DCF Studio

    TRENT.NS · NSI · Consumer Cyclical

    Trent Limited

    Also onConsensus Drift

    Implied value per share

    INR 928.68

    Market price

    INR 2824.00

    Implied upside

    -67.1%

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

    NoteRisk-free rate is an assumption: INR assumption - no free live source available for this market.

    Current EV/EBITDA of 40.7x 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 928.68-67.1%
    Exit multiple
    INR 3419.55+21.1%
    Market price
    INR 2824.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (INR). Outflows negative.

    0bn16bn31bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayINR
    LineFY27FY28FY29FY30FY31CAGR
    RevenueINR 267.5bnINR 360.4bnINR 485.7bnINR 654.5bnINR 882.0bn+34.8%
    EBITINR 27.6bnINR 37.3bnINR 50.2bnINR 67.7bnINR 91.2bn+34.8%
    NOPATINR 21.1bnINR 28.4bnINR 38.3bnINR 51.6bnINR 69.5bn+34.8%
    Add depreciation & amortisationINR 15.9bnINR 21.4bnINR 28.9bnINR 38.9bnINR 52.4bn+34.8%
    Less capital expenditureINR -19.2bnINR -25.8bnINR -34.8bnINR -46.9bnINR -63.1bn+34.8%
    Less increase in working capitalINR -8.4bnINR -11.3bnINR -15.2bnINR -20.5bnINR -27.7bn+34.8%
    Free cashflow to firmINR 9.4bnINR 12.7bnINR 17.1bnINR 23.1bnINR 31.1bn+34.8%
    Discount factor0.94780.85130.76470.68690.6170-
    Present valueINR 8.9bnINR 10.8bnINR 13.1bnINR 15.9bnINR 19.2bn+21.0%
    Present Value Of The ForecastINR 67.9bn

    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
    Beta0.579Reported 0.371, pulled toward 1.0 (Blume)
    Cost of equity11.43%Risk-free + beta x equity risk premium
    Cost of debt7.02%Interest expense / average total debt
    Market capitalisationINR 1505.8bn98.3% of capital
    Total debtINR 25.6bn1.7% of capital, book value as a proxy
    Tax rate23.7%Effective, capped at statutory
    WACC11.33%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 928.68

    87% of EV

    Forecast FCFF, final year
    INR 31.1bn
    Capex at depreciation, working capital in reinvestment
    INR 69.5bn
    Less reinvestment at g/ROIC (10.9% of NOPAT)
    INR -7.6bn
    Capitalised
    INR 61.9bn
    ROIC (reported)
    22.8%
    Terminal value, undiscounted
    INR 718.9bn
    Terminal value, discounted
    INR 443.6bn
    Enterprise value
    INR 511.5bn
    Less net debt
    INR 16.3bn
    Equity value
    INR 495.2bn

    Exit at 20.0x EBITDA

    Value per shareINR 3419.55

    96% of EV

    Terminal value, undiscounted
    INR 2871.5bn
    Terminal value, discounted
    INR 1771.8bn
    Enterprise value
    INR 1839.7bn
    Less net debt
    INR 16.3bn
    Equity value
    INR 1823.4bn

    Spread between methods: 115%.

    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%
    9.33%1161.201212.331270.661337.921416.39
    10.33%1000.241036.521077.201123.181175.62
    11.33%873.12899.50928.68961.14997.53
    12.33%770.40789.96811.33834.81860.76
    13.33%685.85700.55716.47733.76752.65

    Outlined: this model. Green text: above today's price of 2824.00. 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 year34.8%70.7%+36.0pp
    EBIT margin10.3%27.9%+17.5pp
    Discount rate11.3%5.9%-5.4pp
    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.