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

, Mumbai

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
demand in the investment market. This gave us the opportunity to guide our student to come out with a financial model on the c
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 fo
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 t
analysis and modeling skills. The program aims to impart the necessary skills required to perform the role of a Financial Resea
with the practical skill sets required to perform financial analysis, modeling and valuation through Excel.
please contact the address furnished below. You can also email us at the below mentioned email-id.

uccess within a few span of time. A financial model of such a company is in great
ome out with a financial model on the company. These exercises help the student at

provided as reference model and is for information purpose only. Keeping in view
act.

the candidates for entry level jobs in the finance sector which require financial
perform the role of a Financial Research Analyst. The program equips students
through Excel.
For more details,
ed 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
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

Mindtree Ltd. Limited , formerly

development. It operates in two
engineering (SPE). SPE provides fu
production support for customers
supply chain management, enterp
Products & Services

Internet & Enabling Technologies

Application Maintenance
Per Share Data & Key Ratios

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

EPS diluted
Gross
Profit
Margin
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

25,552
7,737
12,101

84,209
USA

Europe

India

APAC / Rest of the World

Revenue Forecast

20000000%
18000000%
16000000%
14000000%
12000000%
10000000%
8000000%
6000000%
4000000%
2000000%
0%

% y/y
Growth

2010

2011

2012

2013

2014

2015E

2016E

2017E

6000000%
4000000%
2000000%
0%
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%

mpany Description

ndtree Ltd. Limited , formerly is an international information technology (IT) consulting and implementation company. It delivers business solut
velopment. It operates in two units: production engineering (PE) services and IT services. PE services include research and development (R&D) s
gineering (SPE). SPE provides full life cycle product engineering, professional services and sustained engineering services. IT Services offer consulting
oduction support for customers in manufacturing, financial services, travel and leisure and other industries, in the areas of e-business, data warehous
pply chain management, enterprise resource planning (ERP) and maintenance and re-engineering of legacy mainframe applications.

oducts & Services

ernet & Enabling Technologies, Data Warehousing /Business Intelligence, Supply Chain Management, ERP, Product Engineering, Product Assuran
plication Maintenance

r Share Data & Key Ratios

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

ITDA/sales (%)
t income/sales (%)

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

25,552

69,802
59,796
129,598

46%

7,737
12,101

Rest of the World

54%

% y/y
Growth

2017E

IT Services PE Services

2017E

2015E
166,156
7%

2016E
177,787
7%

2017E
186,677
5%

ny. It delivers business solutions through global software

ch and development (R&D) services and software product
s. IT Services offer consulting and implementation and post
of e-business, data warehousing and business intelligence,
lications.

Engineering, Product Assurance & Testing, Web Services.

ces PE Services

46%

Financial Summary Of Mindtree

2007-08A

2008-09A

2009-1A

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

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)

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

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

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

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

36%
17%
12%
15%
14%

44%
27%
22%
5%
4%

38%
19%
14%
20%
17%

EPS - Basic
EPS - Diluted
Book Value

27.69
26.75
137

13.84
13.70
136

54.77
52.79
161

y Of Mindtree
2010-11E

2011-12E

2012-13E

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

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

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

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

22,193
(3,821)
(771)

27,879
(4,070)
(771)

18,969
(4,706)
19,025

17,601
(4,872)
17,321

23,038
(5,121)
22,758

3,951
79,912
83,863

3,951
97,649
101,601

3,951
121,554
125,505

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

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%
15%
13%

38%
19%
15%
16%
13%

38%
19%
15%
16%
14%

44.66
43.04
202

47.05
45.35
246

50.17
48.35
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

Audited
2007-08 A

Net profit after tax

123,747
(69,678)

129,598
(79,825)

26,606

54,069

49,773

(13,875)
(151)

(20,168)
(806)

(24,978)
(239)

12,580

33,095

24,556

(590)
(3,493)

Weighted average number of shares

Basic
Diluted

Growth Analysis - Y/Y

Revenues
EBITDA
Operating Profit
Net Profit

(1,620)
(5,696)

8,497

25,779

399
2,377

(20,892)
1,152

(1,290)
436
-

10,419

EPS Basic
EPS Diluted

Audited
2009-10 A

73,384
(46,778)

11,273

Provision for taxation including FBT

Deferred tax (charge)/credit
MAT Credit Entitlement/(reverse)
Share of profits of associates
Minority interest

Audited
2008-09 A

27.69
26.75

6,039
(1,386)
681
33
274
(410)
5,231

13.84
13.70

376.3
389.5

378
382

(267)
(6,518)
17,771
6,734
962
25,467
(3,796)
(288)
101
21,484

54.77
52.79

392
407

69%
163%
203%
-50%

4.7%
-26%
-31%
311%

44%
27%

38%
19%

Growth Analysis - Q/Q

Revenues
EBITDA
Operating Profit
Net Profit

Margin Analysis ( as a % of Revenues)

Gross Profit Margin
EBITDA

36%
17%

EBIT
PBT
Net Profit Margin

12%
15%
14%

22%
5%
4%

14%
20%
17%

Interest Cover
Effective Tax rate
Financial Leverage

21
11%
1.5

20
11%
1.3

92
15%
1.4

2010-11 E

2011-12 E

2012-13 E

133,358
(82,141)

138,077
(85,047)

145,127
(89,390)

51,217

53,029

55,737

(25,703)
(263)

(26,612)
(273)

(27,971)
(287)

25,251

26,145

27,480

(30)
(5,685)

(5,506)

(5,404)

19,536

20,639

22,075

1,051

1,051

1,051

20,587

21,690

23,126

(3,069)
17,519

44.66
43.04

(3,233)
18,457

47.05
45.35

(3,447)
19,679

50.17
48.35

392
407

392
407

392
407

38%
19%

38%
19%

38%
19%

15%
15%
13%

15%
16%
13%

15%
16%
14%

15%
1.3

15%
1.3

15%
1.2

Mindtree Ltd.
Balance Sheet
(All Figs in Lacs)
Sources Of Funds
Shareholders Funds
Share Capital ( Face Value of Rs. 10 Each)
Share Application Money
Reserves & Surplus

Standalone
Audited
2007-08 A

Consolidated
Audited
2008-09 A

3,792
5
49,605
53,403

Minority Interest

3,800
0.03
51,328
55,127

Loan Funds
Secured Loans
Unsecured Loans

Consolidated
Audited
2009-10 A

3,951
63,112
67,064

3,276

9,172
-

13,757
180

305

62,575

72,340

67,369

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

16,549
898

14,605
10,133
1,897

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

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

Net Current Assets

19,230

16,088

22,379

62,575

72,340

67,369

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

Total Assets
Check: Assets = Liab + Equity ?

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

19.51%
137
86

2.4

9.49%
136
82

1.5

(0)

32.04%
161
67

1.9

Capital Structure Ratio

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

0.17
15%

0.25
20%

0.005
0.45%

% of Revenues
Loans and Advances

14%

11%

16%

% of Cost of revenue
Current Liabilities

24%

41%

26%

2010-11 E

3,951
79,912
83,863

2011-12 E

3,951
97,649
101,601

2012-13 E

3,951
121,554
125,505

83,863

101,601

125,505

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

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

66,033
(41,806)
24,227
2,466
26,692

1,543
12,725
2,136

1,543
12,725
2,136

1,543
12,725
2,136

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

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

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

25,016
4,900
29,916

25,901
4,900
30,801

27,224
4,900
32,124

39,852

58,222

82,410

83,863

101,601

125,506

(0)

(0)

(0)

20.89%
202
78

18.17%
246
78

15.68%
305
78

2.3

2.9

3.6

0.000
0%

0.000
0%

0.000
0%

14%

14%

14%

30%

30%

30%

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

2008-09 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
3,493
192
589
(1,743)
(6)
(253)
13
13,560

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)

Net cash provided by / (used in) operating activities

9,063

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

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)

Net cash Provided/(used) by financing activities

Effect of exchange differences on translation of foreign currency cash
and cash equivalents

6,039
5,696
100
1,620
(870)
(189)
(58)
15,229
(41)
27,525
(3,352)
(21)
(3,304)
(2,869)
17,980

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

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

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

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

3,739

2,256

(13)

41

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

(2,214)

(1,958)

7,680
5,465

###
6,834
4,876

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

17,980
(4,346)
13,634

0.12
-140.28%

0.15
75.83%

23%

24%

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

2009-10 A
Consolidated

2010-11 E

25,468
6,518
51
267
(500)
6
(110)
(11,131)
79
20,649
4,542
6
2,181
(4,360)

20,587
5,685
51
30
(1,051)
25,302
(4,890)
2,506
3,881
(3,069)

2011-12 E

2012-13 E

21,690
5,506
51
(1,051)
26,196
(1,012)
(643)
885
(3,233)

23,126
5,404
51
(1,051)
27,531
1,511
961
1,323
(3,447)

23,017

23,730

22,193

27,879

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

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

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

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

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

(30)
###
(305)
(771)

(771)

(771)

(13,415)

(1,106)

(771)

(771)

(79)

(522)

18,969

17,601

23,038

764
3,791
4,033

4,033
23,002

23,002
40,603

0
40,603
63,641

23,017
(4,573)
18,444

23,730
(4,706)
19,025

22,193
(4,872)
17,321

27,879
(5,121)
22,758

0.18
80.13%

0.18
80.17%

0.16
78.05%

0.19
81.63%

12%

20%

20%

20%

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

Q2 Sep-08

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%

47%
19%
61%
42%
40%

61%
24%
5%
10%
100%

64%
21%
5%
10%
100%

4
Amount In Rs.
31,202
36,380
Q2 Sep-08
Q3 Dec-08
USA
19,894
24,097
Europe
6,403
7,232
India
1,664
2,425.95
APAC/ ROW
3,241.7
2,625.76
Total
31,202
36,380
-----------------------------------------------------------------------------------------------------------3
% Wise Contribution to total Sales
Q2 Sep-08
Q3 Dec-08
USA
64%
66%

Europe
India
APAC/ ROW
Total

21%
5%
10%
100%

20%
7%
7%
100%

Q3 Dec-08

Q4 Mar-09

Q1 Jun-09

Q2 Sep-09

Q3 Dec-09

2008-09 A

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

103%
102%
92%
36%
95%

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

77%
37%
109%
23%
66%

21%
13%
46%
-19%
17%

67%
81%
86%
48%
69%

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

66%
20%
7%
7%
100%

33,806
Q4 Mar-09
23,178
5,360
2,697
2,571
33,806
-----------------------------------------Q4 Mar-09
69%

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

69%
16%
8%
8%
100%

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%

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

64%
18%
6%
11%
100%

16%
8%
8%
100%
100000
0
0
0
0
-

Q4 Mar-10
2009-10 A

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

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

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

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%
-8%
-9%
2.9%

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

5%
6%
-7%
15%
5%

66%
20%
5%
8%
100%

67%
21%
5%
8%
100%

67%
21%
4%
8%
100%

65%
20%
6%
9%
100%

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

2008-09 A

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

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

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

Sales Growth Analysis - Y-Y

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

36%
38%
69%

Sales Growth Analysis - Q-Q

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

232
(410)
(178)

Sales Weightage Analysis

R & D Services
IT Services
Aztec Business
PE Services
Total

22%
78%
100%

Other Income Analysis

Interest on deposits
Dividend from investments

612
1,132

As % of Closing Investment
Interest on deposits
Dividend from investments

3.70%
7%

18%
64%
18%
100%

145
350

1.44%
3.45%

2009-10 A

2010-11 E

2011-12 E

2012-13 E

69,802
59,796
129,598

143
110
357
163
143
46
962

274
777
1,051

274
777
1,051

274
777
1,051

-12%
34%
5%

54%
46%
100%

0%

143
357

1%
3%

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

Cost of Revenues
Selling, General & Administrative expenses

46,778
13,875

69,658
20,105

79,825
24,978

Total Operating Expnese(excluding bad debts)

60,653

89,763

104,803

151

806

239

60,804

90,569

105,042

Provision for bad & doubtful debts

Total Operating Expnese

As % of Revenues
Cost of Revenues

64%

56%

62%

Selling, General & Administrative expenses

19%

16%

19%

Total Operating Expnese(excluding bad debts)

83%

73%

81%

0.21%

0.65%

0.18%

Provision for bad & doubtful debts

2010-11 E

2011-12 E

2012-13 E

82,141
25,703

85,047
26,612

89,390
27,971

107,844

111,660

117,361

263

273

287

108,107

111,932

117,648

62%

62%

62%

19%

19%

19%

81%

81%

81%

0.20%

0.20%

0.20%

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

2008-09 A

2009-10 A

2010-11 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

###

Total Unsecured Loan

180

305

305

305

305

Total

9,172

13,937

Interest Expense (Q Wise)

Interest Expense Rate (Q wise)

590
6.43%

1,620
11.62%

267
87.54%

30
9.89%

2011-12 E 2012-13 E

Mindtree Ltd.
Fixed Asset & Depreciation Schedule
Fixed Assets
Gross Block
Less Accumulated Depreciation
Net Block
Capital Work in Progress

Depreciation Schedule
Depreciation
Implied Depreciation Rate

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 throu

for new fixed assets(capex) purchased in C Y.
CY Depreciation = Half Dep of New Capex + Full Depreciation from Ne

2007-08 A

2008-09 A

2009-10 A

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

34,744
(11,176)
23,568

49,409
(21,096)
28,313

51,334
(25,212)
26,122

56,040
(30,896)
25,143

60,912
(36,402)
24,510

66,033
(41,806)
24,227

2,329
25,897

1,304
29,616

2,466
28,587

2,466
27,609

2,466
26,975

2,466
26,692

2007-08 A
3,493
15%

2008-09 A
5,696
20%

21,778
30%

4,346
4%

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%

ed Dep. + CY Dep

fixed asset half-way through the year, so I have taken only half year depreciation

Full Depreciation from Net 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%

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

Projection Year
Discount Factor
Present Value of FCF
Y/Y Growth Analysis
Revenues
EBITDA
EBIT
Depreciation & Amortisation
Margin Analysis (As % of Revenues)
EBITDA Margin
EBIT Margin
Depreciation & Amortisation
Capex
Tax Rate (Tax Expense/EBIT)

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

Explicit Forecast Period

2010-11 E
2011-12 E
2012-13 E
133,358
25,251
19,567
(3,069)
16,498
5,685
1,497
20,686
(4,706)
15,980

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

407

407

407

1
0.86
13,744

2
0.74
13,913

3
0.64
9,617

3%
3%
8%
-13%

4%
4%
5%
-3%

5%
5%
7%
-2%

19%
14%
5%
4%

19%
15%
4%
4%

19%
15%
4%
4%

19%
15%
4%
4%

-21%

-16%

-16%

-16%

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

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

Sensitivity - Varying Terminal Growth Rate

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

Sensitivity - EV/EBITDA Exit Multiple

PV of Terminal Value (EV/EBITDA)
5.0
5.5
170,046
187,050
169,424
186,366
166,273
182,901
168,204
185,024
167,605
184,365

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 pos
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

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

First Stage of Valuation

2014E
2015E
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

Interest Rate (%)

Tax Rate (@)
WACC Calculation
WACC

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

407

407

4
0.55
13,033

5
0.47
12,119

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%

7%
7%
7%
7%

7%
7%
7%
7%

5%
5%
5%
5%

19%
15%
4%
4%

19%
15%
4%
4%

19%
15%
4%
4%

19%
15%
4%
4%

-16%

-16%

-16%

-16%

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

99.85%
0.15%

Intrinsic Value
Equity Value
Diluted Shares
Intrinsic Value

183,015
407
450

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

nal Value (EV/EBITDA)

6.0
204,055
203,309
199,528
201,844
201,126

Intrinsic Value
2%
494
445
368
374
346

3%

3%
511
458
377
381
352

Intrinsic Value
5.5
684
725
673
715
624
665
653
694
644
685

.12, we recommend a hold 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
n

12

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

Stk R
-1.023

Stk R - Stk

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

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

Mkt R
2.595
Formula

Covsm

Stk R - Stk R x Mkt R - Mkt R

n-1

Formula

2m

(Mkt R - Mkt R)2

n-1

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

Mindtree
Close
525
512
503
531
551
551

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

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

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

575
589
533
583
695
647
601
598

-2.33%
10.58%
-8.73%
-16.10%
7.48%
7.67%
0.54%
#DIV/0!

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

a using book method

Covsm

Beta or

Mkt R - Mkt

Stk R - Stk

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

R - Stk R x Mkt R - Mkt R

n-1

(Mkt R - Mkt R)2

n-1

1.16

x Mkt R - Mkt

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

(Mkt R - Mkt R)2

0.95%
12%
1%
1%
4%
-3%

17,559
17,528
16,430
16,358
17,465
16,926
15,896
16,886

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 Consolidate
3) I have adjusted Share Count(Basic & Diluted) wherever necessary to align with reported E

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, a
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 breaki

Geographic Revenue
8) I have done some small calculation, for converting USD* wise Geographic revenue into Rs
as Compnay did not reported consolidated figs. Geographic wise in Rs. terms.( Q1 figs. Are
by the Company. I took the Consolidated figs. From the fact sheet of respective quarters, a
to that respective quarters.(calculation is below the Geographic revenues break-up figure
* 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 Servi
Hence, while calculating YoY & QoQ growth in % for 2009-10, I have grouped R&D Serv. an
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
Provisions = straight line basis

2009-10 Annual Report Excerpts

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

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
6 On our services business, based on current trends, we expect that
than industry growth estimates of 13-15%
7 pg 51 for report

ance Sheet
m Q2 all figures are Consolidated, including Audited Balance Sheet
essary to align with reported EPS by the company, as all figures in the model are in Lacs.

figures in Profit & Loss A/c

dalone figs for Balance Sheet, as Consolidated Figs. were not provided by the company, however

getting errant figures by breaking it into periods/quarters

se Geographic revenue into Rs. wise Geographic revenue for consolidated figs, from Q2-2008-09,
wise in Rs. terms.( Q1 figs. Are standalone, as consolidated break-up of Geograhic Revenues were not provided
sheet of respective quarters, and applied the USD region wise weighted % to total figure of reported Revenues
phic revenues break-up figures)
etting the accurate figs

gs. are consolidated

ness is grouped under PE Services.
0, I have grouped R&D Serv. and Aztec under PE Services

hown in closing balance

rojected Revenue/365)

venues * Projected Revenues

f Revenues * Projected Cost of Revenues

s estimated to grow by 5.5% in FY2010

ness is likely to be stable.
axes is about 15.6% as

ady to brand 3G smart phone and IP in the area of cellular infrastructure. We expect to launch these products to
current trends, we expect that we will attain growth rates higher

ny, however

Q2-2008-09,
evenues were not provided
gure of reported Revenues

to launch these products to the market in Q3/Q4 of 2010-11. Since this is a new initiative, the financial perform

nitiative, the financial performance of the NIW business would depend onthe success of the products when they

cess of the products when they are launched.If these initiatives are successful, they will greatly enhance our rev

ey will greatly enhance our revenues and profitability