Sundaram Paints is a large privately held decorative paints company which has been in existence for...

  

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Sundaram Paints is a large privately held decorative paints company which has been in existence for nearly three decades. Founded by Shankar Sundaram, it is presently managed by Ravi Sundaram, the only son of founder. Ravi wants to expand the business and take it global. For that firm needs access to the capital market. So, Ravi has engaged the service of ICICI securities, a merchant banking firm. Praveen Chopra, the CEO of the ICICI Securities, has entrusted you with the task of doing preliminary valuation of Sundaram Paints Pvt. Ltd. You have collected relevant financial details of the company and three largest listed companies of the same industry. Financial Information (in Rs. Million) Revenue EBITDA NI Shareholder's Fund Loan Funds Total Assets NPM Debt Equity Ratio Paid up equity Capital (par value is Rs. 10 in all cases) Expected EPS Growth (5 years) Market Price Per Share Beta Kansai Nerolac Paints Ltd. 19600 2840 1588 8750 5060 13810 8.1% 57.8% 2400 14% 96.8 1.10 Berger Paints India Ltd. 15400 2520 1098 7540 5150 12690 7.1% 68.3% 2000 12% 68.4 1.20 Shalimar Paints Ltd. 12750 1675 791 6260 4500 10760 6.2% 71.9% 1800 10.2% 43.2 1.28 Sundaram Paints 10800 1890 886 4820 2880 7700 8.2% 59.8% 1440 15% Question What is the prospective P/E ratio for all three competitors? Berger Paints India Ltd. Financial Information (in Rs. Million) P/E Ratio Kansai Nerolac Paints Ltd. (6) Shalimar Paints Ltd. Sundaram Paints is a large privately held decorative paints company which has been in existence for nearly three decades. Founded by Shankar Sundaram, it is presently managed by Ravi Sundaram, the only son of founder. Ravi wants to expand the business and take it global. For that firm needs access to the capital market. So, Ravi has engaged the service of ICICI securities, a merchant banking firm. Praveen Chopra, the CEO of the ICICI Securities, has entrusted you with the task of doing preliminary valuation of Sundaram Paints Pvt. Ltd. You have collected relevant financial details of the company and three largest listed companies of the same industry. Financial Information (in Rs. Million) Revenue EBITDA NI Shareholder's Fund Loan Funds Total Assets NPM Debt Equity Ratio Paid up equity Capital (par value is Rs. 10 in all cases) Expected EPS Growth (5 years) Market Price Per Share Beta Kansai Nerolac Paints Ltd. 19600 2840 1588 8750 5060 13810 8.1% 57.8% 2400 14% 96.8 1.10 Berger Paints India Ltd. 15400 2520 1098 7540 5150 12690 7.1% 68.3% 2000 12% 68.4 1.20 Shalimar Paints Ltd. 12750 1675 791 6260 4500 10760 6.2% 71.9% 1800 10.2% 43.2 1.28 Sundaram Paints 10800 1890 886 4820 2880 7700 8.2% 59.8% 1440 15% Question What is the prospective P/E ratio for all three competitors? Berger Paints India Ltd. Financial Information (in Rs. Million) P/E Ratio Kansai Nerolac Paints Ltd. (6) Shalimar Paints Ltd.

Answer rating: 100% (QA)

To calculate the prospective PE pricetoearnings ratio for the three competitors we need to use current market data and the expected earnings growth to ... View the full answer