Intrinsic value of India Globalization Capital - IGC

Previous Close

$2.49

  Intrinsic Value

$0.06

stock screener

  Rating & Target

str. sell

-97%

Previous close

$2.49

 
Intrinsic value

$0.06

 
Up/down potential

-97%

 
Rating

str. sell

We calculate the intrinsic value of IGC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  4
  5
  8
  12
  17
  23
  31
  40
  52
  65
  81
  99
  120
  142
  167
  195
  224
  256
  290
  326
  364
  404
  446
  490
  536
  584
  634
  686
  740
  796
Variable operating expenses, $m
  4
  5
  8
  12
  17
  23
  30
  40
  51
  65
  81
  99
  119
  141
  166
  193
  223
  254
  288
  324
  362
  402
  444
  487
  533
  581
  630
  682
  736
  792
Fixed operating expenses, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
Total operating expenses, $m
  6
  7
  10
  14
  19
  25
  32
  42
  53
  67
  84
  102
  122
  144
  169
  196
  226
  257
  291
  327
  365
  405
  447
  490
  536
  585
  634
  686
  740
  796
Operating income, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  1
  1
EBITDA, $m
  -2
  -2
  -2
  -1
  -1
  -1
  0
  0
  1
  2
  3
  4
  5
  7
  8
  10
  12
  14
  16
  19
  21
  24
  27
  30
  33
  36
  39
  42
  46
  50
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  17
  18
  20
  22
  24
  26
  28
  31
Earnings before tax, $m
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -21
  -22
  -24
  -26
  -28
  -30
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -21
  -22
  -24
  -26
  -28
  -30

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  17
  26
  39
  57
  80
  110
  147
  193
  249
  314
  390
  477
  575
  684
  804
  936
  1,078
  1,230
  1,394
  1,567
  1,750
  1,943
  2,145
  2,357
  2,578
  2,809
  3,049
  3,299
  3,559
  3,829
Adjusted assets (=assets-cash), $m
  17
  26
  39
  57
  80
  110
  147
  193
  249
  314
  390
  477
  575
  684
  804
  936
  1,078
  1,230
  1,394
  1,567
  1,750
  1,943
  2,145
  2,357
  2,578
  2,809
  3,049
  3,299
  3,559
  3,829
Revenue / Adjusted assets
  0.235
  0.192
  0.205
  0.211
  0.213
  0.209
  0.211
  0.207
  0.209
  0.207
  0.208
  0.208
  0.209
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
Average production assets, $m
  6
  10
  15
  22
  30
  42
  56
  74
  95
  120
  149
  182
  220
  261
  307
  358
  412
  470
  533
  599
  669
  743
  820
  901
  986
  1,074
  1,166
  1,261
  1,361
  1,464
Working capital, $m
  1
  2
  3
  5
  7
  10
  13
  17
  22
  28
  35
  42
  51
  61
  71
  83
  95
  109
  123
  139
  155
  172
  190
  209
  228
  249
  270
  292
  315
  339
Total debt, $m
  3
  5
  7
  10
  13
  18
  24
  31
  40
  51
  63
  77
  92
  109
  129
  149
  172
  196
  222
  250
  279
  310
  342
  375
  411
  447
  485
  525
  567
  610
Total liabilities, $m
  3
  4
  6
  9
  13
  17
  23
  31
  40
  50
  62
  76
  91
  109
  128
  149
  171
  196
  222
  249
  278
  309
  341
  375
  410
  447
  485
  525
  566
  609
Total equity, $m
  14
  22
  33
  48
  67
  92
  124
  163
  209
  264
  328
  401
  483
  575
  676
  787
  906
  1,035
  1,172
  1,318
  1,472
  1,634
  1,804
  1,982
  2,168
  2,362
  2,564
  2,774
  2,993
  3,220
Total liabilities and equity, $m
  17
  26
  39
  57
  80
  109
  147
  194
  249
  314
  390
  477
  574
  684
  804
  936
  1,077
  1,231
  1,394
  1,567
  1,750
  1,943
  2,145
  2,357
  2,578
  2,809
  3,049
  3,299
  3,559
  3,829
Debt-to-equity ratio
  0.240
  0.220
  0.210
  0.200
  0.200
  0.200
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
Adjusted equity ratio
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -21
  -22
  -24
  -26
  -28
  -30
Depreciation, amort., depletion, $m
  0
  0
  1
  1
  1
  1
  2
  2
  3
  4
  5
  6
  7
  9
  10
  12
  14
  16
  18
  20
  22
  25
  27
  30
  33
  36
  39
  42
  45
  49
Funds from operations, $m
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  1
  1
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  11
  12
  14
  15
  16
  18
  19
Change in working capital, $m
  1
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  20
  21
  22
  23
  24
Cash from operations, $m
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -9
  -8
  -8
  -8
  -8
  -7
  -7
  -6
  -6
  -5
  -5
Maintenance CAPEX, $m
  0
  0
  0
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -9
  -10
  -12
  -14
  -16
  -18
  -20
  -22
  -25
  -27
  -30
  -33
  -36
  -39
  -42
  -45
New CAPEX, $m
  -3
  -4
  -5
  -7
  -9
  -11
  -14
  -18
  -21
  -25
  -29
  -33
  -37
  -42
  -46
  -50
  -54
  -58
  -62
  -66
  -70
  -74
  -77
  -81
  -85
  -88
  -92
  -96
  -99
  -103
Cash from investing activities, $m
  -3
  -4
  -5
  -7
  -10
  -12
  -15
  -20
  -23
  -28
  -33
  -38
  -43
  -49
  -55
  -60
  -66
  -72
  -78
  -84
  -90
  -96
  -102
  -108
  -115
  -121
  -128
  -135
  -141
  -148
Free cash flow, $m
  -5
  -6
  -8
  -11
  -13
  -17
  -20
  -25
  -29
  -34
  -40
  -45
  -51
  -57
  -63
  -69
  -75
  -81
  -87
  -93
  -98
  -104
  -110
  -116
  -122
  -128
  -134
  -140
  -147
  -154
Issuance/(repayment) of debt, $m
  1
  1
  2
  3
  4
  5
  6
  7
  9
  10
  12
  14
  16
  17
  19
  21
  23
  24
  26
  28
  29
  31
  32
  34
  35
  37
  38
  40
  41
  43
Issuance/(repurchase) of shares, $m
  8
  10
  13
  17
  22
  28
  35
  42
  50
  59
  69
  78
  88
  99
  109
  119
  129
  139
  149
  159
  169
  178
  188
  197
  207
  216
  226
  236
  246
  257
Cash from financing (excl. dividends), $m  
  9
  11
  15
  20
  26
  33
  41
  49
  59
  69
  81
  92
  104
  116
  128
  140
  152
  163
  175
  187
  198
  209
  220
  231
  242
  253
  264
  276
  287
  300
Total cash flow (excl. dividends), $m
  4
  5
  7
  10
  13
  16
  20
  25
  30
  35
  41
  47
  53
  59
  65
  71
  77
  83
  88
  94
  99
  104
  110
  115
  120
  125
  130
  135
  141
  146
Retained Cash Flow (-), $m
  -8
  -10
  -13
  -17
  -22
  -28
  -35
  -42
  -50
  -59
  -69
  -78
  -88
  -99
  -109
  -119
  -129
  -139
  -149
  -159
  -169
  -178
  -188
  -197
  -207
  -216
  -226
  -236
  -246
  -257
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -4
  -5
  -6
  -8
  -10
  -12
  -14
  -17
  -20
  -24
  -28
  -31
  -35
  -40
  -44
  -48
  -52
  -56
  -61
  -65
  -69
  -74
  -78
  -82
  -87
  -91
  -96
  -101
  -106
  -111
Discount rate, %
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -9
  -10
  -10
  -10
  -10
  -10
  -9
  -9
  -8
  -7
  -6
  -5
  -4
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  90.3
  84.1
  79.2
  75.0
  71.5
  68.6
  66.0
  63.7
  61.7
  59.9
  58.3
  56.9
  55.6
  54.5
  53.4
  52.5
  51.6
  50.8
  50.0
  49.3
  48.7
  48.1
  47.5
  47.0
  46.5
  46.0
  45.5
  45.1
  44.7
  44.3

India Globalization Capital, Inc. develops intellectual property for the treatment of life altering or life threatening conditions, through its research on phytocannabinoid-based therapies, in the United States. The Company also builds farming facilities for leasing. In Malaysia, the Company develops and manages residential and commercial real estate. In India, it leases heavy equipment. It is also focused on developing, testing and patenting phytocannabinoid-based pharmaceutical therapies and becoming a specialty pharmaceutical provider of phytocannabinoid-based pharmaceutical and nutraceutical products. It is developing a product portfolio of phytocannabinoid-based therapies for indications, including neuropathic and cancer pain, epilepsy, end of life supportive care, adjunctive supportive therapies of chronic neurological and oncological diagnosis. In Malaysia, the Company’s subsidiary, Cabaran Ultima Sdn. Bhd., is focused on building a five-star hotel, Genting highlands.

FINANCIAL RATIOS  of  India Globalization Capital (IGC)

Valuation Ratios
P/E Ratio -35.2
Price to Sales 70.4
Price to Book 10.1
Price to Tangible Book
Price to Cash Flow -70.4
Price to Free Cash Flow -70.4
Growth Rates
Sales Growth Rate -83.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 42.9%
Total Debt to Equity 42.9%
Interest Coverage 0
Management Effectiveness
Return On Assets -13.3%
Ret/ On Assets - 3 Yr. Avg. -18.3%
Return On Total Capital -15.4%
Ret/ On T. Cap. - 3 Yr. Avg. -21.3%
Return On Equity -20%
Return On Equity - 3 Yr. Avg. -26%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 9.7%
EBITDA Margin -200%
EBITDA Margin - 3 Yr. Avg. -94.4%
Operating Margin -200%
Oper. Margin - 3 Yr. Avg. -100%
Pre-Tax Margin -200%
Pre-Tax Margin - 3 Yr. Avg. -104.2%
Net Profit Margin -200%
Net Profit Margin - 3 Yr. Avg. -104.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

IGC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IGC stock intrinsic value calculation we used $2.19259 million for the last fiscal year's total revenue generated by India Globalization Capital. The default revenue input number comes from 0001 income statement of India Globalization Capital. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our IGC stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.8%, whose default value for IGC is calculated based on our internal credit rating of India Globalization Capital, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of India Globalization Capital.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of IGC stock the variable cost ratio is equal to 100%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2 million in the base year in the intrinsic value calculation for IGC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for India Globalization Capital.

Corporate tax rate of 27% is the nominal tax rate for India Globalization Capital. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the IGC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for IGC are equal to 183.8%.

Life of production assets of 193.6 years is the average useful life of capital assets used in India Globalization Capital operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for IGC is equal to 42.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $8.064746 million for India Globalization Capital - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 31.038 million for India Globalization Capital is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of India Globalization Capital at the current share price and the inputted number of shares is $0.1 billion.

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