Safal Niveshak

Value Investing Made Simple

www.safalniveshak.com
Basic Company Details
(Enter values only in red cells)
Parameters Details
Company Havell's
Industry Electricals
Current Stock Price (Rs) 420
Face Value (Rs) 1.0
No. of Shares (Crore) 62.5
Market Capitalization (Rs Crore) 26,244

Key Financials (Last 10-Years)

Parameters Details
Sales Growth (8-Year CAGR) 5.6%
Gross Profit Growth (8-Year CAGR) 4.3%
Net Profit Growth (8-Year CAGR) 14.8%
Average Debt/Equity (5-Years, x) 0.4
Average Return on Equity (5-Years) 30.3%
 Warning!
Excel can be a wonderful tool to analyze the past. But it can be a weapon of
mass destruction to predict the future! So be very careful of what you are
getting into. Here, garbage in will always equal garbage out.

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

Please!
It's your money. Please don't blame me if results of this excel cause you to
lose it all! I've designed this excel to aid your own thinking, but you alone are
responsible for your actions. I want to live peacefully ever after! :-)
I am not a sadist who wants you to do the hard work by analyzing
companies on your own. But I'd rather give you a compass instead of a map,
for you can confuse map with territory and lose it all! All the best!
 be a weapon of
of what you are
age out.

mes. Look for

cel cause you to

but you alone are
er! :-)
k by analyzing
nstead of a map,
All the best!
 Buffett Checklist - Read, Remembe
Source - Buffettology by Mary Buffett & David Clark
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 company’s return on equity

above average?
Is the company free to adjust
prices to inflation?

Does the company need to

constantly reinvest in capital?

Conclusion

Never Forget
 Buffett Checklist - Read, Remember, Follow!
Source - Buffettology by Mary Buffett & David Clark
Explanation
Seek out companies that have no or less competition, either due to a patent or brand name or similar in
the product unique. Such companies will typically have high gross and operating profit margins becaus
niche. However, don't just go on margins as high margins may simply highlight companies within indust
high margins. Thus, look for companies with gross, operating and net profit margins above industry nor
strong growth in earnings and high return on equity in the past.

Try to invest in industries where you possess some specialized knowledge (where you work) or can mo
company, its industry, and its competitive environment (simple products you consume). While it is difficu
quantitative filter, you should be able to identify areas of interest. You should "only" consider analyzing t
operate in areas that you can clearly grasp - your circle of competence. Of course you can increase the
only over time by learning about new industries. More important than the size of the circle is to know its

Seeks out companies with conservative financing, which equates to a simple, safe balance sheet. Such
have strong cash flows, with little need for long-term debt. Look for low debt to equity or low debt-burde
companies that have history of consistently generating positive free cash flows.

Rising earnings serve as a good catalyst for stock prices. So seek companies with strong, consistent, a
earnings (profits). Seek companies with 5/10 year earnings per share growth greater than 25% (alongw
sheets). To help indicate that earnings growth is still strong, look for companies where the last 3-years e
is higher than the last 10-years growth rate. More important than the rate of growth is the consistency in
exclude companies with volatile earnings growth in the past, even if the "average" growth has been hig

Like you should stock to your circle of competence, a company should invest its capital only in those bu
circle of competence. This is a difficult factor to screen for on a quantitative level. Before investing in a c
company’s past pattern of acquisitions and new directions. They should fit within the primary range of o
Be cautious of companies that have been very aggressive in acquisitions in the past.

Buffett prefers that firms reinvest their earnings within the company, provided that profitable opportunitie
companies have excess cash flow, Buffett favours shareholder-enhancing maneuvers such as share bu
not screen for this factor, a follow-up examination of a company would reveal if it has a share buyback p

Seek companies where earnings have risen as retained earnings (earnings after paying dividends) hav
profitably. A great way to screen for such companies is by looking at those that have had consistent ear
return on equity in the past.

Consider it a positive sign when a company is able to earn above-average (better than competitors) ret
employing much debt. Average return on equity for Indian companies over the last 10 years is approxim
seek companies that earn atleast this much (16%) or more than this. Again, consistency is the key here
That's what is called "pricing power". Companies with moat (as seen from other screening metrics as su
high ROE, high grow margins, low debt etc.) are able to adjust prices to inflation without the risk of losin
sales.

Companies that consistently need capital to grow their sales and profits are like bank savings account,
investor's long term portfolio. Seek companies that don't need high capital investments consistently. Re
first go toward maintaining current operations at competitive levels, so the lower the amount needed to
operations, the better. Here, more than just an absolute assessment, a comparison against competitors
companies that consistently generate positive and rising free cash flows.

Sensible investing is always about using “folly and discipline” - the discipline to identify excellent busine
folly of the market to drive down the value of these businesses to attractive levels. You will have little tro
this philosophy. However, its successful implementation is dependent upon your dedication to learn and
and apply them to pick stocks successfully.

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

 Havells India Ltd. - Balance Sheet
(Enter values only in red cells) | Data Source: Annual Reports
Year / Rs Crore FY07 FY08 FY09 FY10 FY11
SOURCES OF FUNDS / EQUITY & LIABILITIES
Share Capital 27 29 30 31 62
Reserves & Surplus 236 643 582 369 591
Shareholder's Funds / Equity 262 672 613 400 654

Minority Interest/Others - 18 2 0 1

Non-Current Liabilities 52 863 686 744 922

Long-Term Borrowings 41 863 686 700 582
Deferred Tax Liabilities 12 - - 43 56
Other Long-Term Liabilities - - - - 14
Long-Term Provisions - - - - 271

Current Liabilities 297 1,947 1,992 1,954 1,987

Short-Term Borrowings 15 433 542 366 375
Trade Payables 181 746 622 649 818
Other Current Liabilities 69 720 771 906 675
Short-Term Provisions 32 49 57 32 119

TOTAL LIABILITIES 612 3,501 3,293 3,098 3,564

APPLICATION OF FUNDS / ASSETS

Non-Current Assets 266 1,273 1,365 1,310 1,395
Tangible Assets 213 688 818 857 963
Intangible Assets 0 43 36 31 33
Capital Work-in-Progress 29 101 31 34 25
Goodwill on Consolidation - 335 358 321 335
Non-Current Investments - - - - -
Deferred Tax Assets - 8 10 - -
Long-Term Loans and Advances 23 99 113 68 39
Other Non-Current Assets - - - - 0

Current Assets 346 2,228 1,928 1,788 2,168

Current Investments 3 3 - - -
Inventories 240 1,042 795 825 1,086
Trade Receivables 31 823 757 698 772
Cash and Bank Balance 36 243 247 148 178
Short-Term Loans and Advances 30 114 121 107 121
Other Current Assets 4 3 8 10 12
Miscellaneous Expenditure 2 0 0 0 -
TOTAL ASSETS 612 3,501 3,293 3,098 3,564

ASSETS minus LIABILITIES - - (0) - -

Sheet
Annual Reports
FY12 FY13 FY14 FY15 FY16

62 62 62 62 62
893 1,380 1,604 1,756 2,495
956 1,442 1,666 1,818 2,558

0 0 0 0 8

812 1,151 1,186 695 94

439 742 706 226 2
56 62 52 43 75
15 33 40 1 4
302 313 389 424 13

2,408 1,879 2,485 2,317 1,481

430 92 118 70 84
1,070 933 1,197 1,051 520
701 644 826 816 468
208 211 344 380 410

4,175 4,472 5,337 4,831 4,142

1,504 1,600 1,730 1,870 1,454

989 1,093 1,128 1,158 1,067
40 38 35 24 11
66 25 44 38 21
362 369 438 358 20
- - - - 252
- 14 5 57 1
46 60 80 58 80
0 1 0 175 0

2,672 2,872 3,607 2,961 2,688

- - - - 5
1,368 1,318 1,493 1,366 837
891 862 1,001 623 259
234 474 882 777 1,465
168 205 211 172 85
12 13 20 22 36
- - - - -
4,175 4,472 5,337 4,831 4,142

- - - - -
 Havells India Ltd. - Common Size Balance Sheet
Year / Rs Crore FY07 FY08 FY09 FY10 FY11
SOURCES OF FUNDS / EQUITY & LIABILITIES
Share Capital 4.4% 0.8% 0.9% 1.0% 1.8%
Reserves & Surplus 38.5% 18.4% 17.7% 11.9% 16.6%
Shareholder's Funds / Equity 42.9% 19.2% 18.6% 12.9% 18.3%

Minority Interest 0.0% 0.5% 0.1% 0.0% 0.0%

Non-Current Liabilities 8.6% 24.7% 20.8% 24.0% 25.9%

Long-Term Borrowings 6.6% 24.7% 20.8% 22.6% 16.3%
Deferred Tax Liabilities 1.9% 0.0% 0.0% 1.4% 1.6%
Other Long-Term Liabilities 0.0% 0.0% 0.0% 0.0% 0.4%
Long-Term Provisions 0.0% 0.0% 0.0% 0.0% 7.6%

Current Liabilities 48.6% 55.6% 60.5% 63.1% 55.8%

Short-Term Borrowings 2.5% 12.4% 16.5% 11.8% 10.5%
Trade Payables 29.6% 21.3% 18.9% 21.0% 22.9%
Other Current Liabilities 11.2% 20.6% 23.4% 29.3% 18.9%
Short-Term Provisions 5.2% 1.4% 1.7% 1.0% 3.4%

TOTAL LIABILITIES 100% 100% 100% 100% 100%

APPLICATION OF FUNDS / ASSETS

Non-Current Assets
Tangible Assets
Intangible Assets
Capital Work-in-Progress
Goodwill on Consolidation
Non-Current Investments
Deferred Tax Assets
Long-Term Loans and Advances
Other Non-Current Assets
43.4% 36.4% 41.4% 42.3% 39.1%
34.8% 19.7% 24.8% 27.7% 27.0%
0.0% 1.2% 1.1% 1.0% 0.9%
4.8% 2.9% 0.9% 1.1% 0.7%
0.0% 9.6% 10.9% 10.4% 9.4%
0.0% 0.0% 0.0% 0.0% 0.0%
0.0% 0.2% 0.3% 0.0% 0.0%
3.8% 2.8% 3.4% 2.2% 1.1%
0.0% 0.0% 0.0% 0.0% 0.0%

Current Assets 56.6% 63.6% 58.6% 57.7% 60.9%

Current Investments 0.5% 0.1% 0.0% 0.0% 0.0%
Inventories 39.1% 29.8% 24.1% 26.6% 30.5%
Trade Receivables 5.1% 23.5% 23.0% 22.5% 21.7%
Cash and Bank Balance 6.0% 6.9% 7.5% 4.8% 5.0%
Short-Term Loans and Advances 5.0% 3.3% 3.7% 3.4% 3.4%
Other Current Assets 0.6% 0.1% 0.2% 0.3% 0.3%

TOTAL ASSETS 100% 100% 100% 100% 100%

lance Sheet
FY12 FY13 FY14 FY15 FY16

1.5% 1.4% 1.2% 1.3% 1.5%

21.4% 30.9% 30.0% 36.3% 60.2%
22.9% 32.2% 31.2% 37.6% 61.8%

0.0% 0.0% 0.0% 0.0% 0.2%

19.4% 25.7% 22.2% 14.4% 2.3%

10.5% 16.6% 13.2% 4.7% 0.0%
1.3% 1.4% 1.0% 0.9% 1.8%
0.4% 0.7% 0.8% 0.0% 0.1%
7.2% 7.0% 7.3% 8.8% 0.3%

57.7% 42.0% 46.6% 48.0% 35.8%

10.3% 2.1% 2.2% 1.4% 2.0%
25.6% 20.9% 22.4% 21.8% 12.6%
16.8% 14.4% 15.5% 16.9% 11.3%
5.0% 4.7% 6.4% 7.9% 9.9%

100% 100% 100% 100% 100%

36.0% 35.8% 32.4% 38.7% 35.1%

23.7% 24.4% 21.1% 24.0% 25.8%
1.0% 0.9% 0.7% 0.5% 0.3%
1.6% 0.6% 0.8% 0.8% 0.5%
8.7% 8.3% 8.2% 7.4% 0.5%
0.0% 0.0% 0.0% 0.0% 6.1%
0.0% 0.3% 0.1% 1.2% 0.0%
1.1% 1.3% 1.5% 1.2% 1.9%
0.0% 0.0% 0.0% 3.6% 0.0%

64.0% 64.2% 67.6% 61.3% 64.9%

0.0% 0.0% 0.0% 0.0% 0.1%
32.8% 29.5% 28.0% 28.3% 20.2%
21.3% 19.3% 18.7% 12.9% 6.3%
5.6% 10.6% 16.5% 16.1% 35.4%
4.0% 4.6% 4.0% 3.6% 2.1%
0.3% 0.3% 0.4% 0.5% 0.9%

100% 100% 100% 100% 100%

 Havells India Ltd. - P&L Account
(Enter values only in red cells) | Data Source: Annual Reports
Year / Rs Crore FY07 FY08 FY09 FY10 FY11
Net Sales 1,547 5,003 5,477 5,163 5,613

Expenditure
Cost of Material Consumed 906 2,074 1,911 1,914 2,586
Purchase of Traded Goods 80 639 1,096 1,001 838
Change in Inventories - - - - (231)
Employee Cost 53 764 848 764 640
Other Manufacturing Expenses 73 123 122 168 178
Advertising and Sales Promotion Expenses 32 103 112 137 130
Other Expenses 258 954 1,100 855 914
Total Operating Expenditure 1,401 4,656 5,189 4,840 5,056
Gross Profit 488 2,167 2,349 2,079 2,242
Operating Profit / EBITDA 146 347 289 322 557
Other Income 5 25 9 22 24
Depreciation 10 69 91 84 80
Profit Before Interest & Tax (PBIT) 141 302 207 261 500
Interest/Finance Costs 21 104 125 98 90
Exceptional Income / Expenses - - (199) - (3)
Profit Before Tax 121 199 (117) 163 407
Current Tax 15 30 42 60 101
Other Taxes 4 7 1 34 2
Total Tax 18 38 43 93 103
Profit After Tax 102 161 (160) 70 304
Minority Interest - - - (0) (0)
Share of Associate - - - - -
Profit After Tax - Reported (PAT) 102 161 (160) 70 304
Diluted EPS (Rs) 1.6 2.6 (2.6) 1.1 4.9

Profit After Tax - Excluding Exception Items 102 161 38 70 307

Diluted EPS - Adjusted (Rs) 1.6 2.6 0.6 1.1 4.9
ccount
e: Annual Reports
FY12 FY13 FY14 FY15 FY16 CAGR
6,518 7,248 8,186 8,569 7,714 5.6%

2,565 2,727 3,149 3,239 3,213

1,249 1,437 1,613 1,486 1,243
(187) (1) (123) 104 (73)
790 906 1,087 1,188 859
193 223 246 274 289
185 228 223 259 245
1,066 1,054 1,247 1,299 1,137
5,861 6,574 7,443 7,848 6,914
2,698 2,862 3,300 3,467 3,042 4.3%
657 674 742 721 800 11.0%
41 28 41 50 86
95 110 116 139 127
604 593 668 633 760 12.2%
128 123 74 64 45
- 194 - - 724
476 664 594 569 1,439
112 102 160 243 217
(7) (20) (12) (59) 13
106 82 148 184 230
370 581 446 385 1,209
- - - - (0)
- - - - -
370 581 446 385 1,209
5.9 9.3 7.1 6.2 19.3

370 387 446 385 485 14.8%

5.9 6.2 7.1 6.2 7.8
 Havells India Ltd. - Common Size P&L Account
Year / Rs Crore FY07 FY08 FY09 FY10 FY11
Net Sales 100% 100% 100% 100% 100%

Expenditure
Cost of Material Consumed 58.6% 41.5% 34.9% 37.1% 46.1%
Purchase of Traded Goods 5.2% 12.8% 20.0% 19.4% 14.9%
Change in Inventories 0.0% 0.0% 0.0% 0.0% -4.1%
Employee Cost 3.4% 15.3% 15.5% 14.8% 11.4%
Other Manufacturing Expenses 4.7% 2.5% 2.2% 3.3% 3.2%
Advertising and Sales Promotion Expenses 2.0% 2.1% 2.0% 2.6% 2.3%
Other Expenses 16.7% 19.1% 20.1% 16.6% 16.3%
Total Operating Expenditure 90.6% 93.1% 94.7% 93.8% 90.1%
Gross Profit 31.5% 43.3% 42.9% 40.3% 39.9%
Operating Profit / EBITDA 9.4% 6.9% 5.3% 6.2% 9.9%
Other Income 0.4% 0.5% 0.2% 0.4% 0.4%
Depreciation 0.6% 1.4% 1.7% 1.6% 1.4%
Profit Before Interest & Tax (PBIT) 9.1% 6.0% 3.8% 5.0% 8.9%
Interest/Finance Costs 1.4% 2.1% 2.3% 1.9% 1.6%
Exceptional Income / Expenses 0.0% 0.0% -3.6% 0.0% -0.1%
Profit Before Tax 7.8% 4.0% -2.1% 3.2% 7.3%
Current Tax 0.9% 0.6% 0.8% 1.2% 1.8%
Other Taxes 0.2% 0.1% 0.0% 0.7% 0.0%
Total Tax 1.2% 0.8% 0.8% 1.8% 1.8%
Profit After Tax 6.6% 3.2% -2.9% 1.4% 5.4%
Minority Interest 0.0% 0.0% 0.0% 0.0% 0.0%
Share of Associate 0.0% 0.0% 0.0% 0.0% 0.0%
Profit After Tax (PAT) 6.6% 3.2% -2.9% 1.4% 5.4%
ze P&L Account
FY12 FY13 FY14 FY15 FY16
100% 100% 100% 100% 100%

39.4% 37.6% 38.5% 37.8% 41.7%

19.2% 19.8% 19.7% 17.3% 16.1%
-2.9% 0.0% -1.5% 1.2% -0.9%
12.1% 12.5% 13.3% 13.9% 11.1%
3.0% 3.1% 3.0% 3.2% 3.8%
2.8% 3.1% 2.7% 3.0% 3.2%
16.4% 14.5% 15.2% 15.2% 14.7%
89.9% 90.7% 90.9% 91.6% 89.6%
41.4% 39.5% 40.3% 40.5% 39.4%
10.1% 9.3% 9.1% 8.4% 10.4%
0.6% 0.4% 0.5% 0.6% 1.1%
1.5% 1.5% 1.4% 1.6% 1.6%
9.3% 8.2% 8.2% 7.4% 9.8%
2.0% 1.7% 0.9% 0.7% 0.6%
0.0% 2.7% 0.0% 0.0% 9.4%
7.3% 9.2% 7.3% 6.6% 18.7%
1.7% 1.4% 1.9% 2.8% 2.8%
-0.1% -0.3% -0.1% -0.7% 0.2%
1.6% 1.1% 1.8% 2.1% 3.0%
5.7% 8.0% 5.5% 4.5% 15.7%
0.0% 0.0% 0.0% 0.0% 0.0%
0.0% 0.0% 0.0% 0.0% 0.0%
5.7% 8.0% 5.5% 4.5% 15.7%
 Havells India Ltd. - Cash Flow Statement
(Enter values only in red cells) | Data Source: Annual Report
Year / Rs Crore FY07 FY08 FY09 FY10
Net cash (used in) / generated from operating activities (24) 220 309
Payment for purchase of fixed assets 705 140 154
Free Cash Flow - (729) 80 155
Net cash (used in) / generated from investing activities (769) (163) (96)
Net cash (used in) / generated from financing activities 919 (52) (313)
Net increase in cash and cash equivalents - 126 6 (100)

Sample Cash Flow Statement (fr

MINUS
Flow Statement
Source: Annual Reports
FY11 FY12 FY13 FY14 FY15 FY16
253 462 638 868 963 531
189 172 175 176 174 225 Remember!
64 290 463 692 789 306 Cash flo
(176) (105) (143) (376) (486) 28 what determines a co
(65) (257) (252) (310) (754) (622)
11 100 242 182 (278) (62)

low Statement (from Annual Report)

Remember!
Cash flow, not reported earnings, is
what determines a company's long-term value.
 Havells India Ltd. - Key Ratios
(Don't touch any cell on this sheet, as all are calculated figures)
Operational & Financial Ratios FY07 FY08 FY09 FY10 FY11 FY12 FY13
Diluted Earnings Per Share (Rs) 1.6 2.6 0.6 1.1 4.9 5.9 6.2
Diluted Book Value Per Share (Rs) 4.2 10.8 9.8 6.4 10.5 15.3 23.1
Tax Rate (%) 12% 15% -36% 36% 25% 24% 15%

Profitability Ratios FY07 FY08 FY09 FY10 FY11 FY12 FY13

Gross Margin (%) 32% 43% 43% 40% 40% 41% 39%
EBITDA Margin (%) 9% 7% 5% 6% 10% 10% 9%
EBIT Margin (%) 9% 6% 4% 5% 9% 9% 8%
Net Profit Margin (%) 7% 3% 1% 1% 5% 6% 5%

Performance Ratios FY07 FY08 FY09 FY10 FY11 FY12 FY13

Return on Equity (%) 39% 34% 6% 14% 58% 46% 32%
Return on Capital Employed (%) 47% 25% 35% 23% 32% 36% 24%
Return on Invested Capital (%) 45% 15% 18% 13% 26% 29% 28%
Sales/Working Capital (x) 31.5 17.8 (85.6) (31.1) 31.0 24.7 7.3

Efficiency Ratios FY07 FY08 FY09 FY10 FY11 FY12 FY13

Receivable Days 7 60 50 49 50 50 43
Inventory Days 56 76 53 58 71 77 66
Payable Days 43 54 41 46 53 60 47

Growth Ratios FY07 FY08 FY09 FY10 FY11 FY12 FY13

Net Sales Growth (%) 223% 9% -6% 9% 16% 11%
EBITDA Growth (%) 138% -17% 12% 73% 18% 3%
PBIT Growth (%) 114% -32% 26% 92% 21% -2%
PAT Growth (%) 58% -76% -144% 339% 22% 5%

Financial Stability Ratios FY07 FY08 FY09 FY10 FY11 FY12 FY13
Total Debt/Equity (x) 0.2 1.9 2.0 2.7 1.5 0.9 0.6
Debt Burden (x) (1.2) 8.6 4.5 9.0 1.5 1.6
Current Ratio (x) 1.2 1.1 1.0 0.9 1.1 1.1 1.5
Quick Ratio (x) 0.4 0.6 0.6 0.5 0.5 0.5 0.8
Interest Cover (x) 6.8 2.9 1.6 2.7 5.5 4.7 4.8
ures)
FY14 FY15 FY16 Trends
7.1 6.2 7.8 Remember!
26.7 29.1 40.9 What counts in the long run is the increase in
27% 43% 15% "per share value", not overall growth or size of a
business.
FY14 FY15 FY16
40% 40% 39%
9% 8% 10%
8% 7% 10% Remember!
5% 4% 6% Gross margins suggest pricing power.
Higher = Better, but also invites competition. So
watch out for consistency.
FY14 FY15 FY16
29% 22% 22%
21% 20% 28%
30% 27% 55% Remember!
7.3 13.3 6.4 ROE = Efficiency in allocating capital, which is a
CEO's #1 job. Higher = Better. Look for
consistency.
FY14 FY15 FY16
45 27 12
67 58 40
53 45 25

FY14 FY15 FY16

13% 5% -10%
10% -3% 11%
13% -5% 20%
-23% -14% 26%

FY14 FY15 FY16

0.5 0.2 0.0
1.0 0.3 0.0
1.5 1.3 1.8
0.9 0.7 1.2
9.0 9.9 16.9
 run is the increase in
erall growth or size of a
ess.

suggest pricing power.

nvites competition. So
consistency.

ating capital, which is a

= Better. Look for
ency.
 Two-Stage DCF: Havells India Ltd.
Figures in Rs Crore | Enter values only in red cells

Initial Cash Flow 595

Years 1-5 6-10

FCF Growth Rate 15% 12%
Discount Rate 15%
Terminal Growth Rate 2%

Shares Outstanding (Crore) 62

Net Debt Level (1,385)

Year FCF Growth Present Value

1 685 15% 595
2 788 15% 595
3 906 15% 595
4 1,041 15% 595
5 1,198 15% 595
6 1,341 12% 580
7 1,502 12% 565
8 1,683 12% 550
9 1,885 12% 536
10 2,111 12% 522

Final Calculations
Terminal Year 2,153
PV of Year 1-10 Cash Flows 5,730
Terminal Value 4,094
Total PV of Cash Flows 9,823
Number of Shares 62
DCF Value / Share (Rs) 179

Note: See the explanation of DCF here

Expected Return Model - Havells Indi

Particulars FY07 FY08 FY09
Earnings per Share (Rs ) 1.6 2.6 0.6
Net Profit Margin 7% 3% 1%
Return on Equity 39% 34% 6%

Calculations (Enter values only in red cells)

Estimated CAGR in EPS over next 10 years 15%
Estimated EPS after 10 years 31
Current P/E (x) 32.4
Exit P/E in the 10th year from now (x, Estimated) 20.0
Esti. Stock Price (10th year from now) 628
CMP (Rs) 420
Esti. CAGR Return in 10 Years 4.1%

Note: See the explanation of this model here

 179 DCF Value (As calculated in cell B33)
420 Current Market Price
43% DCF as % of CMP

Remember!
Give importance to a stock's valuations / fair value only
"after" you have answered in "Yes" to these two questions - (1)
Is this business simple to be understood? and (2) Can I
understand this business?

Don't try to quantify everything. In stock research, the less non-

mathematical you are, the more simple, sensible, and useful will
be your analysis and results. Great analysis is generally "back-
of-the-envelope".

Also, your calculated "fair value" will be proven wrong in the

future, so don't invest your savings just because you fall in love
with it. Don't look for perfection. It is overrated. Focus on
decisions, not outcomes. Look for disconfirming evidence.

n Model - Havells India Ltd.

FY10 FY11 FY12 FY13 FY14 FY15 FY16 CAGR (10-Yr) CAGR (5-Yr)
1.1 4.9 5.9 6.2 7.1 6.2 7.8 19% 10%
1% 5% 6% 5% 5% 4% 6%
14% 58% 46% 32% 29% 22% 22%
 Havells India Ltd. - Quarterly Analysis
Parameters 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16
Net Sales 1,267 1,353 1,236 1,340 1,243
% Growth YOY -1.9%
Profit Before Tax 150 166 159 171 149
% Growth YOY -0.4%
PBT Margin 11.8% 12.3% 12.9% 12.8% 12.0%
Net Profit 107 120 116 122 106
% Growth YOY -1.2%
Net Profit Margin 8.5% 8.8% 9.4% 9.1% 8.5%

Segment-Wise Results
Parameters 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16
Switchgears-Revenue 307 339 327 306 294
% Growth YOY -4.5%
% of Total Revenue 24.1% 24.8% 26.3% 22.6% 23.4%
Switchgears-PBIT 112 130 112 91 112
% Growth YOY 0.4%
PBIT Margin 36.5% 38.4% 34.3% 29.7% 38.3%
Cable-Revenue 535 591 495 569 508
% Growth YOY -5.0%
% of Total Revenue 41.9% 43.3% 39.7% 42.2% 40.6%
Cable-PBIT 59 71 58 78 72
% Growth YOY 21.9%
PBIT Margin 11.0% 12.0% 11.8% 13.6% 14.1%
Lighting & Fixtures-Revenue 165 194 194 188 161
% Growth YOY -2.9%
% of Total Revenue 13.0% 14.2% 15.6% 13.9% 12.8%
Lighting & Fixtures-PBIT 43 52 53 48 34
% Growth YOY -20.1%
PBIT Margin 26.0% 26.9% 27.6% 25.7% 21.4%
Electrical Consumer Durables-Revenue 269 241 231 287 290
% Growth YOY 7.8%
% of Total Revenue 21.1% 17.7% 18.5% 21.3% 23.2%
Electrical Consumer Durables-PBIT 68 60 56 73 73
% Growth YOY 6.9%
PBIT Margin 25.4% 24.9% 24.4% 25.5% 25.2%
Others
% of Total Revenue
PBIT
PBIT Margin
Total Gross Revenue 1,277 1,365 1,247 1,349 1,252
uarterly Analysis
2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 Trends
1,339 1,422 1,463 1,455 1,548 1,610
-1.0% 15.0% 9.2% 17.1% 15.6% 13.2%
170 170 221 202 203 207
2.3% 6.8% 28.9% 35.8% 19.3% 21.6%
12.7% 12.0% 15.1% 13.9% 13.1% 12.8%
121 119 164 145 143 151
0.9% 2.4% 34.7% 36.5% 18.5% 27.0%
9.0% 8.4% 11.2% 9.9% 9.2% 9.4%

e Results
2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 Trends
334 340 327 353 362 346
-1.3% 3.9% 7.1% 20.2% 8.4% 1.7%
24.8% 23.8% 22.2% 24.1% 23.2% 21.3%
132 130 128 143 144 129
1.5% 15.8% 41.7% 27.6% 9.5% -0.9%
39.4% 38.3% 39.2% 40.7% 39.9% 37.3%
563 582 609 533 630 683
-4.8% 17.5% 7.0% 4.9% 11.9% 17.4%
41.7% 40.6% 41.3% 36.3% 40.4% 42.1%
78 73 89 72 79 87
9.4% 25.2% 15.4% 0.4% 2.2% 18.8%
13.8% 12.6% 14.7% 13.5% 12.6% 12.7%
197 221 232 196 223 225
1.5% 13.9% 23.3% 22.1% 13.6% 1.7%
14.6% 15.4% 15.7% 13.4% 14.3% 13.9%
47 54 57 51 57 64
-10.3% 1.5% 17.4% 49.4% 21.4% 18.2%
23.8% 24.6% 24.5% 26.2% 25.4% 28.5%
256 289 307 351 318 344
5.9% 25.1% 7.2% 21.1% 24.1% 19.0%
18.9% 20.2% 20.8% 24.0% 20.4% 21.2%
55 73 86 91 82 81
-7.6% 28.9% 17.1% 24.9% 47.9% 11.3%
21.7% 25.2% 27.9% 26.0% 25.8% 23.6%
33 26 25
2.3% 1.7% 1.5%
8 6 5
23.7% 24.7% 22.1%
1,350 1,432 1,475 1,467 1,559 1,622