Corporate Analysis & Valuation — DU Bachelor of Business Administration (Financial Investment Analysis) Previous Year Question Papers

ii. Other financial assets 28.00 152.69 Non-current tax assets (Net) - 22.34 Other non-current assets 229.61 139.33 Total non-current assets 14,881.02 11,844.42 Current assets Financial assets i. Investments 233.19 163.19 ii. Trade receivables 1,280.06 1,302.14 iii. Cash and cash equivalents 293.56 485.83 iv. Bank balances other than (iii) above 264.77 45.13 v. Other financial assets 97.55 77.25 Other current assets 1,186.98 773.48 Total current assets 5,081.87 4,217.82 TOTAL ASSETS 19,962.89 16,062.24 EQUITY AND LIABILITIES Equity share capital 47.51 47.51 Reserves & Surplus 9,889.14 7,683.53 Total equity 9,936.65 7,731.04 Non-current liabilities Financial liabilities i. Borrowings 834.51 986.91 ii. Lease liabilities 192.63 313.07 Deferred tax liabilities (Net) 265.92 187.05 and incremental capital expenditure will be offset by depreciation. During all years, net working capital requirement will be 25% of revenues. The Company wants to maintain its Debt-Equity ratio at 0:1 at all times. Risk free rate is 6%, Beta is 1.125 and Market Risk Premium is 8%. Corporate Tax rate is 30%. Q3. Sigma Ltd. has a return on equity of 23.22%. In the base year, company earns Rs 33.27 per share. It's dividend payout ratio is 16.53% which it will maintain for next 5 years. For this high growth period, it is estimated that the company will have a beta of 1.1 with a risk free rate of 6% and market risk premium of 7%. After 5 years, the firm's growth is expected to slow down to 15% for next 3 years. During this phase, the firm will have a beta of 1 with market risk premium of 5.5%. However, the risk free rate will remain the same as earlier. After 8 years, the growth rate in earnings will remain stable at 5% forever with cost of equity at 8%. You have to calculate the intrinsic value per share as per three stage dividend discount model assuming the firm maintains the same dividend payout ratio every year. Should the investment be made in the company if it is currently trading at Rs. 375 per share? (18) Q4. RST Ltd. is a large unlisted company. The promoters of the company wish to estimate its fair market value. For this purpose, a valuation analyst has identified A Ltd., B Ltd. and C Ltd. as comparable listed companies operating in the same industry. Shareholders' Funds 4,800 4,000 3,200 2,400 Loan Funds 3,600 2,800 2,400 1,500 Total Assets 9,000 7,500 6,000 4,500 Paid-up Equity Share Capital (FV 710 each) 1,200 1,000 800 600 Market Price per Share (P) 40 20 30 - Assume that the market value of debt is the same as its book value. Determine RST Ltd's value using EV/EBITDA, EV/Sales, and EV/Book Value as the base and total assets as a weight for all three companies. Q5. Write Short Notes on any 3 of the following: (6+6+6=18) a) Management Discussion and Analysis. b) Suitability of Price to Book Value ratio. c) Instability of Beta. d) Gordon Growth Model. Other non-current liabilities 28.00 31.50 Total non-current liabilities 1,577.00 1,724.40 Current liabilities