Discounted Cash Flow Calculation for BSE:500357 using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
Rama Paper Mills
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
Note: Free cash flow to equity valuations ignore the company's cash or debt.
BSE:500357 DCF 1st Stage: Next 10 year cash flow forecast
The current share price of
Rama Paper Mills
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
Rama Paper Mills's
is considered below, and whether this is a fair price.
Price based on past earnings
Rama Paper Mills's earnings available for a low price, and how does
this compare to other companies in the same industry?
In this section we usually present revenue and earnings growth projections based on the consensus estimates of professional analysts to help investors understand the company’s ability to generate profit. But as Rama Paper Mills has not provided enough past data and has no analyst forecast, its future earnings cannot be reliably calculated by extrapolating past data or using analyst predictions.
This is quite a rare situation as 97% of companies covered by Simply Wall St do have past financial data. You can see them here.
Show me the analysis anyway
The future performance of a company is measured in the same way as past
performance, by looking at estimated
and how much profit it is expected to make.
Future estimates come from
professional analysts. Just like forecasting the weather, they don’t always get
Expected Forestry industry annual growth in earnings.
Earnings growth vs Low Risk Savings
Rama Paper Mills
expected to grow at an
Unable to compare Rama Paper Mills's earnings growth to the low risk savings rate as no estimate data is available.
Growth vs Market Checks
Unable to compare Rama Paper Mills's earnings growth to the India market average as no estimate data is available.
Unable to compare Rama Paper Mills's revenue growth to the India market average as no estimate data is available.
Unable to determine if Rama Paper Mills is high growth as no earnings estimate data is available.
Unable to determine if Rama Paper Mills is high growth as no revenue estimate data is available.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Rama Paper Mills's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
Rama Paper Mills
has a total score of
5/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Rama Paper Mills's finances.
The net worth of a company is the difference between its assets and liabilities.
Rama Paper Mills's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
Rama Paper Mills's cash and other short term assets cover its long term commitments.
This treemap shows a more detailed breakdown of
Rama Paper Mills's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of physical assets or inventory.
Debt is covered by short term assets, assets are 1.2x debt.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Pramod Kumar Agarwal, LL.B., serves as the Chairman of Rama Paper Mills Ltd and has been its Managing Director since October 1, 2012. Mr. Agarwal joined Rama Paper Mills Ltd in December 4, 1985 and has over 28 years of experience in Paper Industry. He served as the Chief Financial Officer and Manager of Finance at Compucom Software Ltd. He has been an Executive Director of Rama Paper Mills Ltd. since December 4, 1985. He holds LL.B. degree.
Pramod's compensation has been consistent with company performance over the past year, both up more than 20%.
Pramod's remuneration is lower than average for companies of similar size in India.
Chairman & MD
Chief Financial Officer
Compliance Officer & Company Secretary
Board of Directors Tenure
Average tenure and age of the
Rama Paper Mills
board of directors in years:
The tenure for the Rama Paper Mills board of directors is about average.
Board of Directors
Chairman & MD
Non-Executive Independent Director
Non-Independent & Non-Executive Director
Who owns this company?
Recent Insider Trading
No 3 month open market individual insider trading information.
Rama Paper Mills Limited manufactures and sells newsprint, duplex board, and tissue papers in India. The company provides writing and printing paper; and poster paper. It also offers cream wove, colored, kraft, absorbent, one time carbon base, and electrical grade insulating papers. The company was founded in 1985 and is based in New Delhi, India.
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