Reference Model

Mindtree
Prepared By: Neerav Koli, Distance Learning , Mumbai

http://proschoolonline.com
Email ID : mumbai@proschoolonline.com

Mumbai

IMS Proschool Pvt Ltd,

Maharashtra High School Complex,
Principal N.M Kale Marg, Off Gokhale Rd,
Dadar (W), Mumbai 400028
Tel. No. : 022-65285393/94
+91 9372895050
Directions

Mindtree is one of the young IT company of the country which has seen commendable success within a few span of time. A fin
model of such a company is in great demand in the investment market. This gave us the opportunity to guide our student to com
with a financial model on the company. These exercises help the student at IMS Proschool to hone their financial modeling skil

This model is being developed by a financial modeling student at IMS Proschool. This is provided as reference model and is fo
information purpose only. Keeping in view the objective of the reference model, the formulas and linkages of the model are kep

IMS Proschool provides certificate programs in Financial Modeling. The program grooms the candidates for entry level jobs in t
finance sector which require financial analysis and modeling skills. The program aims to impart the necessary skills required to
the role of a Financial Research Analyst. The program equips students with the practical skill sets required to perform financial
modeling and valuation through Excel.

For more details, please contact the address furnished below. You can also email us at the below mentioned e

IMS Proschool Pvt Ltd,

Maharashtra High School Complex,
Principal N.M Kale Marg, Off Gokhale R
Dadar (W), Mumbai 400028
Tel. No. : 022-65285393/94
+91 9372895050
Email ID : mumbai@proschoolonlin
 a few span of time. A financial
o guide our student to come out
eir financial modeling skills.

eference model and is for

ges of the model are kept intact.

es for entry level jobs in the

cessary skills required to perform
ired to perform financial analysis,

t the below mentioned email-id.

a High School Complex,

M Kale Marg, Off Gokhale Rd,
Mumbai 400028
22-65285393/94

mumbai@proschoolonline.com
Mindtree Ltd.

Click on the name of Tab to go to the relevant sheet

No. Name of Tab

1 Company Overview

2 Summary

3 Profit & Loss A/c

4 Balance Sheet

5 Cash Flow Statement

6 Geographic Revenue

7 Segment-wise Revenue

8 Cost Analysis

9 Debt Schedule

10 Fixed Asset

11 Valuation

12 Beta Calculation

13 Notes
Description

Overview of the Company

Financial snapshot of the company

Historical and forecasted income statement

Historical and forecasted balance sheet

Forecasted cash flow statement

Geographic revenue breakup for the historical years as reported by the Company

Segment-wise revenue breakup for the historical years as reported by the Company

Cost Structure

Debt Schedule

Fixed Asset & Depreciation Schedule

DCF Valuation

Beta Calculation of Company relative to Sensex

Notes related to preparation of Financial Statement

Mindtree Ltd.
Company Overview
(Rs. In Lacs, except per share data)

Company Information Company Description

Industry IT Consulting & Software Mindtree Ltd. Limited , formerly is an international information tec
Sector Software-Medium development. It operates in two units: production engineering (PE)
engineering (SPE). SPE provides full life cycle product engineering, pro
Country India production support for customers in manufacturing, financial services
BSE/NSE Code 532819/MINDTREE supply chain management, enterprise resource planning (ERP) and ma
Market Index BSE - 500
Year end 31-Mar Products & Services
Reporting currency Rs. Internet & Enabling Technologies, Data Warehousing /Business Inte
Application Maintenance

Stock Data Per Share Data & Key Ratios

Price as on 22nd Oct 2010 512.7
52 Week High 729.9
52 Week Low 491 EPS diluted
Gross Profit
YTD Change -84.95 Margin
YTD Change % -14.7% EBITDA/sales (%)
Shares Outstanding 407 Net income/sales (%)
Market Capitalization(Lacs) 208,669 ROE (TTM)
Beta Vs Sensex 1.16 EV/Sales
EV/EBITDA
P/E
P/Sales
P/BV

Geo revenue breakup for 2010

USA 84,209
Europe 25,552
India 7,737 25,552
APAC / Rest of the World 12,101
Total 129,598 7,737

84,209 12,101

USA Europe India APAC / Rest of the World

Revenue Forecast

20000000%
18000000%
16000000%
14000000%
12000000%
% y/y Growth
10000000%
Total Revenue
8000000%
6000000%
4000000%
2000000%
0%
2010 2011 2012 2013 2014 2015E 2016E 2017E
 6000000%
4000000%
2000000%
0%
2010 2011 2012 2013 2014 2015E 2016E 2017E

Revenue Data
2010 2011 2012 2013 2014 2015E
Total Revenue 129,598 133,358 138,077 145,127 155,286 166,156
% y/y Growth 3% 4% 5% 7% 7%
formerly is an international information technology (IT) consulting and implementation company. It delivers business solutions through global software
s in two units: production engineering (PE) services and IT services. PE services include research and development (R&D) services and software product
ovides full life cycle product engineering, professional services and sustained engineering services. IT Services offer consulting and implementation and post
ustomers in manufacturing, financial services, travel and leisure and other industries, in the areas of e-business, data warehousing and business intelligence,
t, enterprise resource planning (ERP) and maintenance and re-engineering of legacy mainframe applications.

hnologies, Data Warehousing /Business Intelligence, Supply Chain Management, ERP, Product Engineering, Product Assurance & Testing, Web Services.

2009-10 A 2010-11 E 2011-12 E 2012-13 E

52.79 43.04 45.35 48.35

38% 38% 38% 38%
19% 19% 19% 19%
17% 13% 13% 14%
32% 21% 18% 16%
1.58 1.5 1.5 1.4
16 8 8 7
9.71 11.9 11.3 10.6
1.61 1.6 1.4 1.4
3.18 2.5 2.1 1.7

Segment Revenue Breakup for 2010

IT Services 69,802
PE Services 59,796 46%
Total 129,598

,737

2,101

he World 54% IT Services PE Services

y/y Growth
tal Revenue
 2016E 2017E
177,787 186,677
7% 5%
 Financial Summary Of Mindtree

2007-08A 2008-09A 2009-1A 2010-11E

P&L
Revenue 73,384 123,747 129,598 133,358
Gross Profit 26,606 54,069 49,773 51,217
EBITDA 12,580 33,095 24,556 25,251
PBT 11,273 6,039 25,467 20,587
PAT 10,419 5,231 21,484 17,519

Cash Flow
Cash Flow from operations 9,063 17,980 23,017 23,730
Cash Flow from investing (15,003) (22,235) (10,045) (3,655)
Cash Flow from financing 3,739 2,256 (13,415) (1,106)

Net Cash Flow (2,214) (1,958) (522) 18,969

Capex (21,778) (4,346) (4,573) (4,706)
Free Cash Flow to Firm (12,714) 13,634 18,444 19,025

Balance Sheet
Share Capital 3,792 3,800 3,951 3,951
Share Application Money 5 0.03 - -
Reserves & Surplus 49,605 51,328 63,112 79,912
Total Debt 9,172 17,213 305 -
62,575 72,340 67,369 83,863

Net Fixed Assets 25,897 29,616 28,587 27,609

Goodwill - 14,605 1,543 1,543
Investments 16,549 10,133 12,725 12,725
Deferred tax assets, net 898 1,897 2,136 2,136
Net Current Assets 19,230 16,088 22,379 39,852
62,575 72,340 67,369 83,863

Margins
Gross Profit 36% 44% 38% 38%
EBITDA 17% 27% 19% 19%
EBIT 12% 22% 14% 15%
PBT 15% 5% 20% 15%
Net Profit 14% 4% 17% 13%

Per share Data

EPS - Basic 27.69 13.84 54.77 44.66
EPS - Diluted 26.75 13.70 52.79 43.04
Book Value 137 136 161 202
ree

2011-12E 2012-13E

138,077 145,127
53,029 55,737
26,145 27,480
21,690 23,126
18,457 19,679

22,193 27,879
(3,821) (4,070)
(771) (771)

17,601 23,038
(4,872) (5,121)
17,321 22,758

3,951 3,951
- -
97,649 121,554
- -
101,601 125,505

26,975 26,692
1,543 1,543
12,725 12,725
2,136 2,136
58,222 82,410
101,601 125,506

38% 38%
19% 19%
15% 15%
16% 16%
13% 14%
47.05 50.17
45.35 48.35
246 305
Mindtree Ltd.
Profit & Loss Account
(Rs. In Lacs, except per share data) Audited Audited Audited
2007-08 A 2008-09 A 2009-10 A 2010-11 E 2011-12 E

Revenues 73,384 123,747 129,598 133,358 138,077

Cost of Revenues (46,778) (69,678) (79,825) (82,141) (85,047)

Gross Profit 26,606 54,069 49,773 51,217 53,029

Selling, General & Administrative expenses (13,875) (20,168) (24,978) (25,703) (26,612)
Provision for bad & doubtful debts (151) (806) (239) (263) (273)

Operating profit before interest and depreciation 12,580 33,095 24,556 25,251 26,145

Interest including finance charges (590) (1,620) (267) (30) -

Depreciation (3,493) (5,696) (6,518) (5,685) (5,506)

Operating Profit 8,497 25,779 17,771 19,536 20,639

Foreign exchange gain/(loss) 399 (20,892) 6,734 - -

Other Income 2,377 1,152 962 1,051 1,051

Profit Before Tax 11,273 6,039 25,467 20,587 21,690

Provision for taxation including FBT (1,290) (1,386) (3,796) (3,069) (3,233)
Deferred tax (charge)/credit 436 681 (288) - -
MAT Credit Entitlement/(reverse) - 33 101 - -
Share of profits of associates 274 - - -
Minority interest (410) - - -

Net profit after tax 10,419 5,231 21,484 17,519 18,457

EPS Basic 27.69 13.84 54.77 44.66 47.05

EPS Diluted 26.75 13.70 52.79 43.04 45.35

Weighted average number of shares

Basic 376.3 378 392 392 392
Diluted 389.5 382 407 407 407

Growth Analysis - Y/Y

Revenues - 69% 4.7%
EBITDA - 163% -26%
Operating Profit - 203% -31%
Net Profit - -50% 311%

Growth Analysis - Q/Q

Revenues
EBITDA
Operating Profit
Net Profit

Margin Analysis ( as a % of Revenues)

Gross Profit Margin 36% 44% 38% 38% 38%
EBITDA 17% 27% 19% 19% 19%
EBIT 12% 22% 14% 15% 15%
PBT 15% 5% 20% 15% 16%
Net Profit Margin 14% 4% 17% 13% 13%

Interest Cover 21 20 92
Effective Tax rate 11% 11% 15% 15% 15%
Financial Leverage 1.5 1.3 1.4 1.3 1.3
2012-13 E

145,127
(89,390)

55,737

(27,971)
(287)

27,480

-
(5,404)

22,075

-
1,051

23,126

(3,447)
-
-
-
-

19,679

50.17
48.35

392
407

38%
19%
15%
16%
14%

15%
1.2
Mindtree Ltd.
Balance Sheet
(All Figs in Lacs) Standalone Consolidated Consolidated
Audited Audited Audited
Sources Of Funds 2007-08 A 2008-09 A 2009-10 A 2010-11 E 2011-12 E

Shareholders Funds
Share Capital ( Face Value of Rs. 10 Each) 3,792 3,800 3,951 3,951 3,951
Share Application Money 5 0.03 - - -
Reserves & Surplus 49,605 51,328 63,112 79,912 97,649
53,403 55,127 67,064 83,863 101,601

Minority Interest - 3,276 - -

Loan Funds
Secured Loans 9,172 13,757 - - -
Unsecured Loans - 180 305 - -

Total Shareholders Funds & Liabilities 62,575 72,340 67,369 83,863 101,601

Application Of Funds
Fixed Asset
Gross Block 34,744 49,409 51,334 56,040 60,912
Less Accumulated Depreciation (11,176) (21,096) (25,212) (30,896) (36,402)
Net Block 23,568 28,313 26,122 25,143 24,510
Capital Work In Progress 2,329 1,304 2,466 2,466 2,466
25,897 29,616 28,587 27,609 26,975

Goodwill - 14,605 1,543 1,543 1,543

Investments 16,549 10,133 12,725 12,725 12,725
Deferred tax assets, net 898 1,897 2,136 2,136 2,136

Current assets, loans and advances

Sundry debtors 17,217 27,923 23,699 28,589 29,600
Cash and bank balances 5,465 4,876 4,033 23,002 40,603
Loans and advances 9,927 14,111 20,683 18,177 18,820
Total Current Assets 32,609 46,910 48,414 69,768 89,024

Current liabilities and provisions

Current Liabilities 11,153 28,599 21,135 25,016 25,901
Provisions 2,226 2,223 4,900 4,900 4,900
Total Current Liabilities 13,379 30,822 26,035 29,916 30,801

Net Current Assets 19,230 16,088 22,379 39,852 58,222

Total Assets 62,575 72,340 67,369 83,863 101,601

Check: Assets = Liab + Equity ? - - (0) (0) (0)

ROE (TTM) 19.51% 9.49% 32.04% 20.89% 18.17%

Book Value 137 136 161 202 246
Days Sales Outstanding(TTM) 86 82 67 78 78

Liquidity Ratio
Current Ratio 2.4 1.5 1.9 2.3 2.9
Capital Structure Ratio
Debt Equity Ratio(Times) 0.17 0.25 0.005 0.000 0.000
Debt to Total Funds(%) 15% 20% 0.45% 0% 0%

% of Revenues
Loans and Advances 14% 11% 16% 14% 14%

% of Cost of revenue
Current Liabilities 24% 41% 26% 30% 30%
2012-13 E

3,951
-
121,554
125,505

-
-

125,505

66,033
(41,806)
24,227
2,466
26,692

1,543
12,725
2,136

31,112
63,641
19,781
114,534

27,224
4,900
32,124

82,410

125,506

(0)

15.68%
305
78

3.6
0.000
0%

14%

30%
Mindtree Ltd.
Cash Flow Statement
(All Figs in Lacs)

2007-08 A 2008-09 A 2009-10 A

Standalone Consolidated Consolidated
Cash flows from operating activities:

Profit Before Tax 11,273 6,039 25,468

Adjustments:
Depreciation 3,493 5,696 6,518
Amortization of Stock Compensation 192 100 51
Interest Expense 589 1,620 267
Interest / dividend income (1,743) (870) (500)
Loss /(profit) on sale of fixed assets (6) (189) 6
Profit on sales of investments (253) (58) (110)
Exchange difference on derivatives - 15,229 (11,131)
Effect of exchange differences on translation of foreign currency
cash and cash equivalents 13 (41) 79
Operating profit before working capital changes 13,560 27,525 20,649

Decrease/(Increase) in sundry debtors (5,501) (3,352) 4,542

Decrease/(Increase) in loans and advances (417) (21) 6
(Decrease)/Increase in current liabilities and provisions 3,270 (3,304) 2,181
Income taxes and FBT paid (1,848) (2,869) (4,360)

Net cash provided by / (used in) operating activities 9,063 17,980 23,017

Cash flow from investing activities

Purchase of fixed assets (21,778) (4,346) (4,573)
Proceeds on sale of fixed assets 75 651 50
Purchase of business/acquisition - (29,195) (2,925)
Investment in subsidiaries - - -
Interest /dividend received from investments 847 627 500
Inter-corporate advances granted - - (615)
Purchase of investments (22,918) (80,764) (104,479)
Sale/maturities of investments 28,770 90,792 101,997
Net cash Provided/ (used) in investing activities (15,003) (22,235) (10,045)

Cash flow from financing activities

Issue of share capital (net of issue expenses paid) (1,193) 56 941
Receipt of share application money 5 0 (0)
Interest paid on loans (591) (1,586) (267)
Proceeds from term loans 9,550 10,180 -
Repayment of term loans (1,277) (13,691) (5,157)
Repayment of finance lease obligation (232) (382) -
Proceeds/ (repayment) of short term loans, net (1,647) 8,583 (8,475)
Increase/(decrease) in bank overdraft - - -
Dividends paid (including distribution tax) (877) (904) (458)

Net cash Provided/(used) by financing activities 3,739 2,256 (13,415)

Effect of exchange differences on translation of foreign currency

cash and cash equivalents (13) 41 (79)
Net increase/(decrease) in cash and cash equivalents (2,214) (1,958) (522)
Cash and cash equivalents of MindTree Wireless Pvt Ltd as on the
date of acquisition - - 764
Cash and cash equivalents at the beginning of the year 7,680 6,834 3,791
Cash and cash equivalents at the end of the year 5,465 4,876 4,033

Calculation of Free Cash Flow

Operating Cash Flow 9,063 17,980 23,017

Capital expenditure (21,778) (4,346) (4,573)
Free Cash Flow (12,714) 13,634 18,444

Cash Flow Ratios

Operating Cash Flow / Revenues 0.12 0.15 0.18
Free Cash Flow / Operating Cash Flow -140.28% 75.83% 80.13%

Dividends paid (including distribution tax) % of Share Capital 23% 24% 12%
2010-11 E 2011-12 E 2012-13 E

20,587 21,690 23,126

5,685 5,506 5,404

51 51 51
30 - -
(1,051) (1,051) (1,051)
- - -
- - -
- - -

- - -
25,302 26,196 27,531

(4,890) (1,012) 1,511

2,506 (643) 961
3,881 885 1,323
(3,069) (3,233) (3,447)

23,730 22,193 27,879

(4,706) (4,872) (5,121)

- - -
- - -
- - -
1,051 1,051 1,051
- - -
- - -
- - -
(3,655) (3,821) (4,070)

- - -
- - -
(30)
- - -
(305) - -
- - -
- - -
- - -
(771) (771) (771)

(1,106) (771) (771)

18,969 17,601 23,038

- - 0
4,033 23,002 40,603
23,002 40,603 63,641

23,730 22,193 27,879

(4,706) (4,872) (5,121)
19,025 17,321 22,758

0.18 0.16 0.19

80.17% 78.05% 81.63%

20% 20% 20%

Mindtree Ltd.
Geographic Revenue Model
(All Figs in Lacs)
Q1 Jun-08 Q2 Sep-08 Q3 Dec-08 Q4 Mar-09
2007-08 A
Geographic Wise Revenues

USA 48,440 13,511 19,894 24,097 23,178

Europe 13,486 5,398 6,403 7,231 5,360
India 4,210 1,031 1,664 2,426 2,697
APAC / Rest of the World 7,247 2,281 3,241 2,626 2,571
Total 73,383 22,221 31,202 36,380 33,806

Y/Y (%) Growth in Geographic Revenues

USA - 20% 63% 103% 77%
Europe - 102% 93% 102% 37%
India - 49% 73% 92% 109%
APAC / Rest of the World - 53% 88% 36% 23%
Total - 38% 71% 95% 66%

Q/Q (%) Growth in Geographic Revenues

USA - 3% 47% 21% -4%
Europe - 38% 19% 13% -26%
India - -20% 61% 46% 11%
APAC / Rest of the World - 9% 42% -19% -2%
Total - 9% 40% 17% -7%

Geographic Revenues as % of Total

USA 66% 61% 64% 66% 69%
Europe 18% 24% 21% 20% 16%
India 6% 5% 5% 7% 8%
APAC / Rest of the World 10% 10% 10% 7% 8%
Total 100% 100% 100% 100% 100%

4
Amount In Rs.
31,202 36,380 33,806
Q2 Sep-08 Q3 Dec-08 Q4 Mar-09
USA 19,894 24,097 23,178
Europe 6,403 7,232 5,360
India 1,664 2,425.95 2,697
APAC/ ROW 3,241.7 2,625.76 2,571
Total 31,202 36,380 33,806
------------------------------------------------------------------------------------------------------------
3 % Wise Contribution to total Sales
Q2 Sep-08 Q3 Dec-08 Q4 Mar-09
USA 64% 66% 69%
Europe 21% 20% 16%
India 5% 7% 8%
APAC/ ROW 10% 7% 8%
Total 100% 100% 100%
 Q1 Jun-09 Q2 Sep-09 Q3 Dec-09 Q4 Mar-10
2008-09 A 2009-10 A 2010-11 E

80,680 20,507 20,699 21,393 21,610 84,209 88,027

24,392 6,034 6,972 6,105 6,441 25,552 27,180
7,818 1,983 1,456 2,121 2,177 7,737 7,149
10,719 1,953 2,371 3,566 4,210 12,101 11,003
123,747 30,477 31,498 33,185 34,438 129,598 133,358

67% 52% 4% -11% -7% 4% 5%

81% 12% 9% -16% 20% 5% 6%
86% 92% -12% -13% -19% -1% -8%
48% -14% -27% 36% 64% 13% -9%
69% 37% 1% -9% 2% 5% 2.9%

- -12% 4% -11% -7% -

- 13% 9% -16% 20% -
- -26% -12% -13% -19% -
- -24% -27% 36% 64% -
- -10% 3% 5% 4% -

65% 67% 66% 64% 63% 65% 66%

20% 20% 22% 18% 19% 20% 20%
6% 7% 5% 6% 6% 6% 5%
9% 6% 8% 11% 12% 9% 8%
100% 100% 100% 100% 100% 100% 100%
100000
0
0
0
0
-
2011-12 E 2012-13 E

92,121 96,514
28,918 30,629
6,654 6,085
10,384 11,900
138,077 145,127

5% 5%
6% 6%
-7% -7%
-6% 15%
4% 5%

67% 67%
21% 21%
5% 4%
8% 8%
100% 100%
Mindtree Ltd.
Segment Wise Revenue
(All Figs in Lacs)

2007-08 A 2008-09 A 2009-10 A

Segment Revenue

R & D Services 16,087 21,934 -

IT Services 57,297 79,247 69,802
AztecSoft Business - 22,566 -
PE Services - - 59,796
Total 73,384 123,747 129,598

Other Income (Excluding Forex Gains/Losses)

Interest on deposits 612 145 143
Profit on sale of investments 253 96 110
Profit from sale of assets, net 6 163 -
Dividend from investments 1,132 350 357
Bad debts recovered - - 163
Liabilities no longer required written back - - 143
Miscellaneous income 376 34 46
Total 2,378 788 962

Minority interest
Share of P&L in Associate - 232 -
Minority interest - (410) -
Total Minority Interest - (178) -

Sales Growth Analysis - Y-Y

R & D Services - 36% -
IT Services - 38% -12%
Aztec Business - - -
PE Services - - 34%
Total Sales - 69% 5%

Sales Growth Analysis - Q-Q

R & D Services - - -
IT Services - - -
Aztec Business - - -
PE Services - - -
Total Sales - - -
Sales Weightage Analysis
R & D Services 22% 18% -
IT Services 78% 64% 54%
Aztec Business - 18% -
PE Services - - 46%
Total 100% 100% 100%

Other Income Analysis

Interest on deposits 612 145 143
Dividend from investments 1,132 350 357

As % of Closing Investment
Interest on deposits 3.70% 1.44% 1%
Dividend from investments 7% 3.45% 3%
2010-11 E 2011-12 E 2012-13 E

- - -

274 274 274

- - -
- - -
777 777 777
- - -
- - -
- - -
1,051 1,051 1,051

- -
- -
- - -

- - -
- - -

- - -
- - -
- - -
- - -
- - -
0% 0% 0%

274 274 274

777 777 777
Mindtree Ltd.
Cost Analysis
(Rs. In Lakhs )

Cost Structure 2007-08 A 2008-09 A 2009-10 A 2010-11 E

Cost of Revenues 46,778 69,658 79,825 82,141

Selling, General & Administrative expenses 13,875 20,105 24,978 25,703

Total Operating Expnese(excluding bad debts) 60,653 89,763 104,803 107,844

Provision for bad & doubtful debts 151 806 239 263

Total Operating Expnese 60,804 90,569 105,042 108,107

As % of Revenues

Cost of Revenues 64% 56% 62% 62%

Selling, General & Administrative expenses 19% 16% 19% 19%

Total Operating Expnese(excluding bad debts) 83% 73% 81% 81%

Provision for bad & doubtful debts 0.21% 0.65% 0.18% 0.20%
2011-12 E 2012-13 E

85,047 89,390
26,612 27,971

111,660 117,361

273 287

111,932 117,648

62% 62%

19% 19%

81% 81%

0.20% 0.20%
Mindtree Ltd.
Debt Schedule
(Rs. In Lakhs )

2007-08 A 2008-09 A 2009-10 A 2010-11 E 2011-12 E 2012-13 E

Debt Schedule

Secured Loans
From Banks -
Term Loans 8,848 5,157 - -
Other Loans - 8,600 - -
Finance lease obligation 324 -
Total Secured Loans 9,172 13,757 - - - -

Unsecured Loans -
Council for Scientific and Industrial Research - 180 305 305 - -
-
Total Unsecured Loan - 180 305 305 - -

Total 9,172 13,937 305 305 - -

Interest Expense (Q Wise) 590 1,620 267 30 - -

Interest Expense Rate (Q wise) 6.43% 11.62% 87.54% 9.89%
Mindtree Ltd.
Fixed Asset & Depreciation Schedule

Fixed Assets 2007-08 A 2008-09 A

Gross Block 34,744 49,409

Less Accumulated Depreciation (11,176) (21,096)
Net Block 23,568 28,313

Capital Work in Progress 2,329 1,304

25,897 29,616

Depreciation Schedule 2007-08 A 2008-09 A

Depreciation 3,493 5,696
Implied Depreciation Rate 15% 20%

Acquisition of Property and Equipment (Capex) 21,778 4,346

Capex as % Revenues 30% 4%

Notes

Projected Fixed Assets & Depreciation,

PY=Previous Year, CY=Current Year

1 Gross Block = PY Gross Block + New Capex

2 Accumulated Depreciation = PY Accumulated Dep. + CY Dep

3 Net Block = Gross Block - Accumulated Depreciation

4 Depreciation = Assuming Company buys new fixed asset half-way through the year, so I have ta
for new fixed assets(capex) purchased in C Y.
CY Depreciation = Half Dep of New Capex + Full Depreciation from Net Block Of PY
 2009-10 A 2010-11 E 2011-12 E 2012-13 E

51,334 56,040 60,912 66,033

(25,212) (30,896) (36,402) (41,806)
26,122 25,143 24,510 24,227

2,466 2,466 2,466 2,466

28,587 27,609 26,975 26,692

2009-10 A 2010-11 E 2011-12 E 2012-13 E

6,518 5,685 5,506 5,404
25% 20% 20% 20%

4,573 4,706 4,872 5,121

4% 4% 4% 4%

ugh the year, so I have taken only half year depreciation

Block Of PY
Mindtree Ltd.
DCF Valuation
(All Figs in Lacs)

Growth Assumptions Enterpsire Value (EV)

Long term IT Industry growth rate 15%
Current Market Price 513
Diluted Shares 407
CAPM Assumptions Market Capitalisation 208,669
Ke 16.28% Long Term Liabilities 305
RFR 7.0% Less: Cash & Cash Equivalents 4,033
Beta 1.16 Enterprise Value (in lacks) 204,942
Rp 8%

Calculation of Free Cash Flow

Explicit Forecast Period First Stage of Valuation
2009-10A 2010-11 E 2011-12 E 2012-13 E 2014E 2015E

Revenues 129,598 133,358 138,077 145,127 155,286 166,156

EBITDA 24,556 25,251 26,145 27,480 29,403 31,461
EBIT 18,038 19,567 20,639 22,075 23,621 25,274
Tax Expense (3,796) (3,069) (3,233) (3,447) (3,688) (3,947)
Net Operating Profit After Tax 14,242 16,498 17,406 18,628 27,309 29,221
Depreciation & Amortisation 6,518 5,685 5,506 5,404 5,782 6,187
Working Capital Change 6,729 1,497 (770) 3,795 3,795 3,795
Operating Cash Flow 14,031 20,686 23,681 20,237 29,297 31,613
Capex (4,573) (4,706) (4,872) (5,121) (5,480) (5,863)
FCF 9,458 15,980 18,809 15,116 23,817 25,750

Diluted Shares 407 407 407 407 407 407

Projection Year 1 2 3 4 5
Discount Factor 0.86 0.74 0.64 0.55 0.47
Present Value of FCF 13,744 13,913 9,617 13,033 12,119

Y/Y Growth Analysis

Revenues 3% 4% 5% 7% 7%
EBITDA 3% 4% 5% 7% 7%
EBIT 8% 5% 7% 7% 7%
Depreciation & Amortisation -13% -3% -2% 7% 7%

Margin Analysis (As % of Revenues)

EBITDA Margin 19% 19% 19% 19% 19% 19%
EBIT Margin 14% 15% 15% 15% 15% 15%
Depreciation & Amortisation 5% 4% 4% 4% 4% 4%
Capex 4% 4% 4% 4% 4% 4%

Tax Rate (Tax Expense/EBIT) -21% -16% -16% -16% -16% -16%

Terminal Value Equity Value

Sum of PV of FCF for explicit forecast 73,686 Enterprise Value 179,288
WACC 16.27% - Debt (305)
Long term growth in Revenues 5% + Cash 4,033
Present Value of terminal value 105,602 Net Debt 3,727
Terminal Value as % of Total Value 59% Equity Value 183,015
Sensitivity - Varying Terminal Growth Rate

PV of Terminal Value
WACC PV of FCF 105,602 2% 3% 3%
10.0% 104,473 10.0% 92,943 99,770 107,573
11.0% 100,717 11.0% 76,846 81,885 87,553
16.3% 83,921 12.2% 62,204 65,827 69,843
13.0% 93,788 13.0% 54,504 57,463 60,718
14.0% 90,590 14.0% 46,562 48,895 51,441

Sensitivity - EV/EBITDA Exit Multiple

PV of Terminal Value (EV/EBITDA)

WACC PV of FCF 5.0 5.5 6.0
10.0% 104,473 170,046 187,050 204,055
11.0% 100,717 169,424 186,366 203,309
16.3% 83,921 166,273 182,901 199,528
13.0% 93,788 168,204 185,024 201,844
14.0% 90,590 167,605 184,365 201,126

Recommendation

Mindtree is likely to clock EPS of 45.35 in FY2012 E. By assigning average PE pf IT Industry.i.e.12, we recommend a hold position with target price of Rs.544

Target Price 544

Industry Avg Pe 12
Forward EPS FY 2012 E 45.35
 Debt Equity Weightage
E/(D+E) @ Enterprise Value 99.85%
D/(D+E) @ Enterprise Value 0.15%

Interest Rate (%) 12%

Tax Rate (@) 15%

WACC Calculation
WACC 16.27%

Second Stage Valuation

2016E Terminal Year

177,787 186,677
33,664 35,347
27,043 28,395
(4,223) (4,434)
31,266 32,829
6,620 6,951
3,795 3,795
34,091 35,986
(6,274) (6,587)
27,818 29,398

407 407

6
0.40
11,260 -

7% 5%
7% 5%
7% 5%
7% 5%

19% 19%
15% 15%
4% 4%
4% 4%

-16% -16%

Intrinsic Value
Equity Value 183,015
Diluted Shares 407

Intrinsic Value 450

 Intrinsic Value
2% 3% 3%
494 511 530
445 458 472
368 377 387
374 381 389
346 352 358

Intrinsic Value
5 5.5 6
684 725 767
673 715 756
624 665 706
653 694 736
644 685 726

ld position with target price of Rs.544/- in

I was unable to get current beta of company , hence I calculated beta using book method

Beta or β
Input In Blue

Month Stock R Market R Stk R - Stk R Mkt R - Mkt R

1 3 0.95 4 -2
2 2 12 3 9
3 -5 1 -4 -2
4 -4 1 -2 -2
5 0 4 1 1
6 -4 -3 -3 -6
7 -2 0 -1 -3
8 11 7 12 4
9 -9 0 -8 -3
10 -16 -6 -15 -9
11 7 3 9 0
12 8 6 9 3
Stk R Mkt R
n 12 -1.023 2.595

Formula Covsm Stk R - Stk R x Mkt R - Mkt R

n-1

Formula σ 2m (Mkt R - Mkt R)2

n-1

Mindtree Sensex
Date Close Return Date
01-Oct-10 525 2.54% 01-Oct-10 20,261
01-Sep-10 512 1.75% 01-Sep-10 20,069
02-Aug-10 503 -5.35% 02-Aug-10 17,971
01-Jul-10 531 -3.50% 01-Jul-10 17,868
01-Jun-10 551 0.00% 01-Jun-10 17,701
03-May-10 551 -4.24% 03-May-10 16,945
01-Apr-10 575 -2.33% 01-Apr-10 17,559
02-Mar-10 589 10.58% 02-Mar-10 17,528
01-Feb-10 533 -8.73% 01-Feb-10 16,430
04-Jan-10 583 -16.10% 04-Jan-10 16,358
01-Dec-09 695 7.48% 01-Dec-09 17,465
03-Nov-09 647 7.67% 03-Nov-09 16,926
22-Oct-09 601 0.54% 22-Oct-09 15,896
22-Sep-09 598 #DIV/0! 22-Sep-09 16,886
 Covsm 1.16 β
σ2m

Stk R - Stk R x Mkt R - Mkt R (Mkt R - Mkt R)2

-6 3
26 88
7 3
4 3
1 2
18 31
3 7
51 19
20 7
130 74
3 0
30 12
288 248

288 26
11

248 23
11

Sensex

0.95%
12%
1%
1%
4%
-3%
 0%
7%
0%
-6%
3%
6%
-6%
#DIV/0!
 Profit & Loss A/c
1) Figures for FY 2007-08 are standalone including Audited Balance Sheet
2) For Q1 of 2008-09, I have taken standalone results, and from Q2 all figures are Consolidated, including Audited Bal
3) I have adjusted Share Count(Basic & Diluted) wherever necessary to align with reported EPS by the company, as al

Balance Sheet(BS)
4) 2007-08 figures are standalone, as I have taken standalone figures in Profit & Loss A/c
5) For 2008-09 Figs. For 3M,6M,9M and 12M I have taken standalone figs for Balance Sheet, as Consolidated Figs. we
Audited BS is Consolidated.
6) 2009-10 BS is Consolidated

Cash Flow Statement(CFS)

7) I have prepared CFS on yearly basis for simplicity, as I was getting errant figures by breaking it into periods/quarter

Geographic Revenue
8) I have done some small calculation, for converting USD* wise Geographic revenue into Rs. wise Geographic revenu
as Compnay did not reported consolidated figs. Geographic wise in Rs. terms.( Q1 figs. Are standalone, as consolid
by the Company. I took the Consolidated figs. From the fact sheet of respective quarters, and applied the USD regi
to that respective quarters.(calculation is below the Geographic revenues break-up figures)
* Despite taking exchange rates for calculation, I was not getting the accurate figs

Segment Revenue
9) Upto Q1 of 2008-09, all figs. are standalone, after that all figs. are consolidated
From FY 09-10, Segment R & D Services and AztecSoft Business is grouped under PE Services.
Hence, while calculating YoY & QoQ growth in % for 2009-10, I have grouped R&D Serv. and Aztec under PE Service

Projection Assumptions

11) Share Capital = is projected on as it is/straight line basis

Debt = Assumed that it will be paid in 2010-11, hence not shown in closing balance

Fixed Asset = Detailed working is in Fixed Asset Sheet

Goodwill, Investments & Tax Assets = straight line basis

Sundry Debtors = is calculated by ; Avg. Days Sales O/s * (Projected Revenue/365)

Cash = linked from Cash Flow St.
Loans & Advances = is calculated by ; Avg % of Loans to Revenues * Projected Revenues

Current Liabilities = is calculated by ; Avg % of CL to Cost of Revenues * Projected Cost of Revenues

Provisions = straight line basis
 2009-10 Annual Report Excerpts

1 As per NASSCOM, Indian IT exports is estimated to grow by 5.5% in FY2010

2 EBITDA margins on our services business is likely to be stable.
3 effective tax rate based on current taxes is about 15.6% as
compared to about 11% in the previous year.
4 NiW form part of PE Services
5 Our NIW, business is developing a ready to brand 3G smart phone and IP in the area of cellu
6 On our services business, based on current trends, we expect that we will attain growth rate
than industry growth estimates of 13-15%
7 pg 51 for report
ed, including Audited Balance Sheet
PS by the company, as all figures in the model are in Lacs.

as Consolidated Figs. were not provided by the company, however

g it into periods/quarters

wise Geographic revenue for consolidated figs, from Q2-2008-09,

standalone, as consolidated break-up of Geograhic Revenues were not provided
and applied the USD region wise weighted % to total figure of reported Revenues

d Aztec under PE Services

 nd IP in the area of cellular infrastructure. We expect to launch these products to the market in Q3/Q4 of 2010-11. Since this is a new initi
we will attain growth rates higher
2010-11. Since this is a new initiative, the financial performance of the NIW business would depend onthe success of the products when t
s of the products when they are launched.If these initiatives are successful, they will greatly enhance our revenues and profitability
s and profitability