Financial Valuation and Comparable Analysis

The assignment involves a comprehensive financial valuation of Talbros, including the calculation of various multiples such as EV/Sales, EV/EBITDA, and P/E. It also involves comparable company analysis and precedent transaction analysis to determine the appropriate price range for Talbros. The assignment provides references to relevant resources and companies for further research.

Case Analysis on:Talbros Automotive
Components Limited: Relative valuation

F- 506
Cases in Financial Decision Making
A Case Study on
Case Analysis on Talbros Automotive
Components Limited: Relative Valuation
Submitted To
Dr. Gazi Mohammad HasanJamil
Associate Professor
Department of Finance
University of Dhaka
Submitted By: Group 15
Serial No Name Roll Number
1. Md. Ashiqul Islam 21-817
2. Santa Mazumder 21-913
3. Christina Madhubi Palma 21-914
Date of Submission: 20 August, 2020

Letter of Transmittal
20 August, 2020.
Dr. Gazi Mohammad HasanJamil
Associate Professor
Department of Finance
University of Dhaka
Subject: Submission of Case Analysis Report on “Case Analysis on Talbros Automotive
Components Limited: Relative Valuation”
Sir,
With due respect, we submit here our report on “Talbros Automotive Components Limited:
Relative Valuation” for your kind evaluation that we prepare as a part of requirement of our
MBA Program “Cases in Financial Decision Making” course. During the preparation of the
report we have given our best effort to make it effective. We have tried our best to present our
ideas and findings as clearly as we could within the time and resource available. We express our
gratitude to you for providing us the opportunity to learn about the case analysis. We have
devoted our best effort to make the ultimate solution of our prescribed case.
During preparing this report we have enforced our best effort. Surely, it enriches our knowledge
and promotes our study. Thanks for giving us such an opportunity for working on the topic. We
hope you will find the report in appropriate manner. We are looking forward to your feedback.
Sincerely yours,
Christina Madhubi Palma
Sec: A, Roll Num:21-914
On behalf of Group 15
Department of Finance
University of Dhaka

Acknowledgement
At first, we would like to express our deepest gratitude the Almighty who gave us energy and the
composure to finish this case study within the scheduled time.
This report is an outcome of our effort, but its successful completion would have been
impossible without the sincere effort and helping attitude of our course instructor. We would like
to thank our honorable course teacher Dr. Gazi Mohammad Hasan Jamil, Associate Professor,
Department of Finance, University of Dhaka for providing us such an important and challenging
case to analyze. We would also like to thank him for giving us excellent guideline about how to
analyze a case and solve it using different techniques.
We would like to express our heartiest gratitude to our team members who shared their expertise
and struggled with difficulties to put meaningful effort in accumulation of solid & complete
information and analysis. Thanks to all the members of our group for working as a team and
participate in brain storming process to solve the case.

Executive Summary

Chapter – 01
Introduction
1.1. Background of the Report
This report has been undertaken as a part of course F-506 (Cases in Financial Decisions Making)
under the MBA program. Our course instructor Dr. Gazi Mohammad HasanJamil has assigned
us this task to implement our academic knowledge in the real scenario of business. This really
provides us the opportunity to explore and confront the reality about financial analysis.
1.2. Objective of the Study
The main objective of the study is to fulfill the requirement of our course on Cases in Financial
Decision Making and to apply our theoretical knowledge in solving business cases. The other
objectives behind conducting this study are as follows:
 To understand the valuation process for merger and acquisition.
 To determine the implied share price of Talbros automotive components limited under
comparable company analysis and comparable transaction analysis.
 To find out the total value of the company including control premium that the acquire
company should provide in the merger and acquisition process.
1.3. Scope of the Study
The study topic allows us to do comparable company analysis and comparable transaction
analysis in Talbros automotive components limited. We analyzed the financial condition of this
company and tried to find out the best implied share price of the company. Mean, median,
maximum mad minimum multiples have been considered while doing valuation.
1.4. Methodology of the Report
The data used in this report have been gathered from the case. Relevant industry data has been
collected from secondary sources that are not provided in the case.
The theoretical part of this report has been collected from the case and text provided by our
honorable course teacher.
Required assumptions have been made in consistent with the industry practice.

1.5. Data Analysis
To analyze and solve the problems we have used valuation techniques in MS Excel.
1.6. Limitations of the Study
 Learning all functions, moods of business, risk factors were quite tough within specified
timeframe.
 Time constraint is a major issue for solving this huge case.
 Data provided in the case were not sufficient.

Chapter – 03
Valuation for Merger and Acquisition
3.1Valuation for Merger and acquisition:
When valuing a company as a going concern, there are three main valuation methods used by
industry practitioners: (1) DCF analysis, (2) comparable company analysis, and (3) precedent
transactions. These are the most common methods of valuation used in investment banking,
equity research, private equity, corporate development, mergers & acquisitions (M&A),
leveraged buyouts (LBO), and most areas of finance. When valuing a business or asset, there are
three broad categories that each contains their own methods. The Cost Approach looks at what it
costs to build something and this method is not frequently used by finance professionals to value
a company as a going concern. Next is the Market Approach, this is a form of relative
valuation and frequently used in the industry. It includes Comparable Analysis, Precedent
Transactions. Finally, the discounted cash flow (DCF) approach is a form of intrinsic
valuation and is the most detailed and thorough approach to valuation modeling.
Method 1: Comparable Analysis
Comparable company analysis (also called “trading multiples” or “peer group analysis” or
“equity comps” or “public market multiples”) is a relative valuation method in which you
compare the current value of a business to other similar businesses by looking at trading
multiples like P/E, EV/EBITDA, or other ratios. Multiples of EBITDA are the most common
valuation method. The “comps” valuation method provides an observable value for the business,
based on what companies are currently worth. Comps are the most widely used approach, as they
are easy to calculate and always current.
Method 2: Precedent Transactions
Precedent transactions analysis is another form of relative valuation where we compare the
company in question to other businesses that have recently been sold or acquired in the same
industry. These transaction values include the take-over premium included in the price for which
they were acquired. These values represent the value of a business. They are useful for M&A
transactions, but can easily become stale-dated and no longer reflective of the current market as
time passes. They are less commonly used than Comps or market trading multiples.

Method 3: DCF Analysis
Discounted Cash Flow (DCF) analysis is an intrinsic value approach where an analyst forecasts
the business’ unlevered free cash flow into the future and discounts it back to today at the firm’s
Weighted Average Cost of Capital (WACC).A DCF analysis is performed by building a financial
model in Excel and requires an extensive amount of detail and analysis. It is the most detailed of
the three approaches, requires the most assumptions, and often produces the highest value.
However, the effort required for preparing a DCF model will also often result in the most
accurate valuation. A DCF model allows the analyst to forecast value based on different
scenarios, and even perform a sensitivity analysis. For larger businesses, the DCF value is
commonly a sum-of-the-parts analysis, where different business units are modeled individually
and added together.
3.2 Steps in Comparable company analysis
To value a company with CCA, follow these steps:
 Step 1: Select an appropriate set of comparable public companies.
 Step 2: Determine the metrics and multiples.
 Step 3: Calculate the metrics and multiples for all the companies.
 Step 4: Apply the median or mean multiples to estimate Implied Equity Value and Enterprise
Value.
3.2.1 Step 1: Select an Appropriate Set of Comparable Public Companies
We normally can screen companies by geography, industry, and financial “size.” The first step in
this method was finding a set of comparable firms. Agarwal searched for publicly traded firms
whose primary industry classification was auto parts and equipment, which yielded a list of four
firms. He used the following screen for Talbros Automotive Components limited.
Geography:
Talbros Automotive Components limited is india based company. The Company has
manufacturing facilities situated in over nine locations across approximately three states in India.
Its gaskets manufacturing facilities are located in Faridabad, Haryana; Pune, Maharashtra, and
Sitarganj, Uttarakhand. Its forging manufacturing facilities are located in Bawal, Haryana.
Munjal Showa Limited was established in 1985. It was started as a technical joint venture
between Showa Corporation, Japan, and Hero Group. The company’s manufacturing operations
were spread across the states of Haryana and Uttarakhand.
15, 2020 to May 14, 2020.

Established in 1961, Gabriel India Limited had partnered with Maremont Corporation to
manufacture shock absorbers. The company had six manufacturing facilities (Pune, Khandsa,
Nashik, Hosur,Dewas, and Parwanoo) and three satellite plants (Sanand, Malur, and
Aurangabad).
Minda Industries Limited was established in 1992 as the flagship company of the UNO Minda
Group. It was the largest manufacturer of automotive switches for two-wheelers, three-wheelers,
and off-road vehicles in India. It is also an India based comapny.
Sona Koyo Steering Systems Limited, established in 1985, was the flagship company of Sona
Group and the largest manufacturer of steering systems in India, catering to passenger cars,
utility vehicles, and light commercial vehicles. .it is also an India based comapny.
Industry:
Talbros’s major products were gaskets and heat shields, forgings, suspension systems and
modules, anti-vibration components, and hoses. The company’s manufactured product lines
catered to various segments, including passenger vehicles, commercial vehicles, two-wheelers,
three-wheelers, and farm equipment
Munjal Showa Limited manufactured auto components for two-wheelers and four-wheelers. Its
product range consisted of front forks, shock absorbers, struts, gas springs, and window
balancers for sale in the domestic market.
Gabriel India Limited product line included front forks and rear shock absorbers (for two-
wheelers), McPherson struts and shock absorbers (for passenger cars), axles, cabin and seat
dampers, suspension shock absorbers (for commercial vehicles), and shock absorbers (for
railway coaches).
Minda industries limited was the largest manufacturer of automotive switches for two-wheelers,
three-wheelers, and off-road vehicles in India. Sales to OEMs formed the largest revenue
segment for the company, followed by the after-market and exports.
Sona Koyo Steering Systems Limited, established in 1985, was the flagship company of Sona
Group and the largest manufacturer of steering systems in India, catering to passenger cars,
utility vehicles, and light commercial vehicles. Consider their product lines, we can conclude
that these companies belong to auto parts and equipment.
Authorized for use only by Hossain Fahad in Cases in Financial Decision Making at University of Dhaka from

Financial “Size”:
Here, we can consider their total sales.
Graph: 1 Total sale of comparables companies and Talbros
0
10000
20000
30000
Total Sale
FY-15
FY 16
FY-17
In this graph, talbros sales volume is much lower than other company.Other companies sales
volume is 3 times more than talbros. According to financial size, these companies are not
comparable to talbros.
3.2.2 Step 2: Determine the Metrics and Multiples
We have used EV/Sales,EV/EBITDA and P/E multiples to determine the implied share value of
Talbros Automotive Components limited.We have used historical financial results, usually from
the last fiscal year or the Last Twelve Months (“LTM”) because they are based on real events
that actually happened. However, they can also be distorted by acquisitions, divestitures, and
non-recurring events such as write-downs and impairments, so we also have
used projected financial metrics, such as each company’s projected Revenue and EBITDA over
the next 1-2 years. These projected metrics better represent the company’s “steady state,” but,
like all forecasts, they often turn out to be wrong. However, that’s not a huge issue because all
valuation is based on future expectations. Here, we used Revenue, EBITDA, and Net Income,
and we also looked at each company’s growth rates and margins.

3.2.3 Step 3: Calculate the Metrics and Multiples for the Comparable Public Companies
We have calculated each company’s Equity Value and Enterprise Value first, get the historical
figures from annual and quarterly reports, and get the projected figures from the case. The
historical financial metrics come directly from the company’s financial statements.

Table: 1 Sales ,EBITDA and Net income of comparable companies
Company Name Share
Price
Diluted
Shares
Equity
Value
Enter
prise
Value
Sales EBITDA Net Income
LTM FY-
16
FY-
17
LT
M
FY-
16
FY-
17
LT
M
FY-
16
FY-
17
Munjal showa limited 160.8 39.995 6431.1
9
5736 1642
9
1815
4
2028
3
1266 1422 1629 757 832 969
Gabriel India Limited 76.9 143.64 11046.
21
11066 1444
0
1765
9
2021
1
1165 1462 1782 601 865 1091
Minda Industries
Limited
506.9 15.87 8045.1
7
10042 2226
6
2354
6
2703
1
1544 1919 2342 674 742 1086
Sona Koyo Steering
Systems
50.4 198.74 10016.
58
12921 1552
9
1740
6
1887
3
2158 2322 2617 381 702 666
Maximum 506.9 198.74 11046.
21
12921 2226
6
2354
6
2703
1
2158 2322 2617 757 865 1091
Median 118.8
5
91.81 9030.8
8
10554 1597
9
1790
6.5
2024
7
1405 1690.
5
2062 637
.5
787 1027.
5
Mean 198.7
5
99.56 8884.7
9
9941.
25
1716
6
1919
1.25
2159
9.5
1533
.25
1781.
25
2092.
5
603
.25
785.2
5
953
Minimum 50.4 15.87 6431.1
9
5736 1444
0
1740
6
1887
3
1165 1422 1629 381 702 666
Talbros Automotive
components limited
119 12.34 1469 2534 3887 4600 5460 403 540 700 144 210 310

Table: 2 EV/Sales, EV/ EBITDA, P/E of comparable companies
Valuation Statistics: Capitalization Enterprise Value /
Sales
Enterprise Value /
EBITDA
P / E Multiple
Company Name Equity
Value
Enterprise
Value LTM FY-16 FY-17 LT
M
FY-16 FY-
17
LTM FY-
16
FY-
17
Munjal showa limited 6431.19 5736 0.35 0.32 0.28 4.53 4.03 3.52 8.50 7.73 6.64
Gabriel India Limited 11046.21 11066 0.77 0.63 0.55 9.50 7.57 6.21 18.38 12.77 10.12
Minda Industries Limited 8045.17 10042 0.45 0.43 0.37 6.50 5.23 4.29 11.94 10.84 7.41
Sona Koyo Steering
Systems
10016.58 12921 0.83 0.74 0.68 5.99 5.56 4.94 26.29 14.27 15.04
Maximum 11046.21 12921 0.83 0.74 0.68 9.50 7.57 6.21 26.29 14.27 15.04
Median 9030.88 10554 0.61 0.53 0.46 6.25 5.40 4.61 15.16 11.81 8.77
Mean 8884.79 9941.25 0.60 0.53 0.47 6.63 5.60 4.74 16.28 11.40 9.80
Minimum 6431.19 5736 0.35 0.32 0.28 4.53 4.03 3.52 8.50 7.73 6.64
Talbros Automotive
components limited
1469 2534 0.65 0.55 0.46 6.29 4.69 3.62 10.20 7.00 4.74

3.2.4 Step 4: Apply the Median or Mean to Estimate Implied Equity Value and Enterprise
Value
At first, We have calculated the minimum, mean, median, and maximum for each multiple and
multiply them by the appropriate company figures .after that,we have calculated the Implied
Enterprise Value for each multiple, pairing it with Talbros Automotive Components limited.
Table: 3 implied share price of Talbros
Valuation
Summary
-
TALBRO
S
AUTOM
OTIVE
COMPON
ENETS
LIMITED
TALBROS AUTOMOTIVE
COMPONENETS LIMITED. - Range of
Valuation Multiples / Premiums
TALBROS AUTOMOTIVE
COMPONENETS LIMITED -
Implied Per Share Value Range
Methodol
ogy Name
Maxi
mum
Multip
le
Mea
n
Multi
ple
Medi
an
Multi
ple
Mini
mum
Multi
ple
Applic
able
Comp
any
Figure
Minim
um
Multipl
e
Mean
Multipl
e
Medi
an
Multi
ple
Maxim
um
Multip
le
Public
Company
Compara
bles:
LTM EV /
Sales:
0.83 0.60 0.61 0.35 3887.0
0 32.00 110.87 113.7
2
184.05
FY 16
EV /
Sales:
0.74 0.53 0.53 0.32 4600.0
0 39.81 118.76 118.2
8
198.67
FY 17
EV /
Sales:
0.68 0.47 0.46 0.28 5460.0
0 47.15 130.65 125.3
0
224.86
LTM EV /
EBITDA:
9.50 6.63 6.25 4.53 403.00
69.98 138.51 125.9
6
232.15
FY 16 7.57 5.60 5.40 4.03 540.00

EV /
EBITDA:
98.51 167.03 158.2
2
253.15
FY 17
EV /
EBITDA:
6.21 4.74 4.61 3.52 700.00
121.73 190.78 183.6
1
274.18
LTM P /
E:
26.29 16.28 15.16 8.50 144.00
99.09 189.84 176.8
0
306.65
FY 16 P /
E:
14.27 11.40 11.81 7.73 210.00
131.48 193.96 200.8
3
242.71
FY 17 P /
E:
15.04 9.80 8.77 6.64 310.00
166.65 246.14 220.1
3
377.65
To move from Implied Enterprise Value to Implied Equity Value, we reverse the normal
“bridge” and add Cash and non-core assets and subtract Debt and Preferred Stock. And then we
divides by the diluted share count to get the company’s implied share price for this specific
multiple:
Table: 4 Calculation of implied equity value
Implied Enterprise Value: 1,357.1
(+) Cash & Cash-
Equivalents: 103.0
(-) Total Debt: 1,065.0
(-) Preferred Stock: -
(-) No controlling
Interests:
Implied Equity Value: 395.1
Diluted Shares Outstanding: 12.346
Table: 5 implied enterprise value of Talbros automotive components limited
Implied Enterprise Value or Equity Value at a Range of Multiples:
Minimum
Multiple
Mean
Multiple
Median
Multiple
Maximum
Multiple
Enterprise Value --> 1357.10 2,330.8 2,365.9 3,234.2
Enterprise Value --> 1453.43 2,428.1 2,422.2 3,414.7
Enterprise Value --> 1544.07 2,575.0 2,508.9 3,738.1

Enterprise Value --> 1825.91 2,672.0 2,517.0 3,828.0
Enterprise Value --> 2178.22 3,024.1 2,915.3 4,087.3
Enterprise Value --> 2464.82 3,317.3 3,228.8 4,346.9
Equity Value --> 1223.37 2,343.7 2,182.8 3,785.8
Equity Value --> 1623.25 2,394.6 2,479.3 2,996.4
Equity Value --> 2057.45 3,038.8 2,717.6 4,662.4
3.3 Football field valuation:
This analysis gives us all the implied share prices across the range of multiples, but it’s a bit
difficult to see the results because there are so many numbers on the table.So, we usually create
a football field valuation using charts and graphs in Excel. It might look something like this for
Talbros.
Graph: 2 Football field valuations of Talbros
LTM EV
/ Sales: FY 16
EV /
Sales:
FY 17
EV /
Sales:
LTM EV
/
EBITDA
:
FY 16
EV /
EBITDA
:
FY 17
EV /
EBITDA
:
LTM
P / E: FY 16 P
/ E: FY 17 P
/ E:
-
30.00
60.00
90.00
120.00
150.00
180.00
210.00
240.00
270.00
300.00
330.00
360.00
390.00
32.00 39.81 47.15 69.98 98.51 121.73 99.09 131.48 166.65
184.05
198.67 224.86 232.15 253.15 274.18 306.65
242.71
377.65
Median to Max Multiple
Min to median Multiple
From this graph, our quick conclusion is that Talbros Automotive components limited is
likely undervalued.Its share price at the time of this analysis was close to 119, which is below the
median implied share price in most of the methodology.

3.4 Implied share price of Talbros Automotive Components Limited:
we have considered the median and mean multiple to determine whether the share is fairly priced
or not.
Table: 6 Comparison between mean, median and current price
Comparable
company
analysis
Mean
Multiple
Current
price
Median
Multiple
Current
price
LTM EV /
Revenue: 110.87 119.00
overvalued
113.72 119.00
overvalued
FY 16 EV /
Revenue: 118.76 119.00
overvalued
118.28 119.00
overvalued
FY 17 EV /
Revenue: 130.65 119.00
Undervalued
125.30 119.00
Undervalued
LTM EV /
EBITDA: 138.51 119.00
Undervalued
125.96 119.00
Undervalued
FY 16 EV /
EBITDA: 167.03 119.00
Undervalued
158.22 119.00
Undervalued
FY 17 EV /
EBITDA: 190.78 119.00
Undervalued
183.61 119.00
Undervalued
LTM P / E:
189.84 119.00
Undervalued
176.80 119.00
Undervalued
FY 16 P / E:
193.96 119.00
Undervalued
200.83 119.00
Undervalued
FY 17 P / E:
246.14 119.00
Undervalued
220.13 119.00
Undervalued
Average
165.17
Average
158.09
In comparable company analysis, most of the values under these multiples is higher than current
price. That means, company share is undervalued in the market.Since expected sales,EBITDA
and earnings are higher in 2016 and 2017 compared to 2015, the multiples in 2016 and 2017 are
higher than 2015.

Table: 7 Growth rates of net profit, sales and EBITDA
Company Name Projecte
d
net
profit
Growth
Projecte
d
sales
Growth
Projecte
d
EBITDA
Growth
EBITDA Margin
LTM FY-
16
FY-
17
Munjal showa limited 16.5% 11.7% 14.6% 7.7% 7.8% 8.0%
Gabriel India Limited 26.1% 14.5% 21.9% 8.1% 8.3% 8.8%
Minda Industries Limited 46.4% 14.8% 22.0% 6.9% 8.2% 8.7%
Sona Koyo Steering Systems -5.1% 8.4% 12.7% 13.9
%
13.3
%
13.9%
Talbros Automotive components
ltd
47.6% 18.7% 29.6% 10.4
%
11.7
%
12.8%
In the table, projected net profit growth, projected sales growth and projected EBITDA growth
are higher in Talbros compared to these four companies and its EBITDA margin is quite good
from Munjal showa limited, Gabriel India Limited, Minda Industries Limited. The expected net
profit growth rate of talbros is higher than the other growth rates of the company. That means
company is being operated efficiently through reducing operating cost. That is one of the reasons
for higher implied share price from P/E multiples valuation.
Table: 8 Ranges of implied share price
Comparable company analysis Ranges of implied share price
According to
mean
According to
Median
EV / Revenue 110 to 130 113 to 125
EV /EBITDA 138 to 190 125 to 183
P/E 189 to 246 176 to 220
This is the ranges of implied share price of Talbros Automotive components limited. If we
consider the mean, the approximate share price will be 165. If we consider median, the implied
share price will be 158 which is slightly lower than the mean value.

3.5 Comparable Transaction Analysis
Precedent transaction analysis is a method of company valuation where past M&A transactions
are used to value a comparable business today. Commonly referred to as “precedents”, this
method of valuation is common when trying to value an entire business as part of a
merger/acquisition and is commonly prepared by analysts working in investment banking,
private equity, and corporate development. This is also known as comparable transaction
analysis.
3.6 Comparable Transaction Analysis of Talbros Automotive Components
Limited
3.6.1 Selection of Transactions
The process begins by looking for other transactions that have happened in (ideally) recent
history and are in the same industry.
The screening process requires setting criteria such as:
• Industry classification
• Type of company (public, private, etc.)
• Financial metrics (revenue, EBITDA, net income)
• Geography (headquarters, revenue mix, customer mix, employees)
• Company size (revenue, employees, locations)
• Product mix (the more similar to the company in question the better)
• Type of buyer (private equity, strategic/competitor, public/private)
• Deal size (value)
• Valuation (multiple paid i.e. EV/Revenue, EV/EBITDA, etc.)
So we will do the screening of the given transactions given in Exhibit 12 and 13. The
transactions are identified which are most relevant with the transaction that is being considered.
The recent transactions are also told to give more weight than the old transactions.
We will select the transactions which are in the same sector as Talbros automotive Ltd. This
means they should have similar business and product lines. Since some target companies of
Merger and Acquisition of 2005-2015 were private companies, their financial condition, business
size, assets, revenue could not be retrieved.

So we are going to select the transactions on the basis of same industry or business product lines.
From various sources we have received the data. They are given below:
Target Companies Sector Type
Talbros Automotive Ltd Automotive
Kar Mobiles Limited (60.43%stake) Automotive
JMT Auto Limited (52.61%stake) Automotive
Mag Engineering Private Limited(100%
stake)
Manufacturing (Metals & Chemicals, and
products thereof)
Shanthi Gears Limited (70.12%stake) INDUSTRIAL EQUIPMENT
Trinity India Limited (78% stake) Automotive
Igarashi Motors India Limited (51.9%
stake)
Automotive
Amtek India Limited (60.21%stake) Automotive
Ahmednagar Forgings Ltd (47.4% stake) CASTINGS/FORGINGS
Source
https://www.bloomberg.com/profile/company/KARM:IN
https://www.bloomberg.com/profile/company/JMT:IN#:~:text=JMT%20Auto%20Limited
%20manufactures%20products,pipes%20and%20other%20automotive%20components.
https://economictimes.indiatimes.com/company/mag-engineering-private-limited-/
U28999DL1986PTC248633
https://www.bloomberg.com/profile/company/SG:IN
http://forge-trinityindia.com/
https://www.bloomberg.com/quote/IGM:IN
https://www.indiainfoline.com/company/amtek-india-ltd/summary/15631
https://www.indiainfoline.com/company/metalyst-forgings-ltd/2356
So there are three companies that do not fall in the same sector as Talbros Automotive Ltd. They
are: Mag Engineering Private Limited, Shanthi Gears Limited, Ahmednagar Forgings Ltd. So we
have selected the transactions that are most related to Talbros Automotive Ltd.

3.6.2 Calculation of Multiples with the selected transactions
Target Company Bidder Company Ann. Date EV/Sales
Multiple
EV/
EBITDA
PE
Multiple Multiple
Kar Mobiles
Limited
(60.43%stake)
Rane Engine Valve
Limited
5/20/2014 0.49 7.01 24.47
JMT Auto Limited
(52.61%stake)
Amtek Auto Limited 6/27/2013 1.03 6.17 18.07
Trinity India
Limited (78%
stake)
Ring Plus Aqua Ltd. 1/5/2012 1.06 9.88 117.81
Igarashi Motors
India Limited
(51.9% stake)
Agile Electric Drives
Technologies and
Holdings Private
Limited
12/10/201
0
0.96 8.12 38.73
Amtek India
Limited
(60.21%stake)
Amtek Auto Limited 8/1/2008 1 2.56 6.15
The recent transactions should be given more importance because they will resemble with the
Talbros Automotive Ltd. transaction more appropriately. So we have given weight to the
transactions according to their announcement date.
Target Company Bidder Company Ann. Date Weight
Kar Mobiles Limited
(60.43%stake)
Rane Engine Valve Limited 5/20/2014 35%
JMT Auto Limited
(52.61%stake)
Amtek Auto Limited 6/27/2013 25%
Trinity India Limited (78%
stake)
Ring Plus Aqua Ltd. 1/5/2012 20%
Igarashi Motors India
Limited (51.9% stake)
Agile Electric Drives Technologies and
Holdings Private Limited
12/10/2010 15%
Amtek India Limited
(60.21%stake)
Amtek Auto Limited 8/1/2008 5%
Total 100%
After appropriating weight to the transactions we will rearrange the table. We will calculate the
weighted average EV/Sales, EV/EBITDA, P/E multiple with the weights and we will also

calculated the median. After calculating the multiples we will calculate the Enterprise value of
Talbros automotive Ltd. with these historical multiples. We will calculate value per share for
each multiples and then add the takeover premium.
Target Company Weight Weighted
EV/Sales
Weighted
EV/EBITDA
Weighted PE
Multiple
Kar Mobiles Limited 35% 0.17 2.45 8.56
JMT Auto Limited 25% 0.25 1.54 4.51
Trinity India Limited 20% 0.21 1.97 23.56
Igarashi Motors India
Limited
15% 0.14 1.21 5.80
Amtek India Limited 5% 0.05 0.12 0.30
So we have calculated the multiples from the data:
EV/Sales EV/EBITDA PE Multiple
Weighted Average (Mean) 0.83 7.31 42.76
Median 1 7.01 24.47
3.6.3 Calculation of Control Premium for Talbros Automotive Ltd
Premium
Target Acquirer One Day
Prior (%)
Kar Mobiles Ltd (60.43%) Rane Engine Valves Ltd 48.94
JMT Auto Ltd (52.61%) Amtek Auto Ltd 34.39
Igarashi Motors Ltd (51.9%) Agile Electric Drives Technologies
&Holdings Ltd
69.15
Amtek India Ltd (60.21%) Amtek Auto Ltd −22.98
Average Control Premium 51%
So from the selected transactions we have calculated takeover premium for Talbros Automotive
Ltd. The average control premium is 51%. So we have selected 51% control premium for
Talbros Automotive Ltd. JK Finanncial has to pay 51% control premium over the share price of
Talbros automotive Ltd so that both party has it’s individual gain and accepts the acquisition
with the appropriate share price.
3.6.4 Calculation of Value Per Share of Talbros Automotive Ltd with EV/ Sales Multiple

EV/Sales
EV Calculation Multiples Sales Value (in ₹
millions 2015)
EV (in ₹ millions)
Mean (Weighted
Average)
0.835 3887 3245.64
Median 1 3887 3887
Value Per Share (EV/Sales)
Weighted Average
(Mean)
Median
EV (in ₹ millions) 3245.64 3887
Less: Net debt (in ₹ millions) 1065 1065
Plus: Cash and Cash equivalents
(in ₹ millions)
103 103
Value of Equity (in ₹ millions) 2283.64 2925
Number of shares (in millions) 12.34 12.34
Value Per Share (₹) 184.97 236.92
3.6.5 Calculation of Value per Share of Talbros Automotive Ltd with EV/ EBITDA
Multiple
Enterprise Value
EV Calculation Multiples EBITDA (in ₹
millions 2015)
EV (in ₹ millions)
Mean (Weighted Average) 7.31 403 2949.15
Median 7.01 403 2825.03
Value Per Share (EV/EBITDA)
Mean Median
EV 2949.15 2825.03
Less: Net debt 621.62 1065
Plus: Cash and Cash equivalents 103 103
Value of Equity 2430.52 1863.03
Number of shares (in millions) 12.34 12.34
Value Per Share (₹) 196.87 150.90

3.6.6 Calculation of Value per Share of Talbros Automotive Ltd with P/E Multiple
Value Per Share (P/E Multiple)
P/E Multiple EPS Market Value Per
Share (₹)
Weighted Average PE
Multiple
42.761 11.66 498.76
Median 24.47 11.66 285.41
3.6.7 Value per Share of Talbros Automotive Ltd with Combining Results of Three
multiples
We will combine EV/Sales, EV/EBITDA and P/E multiples’ result and get the final value per
share of Talbros Automotive Ltd and then include the control premium that should be paid JK
Financial Ltd for acquiring Talbros Automotive Ltd.
So the summaries of value per share of three multiples are given below:
Value Per Share (₹) Weighted Average Median
EV/Sales 184.97 236.92
EV/EBITDA 196.87 150.90
P/E Multiple 498.76 285.41
Value Per Share (₹)
High 498.76
Low 150.90
AVERAGE 258.97
So the range of Range of Value Per Share (₹) for Talbros Automotive Ltd is from ₹ 150.91 to ₹
498.77 and the average share price will be ₹ 258.97. But we have to include the control premium
51% on these prices to get the actual share price that JK Financial should pay for Talbros
Automotive Ltd.
Control Premium Included
Control Premium 51%
Average High Low
Value Per Share (₹) 258.97 498.766 150.90
Plus: Control Premium 131.62 253.50 76.70

51%
Value Per Share (₹) Paid 390.60 752.27 227.60
So the Share Price should be
Average High Low
Value Per Share (₹) Paid 390.60 752.27 227.60
3.7 Summaries of Comparable Company Analysis and Comparable
transaction Analysis
Summary
Value Per Share (₹) Paid
Average High Low
Comparable Company Analysis 165.17 246.14 110.87
Comparable Transaction Analysis 390.60 752.27 227.60
So we will combine both techniques and get the final value per share to be paid to Talbros
Automotive Ltd by JK Financial Ltd. The values are averaged and we can also get the highest
and lowest share price to be considered for the transaction. We can also get the appropriate share
price with the average share price of both methods.
Summary
Value Per Share (₹) Paid
Average High Low
Comparable Company Analysis 165.17 246.14 110.87
Comparable Transaction Analysis 390.60 752.27 227.60
Value Per Share (₹) Paid 276.12 499.20 169.23
So JK Financial should pay ₹ 276.12 for Talbros Automotive Ltd. The share price range can be
considered from ₹ 169.24 to ₹ 499.20 respectively. The combination of both methods for
determining the share price of Talbros automotive Ltd will ensure the success of this merger.
Chapter – 04

Conclusion
4.1 Conclusion
There are four comparable companies for Talbros Automotive Ltd. They are Munjal Showa Ltd,
Gabriel India Ltd, Minda Industries Ltd and Sona Koyo Steering Systems ltd. Using their data
we have calculated the EV/Sales, EV/EBITDA and P/E multiples. With their multiples we have
calculated the Enterprise value and share price of Talbros. The comparable company analysis
shows that the share price range is between ₹110.87 and ₹246.14.
The transactions are selected on the basis of sector and business product lines. The selected
transactions are given weights. The recent transactions are given more weight. The comparable
transaction analysis shows that the share price should be between ₹227.60 and ₹752.27.
Combining two methods together we can get the share price paid to Talbros should be between ₹
169.24 to ₹ 499.20. The appropriate price is ₹ 276.12.
4.2 References
1. https://l.facebook.com/l.php?u=https%3A%2F%2Fbreakingintowallstreet.com%2Fbiws
%2Fkb%2Fexcel%2Ffootball-field-valuation%2F%3Ffbclid%3DIwAR3p1NhN9iFhe-
Z1gxwLFJfrtKjtOpAgt8fk9EkIx6efGewnmZqPblZzrrw&h=AT2w0htuOu22xB8z6uDmk
rannaf_QwXqobt1KHdVJ4v2z79USqU32oR33Set8pWMBTXqLRo23Tw4k7dH3J96IJX
Rs0MYRdIzsgnHhPqKugde2J5AimLNR5PP-LAZvwDuie8e
2. https://l.facebook.com/l.php?u=https%3A%2F%2Fbreakingintowallstreet.com%2Fbiws
%2Fkb%2Fvaluation%2Fcomparable-company-analysis-cca%2F%3Ffbclid
%3DIwAR14d4mbukzk7-
PQ_22sTkeydDzgWiwQ1yJOYe1tNfjDwybvCMJkRfN1ZQM&h=AT2w0htuOu22xB8z
6uDmkrannaf_QwXqobt1KHdVJ4v2z79USqU32oR33Set8pWMBTXqLRo23Tw4k7dH
3J96IJXRs0MYRdIzsgnHhPqKugde2J5AimLNR5PP-LAZvwDuie8e
3. https://www.investopedia.com/terms/c/comparable-transaction.asp
4. https://corporatefinanceinstitute.com/resources/knowledge/valuation/precedent-
transaction-analysis/

5. http://www.streetofwalls.com/finance-training-courses/investment-banking-technical-
training/precedent-transaction-analysis/
6. https://corporatefinanceinstitute.com/resources/knowledge/deals/takeover-premium/
#:~:text=Takeover%20premium%20is%20the%20difference,in%20a%20merger%20or
%20acquisition
7. https://www.bloomberg.com/profile/company/KARM:IN
8. https://www.bloomberg.com/profile/company/JMT:IN#:~:text=JMT%20Auto
%20Limited%20manufactures%20products,pipes%20and%20other%20automotive
%20components.
9. https://economictimes.indiatimes.com/company/mag-engineering-private-limited-/
U28999DL1986PTC248633
10. https://www.bloomberg.com/profile/company/SG:IN
11. http://forge-trinityindia.com/
12. https://www.bloomberg.com/quote/IGM:IN
13. https://www.indiainfoline.com/company/amtek-india-ltd/summary/15631
14. https://www.indiainfoline.com/company/metalyst-forgings-ltd/2356
Appendix:

Operating Statistics: Capitalization ProjectedProjected
Share Diluted Equity Preferred Other & Enterprise Sales EBITDA Net Income Revenue EBITDA EBITDA Margin
Company Name Ticker Price Shares Value Cash Debt Stock NCI Value LTM FY16 FY17 LTM FY16 FY17 LTM FY16 FY17 Growth Growth LTM FY16 FY17
MUNJAL SHOWA LIMITED 160.8 40 6431.20 5,736 16,429 18,154 20,283 1,266 1,422 1,629 757 832 969 11.7% 14.6% 8% 8% 8%
GABRIEL INDIA LIMITED 76.9 144 11046.22 11,066 14,440 17,659 20,211 1,165 1,462 1,782 601 865 1091 14.5% 21.9% 8% 8% 9%
MINDA INDUSTRIES LIMITED 506.9 16 8045.17 10,042 22,266 23,546 27,031 1,544 1,919 2,342 674 742 1086 14.8% 22.0% 7% 8% 9%
SONA KOYO STEERING SYSTEMS LIMITED 50.4 199 10016.59 12,921 15,529 17,406 18,873 2,158 2,322 2,617 381 702 666 8.4% 12.7% 14% 13% 14%
Maximum 506.90 198.74 11046.22 12921.00 22266.00 23546.00 27031.00 2158.00 2322.00 2617.00 757.00 865.00 1091.00 0.15 0.22 0.14 0.13 0.14
Median 118.85 91.82 9030.88 10554.00 15979.00 17906.50 20247.00 1405.00 1690.50 2062.00 637.50 787.00 1027.50 0.13 0.18 0.08 0.08 0.09
Mean 198.75 99.56 8,884.79 9,941.25 17,166.00 19,191.25 21,599.50 1,533.25 1,781.25 2,092.50 603.25 785.25 953.00 0.12 0.18 0.09 0.09 0.10
Minimum 50.40 15.87 6,431.20 5,736.00 14,440.00 17,406.00 18,873.00 1,165.00 1,422.00 1,629.00 381.00 702.00 666.00 0.08 0.13 0.07 0.08 0.08
TALBROS AUTOMOTIVE COMPONENETS LIMITED 119.00$ 12.3 1,469.0$ 2534.00 3887.00 4600.00 5460.00 403.00 540.00 700.00 144.00 210.00 310.00 18.7% 29.6% 10.4% 11.7% 12.8%
Valuation Statistics: Capitalization Enterprise Value / Enterprise Value /
Equity Enterprise Sales EBITDA P / E Multiple
Company Name Value Value LTM 31-12-16 31-12-17 LTM 31-12-16 31-12-17 LTM 31-12-16 31-12-17
MUNJAL SHOWA LIMITED 6431.20 5,736 0.35 0.32 0.28 4.53 4.03 3.52 8.50 7.73 6.64
GABRIEL INDIA LIMITED 11046.22 11,066 0.77 0.63 0.55 9.50 7.57 6.21 18.38 12.77 10.12
MINDA INDUSTRIES LIMITED 8045.17 10,042 0.45 0.43 0.37 6.50 5.23 4.29 11.94 10.84 7.41
SONA KOYO STEERING SYSTEMS LIMITED 10016.59 12,921 0.83 0.74 0.68 5.99 5.56 4.94 26.29 14.27 15.04
Maximum 11046.22 12921.00 0.83 0.74 0.68 9.50 7.57 6.21 26.29 14.27 15.04
Median 9030.88 10554.00 0.61 0.53 0.46 6.25 5.40 4.61 15.16 11.81 8.77
Mean 8,884.79 9,941.25 0.60 0.53 0.47 6.63 5.60 4.74 16.28 11.40 9.80
Minimum 6,431.20 5,736.00 0.35 0.32 0.28 4.53 4.03 3.52 8.50 7.73 6.64
TALBROS AUTOMOTIVE COMPONENETS LIMITED 1469.00 2534.00 0.65 0.55 0.46 6.29 4.69 3.62 10.20 7.00 4.74

Maximum Mean Median Minimum Company Minimum Mean Median Maximum
Methodology Name Multiple Multiple Multiple Multiple Figure Multiple Multiple Multiple Multiple
Public Company Comparables:
LTM EV / Sales: 0.83 0.60 0.61 0.35 3887.00 32.00 110.87 113.72 184.05
FY 16 EV / Sales: 0.74 0.53 0.53 0.32 4600.00 39.81 118.76 118.28 198.67
FY 17 EV / Sales: 0.68 0.47 0.46 0.28 5460.00 47.15 130.65 125.30 224.86
LTM EV / EBITDA: 9.50 6.63 6.25 4.53 403.00 69.98 138.51 125.96 232.15
FY 16 EV / EBITDA: 7.57 5.60 5.40 4.03 540.00 98.51 167.03 158.22 253.15
FY 17 EV / EBITDA: 6.21 4.74 4.61 3.52 700.00 121.73 190.78 183.61 274.18
LTM P / E: 26.29 16.28 15.16 8.50 144.00 99.09 189.84 176.80 306.65
FY 16 P / E: 14.27 11.40 11.81 7.73 210.00 131.48 193.96 200.83 242.71
FY 17 P / E: 15.04 9.80 8.77 6.64 310.00 166.65 246.14 220.13 377.65
Implied Enterprise Value: 1,357.1$ Implied Enterprise Value or Equity Value at a Range of Multiples:
(+) Cash & Cash-Equivalents: 103.0
(-) Total Debt: 1,065.0 Enterprise Value --> 1357.102197 2,330.8$ 2,365.9$ 3,234.2$
(-) Preferred Stock: - Enterprise Value --> 1453.431751 2,428.1$ 2,422.2$ 3,414.7$
(-) Noncontrolling Interests: Enterprise Value --> 1544.079278 2,575.0$ 2,508.9$ 3,738.1$
Implied Equity Value: 395.1 Enterprise Value --> 1825.914692 2,672.0$ 2,517.0$ 3,828.0$
Enterprise Value --> 2178.227848 3,024.1$ 2,915.3$ 4,087.3$
Diluted Shares Outstanding: 12.346 Enterprise Value --> 2464.825046 3,317.3$ 3,228.8$ 4,346.9$
Equity Value --> 1223.371498 2,343.7$ 2,182.8$ 3,785.8$
Equity Value --> 1623.258606 2,394.6$ 2,479.3$ 2,996.4$
Equity Value --> 2057.451765 3,038.8$ 2,717.6$ 4,662.4$