Discounted Cash Flow (DCF) Analysis Unlevered

Dr. Reddy's Laboratories Limited (RDY)

$54.79

-1.50 (-2.66%)

All numbers are in Millions, Currency in USD

Stock DCF: 22,342.51 | 54.79 | undervalue

Operating Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	142,028	153,851	174,600	189,722	214,391	237,692.35	263,526.23	292,167.90	323,922.52	359,128.44
Revenue (%)
EBITDA	26,839	35,522	31,487	40,179	45,080	48,595.81	53,877.50	59,733.24	66,225.43	73,423.22
EBITDA (%)
EBIT	15,129	23,332	19,015	27,383	33,256	31,685.88	35,129.69	38,947.81	43,180.90	47,874.07
EBIT (%)
Depreciation	11,710	12,190	12,472	12,796	11,824	16,909.93	18,747.81	20,785.44	23,044.53	25,549.15
Depreciation (%)

Balance Sheet Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Total Cash	20,968	24,757	25,740	34,573	44,365	40,176.46	44,543.09	49,384.31	54,751.70	60,702.46
Total Cash (%)
Account Receivables	54,767	50,030	61,754	61,683	80,270	83,858.46	92,972.72	103,077.58	114,280.69	126,701.42
Account Receivables (%)
Inventories	29,089	33,579	35,066	45,412	50,884	52,321.19	58,007.78	64,312.43	71,302.30	79,051.88
Inventories (%)
Accounts Payable	16,052	10,296	10,745	12,696	15,971	18,202.30	20,180.64	22,374	24,805.74	27,501.78
Accounts Payable (%)
Capital Expenditure	-11,043	-7,491	-6,115	-12,561	-19,049	-15,047.08	-16,682.49	-18,495.64	-20,505.87	-22,734.57
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 54.79
Beta	0.193
Diluted Shares Outstanding	166.33
Cost of Debt
Tax Rate	27.03
After-tax Cost of Debt	2.07%
Risk-Free Rate
Market Risk Premium
Cost of Equity	4.512
Total Debt	33,845
Total Equity	9,113.49
Total Capital	42,958.49
Debt Weighting	78.79
Equity Weighting	21.21
Wacc

Build Up Free Cash

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	142,028	153,851	174,600	189,722	214,391	237,692.35	263,526.23	292,167.90	323,922.52	359,128.44
EBITDA	26,839	35,522	31,487	40,179	45,080	48,595.81	53,877.50	59,733.24	66,225.43	73,423.22
EBIT	15,129	23,332	19,015	27,383	33,256	31,685.88	35,129.69	38,947.81	43,180.90	47,874.07
Tax Rate	31.62%	16.25%	-8.13%	34.74%	27.03%	20.30%	20.30%	20.30%	20.30%	20.30%
EBIAT	10,344.81	19,539.50	20,560.92	17,871.05	24,267.06	25,252.80	27,997.43	31,040.36	34,414.02	38,154.35
Depreciation	11,710	12,190	12,472	12,796	11,824	16,909.93	18,747.81	20,785.44	23,044.53	25,549.15
Accounts Receivable	-	4,737	-11,724	71	-18,587	-3,588.46	-9,114.26	-10,104.85	-11,203.11	-12,420.74
Inventories	-	-4,490	-1,487	-10,346	-5,472	-1,437.19	-5,686.59	-6,304.65	-6,989.87	-7,749.58
Accounts Payable	-	-5,756	449	1,951	3,275	2,231.30	1,978.34	2,193.36	2,431.75	2,696.04
Capital Expenditure	-11,043	-7,491	-6,115	-12,561	-19,049	-15,047.08	-16,682.49	-18,495.64	-20,505.87	-22,734.57
UFCF	11,011.81	18,729.50	14,155.92	9,782.06	-3,741.94	24,321.30	17,240.24	19,114.01	21,191.44	23,494.66
WACC
PV UFCF						23,709.59	16,383.92	17,707.77	19,138.58	20,685.01
SUM PV UFCF										97,624.86

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	2.58
Free cash flow (t + 1)	23,964.55
Terminal Value	4,131,819.25
Present Value of Terminal Value	3,637,708.05

Intrinsic Value

Enterprise Value	3,735,332.91
Net Debt	18,993
Equity Value	3,716,339.91
Shares Outstanding	166.33
Equity Value Per Share	22,342.51