Safal-niveshak-stock-analysis-excel-version-4.0.xlsx

Safal Niveshak Stock Analysis Excel (Ver. 4. www.safalniveshak.com HOW TO USE THIS SPREADSHEET

Step 1 - This spreadsheet works only on Screener.in. The first step is to create a free account here - https://www.screener.in/re Step 2 - After creating your account, while you are logged in to Screener.in website, visit this page - https://www.screener.in/ex

Step 3 - Visit the home page of Screener.in and choose a company of your choice. Once you do that, you will see details of you financial statement table called "Quarterly Results" and click on "View Consolidated". Now, all data you see for this company wi Step 4 - Scroll back to the top of the page, and you will see a button "Export to Excel" on the right side. Click the button and the the exact format as "Safal Niveshak's Stock Analysis Excel Ver. 4.0". Now onwards, any excel you export for any company on S Step 5 - Email me your love and testimonial for helping you with this excel. :-)

IMPORTANT INSTRUCTIONS

1. Ensure that the company whose data you are downloading has numbers at least starting from FY08 (March 2008). This is be from, say, FY10, you will see incorrect data for FY08 and FY09 (which will be of Hero Motocorp on whose financials I have crea 2. All financial data of your chosen company will be automatically updated in the sheet you download, except "Cash and Bank" figures, which you must update manually from the company's annual reports. Don’t forget to make these changes as these num 3. You may update the sheet and add your own analysis, formulae etc. and then upload again to Screener.in site using the Step "Data Sheet" because this will cause errors in your future downloads. 4. DON’T touch any cell except the black ones, where you are required to update the numbers manually from Annual Reports (j the growth assumptions etc. 4. I have added Comments and Instructions wherever necessary so as to explain the concepts. Read those carefully before wo 5. This sheet is not a replacement of the work required to read annual reports as part of the analysis process. So please do tha some discrepancy in numbers (though rare), but you will know this only when you read annual reports. 6. I could not find a bug/errors in this spreadsheet, but if you notice some, please email me at - [email protected] - and 7. I will keep on updating the sheet from time to time and will update the same on the website. I invite you to share your feedba together. 8. This excel won't work for banking and financial services companies. Note: All data is sourced from Screener.in

Safal Niveshak Stock Analysis Excel (Ver. 4.0) www.safalniveshak.com

Warning! Excel can be a wonder a deadly weapon if you wish to careful of what you are getting garbage out. And if you need the a given stock, you mu

Basic Company Details Parameters Company Current Stock Price (Rs) Face Value (Rs) No. of Shares (Crore) Market Capitalization (Rs Crore)

Details HERO MOTOCORP LTD 2,881 2.0 20.0 57,542

Key Financials - Trend Parameters Sales Growth (9-Year CAGR) Profit Before Tax Growth (9-Year CAGR) Net Profit Growth (8-Year CAGR) Average Debt/Equity (5-Years, x) Average Return on Equity (5-Years) Average P/E (5-Years, x) Latest P/E (x)

Details 11.3% 12.7% 12.5% 0.0 34.9% 20.0 15.6

Remember! Focus on decisions evidence

Please! It's your money. Please cause you to lose it all! I've desi but you alone are responsible f ever after! I am not a sadist w analyzing companies on your instead of a map, for you can c A

Excel can be a wonderful tool to analyze the past. But it can be y weapon if you wish to use it to predict the future! So be very of what you are getting into. Here, garbage in will always equal out. And if you need the excel to tell you what you must do with a given stock, you must not use this tool anyways.

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

It's your money. Please don't blame me if results of this excel u to lose it all! I've designed this excel to aid your own thinking, alone are responsible for your actions. I want to live peacefully fter! I am not a sadist who wants you to do the hard work by ng companies on your own. But I'd rather give you a compass of a map, for you can confuse map with territory and lose it all. All the best!

Buffett Checklist - Read, Remember, Follow! 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 intangible that makes the product unique. Such companies will typically have high gross and operating profit margins because of their unique niche. However, don't just go on margins as high margins may simply highlight companies within industries with traditionally high margins. Thus, look for companies with gross, operating and net profit margins above industry norms. Also look for 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 more effectively judge a company, its industry, and its competitive environment (simple products you consume). While it is difficult to construct a quantitative filter, you should be able to identify areas of interest. You should "only" consider analyzing those companies that operate in areas that you can clearly grasp - your circle of competence. Of course you can increase the size of the circle, but only over time by learning about new industries. More important than the size of the circle is to know its boundaries. Seeks out companies with conservative financing, which equates to a simple, safe balance sheet. Such companies tend to have strong cash flows, with little need for long-term debt. Look for low debt to equity or low debt-burden ratios. Also seek 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, and expanding earnings (profits). Seek companies with 5/10 year earnings per share growth greater than 25% (along with safe balance sheets). To help indicate that earnings growth is still strong, look for companies where the last 3-years earnings growth rate is higher than the last 10-years growth rate. More important than the rate of growth is the consistency in such growth. So exclude companies with volatile earnings growth in the past, even if the "average" growth has been high. Like you should stock to your circle of competence, a company should invest its capital only in those businesses within its circle of competence. This is a difficult factor to screen for on a quantitative level. Before investing in a company, look at the company’s past pattern of acquisitions and new directions. They should fit within the primary range of operations for the firm. 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 opportunities exist. When companies have excess cash flow, Buffett favours shareholder-enhancing maneuvers such as share buybacks. While we do not screen for this factor, a follow-up examination of a company would reveal if it has a share buyback plan in place. Seek companies where earnings have risen as retained earnings (earnings after paying dividends) have been employed profitably. A great way to screen for such companies is by looking at those that have had consistent earnings and strong return on equity in the past. Consider it a positive sign when a company is able to earn above-average (better than competitors) returns on equity without employing much debt. Average return on equity for Indian companies over the last 10 years is approximately 16%. Thus, seek companies that earn at least 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 suggested above (like high ROE, high grow margins, low debt etc.) are able to adjust prices to inflation without the risk of losing significant volume sales.

Companies that consistently need capital to grow their sales and profits are like bank savings account, and thus bad for an investor's long term portfolio. Seek companies that don't need high capital investments consistently. Retained earnings must first go toward maintaining current operations at competitive levels, so the lower the amount needed to maintain current operations, the better. Here, more than just an absolute assessment, a comparison against competitors will help a lot. Seek companies that consistently generate positive and rising free cash flows. Sensible investing is always about using “folly and discipline” - the discipline to identify excellent businesses, and wait for the folly of the market to drive down the value of these businesses to attractive levels. You will have little trouble understanding this philosophy. However, its successful implementation is dependent upon your dedication to learn and follow the principles, and apply them to pick stocks successfully. Focus on decisions, not outcomes. Look for disconfirming evidence.

Balance Sheet Rs Cr Equity Share Capital Reserves Borrowings Other Liabilities Total Net Block Capital Work in Progress Investments Other Assets Total

Mar-09 40 3,761 78 2,206 6,085 1,574 121 3,369 1,022 6,085

HERO MOTOCORP LTD Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 40 40 40 40 40 40 40 40 40 3,425 2,916 4,250 4,966 5,560 6,501 8,794 10,071 11,729 66 693 719 642 284 4,992 7,083 4,886 4,001 4,218 3,987 3,796 4,645 5,036 8,523 10,732 9,895 9,649 10,102 10,528 12,631 14,757 16,805 1,659 4,080 48 50 3,926 5,129 2,890 1,473 8,523 10,732

3,786 39 3,964 2,107 9,895

3,071 2,243 2,913 3,584 4,396 4,655 62 854 713 605 465 318 3,624 4,089 3,154 4,581 5,890 7,525 2,892 2,916 3,749 3,860 4,006 4,307 9,649 10,102 10,528 12,631 14,757 16,805

Working Capital -1,184 -2,102 -5,610 -2,779 -1,109 -1,302 -238 64 -639 -729 Debtors 150 108 131 272 665 921 1,390 1,283 1,562 1,520 Inventory 327 436 525 676 637 670 815 673 656 824 Cash & Bank** 4,735 3,367 3,190 3,393 2,605 3,546 4,739 5,829 ** Manually enter this number; Convert to Rs Crore if not already done in the Annual Reports; Use Cash+Bank+Current Investments from Consolidated Balance Sheet in Annual Reports Debtor Days Inventory Turnover Fixed Asset Turnover Debt/Equity Return on Equity Return on Capital Employed

4 38 7.8 0.0 34% 46%

3 36 9.5 0.0 64% 80%

2 37 4.8 0.2 65% 66%

4 35 6.2 0.2 55% 58%

10 37 7.7 0.1 42% 45%

13 38 11.3 0.1 38% 49%

18 34 9.5 36% 51%

16 42 7.9 36% 50%

20 43 6.5 33% 46%

17 39 6.9 31% 45%

Profit & Loss Account / Income Statement Rs Cr Sales % Growth YOY Expenses Material Cost (% of Sales) Power and Fuel Other Mfr. Exp Employee Cost Selling and Admin Cost Operating Profit Operating Profit Margin Other Income Other Income as % of Sales Depreciation Interest Interest Coverage(Times) Profit before tax (PBT) % Growth YOY PBT Margin Tax Net profit % Growth YOY Net Profit Margin EPS % Growth YOY Price to earning Price Dividend Payout Market Cap Retained Earnings Buffett's $1 Test

TRENDS: Sales Growth PBT Growth PBT Margin Price to Earning

Mar-09 12,319 10,635 71% 1% 1% 3% 9% 1,684 14% 280 2.3% 181 3 705 1,781 14% 500 1,282 10% 64.2 17.0 1,093 31.2% 21,819 882 5.1

HERO MOTOCORP LTD Mar-10 Mar-11 Mar-12 Mar-13 15,758 19,398 23,579 23,768 28% 23% 22% 1% 13,096 16,865 19,960 20,484 68% 73% 74% 73% 1% 1% 0% 1% 1% 1% 1% 1% 3% 3% 3% 3% 9% 7% 5% 6% 2,662 2,533 3,619 3,284 17% 13% 15% 14% 363 290 365 398 2.3% 1.5% 1.5% 1.7% 191 402 1,097 1,142 2 15 21 12 1,349 160 135 213 2,832 2,405 2,865 2,529 59% -15% 19% -12% 18% 12% 12% 11% 600 477 487 411 2,232 1,928 2,378 2,118 74% -14% 23% -11% 14% 10% 10% 9% 111.8 96.5 119.1 106.1 74% -14% 23% -11% 17.4 17.8 17.7 14.3 1,941 1,714 2,107 1,517 98.4% 108.8% 37.8% 56.6% 38,768 34,222 42,080 30,296 35 -169 1,479 920

10 YEARS 7 YEARS 5 YEARS 3 YEARS 11.3% 7.5% 6.3% 5.3% 12.7% 11.8% 15.7% 16.4% 13.9% 13.5% 14.3% 16.1% 18.4 18.8 20.0 19.4

Check for long term vs short term trends here. Check if the growth over past 3 or 5 years has slowed down / improved compared to long term (7 to 10 years) growth numbers.

Mar-14 25,275 6% 21,735 72% 1% 1% 4% 6% 3,540 14% 446 1.8% 1,107 12 244 2,867 13% 11% 758 2,109 0% 8% 105.6 0% 21.0 2,222 61.5% 44,362 811

Mar-15 27,585 9% 24,198 72% 1% 1% 4% 7% 3,387 12% 493 1.8% 540 11 301 3,329 16% 12% 943 2,386 13% 9% 119.5 13% 20.7 2,476 50.2% 49,436 1,187

Mar-16 28,443 3% 23,988 68% 0% 1% 5% 7% 4,455 16% 422 1.5% 438 5 908 4,435 33% 16% 1,275 3,160 32% 11% 158.3 32% 18.8 2,980 45.5% 59,515 1,722

Mar-17 28,500 0% 23,866 67% 0% 1% 5% 7% 4,635 16% 522 1.8% 493 6 771 4,658 5% 16% 1,281 3,377 7% 12% 169.1 7% 19.1 3,231 50.3% 64,524 1,680

Mar-18 Trailing 32,230 33,050 13% 26,950 27,688 68% Check for wide fluctuations in key 0% expense items. For manufacturing firms, check their material costs etc. For 1% services firms, look at employee costs. 5% 7% 5,280 5,362 16% 16% 526 510 1.6% 1.5% 556 571 6 7 840 782 5,244 5,294 13% 16% 16% 1,547 1,601 3,697 3,692 9% 11% 11% 185.1 184.9 9% 20.2 15.6 3,732 2,881 51.3% 74,530 1,800

Cash Flow Statement HERO MOTOCORP LTD Rs Cr Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Cash from Operating Activity (CFO) 1,359 2,687 2,254 2,360 1,890 2,963 2,250 % Growth YoY 98% -16% 5% -20% 57% -24% Cash from Investing Activity -861 -528 -1,322 93 -733 -1,617 12 Cash from Financing Activity -500 -2,109 -955 -2,458 -1,056 -1,415 -2,231 Net Cash Flow -2 49 -23 -6 101 -69 32 CFO/Sales 11% 17% 12% 10% 8% 12% 8% CFO/Net Profit 106% 120% 117% 99% 89% 141% 94% Capex** 315 212 364 565 607 937 1,156 FCF 1,044 2,475 1,890 1,795 1,283 2,026 1,094 Average FCF (3 Years) FCF Growth YoY 137% -24% -5% -28% 58% -46% FCF/Sales 8% 16% 10% 8% 5% 8% 4% FCF/Net Profit 81% 111% 98% 75% 61% 96% 46%

** Manually enter this number; Convert to Rs Crore if not already done in the Annual Reports; Use "Capital expenditure" number shown under "Cash Flow from Investing Activities" segment of Consolidated Cash Flow Statement available in the Annual Reports

Mar-16 Mar-17 Mar-18 Total 3,849 4,028 3,981 27,621 71% 5% -1% -2,206 -1,944 -1,915 -11,022 -1,687 -2,096 -2,047 -16,553 -44 -12 19 46 14% 14% 12% 122% 119% 108% 1,638 1,238 824 2,211 2,790 3,157 19,766 2,719 102% 26% 13% 8% 10% 10% 70% 83% 85%

Key Ratios HERO MOTOCORP LTD Mar/09 Mar/10 Mar/11 Mar/12 Mar/13 Sales Growth 27.9% 23.1% 21.6% 0.8% PBT Growth 59.0% -15.1% 19.1% -11.7% Net Profit Growth 74.1% -13.6% 23.4% -10.9% Dividend Growth 450.0% -4.5% -57.1% 33.3% Operating Cash Flow Growth 97.7% -16.1% 4.7% -19.9% Free Cash Flow Growth 137.1% -23.6% -5.0% -28.5% Operating Margin PBT Margin Net Margin

13.7% 14.5% 10.4%

Debtor Days Inventory Turnover Fixed Asset Turnover Debt/Equity Debt/Assets Interest Coverage (Times) Return on Equity Return on Capital Employed Free Cash Flow (Rs Cr)

4.4 2.5 37.7 36.1 7.8 9.5 0.0 0.0 1.3% 0.8% 705.1 1,349.4 33.7% 64.4% 46.0% 80.3% 1,044 2,475

Mar/14 6.3% 13.4% -0.4% 8.3% 56.8% 57.9%

Mar/15 9.1% 16.1% 13.1% -7.7% -24.1% -46.0%

Mar/16 Mar/17 3.1% 0.2% 33.2% 5.0% 32.5% 6.9% 20.0% 18.1% 71.1% 4.6% 102.1% 26.2%

16.9% 13.1% 15.3% 13.8% 14.0% 12.3% 15.7% 16.3% 18.0% 12.4% 12.1% 10.6% 11.3% 12.1% 15.6% 16.3% 14.2% 9.9% 10.1% 8.9% 8.3% 8.6% 11.1% 11.8% 2.5 4.2 10.2 13.3 18.4 16.5 20.0 37.0 34.9 37.3 37.7 33.8 42.3 43.4 4.8 6.2 7.7 11.3 9.5 7.9 6.5 0.2 0.2 0.1 0.1 6.5% 7.3% 6.6% 2.8% 0.0% 0.0% 0.0% 159.5 135.5 213.4 243.6 301.2 907.9 771.0 65.2% 55.4% 42.3% 37.7% 36.5% 35.8% 33.4% 66.3% 57.6% 45.0% 48.9% 51.1% 50.3% 46.1% 1,890 1,795 1,283 2,026 1,094 2,211 2,790

Mar/18 13.1% 12.6% 9.5% 11.8% -1.2% 13.1% 16.4% 16.3% 11.5% 17.2 39.1 6.9 0.0% 840.1 31.4% 44.6% 3,157

What to look for? Higher is better, but also look for long term stability and consistency Higher is better, but also look for long term stability and consistency Higher is better, but also look for long term stability and consistency Higher isn't always better, esp. when the company is generating high ROE, which means the management is allocating capital Higher is better, but also look for long term stability and consistency Higher is better, but also look for long term stability and consistency Higher is better, but also look for long term stability and consistency, plus the nature of the industry. Also compare with industry Higher is better, but also look for long term stability and consistency, plus the nature of the industry. Also compare with industry Higher is better, but also look for long term stability and consistency, plus the nature of the industry. Also compare with industry Lower/reducing is better. Compare with industry peer(s) Higher/rising is better. Compare with industry peer(s) Higher/rising is better. Compare with industry peer(s) Nil / lower than 0.5 / reducing is better Lower is better Look for number > 5 Look for number > 20%. Also check if the debt is low/nil. Compare with industry peer(s) Look for number > 20%. Also check if the debt is low/nil. Compare with industry peer(s) Look for positive and rising numbers. If the company consistently generates negative FCF over say 10 years, avoid it.

Profit Margin

20%

100% 80%

15%

Capital Alloc

Check for a rising trend and Numbers > 20% long term a has zero/marginal debt. Com

60%

10%

40%

5%

20%

Check for a rising trend and/or consistency. Compare with a close competitor

0% Jan/09

Jan/11

Jan/13

Operating Margin Net Margin 35,000 30,000

Jan/15

Jan/17

25,000 20,000 15,000 10,000 5,000 -

6,000 5,000

Jan

ROE

Check for a rising trend.

Jan/11

Jan/11

PBT Margin

Revenue

Jan/09

0% Jan/09

Jan/13

Jan/15

Jan/17

Profit Over Time

Revenue and Pro 80% Check for a ris 70% Compare grow 60% 50% 40% 30% 20% 10% 0% Jan/12 -10% Jan/10 -20% Revenue Growth Net Profit Grow

Operating and 5,000 Check for positive numbe

Check for a rising trend.

4,000

4,000

which are rising over tim

3,000

3,000

2,000

2,000

1,000

1,000 -

Jan/09

Jan/11

PBT

Jan/13

Jan/15

Net Profit

Jan/17

Jan/09

Jan/11

Ja

Operating Cash Flo

Data for Charts (Please don't touch any number below) Margins Mar/09

Mar/10

Mar/11

Mar/12

Mar/13

Mar/14

Mar/15

Mar/16

Mar/17

Operating Margin

14%

17%

13%

15%

14%

14%

12%

16%

16%

PBT Margin

14%

18%

12%

12%

11%

11%

12%

16%

16%

Net Margin

10%

14%

10%

10%

9%

8%

9%

11%

12%

Mar/09

Mar/10

Mar/11

Mar/12

Mar/13

Mar/14

Mar/15

Mar/16

Mar/17

ROE

34%

64%

65%

55%

42%

38%

36%

36%

33%

ROCE

46%

80%

66%

58%

45%

49%

51%

50%

46%

Mar/10

Mar/11

Mar/12

Mar/13

Mar/14

Mar/15

Mar/16

Mar/17

Mar/18

Management Effectiveness

Revenue & Profit Growth Revenue Growth

28%

23%

22%

1%

6%

9%

3%

0%

13%

PBT Growth

59%

-15%

19%

-12%

13%

16%

33%

5%

13%

Net Profit Growth

74%

-14%

23%

-11%

0%

13%

32%

7%

9%

Revenue & Profit Mar/09

Mar/10

Mar/11

Mar/12

Mar/13

Mar/14

Mar/15

Mar/16

Mar/17

12,319

15,758

19,398

23,579

23,768

25,275

27,585

28,443

28,500

PBT

1,781

2,832

2,405

2,865

2,529

2,867

3,329

4,435

4,658

Net Profit

1,282

2,232

1,928

2,378

2,118

2,109

2,386

3,160

3,377

Mar/09

Mar/10

Mar/11

Mar/12

Mar/13

Mar/14

Mar/15

Mar/16

Mar/17

Operating Cash Flow

1,359

2,687

2,254

2,360

1,890

2,963

2,250

3,849

4,028

Free Cash Flow

1,044

2,475

1,890

1,795

1,283

2,026

1,094

2,211

2,790

Revenue

Cash Flows

%

%

Capital Allocation Quality Check for a rising trend and/or consistency. Numbers > 20% long term are good. Also check if the company has zero/marginal debt. Compare with a close competitor

%

%

%

% Jan/09

Jan/11

Jan/13

ROE

Jan/15

Jan/17

ROCE

Revenue and Profit Growth (YoY) % Check for a rising trend and/or low volatility. % Compare growth rates with a close competitor. % % % % % % % Jan/12 Jan/14 Jan/16 Jan/18 % Jan/10 % Revenue Growth PBT Growth Net Profit Growth

Operating and Free Cash Flow 0 Check for positive numbers and

0

which are rising over time.

0

0

0

Jan/09

Jan/11

Jan/13

Operating Cash Flow

Jan/15

Jan/17

Free Cash Flow

Note: Please ignore the dates on the X-axis. The figures are for/as on the year ending date, which for most Indian companies would be 31st March of that year

Mar/18 16% 16% 11%

Mar/18 31% 45%

Mar/18 32,230 5,244 3,697

Mar/18 3,981 3,157

Common Size P&L Rs Cr Sales Raw Material Cost Change in Inventory Power and Fuel Other Mfr. Exp Employee Cost Selling and Admin Cost Other Expenses Operating Profit Other Income Depreciation Interest Profit Before Tax Tax Net Profit Dividend Amount

Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 71% 68% 73% 74% 73% 72% 72% 68% 67% 68% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 1% 1% 1% 0% 1% 1% 1% 0% 0% 0% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 3% 3% 3% 3% 3% 4% 4% 5% 5% 5% 9% 9% 7% 5% 6% 6% 7% 7% 7% 7% 2% 2% 2% 2% 2% 2% 3% 3% 4% 3% 13% 17% 13% 15% 14% 14% 12% 16% 17% 16% 2% 2% 1% 2% 2% 2% 2% 1% 2% 2% 1% 1% 2% 5% 5% 4% 2% 2% 2% 2% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 14% 18% 12% 12% 11% 11% 12% 16% 16% 16% 4% 4% 2% 2% 2% 3% 3% 4% 4% 5% 10% 14% 10% 10% 9% 8% 9% 11% 12% 11% 3% 14% 11% 4% 5% 5% 4% 5% 6% 6%

Common Size Balance Sheet Rs Cr Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Equity Share Capital 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% Reserves 62% 40% 27% 43% 51% 55% 62% 70% 68% 70% Borrowings 1% 1% 6% 7% 7% 3% 0% 0% 0% 0% Other Liabilities 36% 59% 66% 49% 41% 42% 38% 30% 31% 30% Total Liabilities 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Net Block 26% 19% 38% 38% 32% 22% 28% 28% 30% 28% Capital Work in Progress 2% 1% 0% 0% 1% 8% 7% 5% 3% 2% Investments 55% 46% 48% 40% 38% 40% 30% 36% 40% 45% Other Assets 17% 34% 14% 21% 30% 29% 36% 31% 27% 26% Total Assets 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Receivables 2% 1% 1% 3% 7% 9% 13% 10% 11% 9% Inventory 5% 5% 5% 7% 7% 7% 8% 5% 4% 5% Cash & Bank 4% 22% 1% 1% 2% 1% 2% 1% 1% 1%

A common-size financial statement is displays line items as a percentage of one selected or common figure. Creating common-size financial statements makes it easier to analyze a company over time and compare it with its peers. Using common-size financial statements helps investors spot trends that a raw financial statement may not uncover.

Dhandho Intrinsic Value Calculation Read the book - The Dhandho Investor by Mohnish Pabrai HERO MOTOCORP LTD Dhandho IV - Lower Range Year FCF (Rs Cr) PV of FCF (Rs Cr) Assumed FCF Growth 0 Excess Cash (Latest) 5,829 Year 1-3 15% 1 FY18 3,127 2,792 Year 4-6 10% 2 FY19 3,596 2,867 Year 7-10 5% 3 FY20 4,136 2,944 Discount Rate 12% 4 FY21 4,549 2,891 5 FY22 5,004 2,840 Last 5-Years' CAGR 6 FY23 5,505 2,789 Sales 6% 7 FY24 5,780 2,615 PBT 16% 8 FY25 6,069 2,451 FCF 20% 9 FY26 6,372 2,298 10 FY27 6,691 2,154 10 66,909 21,543 Intrinsic Value 54,012 Current Mkt. Cap. 57,542 Premium/(Discount) to IV 7%

HERO MOTOCORP LTD Dhandho IV - Higher Range Year 0 1 2 3 4 5 6 7 8 9 10 10

Excess Cash (Latest) FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27

Intrinsic Value Current Mkt. Cap. Premium/(Discount) to IV

Note: See explanation of this model here

P.S. In case of companies earning negative FCF, where this model will not work, you must use a normalized positive FCF as starting number. This number is your assumption of FCF the business will earn in a normal year, without capex. Check the his this business while arriving at your assumption, and use your judgment wisely without twisting the model to fit your version of

Calculation

by Mohnish Pabrai

HERO MOTOCORP LTD Dhandho IV - Higher Range FCF (Rs Cr) PV of FCF (Rs Cr) Assumed FCF Growth Excess Cash (Latest) 5,829 Year 1-3 20% 3,263 2,914 Year 4-6 15% 3,916 3,122 Year 7-10 10% 4,699 3,345 Discount Rate 12% 5,404 3,434 6,214 3,526 7,146 3,621 7,861 3,556 8,647 3,492 9,512 3,430 10,463 3,369 156,947 50,533 Intrinsic Value 90,170 Current Mkt. Cap. 57,542 Premium/(Discount) to IV -36%

ust use a normalized positive FCF as the al year, without capex. Check the history of sting the model to fit your version of reality.

Ben Graham Formula (Low Range) Company Name Year Ended

HERO MOTOCORP LTD Mar/18

Ben Graham Formula (High Range) Company Name Year Ended

Avg 5-Yr Net Profit (Rs Crore) PE Ratio at 0% Growth Long-Term Growth Rate

2,945.9 8.5 5.9

Avg 5-Yr Net Profit (Rs Crore) PE Ratio at 0% Growth Long-Term Growth Rate

Ben Graham Value (Rs Crore) Current Market Cap (Rs Crore)

59,759 57,542

Ben Graham Value (Rs Crore) Current Market Cap (Rs Crore)

EXPLANATION Ben Graham's Original Formula: Value = EPS x (8.5 + 2G) Here, EPS is the trailing 12 month EPS, 8.5 is the P/E ratio of a stock with 0% growth and g is the growth rate for the next 7-10 Ben Graham's Revised Formula: Value = [EPS x (8.5 + 2G) x 4.4] / Y Here, 4.4 is what Graham determined to be his minimum required rate of return. At the time of around 1962 when Graham was Note: I have used Graham's original formula in the above calculations

m Formula (High Range) HERO MOTOCORP LTD Mar/18 2,945.9 8.5 11.8 94,479 57,542

g is the growth rate for the next 7-10 years

e of around 1962 when Graham was publicizing his works, the risk free interest rate was 4.4% but to adjust to the present, we divide this nu

e present, we divide this number by today’s AAA corporate bond rate, represented by Y in the formula above.

Dicounted Cash Flow Valuation HERO MOTOCORP LTD Initial Cash Flow (Rs Cr)

2,719

Years FCF Growth Rate Discount Rate Terminal Growth Rate

1-5 15% 12% 2%

Net Debt Level (Rs Cr)

(5,829)

Year 1 2 3 4 5 6 7 8 9 10 Final Calculations Terminal Year PV of Year 1-10 Cash Flows Terminal Value Total PV of Cash Flows Current Market Cap (Rs Cr) Note: See explanation of DCF here

FCF 3,127 3,596 4,136 4,756 5,469 6,126 6,861 7,684 8,606 9,639

9,832 30,246 31,656 61,902 57,542

6-10 12%

Growth Present Value 15% 2,792 15% 2,867 15% 2,944 15% 3,023 15% 3,104 12% 3,104 12% 3,104 12% 3,104 12% 3,104 12% 3,104

61,902 57,542 108%

Valuation

LTD DCF Value (As calculated in cell B29) Current Market Cap DCF as % of Current Mkt Cap

Expected Returns Model Particulars Net Profit (Rs Crore) Net Profit Margin Return on Equity Calculations (Enter values only in black cells) Estimated CAGR in Net Profit over next 10 years Estimated Net Profit after 10 years (Rs Cr) Current P/E (x) Exit P/E in the 10th year from now (x, Estimated) Esti. Market Cap (10th year from now; Rs Cr) Cost of Capital/Discount Rate Discounted Value (Rs Cr) Current Market Cap (Rs Cr) Note: See explanation of this model here

HERO MOTOCORP LTD Mar/09 Mar/10 Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 1,282 2,232 1,928 2,378 2,118 2,109 2,386 10% 14% 10% 10% 9% 8% 9% 34% 64% 65% 55% 42% 38% 36%

12% 11,483 15.6 20.0 229,669 12% 73,947 57,542

el Mar/16 Mar/17 Mar/18 CAGR (9-Yr) CAGR (5-Yr) 3,160 3,377 3,697 12% 12% 11% 12% 11% 36% 33% 31%

Intrinsic Value Range HERO MOTOCORP LTD Lower Higher 54,012 90,170 Dhandho Ben Graham 59,759 94,479 DCF 61,902 Expected Return 73,947 Current Market Cap. 57,542 Explanation: Considering the above range, we can say that Hero Moto's IV range is between Rs 55,000 crore to Rs 95,000 crore. It's a big range, but that's fine (who is looking for precision?). Now, if the current market cap is within this IV range, it makes the stock reasonably/attractively priced. If the current market cap is higher then the higher value of the range, it makes it overpriced. But remember, these are just numbers!

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

Don't try to quantify everything. In stock research, the less mathematical you are, the more simple, sensible, and usefu be your analysis and results. Great analysis is generally "b of-the-envelope".

Also, your calculated "fair value" will be proven wrong in future, so don't invest your savings just because you fall in with it. Don't look for perfection. It is overrated. Focus o decisions, not outcomes. Look for disconfirming eviden

importance to a stock's valuations / fair value ave answered in "Yes" to these two questions ness simple to be understood? and (2) Can I understand this business?

fy everything. In stock research, the less nonare, the more simple, sensible, and useful will and results. Great analysis is generally "backof-the-envelope".

lated "fair value" will be proven wrong in the vest your savings just because you fall in love ook for perfection. It is overrated. Focus on outcomes. Look for disconfirming evidence.

HERO MOTOCORP LTD SCREENER.IN Narration Mar-16 Jun-16 Sales 7,505 7,399 % Growth YOY Expenses 6,316 6,169 Operating Profit 1,189 1,230 Other Income 117 120 Depreciation 115 115 Interest 1 2 Profit before tax 1,190 1,234 PBT Margin 16% 17% % Growth YOY Tax 357 351 Net profit 833 883 % Growth YOY OPM 16% 17%

Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 7,796 6,365 6,923 7,981 8,362 7,314 -8% 8% 7% 15% 6,427 5,285 5,965 6,685 6,906 6,156 1,369 1,080 958 1,296 1,456 1,158 152 132 118 132 118 110 119 125 135 133 136 138 2 2 1 2 2 2 1,400 1,085 939 1,293 1,436 1,128 18% 17% 14% 16% 17% 15% -21% 5% 3% 4% 396 313 221 379 425 323 1,004 772 718 914 1,010 805 -14% 4% 1% 4% 18% 17% 14% 16% 17% 16%

Mar-18 Jun-18 8,564 8,810 24% 10% 7,193 7,433 1,371 1,377 167 116 148 148 2 2 1,387 1,343 16% 15% 48% 4% 420 434 967 909 35% -1% 16% 16%

COMPANY NAME LATEST VERSION CURRENT VERSION META Number of shares Face Value Current Price Market Capitalization

PROFIT & LOSS Report Date Sales Raw Material Cost Change in Inventory Power and Fuel Other Mfr. Exp Employee Cost Selling and admin Other Expenses Other Income Depreciation Interest Profit before tax Tax Net profit Dividend Amount

Quarters Report Date Sales Expenses Other Income Depreciation Interest Profit before tax Tax Net profit Operating Profit

BALANCE SHEET Report Date Equity Share Capital

HERO MOTOCORP LTD 2.10 2.10

PLEASE DO NOT MAKE ANY CHA

19.97 2 2881.25 57541.86

Mar-09 12319.12

Mar-10 15758.18

Mar-11 19397.93

Mar-12 23579.03

Mar-13 23768.11

Mar-14 25275.47

8760.22 18.21

10730.41 -5.95

14135.17 24.06

17365.41 83.84

17364.86 -32.8

18221.53 -8.36

73.7 113.33 370.71 1047.27 287.75 280.3 180.66 2.53 1781.46 499.7 1281.76 399.4

81.05 143.49 437.83 1401.46 296.02 363.33 191.47 2.1 2831.73 599.9 2231.83 2196.7

100.47 164.83 618.95 1396.59 473.29 289.62 402.38 15.17 2404.76 476.86 1927.9 2096.85

112.66 187.56 735.52 1155.37 487.57 364.57 1097.34 21.3 2864.71 486.58 2378.13 898.65

129.18 213.96 820.92 1392.12 529.79 398.38 1141.75 11.91 2529.2 411.04 2118.16 1198.2

137.46 232.61 930.04 1591.85 613.56 446.38 1107.37 11.82 2867.25 758.17 2109.08 1298.05

Mar-16 7505.17 6315.99 116.76 114.74

Jun-16 7398.91 6168.83 120.37 115.24

Sep-16 7796.28 6427.41 152.36 119.25

Dec-16 6364.6 5284.86 131.93 124.85

Mar-17 6922.8 5965.24 118.23 135.3

Jun-17 7980.5 6684.59 131.7 132.95

1.22

1.5

1.55

1.52

1.48

1.58

1189.98 356.69 833.29 1189.18

1233.71 350.62 883.09 1230.08

1400.43 396.21 1004.22 1368.87

1085.3 313.25 772.05 1079.74

939.01 221.26 717.75 957.56

1293.08 379.04 914.04 1295.91

Mar-09 39.94

Mar-10 39.94

Mar-11 39.94

Mar-12 39.94

Mar-13 39.94

Mar-14 39.94

Reserves Borrowings Other Liabilities Total Net Block Capital Work in Progress Investments Other Assets Total Receivables Inventory Cash & Bank No. of Equity Shares New Bonus Shares Face value

CASH FLOW: Report Date Cash from Operating Activity Cash from Investing Activity Cash from Financing Activity Net Cash Flow

PRICE: DERIVED: Adjusted Equity Shares in Cr

3760.81

3425.08

2916.12

4249.89

4966.3

5559.93

78.49

66.03

693.35

719.44

641.58

284.26

2205.9 6085.14 1573.71 120.54 3368.75 1022.14 6085.14 149.94

4992.04 8523.09 1658.78 48.14 2890.46 8523.09 108.39

7082.8 10732.21 4080.28 49.96 5128.75 1473.22 10732.21 130.59

4886.14 9895.41 3785.51 38.84 3964.26 2106.8 9895.41 272.31

4001.16 9648.98 3070.98 62.09 3623.83 2892.08 9648.98 665

4217.97 10102.1 2243.25 854.11 4088.77 2915.97 10102.1 920.58

326.83

436.4

524.93

675.57

636.76

669.55

3925.71

219.57 1907.21 71.52 76.82 181.04 117.5 199687500 199687500 199687500 199687500 199687500 199687500 2

2

2

2

2

2

Mar-09 1359.03 -861.19 -499.93 -2.09

Mar-10 2686.64 -528.17 -2109.31 49.16

Mar-11 2254.16 -1322.31 -955.23 -23.38

Mar-12 2359.78 92.79 -2458.16 -5.59

Mar-13 1890.43 -732.94 -1056.27 101.22

Mar-14 2963.41 -1617.02 -1414.93 -68.54

1092.661111 1941.4571 1713.8026 2107.2825 1517.1525 2221.5579

19.97

19.97

19.97

19.97

19.97

19.97

DO NOT MAKE ANY CHANGES TO THIS SHEET

Mar-15 27585.3

Mar-16 28442.7

Mar-17 28500.46

Mar-18 32230.49

19783.88 29.97

19321.72 11.88

18974.11 -63.17

21857.79 23.15

158.47 245.4 1172.87 1933 934.51 492.74 539.97 11.09 3328.82 943.18 2385.64 1198.2

122.13 209.85 1315.93 2071.56 958.42 422.43 437.64 4.89 4434.87 1274.68 3160.19 1437.84

112.62 204.61 1396.01 2077.3 1037.83 522.43 492.73

138.77 240.32 1540.13 2159.1 1037.34 525.82 555.6

6.05

6.25

4658.46 1281.34 3377.12 1697.45

5244.16 1546.8 3697.36 1897.15

Sep-17 8361.99 6906.29 117.6 136.03

Dec-17 7314.21 6156.22 110.02 138.28

Mar-18 8564.04 7193.45 166.5 148.34

Jun-18 8809.82 7432.53 115.73 148.17

1.56

1.57

1.54

2.11

1435.71 425.22 1010.49 1455.7

1128.16 322.73 805.43 1157.99

1387.21 419.81 967.4 1370.59

1342.74 433.57 909.17 1377.29

Mar-15 39.94

Mar-16 39.94

Mar-17 39.94

Mar-18 39.94

6501.39

8794.47

10071.35

11728.94

3986.68 10528.01 2912.69 712.55 3154.11 3748.66 10528.01 1389.59

3796.17 12630.58 3584.35 605.4 4581.02 3859.81 12630.58 1282.8

4645.42 14756.71 4395.59 465.05 5889.85 4006.22 14756.71 1561.87

5035.94 16804.82 4654.54 318.39 7525.2 4306.69 16804.82 1520.18

815.49

672.98

656.31

823.58

159.25 131.36 136.73 141.34 199687500 199690088 199696838 199696838 2

2

2

2

Mar-15 2250 12.08 -2230.52 31.56

Mar-16 3849.14 -2206.19 -1686.69 -43.74

Mar-17 4028.02 -1943.94 -2095.63 -11.55

Mar-18 3980.85 -1915.22 -2046.66 18.97

2475.67 2980.37368 3231.11316 3732.16429

19.97

19.97

19.97

19.97

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