Brief Introduction

Nepal Telecom or Commonly known as NTC is the first state owned telephone company that
provided telephone services to the general public. The company became public in 2003 with the
emergence of companies like UTL and Ncell. Known as Telecommunication Department at the
time of establishment, its name was changed Telecommunications Development Board in 1969.
After the enactment of Communications Corporation Act 1971, it was formally established as
fully state-owned corporation called Nepal Telecommunication Corporation in 1975. On Magh
22, 2060 BS, Nepal Telecommunication Corporation was transformed to a public limited
company. It is claimed to be the first Operator to provide 3G Service in South Asia. Currently
NTC is the highest earning government organization
Company Profile: Nepal Telecom
Name
Company Type
Industry
Predecessor
Traded as
Headquarter
Offered Services

Nepal Telecom (NTC) /Nepal Doorsanchar Company

Public
Telecommunications
Nepal Telecommunication Corporation
Nepse : NTC
Bhadrakali Plaza , Kathmandu
PSTN services, CDMA ,GSM Mobile , Internet and

Total Revenue (In Billions Rs)

Total Expenses (In Billion Rs)
EBIT( In billion Rs)
Net Profit After Tax (3rd Qtr, 2072/73)
Earnings Per Share (3rd Qtr, 2072/73)
Net worth Per Share

Email
42.63
22.63
20.09
14.56
97.04
539.99

Services Offered By Nepal Telecom

General Telephone Services
This service includes PSTN services. Basically, the households, offices etc. are connected
with telephone lines and as of now 587 telephone exchange are in operation. There were

6, 68,000 telephone lines in operation .Mostly ADSL subscribers have increased in

numbers with the expansion of telephone lines by 19.40%.
GSM Services
NTC was the monopolistic leader in GSM services until the emergence Mero Mobile
(Now NCELL). At Present, there are 1,1743,000 GSM subscribers with an increase of
7.34 %.At present the Company has 42% share in the GSM market and plans to increase
the market share to 51 %. Under GSM services, the subscribers can either choose from
prepaid or postpaid services. Features like 3G and proposed 4G services can be accessed
along with other features like GPRS, International call, Call forwarding, Voice call,
multimedia messaging etc.
CDMA Services
CDMA subscribers have increased from client base of 13, 95,000 to 14,57,000 from the
previous year. CDMA is basically wireless telephone services operating upon the radio
waves and has been effective in the rural parts of Nepal. The data and voice services
through CDMA has been marketed as SKYPRO. The services are under CDMA are voice
call, SMS, E-video data, call forwarding etc.
Data/Internet Services
Currently there are 65,14,0000 data service clients who use internet through their GSM
network and broadband services offered by NTC. The data service density has increased
from 24.47 % to 25.27 %. Currently 14,300 clients have acquired WI-MAX services, 78
have acquired FTTH services and 1, 60,000 have acquired ADSL services. The company
has further plans to increase the accessibility of the WI-MAX and FTTH services across
the country. Under data and internet services, NTC offers 3G services which allows real
time video streaming, downloads etc , PDSN , EVDO (services include WIFI dongle
,RUIM services),ADSL(leased telephone internet), Volume based as well unlimited
monthly plan
Marketing Programs of NTC for maintaining the brand value
Introduction of Meet, a social networking site where people can share text, audio,
photos .it was officially launched in 2072/10/4 on both android and IOS platform. The
site was launched under the domain www.meet.com.np .The site has managed to attract

people who prefer localization of the social networking and the access platform for
Facebook, twitter etc. from the meet app has increased its popularity.
Participation in industrial fairs, exhibitions and seminars like the annual trade fair,
INFOTECH, Corporate sports tournament, Annual engineers summit. The participation
has been emphasized to increase the presence among the mass and increase the goodwill

in the market.
Installation of 5 KIOSK machine for the convenience of the tourists and installation of
EVDO technology in the mountainous region to facilitate the tourists with the data and
internet service during their visit in those regions. As well as distribution of free SIM
cards of talk time worth 50 RS in the airport for easy phone services during their stay in

Nepal.
Installation of WIFI Hotspot in Sajha Bus and other locations for convenience of the
users.
Negotiations with other telecom companies outside Nepal, for maintaining the convenient
international tariff rates of call and messaging.
Indulgence in CSR activities like plantation of flower and plants in both side of the main
road from Tinkune to MaitiGhar , Bagmati Cleaning Program along with free SMS to
invite public participation
NTC had provided a greater relief to the public after the earthquake by providing free call
and data services during the period.
Sponsorship in Womens football and mens cricket team, as well as hosting tournament
like telecom t20 championship.
Distribution of free SIM&RUIM to self-volunteers in the rural districts for maintaining
public health
NTC has collaborated with Ministry of agriculture to provide information regarding agro
climate weather via introduction of Framers SIM, an app labeled Hamro Krishi ,
agriculture information and a toll free number. The distribution started from 8 districts in
primary phase another eight in seconady phase and 9 districts in third phase. The further
expansion is currently taking place and soon, it plans to distribute throughout the 75
districts.
Free helpline number for childrens and women in danger and distress.
Future Plans and Programs

 Expansion of its services in rural areas and delivering value added services in effective
price.
Increasing Focus on data services technology to add up to the customers experience and
increase the transmission network.
The company has estimated a distribution of 22, 64,445 telephone line and 20, 60,000
mobile phone line within the fiscal year 2072/73.
NTC has decided to expand its CDMA client base with 3G, 75,000 new CDMA clients.
As per the increasing demand of data services, NTC has decided to bring data card
enabled technology known as EVDO Enabled CDMA.
Expansion of Client base in rural region with the help of NGN( Next Generation
Network)
Estimated expansion of PSTN by 29,445 and distribution of 40,000 new ADSL lines.
Speeding up the distribution of WIMAX services and launching local hotspots to
capitalize upon the growing demand.
Expansion of FTTH services in the region of Birgunj , Lalitpur , Patan , Biratnagar.
Improving PSTN Services through switching TDM with IP based technology and
installation of core query handler of 10 lakhs customer at a time.
Introducing single billing system for multiple services to ease up the current bill payment
hassles the customers are facing and focus on improving he support system to handle
customer grievances.
Replacement of old phone technology with axis gateway technology within the next 3
years.
Expanison of optical fiber route via Madhya Pahadi Rajmarga

and the issuance of the

tender for the project within the next six months.

Key Financial Indicators

Year
Net Profit Margin (%)
EBIDTA Margin (%)
Return on Capital
Employed (%)
Return on Shareholders
Equity (%)
Current Ratio (Times)
Book Value Per Share (Rs)
No of Shares (In Thousand)

2067/ 2068/6 2069/ 2070/ 2071/

68
9
70
71
72
37.58
31.27
29.08
29.16
34.14
61.8
61.92
58.42
48.04
53.82
16.77

15.52

14.55

12.78

15.2

26.76
2.45

23.54
2.7

301.97
15000

330.19
150000

21.07
2.54
357.5
7
15000

15.46
3.55
498.7
2
15000

17.97
3.94
539.9
9
15000

EPS (Rs)
Contribution in National
Revenue (%)
Average salary of
Employees (Rs)
Average Customers Per
Employee

0
80.8

77.73

0
75.33

0
77.12

0
97.04

54.43

48.82

48.48

51.31

48.68

5590

6800

7129

7282

8082

1663

1378

1678

2002

2461

Performance for the past 5 Years

Customer Base (In Millions)

Total Customers

Total GSM Mobile

Total Internet Clients

PSTN Telephone

Total Revenue (In Billions)

Total CDMA

Total Expenses (In Billions)

Net Profit After Tax (In Billions)

Net Profit Margin (%)

Earning Per share

Return on Capital Employed (%)

Expense To Income Ratio (%)

Average Customers Per Employee

ROE After Tax (%)

Current Ratio (Times)

Book Value Per Share and EPS

Earnings Per Share

Book Value Per Share

EBIDTA Margin (%)

Type of Cost
Staff Expenses
Repair and Maintenance Cost
Administrative Cost
Royalty Cost
Depreciation
Licensing Fee
Frequency Fee
Other Expenses

% of cost
26%
36%
7%
10%
16%
1%
3%
1%

Comaparative Analysis of Income , Expenditure and Net Profit

Total Income

Total Expenditure

Net Profit After Tax

Cost Component Breakdown of Nepal Telecom (In %)

Cost Components Breakdown (In %)

Staff Expenses
Repair and Maintenance Cost
1% 3% 1%
26%
16%

Administrative Cost
Royalty Cost
Depreciation

10%

Licensing Fee
Frequency Fee

7%

Other Expenses

36%

Income from Services Breakdown

General Telephone Services
Year

2071/72

2070/71

Local/International

3,070,431,465

3,302,969,307

International Trunk Call

146,410,732

165,183,840

Lease Circuit

124,920,544

93,672,433

IN Service

17,430,288

16,662,819

Internet Service

42,959,689

1,011,582

ADSL

1,576,782,614

1,480,924,582

SIP Phone

48,825

111,293

WIMAX

85,788,832

67,901,301

Other Services
Total Income From Telephone
Services

145,112,786

132,897,644

5,209,885,775

5,261,334,801

Income from GSM Services

Year

2071/72

2070/71

Local call

1,732,684,355

1,561,078,162

International Trunk

137,659,293

120,449,374

Roaming

397,311,120

147,351,423

Prepaid Card

121,903,663

135,441,699

Recharge Card

17,824,783,094

16,004,796,614

Data Service

506,597,004

223,658,772

Other
Total Income From GSM
Services

385,011,611

276,171,443

21,105,950,140

18,468,947,487

Year

2071/72

2070/71

Local/International

102,781,673

124,128,093

International Trunk Call

3,482,660

4,051,470

Data Service

2,015,335

2,376,912

Prepaid Card

64,838,129

30,770,358

Recharge Card

1,077,184,791

1,021,048,245

Income from CDMA

Other
Total Income from CDMA
services

17,397,369

28,798,789

1,267,699,957

1,211,173,867

Two Years Compartive Study of Income From Services

2071/72

2070/71

Analysis of the Income from Services

The growth of technology within the smartphone industry and the easy accessibility of
these technologies in the mass has almost mandated the subscription of data and voice
services.
Most of the smart phone technology feed on data and services which is why the income
from data and services of Nepal telecom has increased in GSM service. Since other
technology are asset intensive, the portability factor of GSM technology has the upper
hand than the other technologies in mass.

 As a result , the income form data services in GSM has doubled from the previous year
which shows the outstanding growth and the huge future potential which can be tapped
through the upcoming 4G technology.

Investments
Nepal Telecom (NTC) is one of the highest earning government entity in Nepal. The company
has been studying the investment avenues and have started to invest certain portion from their
staggering profit amount in areas like hydropower, banks and other projects. The availability of
the funds in huge number provides NTC to invest in future prospects and add up to the revenue.
NTC has invested in following projects over the years:
a) Investment in Associates
NTC has invested in Trishuli hydropower company (24MW) as founding investor and as of now
has invested 9750000 in the hydropower project which is 28.3% of the paid up capital.
b) Investment in as shareholders
NTC has purchased 6,345,000 shares of face value 100 of Upper Tamakoshi Hydropower as
investment in equity share capital, which is 6% of the paid up capital of 10,590,000,000. The
investment has been marked as available for sale and marked in initial price as mark to mark
pricing under NFRS.
c) Investment in debenture and bonds
NTC has invested in debenture of following banks in which the intrinsic coupon rate has
been marked as the interest rate.
Debenture of Bank
Laxmi Bank Debenture
Loan to upper Tamakoshi
Siddhartha Bank Debenture

Amount Invested
20,000,000
1,160,743,324
100,000,000

The interest from the loan to Upper Tamakoshi is recievable on 12 % at the year of loan sanction
and 11% afterwards.

d) Investment in Deposits of the Bank

NTC has various deposits in various banks of the country with maturity of less than 1 year and
interest amount is receivable as per agreed rate. The investment in deposits have been classified
on the basis of maturity period and effective interest rate using held to maturity.
The total deposits in Nepalese and American Dollar are as follows:
Balance in Bank
Ashad 31st, 2072
Ashad 31st , 2071 Shrawan 1st ,2070
Balance in NPR
6,631,000,000
3,551,000,000
14,685,656,000
Balance in American Dollar
4,146,740,000
2,541,350,000
2,327,500,000
Total
10,777,740,000
6,092,350,000
17,013,153,000
Note: The interest of Deposit in NPR has interest rate around 7% to 8.65% and deposit in
USD has interest rate of 1.62% to 3.62%.
e) Investment in Government Bonds
NTC has invested in various government bonds of worth more than 2 billion NPR with
the interest rate in between 7.5% - 10 %. The investment in government bond has less
chances of impairment but the chances of inflation and fluctuations of interest rate in
market can have an impact in the investment in government bonds.
Major cost bearers for Nepal Telecom
GSM licensing Fee
Every Year NTC has to pay GSM license renewal fee of 2.5 Billion NPR every year as an eight
installment plan for eight years. The installment amount is paid every year through an established
fund for licensing fee payment. So licensing fee is one of the major cost for Nepal telecom as it
is a never ending process. The upgrading form 3G to 4G will bear more cost and can have an
impact in the NTCs licensing fee expenditure.

Royalty and contribution to rural telecommunication Development fund

Every Year NTC has to pay royalty of 4% from the total revenue and 2% for the rural
telecommunication development fund. The amount for the total expenditure on royalty including
contribution to the fund was 2.3 Billion NPR.
Voluntary Retirement Scheme

The company decided to provide VRS to the ageing and underperforming employees. The
estimated 3 staged VRS schedule would amount to more than 10 billion NPR. Under this scheme
more than 806 employees have been handed the VRS scheme and have already embarked on the
final stage of the VRS scheme. The Two staged voluntary scheme have already bore more than 8
billion NPR. The earnings per share has been sensitized because of the huge payment in VRS.
The Earnings per Share previously was around Rs 97 but with the introduction of

VRS it

dropped to 81.05. The Price of Rs 81.05 has been obtained after sensitizing the Earnings
Through deduction of VRS scheme. So, the end of VRS scheme would definitely boost up the
earnings and is projected to surpass the RS 100 mark by the FY 2073/74

SWOT Analysis
STRENGTH.
Increasing Net Profit from the Past 5 Years and the trend has continued even in this fiscal
Year as the company registered a staggering net profit of Rs 14.56 billion in the
FY2072/73/ (Q3).
The company has a paid up capital of 15 billion and reserves worth of 86 billion.
The company has one of the most consistent cash flows with increasing earnings per
share
90% of the shares of the company are owned by government ensuring minimal disruption
and conflicts within the shareholders.
First Company to introduce new accounting policy which is already popular at the
international accounting circuit. The new accounting standard has been labeled as NFRS.
NTC is the market leader with 40% market in telecommunication and 55% in
Data/internet Services.
Since the switching costs of moving from one GSM service to another is high and a
tedious job, so the customers are always eager to stick to the same GSM service. This has
helped NTC take a grip in the market which is being shadowed by the vigorous
marketing efforts of companies like NCELL.
The Company has customer base of more than 15.8 million.

 The subsidized tariff rates have ensured customers loyalty towards NTC. Since NCELL
charges very high tariff on calls and data services, it is found that people generally prefer
NTC over NCELL as per their requirement on call and data services.
NTC has its services running all over the country and registered a growth in the customer
base of PSTN, Data/internet Services and GSM Service.
The company witnessed a growth in its GSM internet service user by 38.34 % than the
previous years.
NTC is the one of the highest contributor in national tax revenue which stood at 5.27% of
the entire tax revenue of the country in the FY 2071/72.
NTC contributed 11.46% in the GDP from the service sector.
Increasing incoming international call within the network
WEAKNESS
NTCs marketing campaign in comparison to the vigorous campaigns of NCELL falls
apart and has lost some its marketing share due to the lack of active marketing
campaigns.
Although NTC registers staggering amount of Net profit, the company has failed to
mobilize its earnings into a productive form.
NTC has always faced criticism regarding its tower reception and cases of server failure.
Although the company has good infrastructure, it has failed to address these allegations
from the general public at times.
VRS scheme to 806 staff has reduced the profit figure for Chaitra 2073. Total 1500 staff
will retire under VRS by Poush end 2073 and has already cost more than 8 billion
NPR.

The customer service of NTC has faced criticism of being unresponsive at many times,
failing to address the clients enquiry on many occasions.
The technology transfer in Nepal is quite time consuming. Most of the international
technology in telecommunication take a time of 2-3 years to reach within Nepalese
market scenario. So NTC has failed to introduced international telecommunication
technology in short interval of time.
The use of old technology has resulted in increment of repair and maintenance cost for
the past couple of years, which was 35% of the total expenses in the FY 2071/72.
The lack of proper utilization of the profit has led to slow growth in earnings which is
only 7-8%

 NTC laid off almost 805 employees within 2 years, which led to incurring of VRS
payment to the employees.
The licensing renewal for GSM service has decreased the companys profitability.
OPPORTUNITIES
The growth of smartphone industry has led to opportunities for GSM service providers
like NTC to acquire customers through 3G and 4G services.
Introduction of technology like
The demand for internet and data service is sky rocketing, the demand has almost
doubled in these 5 years and is projected to increase further, which shows a lucrative
prospect for NTC.
Although NCELL has won accolades for its prompt services and its state of the art
technology, NTC provides a competitive price over NCells costly services. So NTC can
use this as a strategy against Ncell to acquire more customer base.
Since Ncell only provides GSM services, NTC can capitalize upon the aspects like
Internet services and telephone services to boost up their income.
WIMAX service is considered a revolution in Nepalese internet circuit. Since NTC is the
first to bring WIMAX service in Nepal, optimizing the access can lead to increase in its
client base.
Nepal telecom has decided that FY 2016/17 will be implemented as the year of
investment and service. As a result , the company has endorsed a budget of Rs 67 billion
for the year which will be invested to upgrade the NTC services as well as invest in
sectors like hydropower and other energy sector to add up to the revenue.
NTC has been adding up its technology marvels like Interactive Voice Response (IVR),&
a video calling service visually impaired and haring disabled persons. This has helped to
position NTC among disabled people.
NTC is trying to build its brand image by focusing on CSR activities like Bagmati
Cleaning Campaign, Maintenance of greenery between Baneshwor-Maitighar sections of
Araniko Highway, commitment of fund worth Rs 1 billion for the reconstruction for the
next 3 years etc. These all activities have helped NTC to position itself as a service
dedicated organization and have helped to persuade people towards NTCs ever
increasing client base.
Nepal is a land of festivals. There are festivals every day and other because of the vast
cultural diversity. Hence, NTC has been launching services and packages for specific

festivals and occasions like Teej, Fathers day, Mothers day, Dashain & tihar etc. So
initiating festival packages can help NTC increase its client base in GSM data services.
NTC initiated a program to distribute free SIM card to the tourists in Nepal, helping
tourist during their stay and persuade a brand new set of users among international
tourists.
Implementing Convergent Real Time Billing System for the convergence of all the bills
of services offered by the company through a single stop and assist the value customers
with the bill payment solutions.
Introduction of Enterprise Risk Management and Revenue Assurance Technologies.
The purchase of Bandwidth from China via Rasuwagadhi can help to increase the internet
speed as well as reduce the general tariff on internet. So, with this NTC can attract more
customers.
The Expansion of its fiber Internet in 32 Districts can increase the companys internet
client base as well compete with other Broadband companies.
The Investment in Hydropower Projects Like Trishuli B and Upper Tamakoshi has
assured future return and increasing the investments helps to properly utilize the profit
which in past have been under-utilized.
THREATS
Since NTC has been dethroned from its monopoly, the open market has created a tough
competition. Ncell has been attracting a lot of customers because of its promptness and
easiness. So in future there are bound to be more competitors. So NTC is vulnerable to
the new entrants and the shifting market trend.
Although, NTC has been connected with all the 75 districts, the 3G expansion has been a
disappointing one in the rural areas, which Ncell has managed to overcome with its state
of the art technology and the expertise from abroad.
Ncell has been concentrating in development of telecommunication with investment
worth of 12 billion and this can create a drastic decline in NTCs market share.
With the growth of smartphone technologies like VIBER, SKYPE, Whatsapp , the
revenue from international call has been decreased by a huge margin as people rely more
on these technologies to make calls which dont cost a penny and can be used through the
data services.

NTC is having a tough competition with the broadband companies in terms of internet
connectivity. With the emergence of broadband companies in large number like
Classictech , Worldlink, Websurfer etc , the internet service client base is also declining.

Valuation
We have used following models for valuation of NTC. The valuation models and the calculations
involved are mentioned below
I) Two Stage Free Cash Flow to Equity Method
In this method we have forecasted 10 years equity cash flow using compounding rate of 5 %. We
have basically compounded the Earning Per share with that compounding rate and have used
EPS of 2072/73(Q4) as the base period Earnings per Share. The calculations involved are shown
below:

Year
Earnings Per share
Depreciation
Net Capital
Expenditure
Equity Cash Flow

2072/73
(Q3)

2073/7
4

2074/7
5

2075/7
6

2076/7
7

2077/7
8

2078/7
9

2079/8
0

2080/8
1

2081/8
2

2082/8
3

81

85

89

94

99

103

109

114

120

126

132

5.67

5.67

5.67

5.67

5.67

5.67

5.67

5.67

5.67

5.67

5.67

79

83

87

92

96

101

106

112

117

123

130

Note:
The average annual expenditure was around 350 million which was almost 7 % of the
earnings and the average depreciation was around 330 million which is almost 4%
Continuing Value = Final year Projected flow x (1 + Long term Cash flow growth
Rate)
(Discount Rate Long term Cash Flow Growth Rate)
= 130x (1+ 0.03)
(0.1 0.03)
= Rs 1909

Calculation of Discounted Cash Flow

Year
2072/73
2073/74
2074/75
2075/76
2076/77
2077/78
2078/79
2079/80
2080/81
2081/82
2082/83

Cash Flow
79
83
87
92
96
101
106
112
117
123
1909
Value

Discounted Cash Flow@10 %

71.8
68.5
66.1
62.5
59.8
57.1
54.6
52.1
49.8
48
669.2
1259

II) Constant Growth Free Cash Flow to Equity Model

For this model we have used a constant growth rate of 3% and required rate of rate of return as
10%. The calculations are shown below:
= Expected Cash Flow of next year
(Ke - g)
Where Ke = required rate of return
g = Constant growth rate
=

83
(0.1-0.03)

= Rs 1183

III) Gordon Growth Model

In this model we have used a constant dividend growth rate of 5 % and required rate return of 10
% and expected dividend one year from the base period of 2072/73
Year
Earnings Per
Share
Dividend

2072/73
(Q3)

2073/7
4

2074/7
5

2075/7
6

2076/7
7

2077/7
8

2078/7
9

2079/8
0

2080/8
1

2081/8
2

2082/8
3

81

85

89

94

99

103

109

114

120

126

132

41

43

45

47

49

52

54

57

60

63

66

Value

Total Value

The calculations are shown below:

Gordon Growth Model = Expected dividend next year (D1)
(Ke g)
=

43
(0.1 0.05)
= Rs 851

IV) Stock Val Method

Company Name
NTC

Average ROE

Net worth Per share

17.50%

570

Payout Ratio
50%

Value
499

Retention Ratio
50%

778

1277

Note: NTC= Nepal Telecommunication Company

1. Since our average ROE is 17.50% we have used 17.50% % as our reference ROE and the
ROE after Tax corresponding to it during the calculations.
2. The value under retained ratio is calculated by multiplying Net worth per share with
retained ratio and the reference value from the table listing reference ROE after tax under
100 % retention of its earnings calculations due to declining ROE trend over the years. T

3. The value under dividend payout ratio is calculated by multiplying Net worth per share
with payout ratio and the reference value from the table listing Reference ROE after tax
under 100 % payout on earnings.
4. Reference value for payout and retained ratio is listed in appendices.

V) Average PE ratio Method

Under this method we have assumed an average PE ratio between 10 and 15. So we have used
both 15 and 20 and calculated the value by multiplying the average PE ratio with the current EPS
Current EPS
Value when PE Ratio @
10
Value when PE ratio @15

81.05
810.5
1215.7
5

Value after Margin of Safety

Valuation Models
FCFE
Constant FCFE
Gordon Growth Model
Stock Val Method
Average PE ratio value@10
Average PE ratio value@15

Value
1259
1183
851
1277
810
1215

Value After 30% Margin of Safety

881
828
596
894
567
851

Note:
FCFE = Free Cash Flow TO Equity
PE = Price Earning
Forward Looking on PE multiples and CAGR on investment
Next Year EPS
FD rate
Relative Value to Fixed Deposit
Current Market Value
Internal Rate of Return (IRR)
EPS after 10 years
PE@10

85

10%
850
689
13%
132
1320

PE@15
Dividend
Market value including dividend
Market value including dividend

1980
576
1896
2556

Values

Estimated Purchase Price

Estimated Purchase Price

CAGR after including dividend

(680)
10.80%

(1000)
6.41 %

CAGR after including dividend

13.33%

9.84 %

Discounted Earnings per Share Method

2072/73
(Q3)

Year
Discount Factor
Earnings Per
Share
Value

2073/
74

2074/
75

2075/
76

2076/
77

2077/
78

2078/
79

2079/
80

2080/
81

2081/
82

2082/
83

0.91

0.83

0.75

0.68

0.62

0.56

0.51

0.47

0.42

0.39

0.35

81

85

89

94

99

103

109

114

120

126

132

74

71

67

64

61

58

55

54

50

49

46

Analysis
1) Does the company we want to invest in has durable competitive advantage?
Yes

2) Does the company have a brand name?

Yes

3) Does the business produce products/services a customer might need repetitive and gets
used/wear out fast?
Yes

4) Is the company low cost producer/operator with high net profit margins?
Yes

Valu
e

649

5) Does the company earn high ROE (at least 20% P.a)?
Yes

6) Does the company earn high Return on TOTAL CAPITAL (includes equity and debt)?
7) Does the company
produce consistent and upward earnings trend?
Yes
Yes

8) Is the company debt low (less than 5 times current net earnings) and can be paid back from its
earnings in just few years (2-3 YEARS)?
Yes

9) Can the company increase price along with inflation without losing market share
Yes

9) Can the company increase price along with inflation without losing market share?
Yes

10) Does the companys retained earnings increase the market value of the company?
Yes

11) Is the company share price and book value on the rise?
YEs

12) Is the current Earnings yield and Dividend yield more than the average FD rates (1 year)
offered by banks?
Yes

13) Is the company purposely delaying capital expenditure / payment of license fee etc. to show
high growth in earnings and cash flows?
No