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The Group is provided with the last 5-year financial information of NTPC Limited along with their approximately last 5 years share prices. Click here to access the excel. Click here to access the 5-year financial information of NTPC (Use Capital Assets Pricing Model (CAPM) to estimate its cost of Equity - Cost of Equity = Risk-Free Rate+(Market Rate - Risk-Free Rate) x Beta; For Market Return use BSE SENSEX (data is provided) and take risk-free rate as 6.65% per annum. For calculating the Market Annual Return from Daily returns, use 250 as the number of working days. Also, use the following formula to calculate return from prices Return = [(Price today - Price of the previous day)/ Price of the previous day] Required: a) Valuation of the Company using Dividend Discount Model (use only constant growth model) Dividend Data is given in the attached EXCEL file. While calculating the intrinsic value of NTPC share, use the formula g = Return on Equity "Retention Rate to calculate the growth rate. After the calculation of growth rate then compute valuation using the Dividend Discount Model. b) Relative Valuation of the Company uses Price/Earnings Ratio. (Calculate Price/Earnings Ratio of last 5 years, take its average for the projection of next year's (FY 2021) P/E, and predict the price of the Company if it is expected that its EPS (Earning Per Share) will be Rs. 13.50. (Note: For Calculating relative valuation of the company 1. Calculate Price/Earnings Ratio for the last 5 years using annual EPS and March-end price of each FY. 2- Number of shares outstanding to be calculated by dividing share capital with the face value of the shares- share capital/ face value per share) SELECTED FINANCIAL INFORMATION Crore) 2015-16 2019-20 2018-19 2017-18 2016-17 97,700.39 2,778.09 1,00,478.41 90,307.43 1,872.13 92, 179.56 83,452.70 1,755.95 85,207.95 78,273.44 1,068.86 79,342.30 70,843.81 1,165 35 72,009.16 47,572.19 43,798,59 Revenue Revenue from operations Other income Total revenue Expenses Fuel Energy purchased for trading Employee benefits expense Other expenses Profit before depreciation, finance cost and tax Depreciation, amortization and impairment expense Profit before finance cost and tax Finance costs Profit before exceptional items tax and regulatory deferral 54,241.89 2,776.44 4,995.60 8,663.81 99,870.74 8,699.85 21,947.89 6,781.97 14,465.92 52,493.74 2,713.68 4,779.89 7,548.63 24,643.62 7,954.36 17,389.26 4,716.74 12,672.52 48,315.47 1,313.51 4,734.67 7,421.73 23,422.57 7,098.86 16,393.71 3,984.25 12,339.46 3,581.65 5,576.49 19,052.43 5,172.34 13,880.09 3,296.41 10,583.68 account balances 14,465.92 9,181.95 5,283.97 4,828.84 10,112.81 (397.29) 9,785.59 2,968.37 607.80 6,536.64 12,672.52 (2,918.71) 15,591.23 (3,841.34) 11,749.89 (201.87) 11,548.02 4,929.55 1,000.49 5,826.85 12,339.46 5,257.14 7,082.32 3,260.85 10,343.17 (14.48) 10,328.69 4,040.28 816.40 5,486.49 4,324.60 5,092.38 29,353.13 5,920.82 16,432.31 3,597.20 12,835.11 (782.95) 12,052.16 2,930.82 9.121.34 263.92 9,385.26 (203.38) 9,181.88 3,595.03 727.79 5,062.44 10,583.68 (173.83) 10.757.51 12.09 10,769.60 (58.63) 10,710.97 2,762.24 502.32 7,445.04 Exceptional items (+) income/ (-) loss Profit before tax Total Tax expense Profit for the year before regulatory deferral account balances Net movement in regulatory deferral account balances (net of tax) Profit for the year Other comprehensive income/(expense) for the year (net of income tax) Total comprehensive income for the year Dividend Dividend tax Retained profit Assets Property, plant & equipment Capital work-in-progress Intangible assets Intangible assets under development Total Fixed Assets (Net block) Investments in Subsidiaries, JVs & Others (Non-current) Other non-current financial assets Other non-current assets Current assets Regulatory deferral account debit balances Total Assets Liabilities Borrowings Non-current borrowings Current maturities of non-current borrowings Total borrowings Other Non-current liabilities Current liabilities Less: Current maturities of non-current borrowings Net Current liabilities Deferred Revenue Regulatory deferral account credit balances Net Equity Other Equity Networth Networth excluding Fly ash utilisation reserve fund & Corporate social responsibility (CSR) reserve Total Liabilities 1,56,273.02 73,066.76 538.28 292.52 2,30,170.58 26,400.89 2,025.42 11,192.62 48,825.18 9.122.76 3,27 667.45 1,25,290.68 90,808.89 329.94 397 80 2,16,827.31 13,145.94 1,968.67 13,269.30 42,133.74 3,406.00 2,90,750.96 1,19,427.57 78,606.91 331.60 469 36 1,98,835.44 10,047.48 2,288.53 11,547.73 36,731.25 8.381.66 2,67,832.09 97,443.34 81,921.82 293.02 434.63 1,80,092.81 8,248.11 2,440.36 16,859.53 28,420.85 5.450.67 2,41,505.33 91,499.36 66,205.59 273.89 217.61 1,58, 196.45 8,014.32 1,534.30 17,636.80 29,756.45 2,15,138.32 D 146,538.70 6.154.92 1,59,693.62 9,449.92 54,866.85 6.154.92 48,711.93 3,242.54 1,19,698.08 7.732.40 1,27,430.48 6,151,34 55,354.00 7.739.40 47,621.60 2,139.37 1,08,697.60 6,406.69 1,15,104.29 12,716.06 42,554.76 6.406,69 36,148.07 2,085.90 97,339.28 6.500.37 1,03,839.65 9,153.62 36,177.32 6.500 37 29,676.95 2,121.14 482.74 85,096.95 6.730.79 91,827.74 4,645.94 31,758.74 6,730.79 25,027.95 2,047.34 295.65 E -worth 9,894.56 1,03,674.88 1,13,569.44 1,12,980.96 3,27,667.45 9,894 56 97,513.61 1,07,408.17 1,06,771.54 2,90,750.96 8,245.46 93,539 31 1,01,777.77 1,01,146.56 2,67,832.09 8,245.46 87,985.77 96,231.23 95,674.55 2,41,505.33 8,245.46 83,048.24 91,293.70 90,815.49 2,15,138.32 B D 1 Company Name 2 NTPC Limited YEAR DIVIDEND RATE FACE VALUE 2010 38.0% Rs.10 3 2011 38.0% Rs.10 4 2012 40.0% Rs.10 2013 57.5% Rs.10 6 2014 57.5% Rs.10 7 2015 25.0% Rs.10 8 2016 33.5% Rs.10 9 2017 47.8% Rs.10 10 2018 51.2% Rs.10 11 2019 60.8% Rs.10 2020 31.5% Rs.10 12 13 14 The Group is provided with the last 5-year financial information of NTPC Limited along with their approximately last 5 years share prices. Click here to access the excel. Click here to access the 5-year financial information of NTPC (Use Capital Assets Pricing Model (CAPM) to estimate its cost of Equity - Cost of Equity = Risk-Free Rate+(Market Rate - Risk-Free Rate) x Beta; For Market Return use BSE SENSEX (data is provided) and take risk-free rate as 6.65% per annum. For calculating the Market Annual Return from Daily returns, use 250 as the number of working days. Also, use the following formula to calculate return from prices Return = [(Price today - Price of the previous day)/ Price of the previous day] Required: a) Valuation of the Company using Dividend Discount Model (use only constant growth model) Dividend Data is given in the attached EXCEL file. While calculating the intrinsic value of NTPC share, use the formula g = Return on Equity "Retention Rate to calculate the growth rate. After the calculation of growth rate then compute valuation using the Dividend Discount Model. b) Relative Valuation of the Company uses Price/Earnings Ratio. (Calculate Price/Earnings Ratio of last 5 years, take its average for the projection of next year's (FY 2021) P/E, and predict the price of the Company if it is expected that its EPS (Earning Per Share) will be Rs. 13.50. (Note: For Calculating relative valuation of the company 1. Calculate Price/Earnings Ratio for the last 5 years using annual EPS and March-end price of each FY. 2- Number of shares outstanding to be calculated by dividing share capital with the face value of the shares- share capital/ face value per share) SELECTED FINANCIAL INFORMATION Crore) 2015-16 2019-20 2018-19 2017-18 2016-17 97,700.39 2,778.09 1,00,478.41 90,307.43 1,872.13 92, 179.56 83,452.70 1,755.95 85,207.95 78,273.44 1,068.86 79,342.30 70,843.81 1,165 35 72,009.16 47,572.19 43,798,59 Revenue Revenue from operations Other income Total revenue Expenses Fuel Energy purchased for trading Employee benefits expense Other expenses Profit before depreciation, finance cost and tax Depreciation, amortization and impairment expense Profit before finance cost and tax Finance costs Profit before exceptional items tax and regulatory deferral 54,241.89 2,776.44 4,995.60 8,663.81 99,870.74 8,699.85 21,947.89 6,781.97 14,465.92 52,493.74 2,713.68 4,779.89 7,548.63 24,643.62 7,954.36 17,389.26 4,716.74 12,672.52 48,315.47 1,313.51 4,734.67 7,421.73 23,422.57 7,098.86 16,393.71 3,984.25 12,339.46 3,581.65 5,576.49 19,052.43 5,172.34 13,880.09 3,296.41 10,583.68 account balances 14,465.92 9,181.95 5,283.97 4,828.84 10,112.81 (397.29) 9,785.59 2,968.37 607.80 6,536.64 12,672.52 (2,918.71) 15,591.23 (3,841.34) 11,749.89 (201.87) 11,548.02 4,929.55 1,000.49 5,826.85 12,339.46 5,257.14 7,082.32 3,260.85 10,343.17 (14.48) 10,328.69 4,040.28 816.40 5,486.49 4,324.60 5,092.38 29,353.13 5,920.82 16,432.31 3,597.20 12,835.11 (782.95) 12,052.16 2,930.82 9.121.34 263.92 9,385.26 (203.38) 9,181.88 3,595.03 727.79 5,062.44 10,583.68 (173.83) 10.757.51 12.09 10,769.60 (58.63) 10,710.97 2,762.24 502.32 7,445.04 Exceptional items (+) income/ (-) loss Profit before tax Total Tax expense Profit for the year before regulatory deferral account balances Net movement in regulatory deferral account balances (net of tax) Profit for the year Other comprehensive income/(expense) for the year (net of income tax) Total comprehensive income for the year Dividend Dividend tax Retained profit Assets Property, plant & equipment Capital work-in-progress Intangible assets Intangible assets under development Total Fixed Assets (Net block) Investments in Subsidiaries, JVs & Others (Non-current) Other non-current financial assets Other non-current assets Current assets Regulatory deferral account debit balances Total Assets Liabilities Borrowings Non-current borrowings Current maturities of non-current borrowings Total borrowings Other Non-current liabilities Current liabilities Less: Current maturities of non-current borrowings Net Current liabilities Deferred Revenue Regulatory deferral account credit balances Net Equity Other Equity Networth Networth excluding Fly ash utilisation reserve fund & Corporate social responsibility (CSR) reserve Total Liabilities 1,56,273.02 73,066.76 538.28 292.52 2,30,170.58 26,400.89 2,025.42 11,192.62 48,825.18 9.122.76 3,27 667.45 1,25,290.68 90,808.89 329.94 397 80 2,16,827.31 13,145.94 1,968.67 13,269.30 42,133.74 3,406.00 2,90,750.96 1,19,427.57 78,606.91 331.60 469 36 1,98,835.44 10,047.48 2,288.53 11,547.73 36,731.25 8.381.66 2,67,832.09 97,443.34 81,921.82 293.02 434.63 1,80,092.81 8,248.11 2,440.36 16,859.53 28,420.85 5.450.67 2,41,505.33 91,499.36 66,205.59 273.89 217.61 1,58, 196.45 8,014.32 1,534.30 17,636.80 29,756.45 2,15,138.32 D 146,538.70 6.154.92 1,59,693.62 9,449.92 54,866.85 6.154.92 48,711.93 3,242.54 1,19,698.08 7.732.40 1,27,430.48 6,151,34 55,354.00 7.739.40 47,621.60 2,139.37 1,08,697.60 6,406.69 1,15,104.29 12,716.06 42,554.76 6.406,69 36,148.07 2,085.90 97,339.28 6.500.37 1,03,839.65 9,153.62 36,177.32 6.500 37 29,676.95 2,121.14 482.74 85,096.95 6.730.79 91,827.74 4,645.94 31,758.74 6,730.79 25,027.95 2,047.34 295.65 E -worth 9,894.56 1,03,674.88 1,13,569.44 1,12,980.96 3,27,667.45 9,894 56 97,513.61 1,07,408.17 1,06,771.54 2,90,750.96 8,245.46 93,539 31 1,01,777.77 1,01,146.56 2,67,832.09 8,245.46 87,985.77 96,231.23 95,674.55 2,41,505.33 8,245.46 83,048.24 91,293.70 90,815.49 2,15,138.32 B D 1 Company Name 2 NTPC Limited YEAR DIVIDEND RATE FACE VALUE 2010 38.0% Rs.10 3 2011 38.0% Rs.10 4 2012 40.0% Rs.10 2013 57.5% Rs.10 6 2014 57.5% Rs.10 7 2015 25.0% Rs.10 8 2016 33.5% Rs.10 9 2017 47.8% Rs.10 10 2018 51.2% Rs.10 11 2019 60.8% Rs.10 2020 31.5% Rs.10 12 13 14