DCF Studio

    SHRIRAMFIN.NS · NSI · Financial Services

    Shriram Finance Limited

    Also onConsensus Drift

    Implied value per share

    INR -124.34

    Market price

    INR 1010.00

    Implied upside

    -112.3%

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

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    NoteRisk-free rate is an assumption: INR assumption - no free live source available for this market.

    Current EV/EBITDA of 29.5x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    INR -124.34-112.3%
    Exit multiple
    INR 1047.85+3.7%
    Market price
    INR 1010.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (INR). Outflows negative.

    0bn69bn139bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayINR
    LineFY27FY28FY29FY30FY31CAGR
    RevenueINR 285.2bnINR 324.9bnINR 370.2bnINR 421.7bnINR 480.4bn+13.9%
    EBITINR 149.2bnINR 170.0bnINR 193.6bnINR 220.6bnINR 251.3bn+13.9%
    NOPATINR 111.6bnINR 127.1bnINR 144.8bnINR 165.0bnINR 188.0bn+13.9%
    Add depreciation & amortisationINR 8.7bnINR 10.0bnINR 11.3bnINR 12.9bnINR 14.7bn+13.9%
    Less capital expenditureINR -3.1bnINR -3.6bnINR -4.1bnINR -4.6bnINR -5.3bn+13.9%
    Less increase in working capitalINR -34.9bnINR -39.7bnINR -45.2bnINR -51.5bnINR -58.7bn+13.9%
    Free cashflow to firmINR 82.3bnINR 93.8bnINR 106.9bnINR 121.8bnINR 138.7bn+13.9%
    Discount factor0.94890.85450.76940.69280.6238-
    Present valueINR 78.1bnINR 80.2bnINR 82.2bnINR 84.4bnINR 86.5bn+2.6%
    Present Value Of The ForecastINR 411.4bn

    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
    Beta0.736Reported 0.606, pulled toward 1.0 (Blume)
    Cost of equity12.69%Risk-free + beta x equity risk premium
    Cost of debt11.93%Interest expense / average total debt
    Market capitalisationINR 2376.6bn56.6% of capital
    Total debtINR 1819.9bn43.4% of capital, book value as a proxy
    Tax rate25.2%Effective, capped at statutory
    WACC11.06%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 -124.34

    73% of EV

    Forecast FCFF, final year
    INR 138.7bn
    Capex at depreciation, working capital in reinvestment
    INR 192.3bn
    Less reinvestment at g/ROIC (22.6% of NOPAT)
    INR -43.5bn
    Capitalised
    INR 148.9bn
    ROIC (WACC floor)
    11.1%
    Terminal value, undiscounted
    INR 1783.4bn
    Terminal value, discounted
    INR 1112.6bn
    Enterprise value
    INR 1524.0bn
    Less net debt
    INR 1758.1bn
    Equity value
    INR -234.1bn

    Exit at 20.0x EBITDA

    Value per shareINR 1047.85

    89% of EV

    Terminal value, undiscounted
    INR 5320.8bn
    Terminal value, discounted
    INR 3319.3bn
    Enterprise value
    INR 3730.8bn
    Less net debt
    INR 1758.1bn
    Equity value
    INR 1972.7bn

    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%
    9.06%70.4774.2978.1181.9385.75
    10.06%-40.06-36.76-33.46-30.16-26.86
    11.06%-130.11-127.23-124.35-121.46-118.58
    12.06%-204.80-202.26-199.72-197.18-194.64
    13.06%-267.67-265.42-263.16-260.91-258.66

    Outlined: this model. Green text: above today's price of 1010.00. 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 year13.9%41.8%+27.9pp
    Discount rate11.1%5.0%-6.1pp
    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.