DCF Studio

    CIPLA.NS · NSI · Healthcare

    Cipla Limited

    Also onConsensus Drift

    Implied value per share

    INR 834.41

    Market price

    INR 1394.50

    Implied upside

    -40.2%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 6.8% of revenue against depreciation of 4.1%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: INR assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    INR 834.41-40.2%
    Exit multiple
    INR 1595.62+14.4%
    Market price
    INR 1394.50

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (INR). Outflows negative.

    0bn18bn37bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayINR
    LineFY27FY28FY29FY30FY31CAGR
    RevenueINR 297.2bnINR 318.7bnINR 341.7bnINR 366.4bnINR 392.9bn+7.2%
    EBITINR 58.8bnINR 63.0bnINR 67.6bnINR 72.5bnINR 77.7bn+7.2%
    NOPATINR 44.0bnINR 47.1bnINR 50.5bnINR 54.2bnINR 58.1bn+7.2%
    Add depreciation & amortisationINR 12.1bnINR 12.9bnINR 13.9bnINR 14.9bnINR 16.0bn+7.2%
    Less capital expenditureINR -20.3bnINR -21.8bnINR -23.4bnINR -25.1bnINR -26.9bn+7.2%
    Less increase in working capitalINR -7.9bnINR -8.4bnINR -9.0bnINR -9.7bnINR -10.4bn+7.2%
    Free cashflow to firmINR 27.8bnINR 29.8bnINR 32.0bnINR 34.3bnINR 36.8bn+7.2%
    Discount factor0.95410.86870.79080.72000.6555-
    Present valueINR 26.5bnINR 25.9bnINR 25.3bnINR 24.7bnINR 24.1bn-2.4%
    Present Value Of The ForecastINR 126.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate6.80%INR assumption - no free live source available for this market (assumption)
    Equity risk premium8.00%Market assumption
    Beta0.382Reported 0.078, pulled toward 1.0 (Blume)
    Cost of equity9.86%Risk-free + beta x equity risk premium
    Cost of debt9.17%Interest expense / average total debt
    Market capitalisationINR 1126.6bn99.5% of capital
    Total debtINR 6.1bn0.5% of capital, book value as a proxy
    Tax rate25.2%Effective, capped at statutory
    WACC9.84%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareINR 834.41

    78% of EV

    Forecast FCFF, final year
    INR 36.8bn
    Capex at depreciation, working capital in reinvestment
    INR 60.7bn
    Less reinvestment at g/ROIC (18.3% of NOPAT)
    INR -11.1bn
    Capitalised
    INR 49.6bn
    ROIC (reported)
    13.6%
    Terminal value, undiscounted
    INR 692.1bn
    Terminal value, discounted
    INR 453.7bn
    Enterprise value
    INR 580.3bn
    Less net debt
    INR -94.1bn
    Equity value
    INR 674.4bn

    Exit at 17.4x EBITDA

    Value per shareINR 1595.62

    89% of EV

    Terminal value, undiscounted
    INR 1630.8bn
    Terminal value, discounted
    INR 1068.9bn
    Enterprise value
    INR 1195.5bn
    Less net debt
    INR -94.1bn
    Equity value
    INR 1289.7bn

    Spread between methods: 63%.

    Sensitivity

    Value per share (INR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.84%1042.161077.161118.351167.641227.83
    8.84%907.92929.32953.79982.131015.43
    9.84%806.28819.56834.41851.17870.28
    10.84%726.75734.96743.95753.87764.90
    11.84%662.90667.83673.11678.80684.97

    Outlined: this model. Green text: above today's price of 1394.50. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year7.2%24.0%+16.8pp
    EBIT margin19.8%33.9%+14.1pp
    Discount rate9.8%6.7%-3.1pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.