2014 03 22 Caso Frozen Food Costo de Capital

Company Advanta India td. Britannia Industries td. GlaxoSmithkline Jubilant Kwality Rei Agro Venky Zydus

Equity β

Equity 0.5472 0.2638 0.0959 0.9856 0.6357 0.5393 0.6690 0.5372

Debt

3,744.20 5,200.40 11,441.80 2,995.50 910.50 23,611.80 3,157.90 1,868.60

Debt/Equity Ratio 5,738.30 281.50 4,248.00 38,540.50 985.70 -

Unlevered β

1.53 0.05 4.67 1.63 0.31 -

0.26 0.25 0.10 0.99 0.15 0.25 0.55 0.54

>>

30%

>>

0.39

>>

0.48

• Exp[ Unlevered β] :

Donde: BL is the firm's beta with leverage. Tc is the corporate tax rate. D/E is the company's debt/equity ratio.

Unlevered β

• Levered β = Unlevered β*(1+(1-T_c)*D/E) Apalancando Unlevered β con la estructura de capital de la Empresa cuando la razón deuda-patrimonio es constante, 1 a 3 :

Levered β • Cost of Equity = Risk free rate + Levered_β*Risk premium Donde: Risk premium (survey estimate) Risk free rate (India)

Cost of Equity (k_p)

8.0% 8.0%

>>

11.8%

>>

8.0%

• WACC: Donde: Re = cost of equity Rd = cost of debt (see income statement) E = market value of the firm's equity D = market value of the firm's debt V=E+D E/V = percentage of financing that is equity

D/V = percentage of financing that is debt Tc = corporate tax rate

WACC

>>

30%

>>

10.3%

Projected Income Statement Year revenue expenses EBITDA Interest payments @8% Depreciation @ 15% Profit Before Tax Tax @30% Profit Ater Tax

1 4400 2400 2000 165 900 935 281 655

2 4900 2700 2200 175 945 1080 324 756

3 5400 3000 2400 185 983 1232 370 862

Projected Balance Sheet Year Equity Debt Total liability Gross Fixed Assets Less Acccumulated Depreciation Net Fixed Assets Working Capital Total Assets

0 6000 2000 8000 6000 0 6000 2000 8000

1 6375 2125 8500 7200 900 6300 2200 8500

2 6754 2251 9005 8400 1845 6555 2450 9005

3 7104 2368 9472 9600 2828 6772 2700 9472

Razón deuda-patrimonio es constante 1:3 Equity % Debt %

75% 25%

75% 25%

75% 25%

75% 25%

Levered β

0.48

0.48

0.48

0.48

Cost of Equity (k_p)

11.8%

11.8%

11.8%

11.8%

WACC

10.3%

10.3%

10.3%

10.3%

PV_flujos NPV

-

594.08

621.90

643.15

4 5900 3300 2600 194 1016 1390 417 973

5 6400 3600 2800 202 1043 1554 466 1088

4 7429 2476 9905 10800 3844 6956 2950 9906

5 7734 2578 10312 12000 4887 7113 3200 10313

75% 25%

75% 25%

0.48

0.48

11.8%

11.8%

10.3%

10.3%

658.44

667.78 3,185.35