Kindly answer the below 3 questions based on Indian School of Business case study by Tuhin Harit | Vikram Kuriyan | Geetika Shah

Assumptions:

1. Revenue Growth = 50%
2. EBITDA Margin = 20%
3. D&A (as % of Capex) = 40%
4. Capex (as % of Revenue) = 2%
5. Discount rate = 12%
6. Tax rate = 30%

Use the 2017 revenue value given in Exhibit 2: 10,000 cr.

Additional simplifying assumptions:

1. The company has negligible debt. Debt can be considered as 0.
2. Working capital remains constant throughout. So there is no change in net working capital.
3. The free cash flows from 2023 onwards are constant and equal to the 2022 value. They continue forever.

Smith wants to calculate the enterprise value of Patanjali using the DCF method. Help him calculate it step by step in the following questions.

Question 1A: Calculate the free cash flows of Patanjali from 2018 to 2022. (10 marks)

Question 1B: Calculate the terminal value from 2023 onwards, assuming the company will generate constant cash flows which are equal to the 2022 cash flow. (5 marks)

Question 1C: Use the free cash flows and the terminal value calculated in the above question and calculate the enterprise value of Patanjali. (5 marks)

\begin{tabular}{|c|c|c|c|c|c|c|c|c|} \hline \begin{tabular}{l} PATANJALI AYURVED \\ \end{tabular} & \multicolumn{6}{|l|}{ln Crs } & & \\ \hline \multirow[b]{2}{*}{ Year } & 0 & 1 & 2 & 3 & 4 & 5 & \multicolumn{2}{|l|}{ Assumptions } \\ \hline & 2017 & 2018E & 2019E & 2020E & 2021E & 2022E & Discount Rate & 12% \\ \hline Revenue & & & & & & & Tax rate & 30% \\ \hline EBITDA & & & & & & & Revenue Growth & 50% \\ \hlineD&A & & & & & & & EBITDA Margin & 20% \\ \hline EBIT & & & & & & & D\&A (\% of Capex) & 40% \\ \hline EBIT(1tax)