You will now help Smith perform the valuation of Patanjali. Use the following assumptions for your calculations from the years 2018 to 2022. Remember, you are performing the valuation at the end of 2017. Smith has given you the following assumptions based to work with. Assumptions: Revenue Growth = 50% EBITDA Margin = 20% D&A (as % of Capex) = 40% Capex (as % of Revenue) = 2% Discount rate = 12% Tax rate = 30% Use the 2017 revenue value given in Exhibit 2: 10,000 cr. Additional simplifying assumptions: The company has negligible debt. Debt can be considered as 0. Working capital remains constant throughout. So there is no change in net working capital. The free cash flows from 2023 onwards are constant and equal to the 2022 value. They continue forever. Question 1 (20 marks) 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) Use this excel sheet for your calculations. Patanjali Valuation - Question 1 Download Question 2 (10 marks) Notes for solving this question: Since we are ignoring debt, i.e. there is no interest, Net income = EBIT (1 - tax rate) Use the same assumptions as the previous question to calculate net income in 2017 Question 2A: Smith wants to check the value of Patanjali using the multiples method. Help him calculate Patanjalis equity value in 2017 using the P/E multiple of Dabur given in Exhibit 1. Please explain your calculations. (5 marks) Question 2B: Help Smith calculate Patanjalis equity value in 2017 using the P/E multiple of Britannia given in Exhibit 1. Please explain your calculations. (5 marks) Question 3 (10 marks) Question 3A: Which of the assumptions could have negatively impacted the enterprise value that you calculated using the DCF method? Identify at least 2 such assumptions. (5 marks) Question 3B: Smith is doing the valuation in 2017 and makes several assumptions about the future. As you know now, the Covid-19 pandemic took the world by storm from 2020 onwards. If Smith could have somehow predicted the pandemic in 2017, how would it have influenced his valuation of Patanjali? Justify your answer. (5 marks)

Patanjal+Enterprise+ValueIcSheet - Microsoft Excel Formula Dale W VW AM General A i Namal Autosur Neutral -- Hur Inaut Cut Copy Femrat PPT Capture A1 Calculation -- Wed FE* Merge Center * Bad Good Extraury Input Real Check Cell Linked Nche at Duit Full B-3 Font $ - 23:Lucial Furla + Funny Number Clear - Soil & F Pille Sale DATANIATI AYURVED C D E G H K M N 0 P O in Crs . 0 2017 3 3 2020E + 2021 2011 2019 2002 Assumptions Discount Race Taxa Revenue Growth EBITDA Margin DSA ( o Capex Capex ('of Revenue 12% 30% 50% 20% % 40% 1 PATANJALI AYURVED 2 3 Year 4 Fue 5 5 EBIDA 6 Dab 7 CDI # EHITAKA 9 Cape 10 FCF to compuny (b) +b 11 Terminal value (2023 onwards 12 FCF Terminal value 13 Enterprise Value 14 15 16 17 18 15 20 21 22 23 21 25 20 27 21 25 30 31 31 35 26 37 38 99 HARDCE Type here to search I 22C Mostly clear ASD N 11:10 PM 502512001 Patanjal+Enterprise+ValueIcSheet - Microsoft Excel Formula Dale W VW AM General A i Namal Autosur Neutral -- Hur Inaut Cut Copy Femrat PPT Capture A1 Calculation -- Wed FE* Merge Center * Bad Good Extraury Input Real Check Cell Linked Nche at Duit Full B-3 Font $ - 23:Lucial Furla + Funny Number Clear - Soil & F Pille Sale DATANIATI AYURVED C D E G H K M N 0 P O in Crs . 0 2017 3 3 2020E + 2021 2011 2019 2002 Assumptions Discount Race Taxa Revenue Growth EBITDA Margin DSA ( o Capex Capex ('of Revenue 12% 30% 50% 20% % 40% 1 PATANJALI AYURVED 2 3 Year 4 Fue 5 5 EBIDA 6 Dab 7 CDI # EHITAKA 9 Cape 10 FCF to compuny (b) +b 11 Terminal value (2023 onwards 12 FCF Terminal value 13 Enterprise Value 14 15 16 17 18 15 20 21 22 23 21 25 20 27 21 25 30 31 31 35 26 37 38 99 HARDCE Type here to search I 22C Mostly clear ASD N 11:10 PM 502512001