VRL Logistics Limited

http://www.vrlgroup.com

Owned fleet of 3546 vehicles and 456 buses  (including 53 staff buses)


Making an initial pubic issue. RHP has been filed.

Advertisement in ET on 9 April 2015.

ITC Ltd.

ITC will achieve a turnover of Rs.100,000 crore from new FMCG businesses by 2030. (ITC President FMCG Business Sanjiv Puri, Economic Times 10 March 2015, page 5)

Rs. 1,00,000 cr. =  Appx. $16 billion ($1 = Rs. 63)

Company Analysis: ITC

http://knol.google.com/k/narayana-rao-kvss/i-t-c-ltd/2utb2lsm2k7a/628

Industry Analysis: Tobacco

http://knol.google.com/k/lakxmikant-ramawat/-/t52mejohl0xi/1#edit

Country Analysis: Singapore

http://knol.google.com/k/lakxmikant-ramawat/-/t52mejohl0xi/2#edit

Disclaimer

It is a student assignment as part of his learning security analysis. The information is meant for demonstrating the application of textbook principles by learners only. It is not for commercial decision making by investors. Investors are advised to contact and consult registered investment advisors only.
About The Company

1.      Chairman:          Yogesh Chander Daveshwar.

2.      Headquarter:    Kolkata, India

3.      Employee:        20000 

4.      Brands:             Sunfeast, John Player, Bingo, Wills Life style,
                                    Fiama Di Wills, Di Wills, Paper Kraft, Classmate
About The Business

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery. 

Note: All data in above section referenced at
http://www.itcportal.com/sets/leadership_frameset.htm
http://www.itcportal.com/sets/itc_frameset.htm
Stock 
1. Current Share Price (Rs)             :         189.90 ( as on 01-05-2009)
2. Market capitalization (Rs)           :        71264 Cr  
3. 52wk H/L (Rs)                             :        232.40 – 132.05
4. PE Ratio                                      :        22.84
5. EPS (Rs)                                      :        8.28    
6. Face Value (Rs)                            :        1
Note: All data in above section referenced at
http://money.rediff.com/companies/itc-ltd/12630003
NEWS
1. ITC - FY 09 results by Jun 30, 2009
ITC Ltd has informed BSE that the Company will be submitting its Audited Financial Results within a period of three months from the close of the financial year ended March 31, 2009, and accordingly will not be publishing the Unaudited Financial Results for the fourth quarter ended March 31, 2009.
http://money.rediff.com/companies/news/432715
2. ITC to source more products from Bengal
ITC Ltd plans to source potato and shrimps from West Bengal soon for its e-choupal venture. It also intends to source organic pineapple from North Bengal for its e-choupal model.

The company also intend to set up more Choupal Fresh on a pilot basis in Bengal. Currently they have six Choupal Fresh outlets in Hyderabad and they are piloting it in Chandigarh and Pune. The company currently has 6,500 e-choupals in 10 states. [Business Standard, April 29th.]

3. ITC - Disclosures under Reg.13(4) of SEBI 

4. ITC Infotech featured in ‘2009 Global Services 100’ for five consecutive years
5. Sunfeast World 10K on May 31st '09
Revenue and Profit ( In Cr INR) 

Year	Mar ‘ 08	Mar ‘ 07	Mar ‘ 06	Mar ‘ 05	Mar ‘ 04
Sales	13,947.53	12,369.30	9,790.53	7,639.45	6,470.44
Net Profit	3,120.10	2,699.97	2,235.35	2,191.40	1,592.85

Quarter	Dec ‘ 08	Sep ‘ 08	Jun ‘ 08	Mar ‘ 08	Dec‘ 07
Sales	3,858.65	3,862.67	3,899.70	3,934.39	3,457.99
Net Profit	903.21	802.72	748.67	735.64	830.72

Note: All data in above section referenced to key financial at

http://www.itcportal.com/sets/shareholder_frameset.htm

Analysis 

We will analyze the stock price of ITC by various methods.

1.    Graham Rao Method (Value Investing): 

It is a method of systematic fundamental analysis of the stock of a company by conservative investors based on several parameters. It is useful to identify equity stocks for buy and hold investment. To know more about it, Please visit the following link:

http://knol.google.com/k/narayana-rao-kvss/fundamental-analysis-grahamrao-method/2utb2lsm2k7a/7 

Qualitative Criteria:

1.      Adequate Size of the Enterprise:  The Company must have a good sales figure and a strong financial condition. The annual sales of the company should be 100 Cr INR for Indian Companies. 

2.      Dividend Record: The Company should have paid dividend continuously in the last 10 year. 

3.     Earnings Stability:  The Company should have earned profits for the last 10 years. 

4.     Earnings Growth:     The Company should have atleast 10% EPS growth in the last seven years 

5.     A Sufficiently Strong Financial Condition: The Company should have current assets at least twice current liabilities, i.e. the current ratio of the company should be 2:1. 

6.     Debt-Equity ratio: The Debt-Equity ratio should not be greater than one. 

For ITC the value of the above parameter for the last 10 year is tabulated below:

Year	Annual Sales  (Rs. Cr)	Dividends (%)	PAT(In Cr INR)	Adjusted EPS	Growth (%)	Current Ratio	Debt equity ratio
1999	7599.24	55	623.42	1.69	-----	1.88	0.58
2000	7971.94	75	792.44	2.15	27	1.54	0.24
2001	8699.75	100	1006.26	2.73	27	1.06	0.25
2002	9849.16	135	1189.72	3.20	17	1.2	0.07
2003	11028.41	150	1371.35	3.69	15	1.1	0.02
2004	11819.77	200	1592.85	4.28	16	0.83	0.02
2005	13361.13	310	2191.40	5.84	36	1	0.03
2006	16236.65	265	2235.35	5.94	2	1.32	0.01
2007	19505.06	310	2699.97	7.17	21	1.45	0.02
2008	21467.38	350	3120.10	8.27	15	1.37	0.02

       The current price should not exceed 20 times the average EPS in the last seven years for companies with past seven-year growth higher than 20 per cent. For companies with past growth rates between 10 and 20 percent per annum, the multiplier have to be the growth rate itself.


 Valuation Criteria

Year	Equity Capital    (In Cr INR)	Face Value	Number  Of Shares	PAT      (In Cr INR)	EPS	Adjust-ment  Factor	Adjusted EPS
1999	245.41	10	245414904	623.42	25.40	0.067	1.69
2000	245.41	10	245414904	792.44	32.29	0.067	2.15
2001	245.41	10	245414904	1006.26	41.00	0.067	2.73
2002	247.51	10	247511886	1189.72	48.07	0.067	3.20
2003	247.59	10	247586073	1371.35	55.39	0.067	3.69
2004	248.10	10	248097657	1592.85	64.20	0.067	4.28
2005	375.51	1	3755136870	2191.40	5.84	1.000	5.84
2006	376.02	1	3760165920	2235.35	5.94	1.000	5.94
2007	376.58	1	3765838830	2699.97	7.17	1.000	7.17
2008	377.15	1	3771510530	3120.10	8.27	1.000	8.27

Bonus announcement: 

2005

Jun

1:2

21/09/2005

Face Value Change

2005

1:10

  

Seven Year Average	5.48
Ratio of Average and Initial	1.71
Growth	17.54
Fair P/E	17.54
Fair Price	96.19

Note: All data in above section referenced at CMIE Prowess .

2. Dividend Discount Model

Calculation of Beta Value of the stock:

For finding the B- Value of the stock we will take the stock price of the stock and NIFTY for 60 consecutive month ( 1st day of every month).

Month	Nifty	Stock Prices	Market Return	Stock Return
Mar-04	2,230.39	1100
Apr-04	1771.45	1052.9	-20.58	-4.28
May-04	1796.1	1072.1	1.39	1.82
Jun-04	1483.9	890	-17.38	-16.99
Jul-04	1506.65	885.05	1.53	-0.56
Aug-04	1631.55	1037.1	8.29	17.18
Sep-04	1631.7	1050	0.01	1.24
Oct-04	1744.4	1145	6.91	9.05
Nov-04	1787.3	1095	2.46	-4.37
Dec-04	1960.75	1285	9.70	17.35
Jan-05	2080	1318.95	6.08	2.64
Feb-05	2057.75	1331	-1.07	0.91
Mar-05	2103.1	1282.25	2.20	-3.66
Apr-05	2035.9	1335	-3.20	4.11
May-05	1903.1	1440	-6.52	7.87
Jun-05	2087.8	1600	9.71	11.11
Jul-05	2220.45	1650	6.35	3.13
Aug-05	2312.05	1690	4.13	2.42
Sep-05	2384.7	1735	3.14	2.66
Oct-05	2601	136.25	0.00	0.00
Nov-05	2366.8	122.4	-9.00	-10.17
Dec-05	2651.6	135	12.03	10.29
Jan-06	2836.8	142	6.98	5.19
Feb-06	3001.3	155	5.80	9.15
Mar-06	3074.6	172.5	2.44	11.29
Apr-06	3403.15	195.65	10.69	13.42
May-06	3557.55	204.5	4.54	4.52
Jun-06	3072.55	168	-13.63	-17.85
Jul-06	3128.75	183	1.83	8.93
Aug-06	3128.2	167.7	-0.02	-8.36
Sep-06	3414	190.6	9.14	13.66
Oct-06	3588.95	186	5.12	-2.41
Nov-06	3744.1	191	4.32	2.69
Dec-06	3955.7	186	5.65	-2.62
Jan-07	3966.25	176.5	0.27	-5.11
Feb-07	4083.4	173.1	2.95	-1.93
Mar-07	3745.4	172.7	-8.28	-0.23
Apr-07	3820	151.2	1.99	-12.45
May-07	4089.45	161.7	7.05	6.94
Jun-07	4296.05	162.6	5.05	0.56
Jul-07	4318.4	155	0.52	-4.67
Aug-07	4528.85	170.5	4.87	10.00
Sep-07	4466.65	170.65	-1.37	0.09
Oct-07	5021.5	190.75	12.42	11.78
Nov-07	5903.8	180	17.57	-5.64
Dec-07	5765.45	190.9	-2.34	6.06
Jan-08	6136.75	212	6.44	11.05
Feb-08	5140.6	192.25	-16.23	-9.32
Mar-08	5222.8	198.3	1.60	3.15
Apr-08	4735.65	208	-9.33	4.89
May-08	5265.3	222.1	11.18	6.78
Jun-08	4869.25	219.2	-7.52	-1.31
Jul-08	4039.75	186.6	-17.04	-14.87
Aug-08	4331.6	187.05	7.22	0.24
Sep-08	4356.1	188	0.57	0.51
Oct-08	3921.85	190	-9.97	1.06
Nov-08	2885.4	157.65	-26.43	-17.03
Dec-08	2755.15	172.9	-4.51	9.67
Jan-09	2963.3	172.3	7.55	-0.35
Feb-09	2872.35	178.1	-3.07	3.37
Mar-09	2764.6	181.1	-3.75	1.68

Note: All data in above section referenced at

http://www.nseindia.com/

Regression plot of ITC and NIFTY

We have B Value = 0.59

Now,
Calculated growth rate in EPS using 7 year adjusted EPS figures:

Year	Adjusted EPS(Rs.)	% Dividend	Dividend	Adjusted Dividend
1999	1.69	55	5.5	0.275
2000	2.15	75	7.5	0.375
2001	2.73	100	10	0.5
2002	3.2	135	13.5	0.675
2003	3.69	150	15	0.75
2004	4.28	200	20	1
2005	5.84	310	3.1	3.1
2006	5.94	265	2.65	2.65
2007	7.17	310	3.1	3.1
2008	8.27	350	3.5	3.5
Growth	17.54 %			37 %

Average growth = (17.54 + 37)/2 = 27.27 =27(say)
Because of recessionary condition, let us take it to be around 24%
Let us assume that this growth rate will continue for 3 years.
Growth for the next 3 years (3, 4 & 5) will be 75% of 24% = 18 %
Growth for the next 3 years after it (6, 7 & 8) will be 50% of 24% = 12 %
Then the company will grow at the rate of 8% for the next 4 yrs (9, 10, 11 &12)
Then on the company will grow with the mature growth rate = 6 %
(Since the company is in the market leader, Mature growth rate = 6%)
Required rate of return 
Risk free rate of return  (rf)  :  4.6
Market Risk Premium   (Mr):  10
B-Value                            (B)   :  0.59
Required Rate(k)         = rf + Mr*B = 4.6 + 10* 0.59 = 10.5

S.NO	Year	Growth	Dividend	Discounting Factor		Discounted Dividend
0	2008	24	3.5	1
1	2009	24	4.34	0.9	3.906
2	2010	24	5.38	0.82	4.4116
3	2011	18	6.35	0.74	4.699
4	2012	18	7.49	0.67	5.0183
5	2013	18	8.84	0.61	5.3924
6	2014	12	9.9	0.55	5.445
7	2015	12	11.09	0.5	5.545
8	2016	12	12.42	0.45	5.589
9	2017	8	13.41	0.41	5.4981
10	2018	8	14.48	0.37	5.3576
11	2019	8	15.64	0.33	5.1612
12	2020	8	16.89	0.3	5.067
13	2021	6	397.85	0.27	107.4195
				Total	168.5097

The column 13 in the above table contains the value of the stock in the year 13 when it will grow at the mature rate of 6% for the rest of its life.
Conclusion
So we have seen that the intrinsic value of ITC stock is:
                1. Graham Rao Method:        Rs 96.19

                2. Dividend Discount Model: Rs 168.5



However the current market price of the stock is Rs. 189
Note: All data in above section referenced at CMIE PROWESS.

http://knol.google.com/ k/ itc-ltd, Knol Number 628.


Updated  10 March 2015, 8 March 2012