Sameer is an MBA Finance working as an analyst in an investment bank. He is at present working in M&A buy-side team, engaged on valuation of a target company -Alpha Industries Ltd Based on his knowledge of that industry and the target company, after going through various industry sector reports and equity research reports; reviewing the audited Balance Sheet and P&L of the target company: looking at its peer group companies financials, and face-to-face meetings with the top management of the target firm, he has collected a lot of data and come up with some assumptions of sales and operating costs which are given below.

Sales in FY21 Rs 300cr (Actual)

Fixed assets as at end of FY21 R$ 250 cr

Cash and marketable securities Rs 20 cr

Long term debit as at end of FY21 Rs 140 cr interest rate 11%, the Loan is tepayable in three instalments at the end of 3rd 4th and 5th year (e end of FY24, PY25 and FY26) Equity Share Capital as on FY21 4 cr equity shares of Rs 10-face value each reserves and surplus. Rs 100 cr

Projected Sales in FY 22 Rs 350 cr, and Sales are projected to increase by 5% each year for next 4 years (ie upto FY26)

Variable cost: 60% of sales

Fixed operating cost per annum (other than depreciation) Rs 30 cr

Depreciation: 20% WDV basis, Tax rate: 30%

Net Working Capital required equivalent to 4 months Sales

Cost of Equity of the firm: 16%

Perpetuity growth rate in operating cashflow: 2% pa beyond FY26 Based on all the above, calculate the following

a) Free Cashflow to Firm and Free Cashflow to Equity for 5 years

b) Fair value per Equity share using FCFF method

c) Equity value using FCFE method

d) If Industry's average EVIEBITDA is 3X, what is the fair price of the equity share of Alpha?