Emami Ltd Valuation and Intrinsic Value of Shares- DCF Excel Model

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Emami Ltd Valuation : About the Company

Emami was established in 1974 and is an Indian conglomerate company headquartered in Kolkata. It is one of the leading and fastest-growing personal and healthcare businesses in India, with a large portfolio of household brand names such as BoroPlus, Navratna, Fair and Handsome, Zandu Balm, Mentho Plus Balm, Fast Relief and Kesh King. The company, however, operates in a highly competitive environment of the FMCG sector in India against HUL, Dabur, Patanjali, Marico etc. From here, we go ahead with Emami Ltd Valuation and Intrinsic Value of its shares.

Read more here: Emami Ltd Shares Fundamental Analysis 

Methodology Used:

Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its expected future cash flows. DCF analysis attempts to figure out the value of an investment today, based on projections of how much money it will generate in the future. The following step by step procedure is followed.

  1. Determining the Revenue Growth Rates
  2. Forecasting the Financial Statements
  3. Deriving the FCFF and FCFE
  4. Calculating the Terminal Value
  5. Calculating the Discount Rate
  6. Discounting the Cashflows
  7. Arriving at the Intrinsic Value of the Shares
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You can also get the formula based DCF Excel Model used for this Analysis from below:



Step 1: Determining the Revenue Growth Rates

We arrive at the below table by using the past and expected future performance of both the company and the economy. This along with adjustments to changes in the management expectations, extraordinary events and other macro factors give the revenue growth rates for Emami Ltd Valuation.

Financial Year Revenue Growth Rate
Year 1 -7%
Year 2 -6%
Year 3 13%
Year 4 12%
Year 5 12%
Revenue Growth Rates: Emami Ltd Valuation

Step 2: Forecasting the Financial Statements

The financial statements are forecasted for a period of 5 years using the annual report data of the company. The assumptions used for forecasting are tabulated below. The Excel model is completely editable and can be adjusted for specific changes which may happen over a period of time.

Financial Statements Forecast : Emami Ltd Valuation
Financial Statements Forecast : Emami Ltd Valuation



Step 3: Deriving the FCFF and FCFE

Free cash flow to the firm (FCFF) represents the amount of cash flow from operations available for distribution after accounting for depreciation expenses, taxes, working capital, and investments. FCFF is a measurement of a company’s profitability after all expenses and reinvestments. It is given as follows.

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Free cash flow to equity (FCFE) is a measure of how much cash is available to the equity shareholders of a company after all expenses, reinvestment, and debt are paid. FCFE is a measure of equity capital usage.

F/S Items (INR Millions) Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
Free Cash Flow to Firm 1314 2083 8221 5158 5775
Free Cash Flow to Equity 4350 1803 8477 4842 5657
FCFF and FCFE values: Emami Ltd Valuation

Step 4: Calculating the Terminal Value

Terminal value (TV) is the value of a business or project beyond the forecast period when future cash flows can be estimated. It assumes that a business will grow at a set growth rate forever after the forecast period. Terminal value often comprises a large percentage of the total assessed value.

Terminal Value Calculation Units INR Millions
Free Cash Flow to Firm 5775.45
Growth Rate 5.00%
Cost of Capital 13.10%
Terminal Value 74857.59
Terminal Value: Emami Ltd Valuation

Step 5: Calculating the Discount Rate

DCF analysis helps assess the viability of a project or investment by calculating the present value of expected future cash flows using a discount rate. Here we use the Weighted average cost of capital (WACC) to discount the cash flow. The below table from the excel model shows the calculation of WACC for Emami Ltd Valuation.

WACC Calculation for Emami Ltd Valuation.
WACC Calculation for Emami Ltd Valuation.



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Step 6: Discounting the Cashflows

The WACC and the Cost of Equity for the company calculated in the above step are then used to discount the FCFF, FCFE and Terminal Value calculated in Step 3 and 4. In our case, we’ll only consider the FCFF based Intrinsic price of the shares as it represents the cash flow to all the suppliers of capital and not only to the equity shareholders. Thus we arrive at Present value of future FCFF for Emami Ltd Valuation. (Units are INR Millions)

PV of FCFF and FCFE  for Emami Ltd Valuation.
PV of FCFF and FCFE for Emami Ltd Valuation.

Step 7: Arriving at the Intrinsic Value of the Shares

Dividing the PV of the FCFF and Terminal Value (the Value of the entire firm) by the number of outstanding shares we get the per share intrinsic value. We can compare this price with the current market price of the stock to get the Discount or Premium to its intrinsic price.

Emami Ltd Valuation Units
PV in INR Million 55193
No of Shares Outstanding (In Million) 454
Intrinsic Value 121.57
Current Market Price of Share 163.00
Current Discount/Premium 34%
Intrinsic Value of the Shares: Emami Ltd Valuation

Emami Ltd Valuation and Intrinsic Share Price = INR 121.57

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Download the Excel Model from Here!

References: Investopedia
Our 150+ Stock Valuations
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You can read more about the company on its website!
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(Note: All the research done by me is only for educational purposes and should not be seen as Investment recommendations. I am a Research analyst and not a SEBI registered Investment Advisor. My research completely reflects my personal opinions and not of my employers. Kindly do your own due diligence before Investing)



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