112
305
67,369

3,951
79,912
83,863

25,897
16,549
898
19,230
62,575

29,616
14,605
10,133
1,897
16,088
72,340

28,587
1,543
12,725
2,136
22,379
67,369

27,609
1,543
12,725
2,136
39,852
83,863

P&L
Revenue
Gross Profit
EBITDA
PBT
PAT

Balance Sheet
Share Capital
Share Application Money
Reserves & Surplus
Total Debt

Net Fixed Assets

Goodwill
Investments
Deferred tax assets, net
Net Current Assets

Margins
Gross Profit
EBITDA
EBIT
PBT
Net Profit

Per share Data

EPS - Basic
EPS - Diluted

36%
17%
12%
15%
14%

27.69
26.75

44%
27%
22%
5%
4%

13.84
13.70

38%
19%
14%
20%
17%

54.77
52.79

38%
19%
15%
15%
13%

44.66
43.04

Book Value

137

136

161

202

ree
2011-12E

2012-13E

138,077
53,029
26,145
21,690
18,457

145,127
55,737
27,480
23,126
19,679

22,193
(3,821)
(771)

27,879
(4,070)
(771)

17,601
(4,872)
17,321

23,038
(5,121)
22,758

3,951
97,649
101,601

3,951
121,554
125,505

26,975
1,543
12,725
2,136
58,222
101,601

26,692
1,543
12,725
2,136
82,410
125,506

38%
19%
15%
16%
13%

47.05
45.35

38%
19%
15%
16%
14%

50.17
48.35

246

305

Mindtree Ltd.
Profit & Loss Account
(Rs. In Lacs, except per share data)

Revenues
Cost of Revenues
Gross Profit
Selling, General & Administrative expenses
Provision for bad & doubtful debts
Operating profit before interest and depreciation
Interest including finance charges
Depreciation
Operating Profit
Foreign exchange gain/(loss)
Other Income
Profit Before Tax
Provision for taxation including FBT
Deferred tax (charge)/credit
MAT Credit Entitlement/(reverse)
Share of profits of associates
Minority interest
Net profit after tax

EPS Basic
EPS Diluted
Weighted average number of shares
Basic
Diluted

Growth Analysis - Y/Y

Revenues
EBITDA
Operating Profit
Net Profit

Audited
2007-08 A

Audited
2008-09 A

Audited
2009-10 A

2010-11 E

2011-12 E

73,384
(46,778)

123,747
(69,678)

129,598
(79,825)

133,358
(82,141)

138,077
(85,047)

26,606

54,069

49,773

51,217

53,029

(13,875)
(151)

(20,168)
(806)

(24,978)
(239)

(25,703)
(263)

(26,612)
(273)

12,580

33,095

24,556

25,251

26,145

(590)
(3,493)

(1,620)
(5,696)

(267)
(6,518)

(30)
(5,685)

(5,506)

8,497

25,779

17,771

19,536

20,639

399
2,377

(20,892)
1,152

6,734
962

1,051

1,051

11,273

6,039

25,467

20,587

21,690

(1,290)
436
-

(1,386)
681
33
274
(410)

(3,796)
(288)
101
-

(3,069)
-

(3,233)
-

10,419

5,231

21,484

17,519

18,457

27.69
26.75

13.84
13.70

376.3
389.5

54.77
52.79

44.66
43.04

378
382

392
407

69%
163%
203%
-50%

4.7%
-26%
-31%
311%

44%
27%
22%
5%
4%

38%
19%
14%
20%
17%

47.05
45.35

392
407

392
407

38%
19%
15%
15%
13%

38%
19%
15%
16%
13%

Growth Analysis - Q/Q

Revenues
EBITDA
Operating Profit
Net Profit

Margin Analysis ( as a % of Revenues)

Gross Profit Margin
EBITDA
EBIT
PBT
Net Profit Margin

36%
17%
12%
15%
14%

Interest Cover
Effective Tax rate
Financial Leverage

21
11%
1.5

20
11%
1.3

92
15%
1.4

15%
1.3

15%
1.3

2012-13 E
145,127
(89,390)
55,737
(27,971)
(287)
27,480
(5,404)
22,075
1,051
23,126
(3,447)
19,679

50.17
48.35

392
407

38%
19%
15%
16%
14%

15%
1.2

Mindtree Ltd.
Balance Sheet
(All Figs in Lacs)
Sources Of Funds

Standalone
Audited
2007-08 A

Shareholders Funds
Share Capital ( Face Value of Rs. 10 Each)
Share Application Money
Reserves & Surplus

Consolidated
Audited
2008-09 A

Consolidated
Audited
2009-10 A

2010-11 E

3,792
5
49,605
53,403

3,800
0.03
51,328
55,127

3,276

9,172
-

13,757
180

305

62,575

72,340

67,369

83,863

101,601

34,744
(11,176)
23,568
2,329
25,897

49,409
(21,096)
28,313
1,304
29,616

51,334
(25,212)
26,122
2,466
28,587

56,040
(30,896)
25,143
2,466
27,609

60,912
(36,402)
24,510
2,466
26,975

16,549
898

14,605
10,133
1,897

1,543
12,725
2,136

1,543
12,725
2,136

1,543
12,725
2,136

Current assets, loans and advances

Sundry debtors
Cash and bank balances
Loans and advances
Total Current Assets

17,217
5,465
9,927
32,609

27,923
4,876
14,111
46,910

23,699
4,033
20,683
48,414

28,589
23,002
18,177
69,768

29,600
40,603
18,820
89,024

Current liabilities and provisions

Current Liabilities
Provisions
Total Current Liabilities

11,153
2,226
13,379

28,599
2,223
30,822

21,135
4,900
26,035

25,016
4,900
29,916

25,901
4,900
30,801

Net Current Assets

19,230

16,088

22,379

39,852

58,222

Total Assets

62,575

72,340

67,369

83,863

101,601

19.51%
137
86

9.49%
136
82

Minority Interest
Loan Funds
Secured Loans
Unsecured Loans

Total Shareholders Funds & Liabilities

Application Of Funds
Fixed Asset
Gross Block
Less Accumulated Depreciation
Net Block
Capital Work In Progress

Goodwill
Investments
Deferred tax assets, net

Check: Assets = Liab + Equity ?

ROE (TTM)
Book Value
Days Sales Outstanding(TTM)
Liquidity Ratio
Current Ratio

2.4

1.5

Capital Structure Ratio

Debt Equity Ratio(Times)
Debt to Total Funds(%)

0.17
15%

0.25
20%

3,951
63,112
67,064

3,951
79,912
83,863

2011-12 E

3,951
97,649
101,601

(0)

(0)

(0)

32.04%
161
67

20.89%
202
78

18.17%
246
78

1.9

2.3

2.9

0.005
0.45%

0.000
0%

0.000
0%

% of Revenues
Loans and Advances

14%

11%

16%

14%

14%

% of Cost of revenue
Current Liabilities

24%

41%

26%

30%

30%

2012-13 E

3,951
121,554
125,505
-

125,505

66,033
(41,806)
24,227
2,466
26,692
1,543
12,725
2,136

31,112
63,641
19,781
114,534

27,224
4,900
32,124

82,410
125,506
(0)

15.68%
305
78

3.6

0.000
0%

14%

30%

Mindtree Ltd.
Cash Flow Statement
(All Figs in Lacs)
2007-08 A
Standalone

2008-09 A
Consolidated

2009-10 A
Consolidated

Cash flows from operating activities:

Profit Before Tax
Adjustments:
Depreciation
Amortization of Stock Compensation
Interest Expense
Interest / dividend income
Loss /(profit) on sale of fixed assets
Profit on sales of investments
Exchange difference on derivatives
Effect of exchange differences on translation of foreign currency cash
and cash equivalents
Operating profit before working capital changes

11,273

6,039

25,468

3,493
192
589
(1,743)
(6)
(253)
-

5,696
100
1,620
(870)
(189)
(58)
15,229

6,518
51
267
(500)
6
(110)
(11,131)

13
13,560

(41)
27,525

79
20,649

Decrease/(Increase) in sundry debtors

Decrease/(Increase) in loans and advances
(Decrease)/Increase in current liabilities and provisions
Income taxes and FBT paid

(5,501)
(417)
3,270
(1,848)

(3,352)
(21)
(3,304)
(2,869)

4,542
6
2,181
(4,360)

Net cash provided by / (used in) operating activities

9,063

17,980

23,017

Cash flow from investing activities

Purchase of fixed assets
Proceeds on sale of fixed assets
Purchase of business/acquisition
Investment in subsidiaries
Interest /dividend received from investments
Inter-corporate advances granted
Purchase of investments
Sale/maturities of investments
Net cash Provided/ (used) in investing activities

(21,778)
75
847
(22,918)
28,770
(15,003)

(4,346)
651
(29,195)
627
(80,764)
90,792
(22,235)

(4,573)
50
(2,925)
500
(615)
(104,479)
101,997
(10,045)

Cash flow from financing activities

Issue of share capital (net of issue expenses paid)
Receipt of share application money
Interest paid on loans
Proceeds from term loans
Repayment of term loans
Repayment of finance lease obligation
Proceeds/ (repayment) of short term loans, net
Increase/(decrease) in bank overdraft
Dividends paid (including distribution tax)

(1,193)
5
(591)
9,550
(1,277)
(232)
(1,647)
(877)

56
0
(1,586)
10,180
(13,691)
(382)
8,583
(904)

941
(0)
(267)
(5,157)
(8,475)
(458)

Net cash Provided/(used) by financing activities

3,739

2,256

(13,415)

(13)

41

(79)

(2,214)

(1,958)

(522)

764

Effect of exchange differences on translation of foreign currency cash

and cash equivalents
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents of MindTree Wireless Pvt Ltd as on the date
of acquisition

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

7,680
5,465

6,834
4,876

3,791
4,033

9,063
(21,778)
(12,714)

17,980
(4,346)
13,634

23,017
(4,573)
18,444

0.12
-140.28%

0.15
75.83%

0.18
80.13%

23%

24%

12%

Calculation of Free Cash Flow

Operating Cash Flow
Capital expenditure
Free Cash Flow

Cash Flow Ratios

Operating Cash Flow / Revenues
Free Cash Flow / Operating Cash Flow

Dividends paid (including distribution tax) % of Share Capital

2010-11 E

2011-12 E

2012-13 E

20,587

21,690

23,126

5,685
51
30
(1,051)
-

5,506
51
(1,051)
-

5,404
51
(1,051)
-

25,302

26,196

27,531

(4,890)
2,506
3,881
(3,069)

(1,012)
(643)
885
(3,233)

1,511
961
1,323
(3,447)

23,730

22,193

27,879

(4,706)
1,051
(3,655)

(4,872)
1,051
(3,821)

(5,121)
1,051
(4,070)

(30)
(305)
(771)

(771)

(771)

(1,106)

(771)

(771)

18,969

17,601

23,038
0

4,033
23,002

23,002
40,603

40,603
63,641

23,730
(4,706)
19,025

22,193
(4,872)
17,321

27,879
(5,121)
22,758

0.18
80.17%

0.16
78.05%

0.19
81.63%

20%

20%

20%

Mindtree Ltd.
Geographic Revenue Model
(All Figs in Lacs)
Q1 Jun-08

Q2 Sep-08

Q3 Dec-08

Q4 Mar-09

2007-08 A
Geographic Wise Revenues
USA
Europe
India
APAC / Rest of the World
Total

48,440
13,486
4,210
7,247
73,383

Y/Y (%) Growth in Geographic Revenues

USA
Europe
India
APAC / Rest of the World
Total

Q/Q (%) Growth in Geographic Revenues

USA
Europe
India
APAC / Rest of the World
Total

Geographic Revenues as % of Total

USA
Europe
India
APAC / Rest of the World
Total

66%
18%
6%
10%
100%

13,511
5,398
1,031
2,281
22,221

20%
102%
49%
53%
38%

19,894
6,403
1,664
3,241
31,202

63%
93%
73%
88%
71%

3%
38%
-20%
9%
9%

103%
102%
92%
36%
95%

47%
19%
61%
42%
40%

61%
24%
5%
10%
100%

24,097
7,231
2,426
2,626
36,380

77%
37%
109%
23%
66%

21%
13%
46%
-19%
17%

64%
21%
5%
10%
100%

23,178
5,360
2,697
2,571
33,806

-4%
-26%
11%
-2%
-7%

66%
20%
7%
7%
100%

4
Amount In Rs.
31,202
36,380
33,806
Q2 Sep-08
Q3 Dec-08
Q4 Mar-09
USA
19,894
24,097
23,178
Europe
6,403
7,232
5,360
India
1,664
2,425.95
2,697
APAC/ ROW
3,241.7
2,625.76
2,571
Total
31,202
36,380
33,806
-----------------------------------------------------------------------------------------------------------3
% Wise Contribution to total Sales
Q2 Sep-08
Q3 Dec-08
Q4 Mar-09
USA
64%
66%
69%
Europe
21%
20%
16%
India
5%
7%
8%

69%
16%
8%
8%
100%

APAC/ ROW
Total

10%
100%

7%
100%

8%
100%

Q1 Jun-09

Q2 Sep-09

Q3 Dec-09

Q4 Mar-10

2008-09 A

80,680
24,392
7,818
10,719
123,747

67%
81%
86%
48%
69%

2009-10 A

20,507
6,034
1,983
1,953
30,477

52%
12%
92%
-14%
37%

20,699
6,972
1,456
2,371
31,498

4%
9%
-12%
-27%
1%

-12%
13%
-26%
-24%
-10%

65%
20%
6%
9%
100%

67%
20%
7%
6%
100%

21,393
6,105
2,121
3,566
33,185

-11%
-16%
-13%
36%
-9%

4%
9%
-12%
-27%
3%

66%
22%
5%
8%
100%

21,610
6,441
2,177
4,210
34,438

-7%
20%
-19%
64%
2%

-11%
-16%
-13%
36%
5%

64%
18%
6%
11%
100%

4%
5%
-1%
13%
5%

-7%
20%
-19%
64%
4%

63%
19%
6%
12%
100%

84,209
25,552
7,737
12,101
129,598

2010-11 E

88,027
27,180
7,149
11,003
133,358

5%
6%
-8%
-9%
2.9%

65%
20%
6%
9%
100%

66%
20%
5%
8%
100%

100000
0
0
0
0
-

2011-12 E

2012-13 E

92,121
28,918
6,654
10,384
138,077

96,514
30,629
6,085
11,900
145,127

5%
6%
-7%
-6%
4%

5%
6%
-7%
15%
5%

67%
21%
5%
8%
100%

67%
21%
4%
8%
100%

Mindtree Ltd.
Segment Wise Revenue
(All Figs in Lacs)
2007-08 A

2008-09 A

2009-10 A

Segment Revenue
R & D Services
IT Services
AztecSoft Business
PE Services
Total

16,087
57,297
73,384

21,934 79,247
22,566 123,747

612
253
6
1,132
376
2,378

145
96
163
350
34
788

Minority interest
Share of P&L in Associate
Minority interest
Total Minority Interest

232
(410)
(178)

Sales Growth Analysis - Y-Y

R & D Services
IT Services
Aztec Business
PE Services
Total Sales

36%
38%
69%

-12%
34%
5%

Sales Growth Analysis - Q-Q

R & D Services
IT Services
Aztec Business
PE Services
Total Sales

Other Income (Excluding Forex Gains/Losses)

Interest on deposits
Profit on sale of investments
Profit from sale of assets, net
Dividend from investments
Bad debts recovered
Liabilities no longer required written back
Miscellaneous income
Total

69,802
59,796
129,598

143
110
357
163
143
46
962

Sales Weightage Analysis

R & D Services
IT Services
Aztec Business
PE Services
Total

22%
78%
100%

18%
64%
18%
100%

54%
46%
100%

Other Income Analysis

Interest on deposits
Dividend from investments

612
1,132

145
350

As % of Closing Investment
Interest on deposits
Dividend from investments

3.70%
7%

1.44%
3.45%

143
357

1%
3%

2010-11 E

2011-12 E

2012-13 E

274
777
1,051

274
777
1,051

274
777
1,051

0%

0%

274
777

0%

274
777

274
777

Mindtree Ltd.
Cost Analysis
(Rs. In Lakhs )
Cost Structure

2007-08 A

2008-09 A

2009-10 A

2010-11 E

Cost of Revenues
Selling, General & Administrative expenses

46,778
13,875

69,658
20,105

79,825
24,978

82,141
25,703

Total Operating Expnese(excluding bad debts)

60,653

89,763

104,803

107,844

151

806

239

263

60,804

90,569

105,042

108,107

Provision for bad & doubtful debts

Total Operating Expnese

As % of Revenues
Cost of Revenues

64%

56%

62%

62%

Selling, General & Administrative expenses

19%

16%

19%

19%

Total Operating Expnese(excluding bad debts)

83%

73%

81%

81%

0.21%

0.65%

0.18%

0.20%

Provision for bad & doubtful debts

2011-12 E

2012-13 E

85,047
26,612

89,390
27,971

111,660

117,361

273

287

111,932

117,648

62%

62%

19%

19%

81%

81%

0.20%

0.20%

Mindtree Ltd.
Debt Schedule
(Rs. In Lakhs )
2007-08 A

2008-09 A

2009-10 A

2010-11 E 2011-12 E 2012-13 E

Debt Schedule
Secured Loans
From Banks
Term Loans
Other Loans
Finance lease obligation
Total Secured Loans

8,848
324
9,172

5,157
8,600
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)

Interest Expense Rate (Q wise)

590
6.43%

1,620
11.62%

267
87.54%

30
9.89%

Mindtree Ltd.
Fixed Asset & Depreciation Schedule
Fixed Assets

2007-08 A

Gross Block
Less Accumulated Depreciation
Net Block
Capital Work in Progress

Depreciation Schedule
Depreciation
Implied Depreciation Rate

2008-09 A

34,744
(11,176)
23,568

49,409
(21,096)
28,313

2,329
25,897

1,304
29,616

2007-08 A
3,493
15%

2008-09 A
5,696
20%

21,778
30%

4,346
4%

Acquisition of Property and Equipment (Capex)

Capex as % Revenues

Notes
Projected Fixed Assets & Depreciation,
PY=Previous Year, CY=Current Year
1 Gross Block = PY Gross Block + New Capex
2 Accumulated Depreciation = PY Accumulated Dep. + CY Dep
3 Net Block = Gross Block - Accumulated Depreciation
4 Depreciation = Assuming Company buys new fixed asset half-way through the year, so I have
for new fixed assets(capex) purchased in C Y.
CY Depreciation = Half Dep of New Capex + Full Depreciation from Net Block Of PY

2009-10 A

2010-11 E

2011-12 E

2012-13 E

51,334
(25,212)
26,122

56,040
(30,896)
25,143

60,912
(36,402)
24,510

66,033
(41,806)
24,227

2,466
28,587

2,466
27,609

2,466
26,975

2,466
26,692

2009-10 A
2010-11 E 2011-12 E 2012-13 E
6,518
5,685
5,506
5,404
25%
20%
20%
20%

4,573
4%

4,706
4%

4,872
4%

5,121
4%

gh the year, so I have taken only half year depreciation

Block Of PY

Mindtree Ltd.
DCF Valuation
(All Figs in Lacs)
Growth Assumptions
Long term IT Industry growth rate

CAPM Assumptions
Ke
RFR
Beta
Rp

Enterpsire Value (EV)

15%
Current Market Price
Diluted Shares
Market Capitalisation
Long Term Liabilities
Less: Cash & Cash Equivalents
Enterprise Value (in lacks)

16.28%
7.0%
1.16
8%

513
407
208,669
305
4,033
204,942

Calculation of Free Cash Flow

2009-10A
Revenues
EBITDA
EBIT
Tax Expense
Net Operating Profit After Tax
Depreciation & Amortisation
Working Capital Change
Operating Cash Flow
Capex
FCF
Diluted Shares

129,598
24,556
18,038
(3,796)
14,242
6,518
6,729
14,031
(4,573)
9,458
407

Terminal Value
Sum of PV of FCF for explicit forecast
WACC
Long term growth in Revenues
Present Value of terminal value
Terminal Value as % of Total Value

Sensitivity - Varying Terminal Growth Rate

138,077
26,145
20,639
(3,233)
17,406
5,506
(770)
23,681
(4,872)
18,809

145,127
27,480
22,075
(3,447)
18,628
5,404
3,795
20,237
(5,121)
15,116

155,286
29,403
23,621
(3,688)
27,309
5,782
3,795
29,297
(5,480)
23,817

166,156
31,461
25,274
(3,947)
29,221
6,187
3,795
31,613
(5,863)
25,750

407

407

407

407

1
0.86
13,744

2
0.74
13,913

3
0.64
9,617

4
0.55
13,033

5
0.47
12,119

3%
3%
8%
-13%

4%
4%
5%
-3%

5%
5%
7%
-2%

7%
7%
7%
7%

7%
7%
7%
7%

19%
14%
5%
4%

19%
15%
4%
4%

19%
15%
4%
4%

19%
15%
4%
4%

19%
15%
4%
4%

19%
15%
4%
4%

-21%

-16%

-16%

-16%

-16%

-16%

Y/Y Growth Analysis

Revenues
EBITDA
EBIT
Depreciation & Amortisation

Tax Rate (Tax Expense/EBIT)

133,358
25,251
19,567
(3,069)
16,498
5,685
1,497
20,686
(4,706)
15,980

First Stage of Valuation

2014E
2015E

407

Projection Year
Discount Factor
Present Value of FCF

Margin Analysis (As % of Revenues)

EBITDA Margin
EBIT Margin
Depreciation & Amortisation
Capex

Explicit Forecast Period

2010-11 E
2011-12 E
2012-13 E

73,686
16.27%
5%
105,602
59%

Equity Value
Enterprise Value
- Debt
+ Cash
Net Debt
Equity Value

179,288
(305)
4,033
3,727
183,015

WACC
10.0%
11.0%
16.3%
13.0%
14.0%

PV of FCF
104,473
100,717
83,921
93,788
90,590

WACC
10.0%
11.0%
16.3%
13.0%
14.0%

PV of FCF
104,473
100,717
83,921
93,788
90,590

105,602
10.0%
11.0%
12.2%
13.0%
14.0%

PV of Terminal Value
2%
3%
92,943
99,770
76,846
81,885
62,204
65,827
54,504
57,463
46,562
48,895

3%
107,573
87,553
69,843
60,718
51,441

Sensitivity - EV/EBITDA Exit Multiple

PV of Terminal Value (EV/EBITDA)
5.0
5.5
6.0
170,046
187,050
204,055
169,424
186,366
203,309
166,273
182,901
199,528
168,204
185,024
201,844
167,605
184,365
201,126

Recommendation

Mindtree is likely to clock EPS of 45.35 in FY2012 E. By assigning average PE pf IT Industry.i.e.12, we recommend a hold position with target price of Rs.544
Target Price
Industry Avg Pe
Forward EPS FY 2012 E

544
12
45.35

Debt Equity Weightage

E/(D+E) @ Enterprise Value
D/(D+E) @ Enterprise Value
Interest Rate (%)
Tax Rate (@)
WACC Calculation
WACC

99.85%
0.15%
12%
15%

16.27%

Second Stage Valuation

Terminal Year

2016E
177,787
33,664
27,043
(4,223)
31,266
6,620
3,795
34,091
(6,274)
27,818
407
6
0.40
11,260

186,677
35,347
28,395
(4,434)
32,829
6,951
3,795
35,986
(6,587)
29,398
407

7%
7%
7%
7%

5%
5%
5%
5%

19%
15%
4%
4%

19%
15%
4%
4%

-16%

-16%

Intrinsic Value
Equity Value
Diluted Shares

183,015
407

Intrinsic Value

450

Intrinsic Value
2%
494
445
368
374
346

5
684
673
624
653
644

3%

3%
511
458
377
381
352

Intrinsic Value
5.5
725
715
665
694
685

position with target price of Rs.544/- in

530
472
387
389
358

6
767
756
706
736
726

I was unable to get current beta of company , hence I calculated beta using book method

Beta or
Input In Blue

Month

Stock R

1
2
3
4
5
6
7
8
9
10
11
12

3
2
-5
-4
0
-4
-2
11
-9
-16
7
8
Stk R

12

Stk R - Stk

Market R

-1.023

0.95
12
1
1
4
-3
0
7
0
-6
3
6

Mkt R - Mkt

4
3
-4
-2
1
-3
-1
12
-8
-15
9
9

-2
9
-2
-2
1
-6
-3
4
-3
-9
0
3

Mkt R
2.595
Formula

Cov sm

Stk R - Stk R x Mkt R - Mkt R

n-1

Formula

2m

(Mkt R - Mkt R)2

n-1

Mindtree
Date
Close
01-Oct-10
525
01-Sep-10
512
02-Aug-10
503
01-Jul-10
531
01-Jun-10
551
03-May-10
551
01-Apr-10
575

Sensex
Return
2.54%
1.75%
-5.35%
-3.50%
0.00%
-4.24%
-2.33%

Date
01-Oct-10
01-Sep-10
02-Aug-10
01-Jul-10
01-Jun-10
03-May-10
01-Apr-10

20,261
20,069
17,971
17,868
17,701
16,945
17,559

02-Mar-10
01-Feb-10
04-Jan-10
01-Dec-09
03-Nov-09
22-Oct-09
22-Sep-09

589
533
583
695
647
601
598

10.58%
-8.73%
-16.10%
7.48%
7.67%
0.54%
#DIV/0!

02-Mar-10
01-Feb-10
04-Jan-10
01-Dec-09
03-Nov-09
22-Oct-09
22-Sep-09

17,528
16,430
16,358
17,465
16,926
15,896
16,886

Cov sm
2 m
Stk R - Stk

1.16

x Mkt R - Mkt

(Mkt R - Mkt R ) 2

-6
26
7
4
1
18
3
51
20
130
3
30

3
88
3
3
2
31
7
19
7
74
0
12

288

248

288
11

26

248
11

23

Sensex
0.95%
12%
1%
1%
4%
-3%
0%

7%
0%
-6%
3%
6%
-6%
#DIV/0!

Profit & Loss A/c

1) Figures for FY 2007-08 are standalone including Audited Balance Sheet
2) For Q1 of 2008-09, I have taken standalone results, and from Q2 all figures are Consolidated, including Audited Ba
3) I have adjusted Share Count(Basic & Diluted) wherever necessary to align with reported EPS by the company, as a

Balance Sheet(BS)
4) 2007-08 figures are standalone, as I have taken standalone figures in Profit & Loss A/c
5) For 2008-09 Figs. For 3M,6M,9M and 12M I have taken standalone figs for Balance Sheet, as Consolidated Figs. we
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 errant figures by breaking it into periods/quarte

Geographic Revenue
8) I have done some small calculation, for converting USD* wise Geographic revenue into Rs. wise Geographic reven
as Compnay did not reported consolidated figs. Geographic wise in Rs. terms.( Q1 figs. Are standalone, as consolid
by the Company. I took the Consolidated figs. From the fact sheet of respective quarters, and applied the USD reg
to that respective quarters.(calculation is below the Geographic revenues break-up figures)
* Despite taking exchange rates for calculation, I was not getting the accurate figs

Segment Revenue
9) Upto Q1 of 2008-09, all figs. are standalone, after that all figs. are consolidated
From FY 09-10, Segment R & D Services and AztecSoft Business is grouped under PE Services.
Hence, while calculating YoY & QoQ growth in % for 2009-10, I have grouped R&D Serv. and Aztec under PE Servic
Projection Assumptions
11) Share Capital = is projected on as it is/straight line basis
Debt = Assumed that it will be paid in 2010-11, hence not shown in closing balance
Fixed Asset = Detailed working is in Fixed Asset Sheet
Goodwill, Investments & Tax Assets = straight line basis
Sundry Debtors = is calculated by ; Avg. Days Sales O/s * (Projected Revenue/365)
Cash = linked from Cash Flow St.
Loans & Advances = is calculated by ; Avg % of Loans to Revenues * Projected Revenues
Current Liabilities = is calculated by ; Avg % of CL to Cost of Revenues * Projected Cost of Revenues
Provisions = straight line basis

2009-10 Annual Report Excerpts

1 As per NASSCOM, Indian IT exports is estimated to grow by 5.5% in FY2010

2 EBITDA margins on our services business is likely to be stable.
3 effective tax rate based on current taxes is about 15.6% as
compared to about 11% in the previous year.
4 NiW form part of PE Services
5 Our NIW, business is developing a ready to brand 3G smart phone and IP in the area of cell
6 On our services business, based on current trends, we expect that we will attain growth ra
than industry growth estimates of 13-15%
7 pg 51 for report

onsolidated, including Audited Balance Sheet

eported EPS by the company, as all figures in the model are in Lacs.

nce Sheet, as Consolidated Figs. were not provided by the company, however

by breaking it into periods/quarters

ue into Rs. wise Geographic revenue for consolidated figs, from Q2-2008-09,
1 figs. Are standalone, as consolidated break-up of Geograhic Revenues were not provided
quarters, and applied the USD region wise weighted % to total figure of reported Revenues
-up figures)

r PE Services.
&D Serv. and Aztec under PE Services

d Cost of Revenues

by 5.5% in FY2010

rt phone and IP in the area of cellular infrastructure. We expect to launch these products to the market in Q3/Q4 of 2010-11. Since this is
pect that we will attain growth rates higher

Q3/Q4 of 2010-11. Since this is a new initiative, the financial performance of the NIW business would depend onthe success of the produc

pend onthe success of the products when they are launched.If these initiatives are successful, they will greatly enhance our revenues and

greatly enhance our revenues and profitability