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LeapUp Financial Modelling Workshop

Work shop

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Muskan Maheshwari
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47 views42 pages

LeapUp Financial Modelling Workshop

Work shop

Uploaded by

Muskan Maheshwari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Financial Modelling

Workshop
Ronak Gala
Workshop Instructions
• Let’s make this fun and interactive… do post answers in the chatbox

• There is a 30 second lag in the stream. So bear with me.

• Instructions on how to get your certificate will be discussed at the


end, so stick around

• Let’s start the learning


My Journey

• MBA
2014 • Leave MAD
2018 • LeapUp &
• ACE Equity • Co-founded • Ideation of • Pararthya Capital Pararthya go
Erevna Capital LeapUp is Born online
• Start teaching
with MAD
2012-14 2016 2020

10+ Years 6+ Years 2 Ventures 5000+ 10+


Experience in Stock As a professional Pararthya Capital Students trained in Taught at various
Markets Investment Advisor LeapUp Edutech FM and Valuation institutes pan India
What is the Value of any Asset?
The Future Benefits that the
Asset will give you…
This leads to concept of Cheap vs Expensive

Xiaomi Phone Apple iPhone


[Benefit > Price] [Benefit < Price]
What is the Value of any Financial
Asset?
Present Value of Future Benefit

Future Benefits
[Profits, Dividend, Cash Flows]
Value of any Financial Asset
So what is CEAT?
We can compare the Price [Current Market Capitalization] to the Value and see if it
cheap or expensive
But how do you determine
Future Benefits?
To determine Future Benefits

You will have to


Forecast Future Financial Statements
Income Statement / Profit & Loss Account
Balance Sheet
Cash Flow
Where is Financial Modelling Used?

Equity Debt Investment Credit


Research Research Banking Rating

Mergers & Private Venture Project


Acquisitions Equity Capital Finance

Financial Modelling is one of the basic skills required in these profiles.


Do you aspire for such profiles?
Model making process

Understand Decide Input


Business Template Historical Data

Forecasting
Rationalizing
Valuation Financial
Assumptions
Statements
Step 1
Understanding a Business
Sources of Data for a listed company
• Annual Report – Regulatory requirement
• Available on Company Website / NSE & BSE Website / Other websites
• MD’s / Chairman’s / CEO’s speech
• Management Discussion & Analysis Segment
• Financial Statements

• Investor Presentation – Not Compulsory


• Available on Company Website / NSE & BSE Website / Other websites
• Usually put out quarterly or yearly

• Investor Concall Audio / Transcripts – Not Compulsory


• Available on Company Website / Other websites
• Usually put out quarterly or yearly
Sources of Data for a listed company
• Management Interviews – Not Compulsory
• Google Search / Youtube / Company Website

• Analyst Research Reports – Tough to get quality ones for free


• Google Search / Other websites

• Other websites list


• www.screener.in
• www.ratestar.in
• www.trendlyne.in
Step 2
Deciding a Template
Template depends on Sector and Company
Let’s look at a generic
manufacturing template
Characteristics of a Good Financial Model

• Clean – less cluttered

• User Friendly – easy to navigate

• Well Formatted – colour coded

• Consistent – proper denomination


Step 3
Input Historical Financial and
Operational Data
Taking Detailed values from Accounting
Notes
Do not rely on shortcuts like MoneyControl, Screener, etc…
Step 4
Forecasting Financial Statements
Forecasting Sales
• Identify Drivers of Sales (Volume x Pricing)
• In case of CEAT Volume is Tonnes and Pricing is Realization per tonne

• Make assumptions on volume and pricing drivers (grow them by a


particular %)

• Work backwards to determine Sales number


Forecasting Costs
• Identify Drivers of Major Cost (again volume and price)
• In case of CEAT it is COGS per tonne

• Forecast Other Cost Drivers assuming YoY % growth or % of Sales

• Work backwards to determine cost numbers


Step 5
Rationalizing Assumptions
Some Ground Rules For Assumptions
• Rely on past trends

• Be conservative

• Look for guidance numbers

• Look for major changes / disruptions / developments


Step 6
Valuation
Choice of Valuation Method
depends on the
Type of Business + End Use
This is all planned… what about
Uncertain / Unexpected events?
Nifty had a massive fall due to
Corona led Lockdown
Question is…
When was the Lockdown announced?
When did the fall happen?
When did the Lockdown led fall happen?
Forward vs Backward Looking Analysis

21 day Lockdown
was announced on
25th March 2020
Forward vs Backward Looking Analysis
Smart Money Sold
off before the
announcement 21 day Lockdown
was announced on
25th March 2020

Smart Money starts buying


anticipating recovery +
stimulus + valuations
This is not a one-off Incident

2019 Election result


Demonetization was was announced on
announced on 23rd May 2019
8th November 2016
How do you anticipate?
Financial Models are Essential!
Run various scenarios and sensitivity quickly and easily to be prepared…
This is just the start…

End Use
Valuation
Sector Models

• Manufacturing • Cash Flow • M&A


Businesses Based Modelling
• Services • Comparable • Project
• Banks and Multiples Modelling
NBFCs • Transaction • Investment
• Technology / Multiples Pitch
Startups • Option Based • Research
Reports
The Problem with Learning Modelling &
Valuation

Cost in Excess of Rs. 20,000/-


Complete & Comprehensive
Financial Modelling & Valuation Course
Batch Starts Certified Build 3 Models Learn 3
from different Valuation
17 April’21 4 Week Course sectors Techniques

Weekly Live 3 Hour Live Fees


10+ Hours
Doubt Solving Final Mega Rs. 4,999/-
Video Lectures
Sessions Webinar Rs. 2,999/-

Offer Valid for first 30 Registrations Only|www.leapup.in/fm


How to get your certificate?

Step 3
Step 2 • We email you
the
Step 1 • Fill out the certificate
certificate
• Follow us on form
Instagram

All links will be shared with you on the Whatsapp Group


Thank You!

• I will be happy to help you.


• Subscribe to us on YouTube for more such content
• Connect with me on LinkedIn – Search for Ronak Gala

• Hope you had a good learning experience.

• Q&A

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