FY ends on March 30

All figures in million Rs

2008

2009

2010 2011E 2012E 2013E

67.3%
56.3%
33.8%
20.1%
(162)
115
11.1%
38
38
(50.0)%
(14)

4.7%
61.6%
19.5%
25.0%
(27)
770
15.6%
39
41
###
-

Profit and Loss Acount

Sales Growth (YoY %)
Cost of Goods Sold (% Sales)
SG&A (% Sales)
Depreciation (% of Net PPE)
Interest Expense
Other Income
Effective Tax Rate
Basic Sharess Outstanding
Diluted Sharess Outstanding
Dividend Per Share Growth Rate
Minority Interest

63.9%
19.2%
(59)
279
7.6%
38
39
-

22.0%
65.0%
20.0%
25.0%
(3)
188
16.0%
39
41
(5.0)%
-

22.0%
61.0%
19.5%
25.0%
188
16.0%
39
41
10.0%

20.0%
59.0%
19.0%
25.0%
188
16.0%
39
41
10.0%

Balance Sheet
Cash and Bank balances
Debtors collection period (Sales)
Loans and advances (% sales)
Capital Expenditure (% Sales)
Capital WIP (% of sales)
Goodwill (US$)
Current Investments
Deferred tax assets
Creditors payment period (Sales)
Other Current Liabilities (% Sales)
Provisions (% sales)
Dividend payment tax
Share Issuance/(Repurchases)

86.6
12.8%

18.9%

13.0%
2.3%

3.1% 3.1% 3.1% 3.1% 3.1%

82.4
66.7
65.0 65.0 65.0
12.3% 16.0% 12.0% 12.0% 12.0%
3.5% 5.8% 6.0% 6.0% 6.0%
1.1% 1.9% 1.5% 1.5% 1.5%
1,460
154
154
154
154
8.1% 9.8% 10.0% 10.0% 10.0%
190
214
202
208
205
6.4
3.6
5.0
5.0
5.0
21.4% 15.3% 15.0% 15.0% 15.0%
1.8% 3.8% 3.0% 3.0% 3.0%
17.0% 17.0% 17.0% 17.0% 17.0%
-

Debt Schedule
Long term debt

1,393.7

30.5

45

2014E 2015E
16.0%
58.5%
19.0%
25.0%
188
16.0%
39
41
10.0%

14.0%
57.5%
19.0%
25.0%
188
16.0%
39
41
10.0%

3.1%
65.0
12.0%
6.0%
1.5%
154
10.0%
206
5.0
15.0%
3.0%
17.0%
-

3.1%
65.0
12.0%
6.0%
1.5%
154
10.0%
205
5.0
15.0%
3.0%
17.0%
-

2008

2009

2010

2011E

2012E

2013E

Revenue
Software development expenses
Gross Profit

7,398
(4,725)
2,673

12,375
(6,968)
5,407

12,960 15,811 19,289 23,147

(7,982) (10,277) (11,760) (13,657)
4,977
5,534
7,529
9,490

SG&A
EBIT

(1,419)
1,254

(4,187)
1,220

(2,522)
2,456

(3,162)
2,372

(3,761)
3,768

(4,398)
5,092

Depreciation
EBITDA

356
1,610

570
1,790

652
3,107

653
3,025

727
4,495

835
5,927

Other Income
Interest Expense
Profit Before Tax

279
(59)
1,118

115
(162)
604

770
(27)
2,547

188
(3)
1,904

188
3,229

188
4,446

Tax
Non Recurring Tax
Profit After Tax

(129)
43
1,033

(139)
71
537

(380)
(19)
2,149

(305)

(517)

(711)

1,599

2,712

3,735

Minority Interest
Net Income

1,033

(14)
523

2,149

1,599

2,712

3,735

(76)

(38)

(118)

(112)

(124)

(136)

38
39
27.45
26.52
2.01

38
38
13.84
13.70
1.01

39
41
54.77
52.79
3.01

39
41
40.76
39.29
2.86

39
41
69.13
66.64
3.15

39
41
95.19
91.76
3.46

Profit and Loss Acount

Dividends
Shareholder Information
Basic Sharess Outstanding
Diluted Sharess Outstanding
Basic EPS
Diluted EPS
Dividend Per Share

2014E

2015E

26,851 30,610
(15,708) (17,601)
11,143 13,009
(5,102)
6,041

(5,816)
7,193

973
7,015

1,133
8,326

188
5,256

188
6,249

(841)

(1,000)

4,415

5,249

4,415

5,249

(149)

(164)

39
41
112.54
108.49
3.81

39
41
133.79
128.97
4.19

21,172.82

2008

2009

2010

2011E

2012E

379
2,792
1,520
1,007
5,698

403
2,370
2,068
1,266
6,107

1,483
2,816
1,897
1,581
7,777

2,807
3,435
2,315
1,929
10,486

2,831
130
1,460
7
190
4,619

2,612
247
154
7
214
3,233

2,908
234
154
7
202
3,504

3,338
285
154
7
208
3,992

10,316

9,340

11,282

14,478

216
2,644
222
3,082

127
1,987
490
2,604

217
2,372
474
3,063

264
2,893
579
3,736

1,394

31

45

1,394

31

45

5,840

6,706

8,174

10,742

10,316

9,340

11,282

14,478

Assets
Cash and bank balances
Sundry debtors
Loans and advances
Short Term Investments

###
###
###

Total Current Assets

PPE (net)
Capital WIP
Goodwill
Long term investments
Deferred tax assets (net)

Total Non Current Assets

Total Assets
Liability and Equity
Sundry Creditors
Other current liabilities
Provisions
Short Term Debt
Total Current Liabilities
Long Term Debt
Total Non Current Liabilities
Equity
Total Liability and Equity
BALANCE CHECK
DIFFERENCE

###
###

OK

OK
-

CHECK
0.0

CHECK
0.0

2013E

2014E

2015E

4,986
4,122
2,778
2,315
14,201

7,775
4,782
3,222
2,685
18,464

11,305
5,451
3,673
3,061
23,490

3,892
342
154
7
205
4,600

4,530
397
154
7
206
5,294

5,234
452
154
7
205
6,053

18,801

23,759

29,543

317
3,472
694
4,484

368
4,028
806
5,201

419
4,591
918
5,929

14,317

18,558

23,614

18,801

23,759

29,543

CHECK
0.0

CHECK
0.0

CHECK
0.0

2008 2009 2010

2011E

2012E

2013E

Operating Cash Flow

Net Income
Depreciation
(Inc) Dec in Operating Working Capital
(Inc) Dec in Capital WIP
(Inc) Dec in Deferred tax assets (net)

1,599
653
(131)
13
12
2,146

Operating Cash Flow

2,712
727
(711)
(51)
(6)
2,671

3,735
835
(788)
(57)
3
3,727

Investing Cash Flow

Capex

(949) (1,157) (1,389)

(949) (1,157) (1,389)

Inc (Dec) in Long Term Debt

Dividends
Dividend payment tax
Share Issuance/(Repurchase)

14
(112)
(19)
(117)

(45)
(124)
(21)
(190)

(136)
(23)
(159)

1,080
1,483

1,324
2,807

2,179
4,986

Investing Cash Flow

Financing Cash Flow

Financing Cash Flow

Net Cash Flow
Cash and Bank Balances

###

2014E
4,415
973
(757)
(55)
(1)
4,575

2015E
5,249
1,133
(768)
(56)
1
5,558

(1,611) (1,837)
(1,611) (1,837)

(149)
(25)
(175)

(164)
(28)
(192)

2,789 3,529
7,775 11,305

2008
Property, Plant and Equipment
Beginning Balance
Capex
Depreciation
Ending Balance

2009

2010

2,612

2011E 2012E
2,612
949
(653)
2,908

2,908
1,157
(727)
3,338

Equity
Beginning Balance
Net Income
Dividends
Dividend payment tax
Share Issuance/(Repurchases)
Ending Balance

6,706
8,174
1,599
2,712
(112)
(124)
(6)
(20)
(19)
(21)
6,706 8,174 10,742

Operating Working Capital

Sundry Debtors
Loans and Advances
Short Term Investments
Total Operating Current Asset

2,370
2,068
1,266
5,704

2,816
1,897
1,581
6,294

3,435
2,315
1,929
7,679

Sundry Creditors
Other Current Liabilities

127
1,987

217
2,372

264
2,893

Provisions
Total Operating Current Liabilities

490
2,604

474
3,063

579
3,736

Operating Working Capital

3,100

3,232

3,942

EV

2013E
3,338
1,389
(835)
3,892

2014E

2015E

3,892 4,530
1,611 1,837
(973) (1,133)
4,530 5,234

10,742 14,317 18,558

3,735
4,415 5,249
(136)
(149)
(164)
(23)
(25)
(28)
14,317 18,558 23,614

4,122
2,778
2,315
9,215

4,782 5,451
3,222 3,673
2,685 3,061
10,689 12,185

317
3,472

368
4,028

419
4,591

694
4,484

806
5,201

918
5,929

4,731

5,488

6,256

2008 2009 2010 2011E

2012E

Free Cash Flow

EBIT
Tax on EBIT

2,372
(305)
2,067

3,768
(517)
3,251

Depreciation
(Inc) Dec in Capital WIP
Inc (Dec) in Defrred Tax
(Inc) Dec in Operating Working Capital
Capital Expenditure
Free Cash Flow

653
13
12
(131)
(949)
1,665

727
(51)
(6)
(711)
(1,157)
2,052

Weighted Average Capital Cost

Effective tax rate
Indian Government 10 Yr bond yield
Market Risk Premium
Levered Beta
Equity Cost

16.0%
8.2%
7.3%
1.30
17.6%

Profit After Tax

Credit Rating (Long Term Capital Structure)

Credit Spread Over Risk Free
Debt Cost Pre Tax
Debt Cost Post Tax

Share Price
Shares Outstanding (Diluted)
Market Capitalization
Total Debt ETC
Total Capital
EV
Capital Structure (% Equity)
Capital Structure (% Debt)
WACC
Terminal Growth rate

A+
0.2%
8.4%
7.0%
Comp A
542.90 As of 21.01.2011
41
22,095
45
22,140
21,736
99.8%
0.2%
17.6%
1.75%

Discounting Model
Year Count
PV of FCF
Terminal Value
NPV
Intrinsic value

1.0
1,416
###
22,115
543.41

2.0
1,485

2013E

2014E
5,092
(711)
4,381

2015E

6,041 7,193
(841) (1,000)
5,200 6,194

835
973 1,133
(57)
(55)
(56)
3
(1)
1
(788)
(757)
(768)
(1,389) (1,611) (1,837)
2,984 3,749 4,666

As of 21.01.2011

3.0
1,836

4.0
1,961

5.0
2,076

DCF
543.41
Beta Sensitivity and Terminal Growth Rate
Terminal Growth rate/
Beta
0.50%
0.75%
1.00%
1.25%
1.50%
1.75%

Case

0.9

1.1

1.2

683.6
693.2
703.1
713.4
724.1
735.3

642.9
651.3
660.0
669.0
678.3
688.0

606.3
613.7
621.3
629.2
637.4
645.9

573.2
579.7
586.5
593.5
600.7
608.2

543.1
548.9
554.9
561.2
567.6
574.2

36

Beta

TGR
1.3

0.0

0.8
0.8
0.8
0.8
0.8
0.8
0.9
0.9
0.9
0.9
0.9
0.9
1
1
1
1
1
1
1.1
1.1
1.1
1.1
1.1
1.1
1.2
1.2
1.2
1.2
1.2
1.2
1.3
1.3

TGR
0.50%
0.75%
1.00%
1.25%
1.50%
1.75%
0.50%
0.75%
1.00%
1.25%
1.50%
1.75%
0.50%
0.75%
1.00%
1.25%
1.50%
1.75%
0.50%
0.75%
1.00%
1.25%
1.50%
1.75%
0.50%
0.75%
1.00%
1.25%
1.50%
1.75%
0.50%
0.75%

Beta
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32

0.8

33
34
35
36

1.3
1.3
1.3
1.3

1.00%
1.25%
1.50%
1.75%

1.3
515.7
520.9
526.3
531.8
537.5
543.4

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Mindtree Valuation Ratios

Current1 Yr Forward
P/E
EV/EBITDA
Market Cap/Sales

2 Yr Forward

10.28

13.82

8.15

6.99

7.19

4.84

1.70

1.40

1.15

Company
TCS
Infosys
HCLTech
Wipro
Patni
Tech Mahindra
Hexaware
Mphasis
Polaris
Average (all companies)
Average (mid cap companies)
Mindtree
FY'11
FY'12

P/E EV/EBITDA Market Cap/ Sales

33.2
26.8
8.4
32.5
20.6
8.2
31.8
21.7
5.4
25.4
19.2
4.8
9.8
6.6
2.9
13.4
10.3
1.9
14.7
7.7
2.7
12.9
10.9
3.4
9.8
7.3
1.3
20.4
14.6
4.3
14.9
8.6
2.5
13.4
8.3
1.6
13.8
7.2
1.4
8.1
4.8
1.1

Mastek

45.1

12.7

1.3

Recent acquisitions in the IT space

Target
Acquiror
P/EEV/EBITDA
Patni
I Gate
10
6.5

Premium/(Disc)
Market cap
EV
P/E
EV/EBITDA

Range of Target price (per share)

Low
High
586.5
629.2
Average share price for the last 30 days
10%
18%
532.93
23,868.3 25,608.0
22,430.0 24,169.6
8.8
9.4
5.0
5.4