Question

1. You are an intern with an equity research organization. You have been given the task to project the values of certain income statement and balance sheet items for the next year (FY2020) for ABC Ltd (Your current time=0 is FY ending 2019). You have collected information about the historical income statement and balance sheet items. The historical information is provided in Table 1.

Table 1

PARTICULARS (All values in INR crores)	FY2019	FY2018	FY2017	FY2016
Sales Revenue	21118.00	22084.00	17273.00	15463.00
EBITDA	12452.00	14263.00	12213.00	Not given
Depreciation expense	1883.00	1483.00	1811.00	Not given
EBIT	10569.00	12780.00	10402.00	Not given
Interest	0.00	0.00	0.00	Not given
EBT	10569.00	12780.00	10402.00	Not given
Tax	2642.25	3195.00	2600.50	Not given
Net Profit	7926.75	9585.00	7801.50	Not given
Net PPE	17032	14522	13064	12813

Net PPE: Net Property Plant and equipment (Balance sheet item)

1. Calculate the year-over- year (yoy) growth rate in Sales Revenue for (2016-2017, 2017-2018 and 2018-2019). Also calculate the average of the three growth rates and denote it as Sales growth rate   
2. Calculate the EBITDA margin for three years (2019, 2018 and 2017). Also calculate the average of the EBITDA margin
3. Calculate the ratio Depreciation expense/Net PPE_t-1 for the three years (2019, 2018 and 2017). Calculate the average of this ratio of depreciation expense as a % of prior period Net PPE
4. Calculate the corporate tax rate from the Table above and take an average of the three years.
5. Calculate the Net PPE turnover ratio from the Table above for the three years of data provided (2019, 2018,2017) and take an average of the last three years
6. Project the Sales revenue for the FY2020 using the average growth rate in sales revenue   
7. Project the EBITDA for the FY2020 using EBITDA margin average
8. Project the Depreciation expense for the year FY2020 using average Depreciation divided by NetPPE_t-1   
9. Project the EBIT for the FY2020 using the projected values of EBITDA and depreciation
10. Project the Tax amount for the FY2020 using the tax % average calculated   
11. Project the Net Profit for the FY2020

Project the Net PPE figure for FY2020 ending using the average turnover ratio         

Answer 1

Requirements1 to 4 solved.