Financial Modeling

" Team Assignment"

EQUITY RESEARCH REPORT

SUBMITTED TO: SUBMITTED BY:

Prof. Rajni Joshi Sachin chhillar
(20PGDM038)
Koushik Biswas(20PGDM021)
Punit Kumar Mall(20PGDM034)
Chetan Chauhan(20PGDM120)
CASE STUDY: VALUATION OF ULTRA TECH CEMENT
Rohit sat in his office in End of 2021, contemplating his investing plan. As a result, he
had been considering adding high-growth but expensive investment stocks to his equity
account to boost profits. He had restricted his search to UltraTech Cement Ltd based on
his current market study. With a capacity of 116.8 million tons per year, UltraTech
Cement Limited is India's largest cement business (MTPA). UltraTech Cement is the
only firm outside of China that produces more than 100 MTPA of cement in a single
nation. In addition to India, the firm has operations in the United Arab Emirates, Bahrain,
and Sri Lanka.

The Aditya Birla Group's cement flagship firm is UltraTech Cement Limited. UltraTech is
India's largest maker of grey cement, ready mix concrete (RMC), and white cement,
with a market capitalization of $ 5.9 billion. Except for China, it is the world's third-
largest cement manufacturer. UltraTech has a total capacity of 117.95 million tons of
grey cement per annum (MTPA). UltraTech operates 22 integrated manufacturing units,
27 grinding units, one linearization unit, and seven bulk packaging terminals. UltraTech
has a network of over one lakh channel partners across the country, giving it a market
share of more than 80%. UltraTech's white cement is marketed under the Birla White
brand. With a current capacity of 1.5 MTPA, it has one White Cement unit and one Wall
Care putty unit. UltraTech is India's largest concrete maker, with 130 Ready Mix
Concrete (RMC) units in 50 locations. It also offers a variety of specialty concretes to
fulfill the demands of discriminating consumers.

As Rohit has been doing his research on the share price of ultra tech cement then he
found out that the share price of ultra tech cement has been rising every day or so. The
rate of share growth is very rapid so in the year Jan 11, 2021, the share price starts with
5596.39 and its current share price is at 7,593.90 and the highest share price is the
Ultra Tech Cement touch was 8,214.05 on Nov 08, 2021. So, by observing its rapid
growth in share price Rohit wondered whether Ultra Tech Cement would be a good
investment for his Equity portfolio. He had learned how to apply the free cash flow
discounting valuation approach to locate and evaluate strong growth but Expensive
firms throughout his learning days. Using the financial data he acquired, he decided to
evaluate Ultra Tech Cement.

INDIAN DOMESTIC CEMENT INDUSTRY

Cement output has been flat over the previous five years all over the world. In
comparison to other major cement-producing countries, India has the lowest per capita
cement usage, at 200 to 250 kg. Our cement use per capita is about half of the global
average of 500 to 550 kg. China and Korea are in first and second place, respectively,
with per capita cement consumption of 1650 to 1750 kg and 900 to 950 kg. Notably, we
are the world's second-largest cement consumer, behind China. Domestic cement
demand expanded at a 5% CAGR between 2015 and 2020, driven by infrastructure
building and affordable housing. The Covid-19 epidemic, on the other hand, lowered
cement consumption in fiscal 2020 and 2021. Cement demand might not maintain the
12 percent and 9% growth rates seen in 2019 and 2018. Demand was significantly
influenced by the federal and state governments' cuts to infrastructure expenditure, as
well as various challenges such as high monsoon rains, sand scarcity, labor shortages,
and water scarcity. Over the last five years, the housing sector's proportion of cement
consumption has decreased. This was due to several issues, including poor economic
development, low demand, excessive inventories, and buyer unaffordability. While
housing is likely to be a key contributor to the volume, infrastructure should contribute
more as a result of the federal government's increased expenditures in trains, roads,
and irrigation space. The revised projections for FY2021 over-budgeted spending in
FY2022 were favorable by 10% and 9%, respectively, for the Ministry of Road Transport
and Highways and PMGSY.

Cement Industry Market Share and Margin

Ultratech Cement, Lafarge Holcim Group, Dalmia Bharat, Shree Cement, and Nuvolo
Vistas are among the prominent participants in the Indian cement business. In the
cement sector, there are two types of revenue generation: trade and non-trade. The
dealer/distributor network is part of the trade route, whereas direct interaction with
infrastructure/construction businesses is part of the non-trade route. For manufacturers,
the trade segment delivers larger realizations. In the cement sector, trade/retail sales
account for 65-70 percent of total sales. Many retail-oriented enterprises, such as
Lafarge, Shree Cements (NS: SHCM), and Nuvolo Vistas, have retail shares of 75
percent to 85 percent. For the same manufacturer, the price difference between trade
and non-trade is between Rs 30 and Rs 80. The region, volume, project type, and
connection all have a role in the disparity. It's worth noting that most infrastructure
project pricing is set ex-freight on a road basis. Let us now focus our attention on non-
trade cement. The first large cost gain comes from bulk shipping reductions, and the
second significant cost benefit comes from no dealer commissions. However, due to
rising costs, the cement businesses' trade segment stays more popular, resulting in
increased profits. Due to price and volume discrepancies, the profitability gap between
the trade and non-trade segments ranges from 1% to 4%.

Cement Demand Outlook in India

Because of the country's Covid-19 outbreak and severe lockdowns, cement
consumption fell by 2% year over year in Fiscal 2021. According to CRISIL Research,
cement demand is expected to grow at a 6 percent -7 percent CAGR from fiscal 2021 to
fiscal 2026, owing to government infrastructure spending and a significant increase in
housing demand, compared to a 4.5 percent -5.5 percent CAGR from fiscal 2015 to
fiscal 2020

ULTRA TECH CEMENT

UltraTech Cement Limited is the main cement company of the Aditya Birla
Group. UltraTech is India's largest manufacturer of grey cement, ready mix concrete
(RMC), and white cement, with a market capitalization of $ 5.9 billion. It is the world's
third-largest cement producer, behind China and India. Apart from China, UltraTech is
the only cement company in the world having 100+ MTPA of cement manufacturing
capacity in a single country. The company's operations may be found in the United Arab
Emirates, Bahrain, Sri Lanka, and India.

UltraTech has a total capacity of 117.95 million tons of grey cement per year (MTPA).
UltraTech has 22 integrated production units, 27 grinding units, one linearization facility,
and seven bulk packaging terminals under its control. UltraTech has over one lakh,
channel partners, across the country, with a market share of over 80% in India. In India,
UltraTech sells white cement under the brand name Birla White. It has one White
Cement plant and one Wall Care putty unit, with a current capacity of 1.5 MTPA.

UltraTech created UltraTech Building Solutions (UBS) to provide independent

homebuilders with a one-stop shop for home building. This is the first multi-category
retail network in India that caters to the needs of individual home builders (IHBs). The
purpose of this initiative is to include housebuilders at all stages of the construction
process, offer them high-quality building supplies and services, and assist them in
creating their dream houses. With around 2500 stores, UBS is currently India's largest
single-brand retail network.

UltraTech formed the Global Cement & Concrete Association (GCCA). It has committed
to the GCCA's Net Zero Concrete Roadmap and is a signatory to the GCCA Climate
Ambition 2050. UltraTech is working hard to decarbonize its operations as quickly as
possible. It has put in place cutting-edge technology like the Science-Based Targets
Initiative (SBTi) and the Internal Carbon Price, as well as set ambitious environmental
objectives like EP100 and RE100. UltraTech is the first Indian company to issue dollar-
denominated sustainability-linked bonds and the second in Asia. UltraTech aspires to
contribute to the social and economic development of the communities in which it
operates. Education, healthcare, sustainable livelihoods, community infrastructure, and
social concerns are the focus of the Company's social initiatives.

VISION

To be the industry leader in the field of construction solutions.

Mission

On the four pillars of, offer exceptional value to stakeholders.

1. Sustainability

2. Innovation

3. Customer-centeredness

4. Empowering the team

Analysis of Industry Competition

As Porter has maintained, the level of competition in a firm has a major influence on the
industry's profit potential. Competitive strategy, according to Porter, is a company's
attempt to gain a competitive advantage in its industry. Because a company's future
profitability is heavily determined by its industry's profitability, a company must first
assess its industry's underlying competitive structure to establish a profitable
competitive strategy. After analyzing the competitive structure of the industry, we look at
the factors that determine a firm's relative competitive position within that market. The
competitive climate, according to Porter, is favorable to innovation.

Key Players in the Industry

The Indian cement business is very competitive since it is open to both domestic
and international competitors. In reality, nearly eight out of ten worldwide
enterprises, such as Ultratech and Abuja Cement, are based in India. UltraTech
Cement, Jaypee Cement, Shree Cement, ACC, Abuja Cement, Dalmia Bharat,
Ramco Cement, Birla Cement, JK Cement, India Cement Ltd are the top ten
cement firms in India. Many businesses operate in more than one industry
category.

Porter’s Five Forces Analysis

Entry Hurdles:

The Cement industry has high entrance hurdles. For a new firm, the start-up capital
required to create manufacturing capacity to attain a minimum efficient scale is
prohibitively expensive. Government policies and laws may provide difficulty for new
firms. A domestic firm, on the other hand, with local knowledge and competence, can
compete in its market against lesser-known global corporations.

The Threat of Substitutes:

The Cement is under pressure from substitutes. Due to the variety of alternatives
available, buyers have a wide range of options.
Supplier Bargaining Power:

In the Cement business, this word refers to all providers Some Indian suppliers are tiny
enterprises that rely on the corporation. In the connection between industry and its
suppliers, the power axis is skewed in favor of industry. In most circumstances, the
business is dominated by powerful buyers who may force their conditions on providers.

Customers' bargaining power:

Indian buyers have a wide range of options. In India, more than 20 international
manufacturers sell their products. A low switching cost is related to choosing between
competing brands. As a result, the power axis in the relationship between the car
industry and its eventual consumer's shifts in the consumer's favor.

Rivalry among Competitors:

Despite the high concentration ratio seen in the automotive sector, rivalry in the Indian
auto sector is intense due to the entry of foreign companies into the market. The
industry rivalry is low, with competitors matching any existing product in a matter of
months. This industry instinct is primarily driven by technical capabilities acquired over
years of gestation through technical collaboration with international players.

The beta of Ultra Cement

The volatility—or systematic risk—of a securities or portfolio in comparison to the

market as a whole is measured by beta. The capital asset pricing model (CAPM) uses
beta to characterize the connection between systematic risk and asset anticipated
return (usually stocks). CAPM is a commonly used approach for pricing hazardous
securities and producing estimates of projected returns on assets, taking into account
both asset risk and capital costs.

A beta coefficient can be used to relate the volatility of a single stock to the whole
market's systematic risk. In statistics, beta is the slope of a line resulting from a
regression of data points. In finance, each of these data points reflects the performance
of a single stock relative to the market as a whole.
The activity of a security's returns as they respond to market fluctuations is adequately
described by beta. The beta of a security is determined by multiplying the product of the
security's covariance and the market's returns by the variance of the market's returns
over a certain time. The beta calculation is used by investors to determine if a stock
moves in lockstep with the rest of the market. It also tells you how volatile–or risky–a
stock is in comparison to the rest of the market.

The Capital Asset Pricing Model (CAPM)

It is a mathematical model that captures the link between systematic risk and
anticipated return for assets, especially equities. The CAPM model is frequently used in
finance to price hazardous securities and generate projected returns for assets based
on their risk and cost of capital. When the risk and time value of money are compared to
projected return, the CAPM method is used to determine if a stock is properly valued.
The following is the formula for determining an asset's anticipated return given its risk:

ER = Rf + beta * (ERm - Rf)

Where:

ER = expected return of investment

Rf = risk-free rate

beta = beta of the investment &

(ERm - Rf) = market risk premium

For the computation of beta of UltraTech Cement, all three methods are
used; Historical Beta, Fundamental Beta, and Accounting Beta. The risk-
free rate is assumed to be 6.46 percent.

Historical Beta:
Beta is calculated using slope and standard deviation which comes out to be the same.
The price of a security with a beta greater than 1.0 is potentially more volatile than the
market. The CAPM model is used to compute the cost of equity/ expected returns. On
comparing the expected return using the CAPM model and the average return of the
company, we find that the expected return is more than the average return, hence the
firm is undervalued using the beta calculations.

FORECASTING OF INCOME STATEMENT AND BALANCE

SHEET

To forecast the financial statements like balance sheet, profit and loss account,
organizations should make an educated projection regarding their future financial
position, including a forecast of the business' assets, liabilities, and capital. A balance
sheet estimate of the future is significant for organizations as it predicts what a business
expects to own and what it expects to owe at a particular future date, which can help
them plan for future purchases and other significant business choices.

The reason for financial estimation is to break down the current and past financial
position and utilize that data to foresee a business' future financial conditions. Doing so
can help settle on significant business decisions.

Financial forecasting is a bookkeeping instrument that helps plan for the future of a
business and make a roadmap of how you'd like the organization to develop. With
financial estimates as a guide, the management can make business strategies and set
objectives dependent on accurate information to improve the plan of action later on.

Interpretation:
The forecasted financial statements of the company selected are prepared and attached
in the excel file.

Balance Sheet
Assumption

The forecasting of items on the balance sheet is done for the next four years, 2022-25.
Various items in the forecasted balance sheet are assumed to be constant and
considered as equal to the previous year, the year 2021, like the equity share capital is
assumed to remain constant for the firm, non-controlling interest, deferred tax liabilities,
long-term provisions, short-term borrowings, short-term provisions, other current
liabilities, capital WIP, intangible assets, short-term loans, and advances, to name a few
items. The reason for these items being assumed to remain the same as the previous
year is that some of these balance sheet items cannot be predicted for the future, like
DTA, DTL. Some items like equity share capital generally don't change for a company
for a long period and remain constant.

The cash and cash equivalents items are the PLUG item in the forecasted balance
sheet and represent the balancing item to match total assets with total liabilities for the
balance sheet to match.

The long-term borrowing, other long-term liabilities is forecasted taking sales as the
base for calculation as the borrowings of the firm may increase as more sales are
made.

Trade payables are forecasted taking the raw material as the base for calculation as the
amount due to suppliers is dependent on the raw material purchased.

Fixed assets, PPE, trade receivables, inventory, cash, and cash equivalent are
forecasted taking sales as the basis. If there are more sales, more plant and equipment
is required to match the sales and more money will be due from customers. The
balance sheet shows a somewhat constant forecasted balance sheet with increased
total assets and liabilities.

Profit and Loss Account

The profit and loss account is forecasted for the following four years, 2022, 2023, 2024,
2025, and 2026. So, we take the rate of revenue from operations based on the scenario

Many items like cost of material consumed, operating and direct expenses, employee
cost, are forecasted taking the sales as the base for calculation as most of the profit and
loss items are dependent on the sales. The finance cost, interest, is dependent on how
much the firm has liability and hence forecasted based on liability.

The depreciation and amortization expenses are dependent on the assets, both tangible
and intangible, and hence the base for forecasting.

The forecasted profit and loss account show increased revenue from operations from
the current year 2021. The total expenses for the firm also increased.
The profit before tax increases from the year 2021 which shows the minimum amount of
profits for the firm.

COST OF EQUITY
Cost of Equity is the rate of return a company pays out to equity investors. A firm uses
the cost of equity to assess the relative attractiveness of investments, including both
internal projects and external acquisition opportunities. Companies typically use a
combination of equity and debt financing, with equity capital being more expensive .

Interpretation

Firstly, we calculated a BETA. After the calculation of beta. In this data, we took the
starting Sensex value that was 100, and the current value is 57679.51. From this data,
we calculate a market return that is 6.85%.

Weighted Average Cost of Capital

The weighted average cost of capital (WACC) is the average interest rate that a firm is
anticipated to pay to all of its security holders to finance its assets. The WACC is also
known as the firm's cost of capital. Importantly, it is determined by the external market
rather than by management. The WACC is the minimum return that a firm must make
on its current asset base to satisfy its creditors, owners, and other capital sources, or
else they will invest elsewhere.

FORECASTING DATA

Rohit got all the information he needed to value Ultra Tech

Cement. He Estimated the key performance and valuation ratios
for the sake of his benefit for the investment.
 Company Analysis

In ratio analysis, we do Liquidity ratio, Solvency Ratio, Profitability Ratio, Return Ratio,
Efficiency Ratio, Market Ratio. As we can see in the chart all higher ratios are better and the
lower is better.

INTERPRETATION

I. LIQUIDITY RATIOS

Liquidity Ratio describes the short-term positioning of a company. In the liquidity ratio, we have
taken three Current, Quick & Cash Ratio.
 1. Current Ratio – We have calculated the current ratio under Liquidity Ratios. By
looking at the figures, The current ratio shows the ability of the company to pay its
current liabilities. The companies should have a Current Ratio between 1.33 to 3. In
FY2017 it is 1.60 & FY 2021 is 1.17. The company is maintaining its current ratio.

2. Quick Ratio – Quick ratio considers current assets excluding inventories as it believes
that inventories take time to convert into cash, so it takes current assets that quickly
convert into cash. It is considered better than the current ratio. The Quick Ratio should be
not less than 1 or not more than 2.5 if it is less than 1 company liabilities are more than
assets and if more than 2.5 companies have more quick funds. In FY 2021 is 0.76,
companies should maintain their Quick Ratio that is less than 1.

3. Cash Ratio - The cash ratio is a measurement of a company's liquidity, specifically the
ratio of a company's total cash and cash equivalents to its current liabilities. The cash
ratio should be between 0.5 to 1. And generally, the cash ratio is important for bank
companies. In FY 2021 it is 0.09.

II. SOLVENCY RATIOS

The solvency ratio describes the long-term positioning of the company. From this, the company
can know its sustainability and pay its obligation in the long term.

1. Debt to Asset Ratio - It shows the relationship between borrowed funds and owner
funds. Debt Asset Ratio should be between 0.3 and 0.6. According to the debt asset ratio if
the ratio is more than 0.5 means company insolvent is increased. And if the ratio is 1 which
means now the company is insolvent.

2. Asset to equity ratio - It indicates the relationship of the total assets of the firm to
the part-owned by shareholders. The higher the equity-to-asset ratio, the less leveraged
the company is, meaning that a larger percentage of its assets are owned by the
company and its investors. While a 100% ratio would be ideal, that does not mean that
a lower ratio is necessarily a cause for concern. In 2017 it will be 1.73 and In 2021 it will
be 1.95.

3. Interest Coverage Ratio - The lower interest coverage ratio, means the company's
higher debt burden and the greater the possibility of bankruptcy or default. A higher
ratio indicates better financial health as it means that the company is more capable
of meeting its interest obligations from operating earnings. In 2021 it is 6.45 companies
will maintain their interest coverage ratio.

III. PROFITABILITY RATIOS

The profitability ratio is the key ratio that talks about the company's overall value and its
profitable position. We do two ratios: Operating profit margin & Net profit margin.

1. Operating Profit Margin Or EBIT- In Operating Profit Margin is a profitability or

performance ratio that reflects the percentage of profit a company produces from its
operations, before subtracting taxes and interest charges. The company operating profit
margin is increased by 21.42%.

2. Net Profit Margin- Net profit margin is used to calculate the percentage of profit a
company produces from its total revenue. In 2021 it is 12.42 as compared to 2017 it is
increasing.

IV. RETURN RATIOS

1. Return on Assets- The return on assets shows the percentage of how profitable a
company's assets are in generating revenue. In 2021 the company is maintaining its return on
asset ratio.

2. Return on Capital Employed- Return on capital employed (ROCE) this ratio can
help to understand how well a company is generating profits from its capital as it is put to
use. The high value of ROCE means the company has good profitability and capital
efficiency. Compared to 2017 to 2021 it is increasing.

3. Return on Equity- Return on equity is the measure of a company's net income

divided by its shareholders' equity. ROE is a gauge of a corporation's profitability
and how efficiently it generates those profits. In 2021 it is 12.59 it is maintaining their
return on equity.

V. EFFICIENCY RATIOS
 1. Inventory Turnover Ratio - It indicates that the Finished Goods are converted
into Sales, and the company can recover its Cost of Goods Sold (COGS). It
measures the number of times on average the inventory is sold during the period.
Inventory Turnover Ratio Inventory turnover is the rate at which inventory stock is
sold, used, and replaced. From 2017 to 2021 they are maintaining their inventory
turnover ratio.

2. Receivables Turnover Ratio – Receivables turnover ratio measures the

efficiency with which a company collects on its receivables or the credit it extends
to customers. From 2017 to 2021 it is increasing, which is good for the company.

3. Payable Turnover Ratio - Payable Turnover Ratio payable turnover shows how
many times a company pays off its accounts payable during a period. A lower
ratio is good for the company. That company is maintaining their 2017 is 2.43 to
2021 is 1.51.

4. Asset Turnover Ratio - This ratio tells us how efficiently and profitably company
assets are used to generate sales. Asset turnover ratio with a high asset turnover
ratio operates more efficiently as compared to competitors with a lower ratio. If
the ratio is greater than 1, it's always good. In 2021 it is 1.03.

5. Net Working Capital Turnover Ratio- It measures a company’s liquidity and its
ability to meet short-term obligations, as well as fund operations of the business. The
ideal position is to have more current assets than current liabilities and thus have a
positive net working capital balance. In 2018 it is negative but in 2021 12.93 companies
again maintain their net working capital ratio.

VI. MARKET RATIOS

1. Earnings Per Share (EPS) – It indicates how much money a company makes
for each share of its stock and a higher EPS indicates greater value because
investors will pay more for a company’s shares if they think the company has
higher profits relative to its share price. Earnings per share ratio which divides net
earnings available to common shareholders by the average outstanding shares over a
certain period. The EPS formula indicates a company’s ability to produce net profits for
common shareholders. From 2017 to 2021 it is increasing.
 2. PE Ratio - PE Ratio is the ratio for valuing a company that measures its current share
price relative to its per-share earnings. the P/E ratio is also negative, which means that it
has negative earnings. Higher the P/E ratio higher the growth. In 2021 it is 40.24.

Peer Analysis
 Discounting Cash Flow Valuation

INTERPRETATION

The Discounted Cash Flow model is calculated by two methods: the first is FCFE and
the second is FCFF. In FCFE we use the formula net income-(CAPEX-dep) -(change
in working capital) -(new debt - debt repay), and in FCFF we use ebit(1-tax)
+depreciation-CAPEX-change in working capital, we calculated dcf by FCFF method
firstly, we calculate a Free cash flow the formula as I told you EBIT(1-tax) +Depreciation
– Capex – Change in working capital. When we see in google many analysts say the
same thing that UltraTech Cement is overvalued and This is not the right time to buy the
stock. A stock that is considered overvalued is likely to experience a price decline and
return to a level that better reflects its financial status and fundamentals. Investors try to
avoid overvalued stocks since they are not considered to be a good buy.

RELATIVE VALUATION

In relative valuation, the value of an asset is compared to the values assessed by

the market for similar or comparable assets. To do relative valuation then,

● We need to identify comparable assets and obtain market values for these assets
● TO convert these market values into standardized values since the absolute
prices cannot be compared. This process of standardizing creates price multiples.
● Compare the standardized value or multiple for the asset being analyzed to the
standardized values for the comparable asset, controlling for any differences between
the firms that might affect the multiple, to judge whether the asset is under or
overvalued

Here are some of the reasons for the popularity of multiples

o Use of multiples and comparable is less time and resources intensive cash flow
valuation.

o It is easy to sell.

o It is easier to defend.

o Market imperatives – Relative valuation is much more likely to reflect the current
mood of the market since it attempts to measure relative and not intrinsic value.
Relative Valuation Methods

● Price to Earnings Ratio

● Price to book value ratio

● EV to sales ratio

● EV to EBITDA

PRICE TO EARNING (P/E RATIO)

- It suggests how much investors

are willing to pay for each rupee of the company's earnings. Higher the P/E.

more expensive the stock. A high P/E ratio could mean that a company's

stock is overvalued because the investors are expecting a higher growth

rate in the future. Formula - Stock Price per Share/ Earning per Share

PRICE/EARNING TO GROWTH (P/EG RATIO)-

It compares the PIE of a particular stock with the company's expected earnings
growth rate. It suggests whether a company's high P/E is reflecting an
excessively high

stock price in the market or is a reflection of the company's promising growth

prospect. Formula:-Price to Earning/ Earnings Growth Rate.

PRICE TO BOOK VALUE (P/BV RATIO) -

P/BV measures how much is the market willing to pay for the measured book
value of the company. The book value of any company is the net worth (total
assets -total liabilities). It is assumed that if the company is liquidated, it would at
least receive an amount equal to its book value. It takes into an account book
value per share which is calculated as book value divided by no. of shares
outstanding.

Formula - Stock Price per Share/ Book value per share

PRICE TO SALES (P/S RATIO) -

P/S compares the stock price to the company's sales per share. Sales per share
are calculated as the company's earnings from sales divided by no. of shares
outstanding Stocks that trade at low P/S multiple are viewed cheap as compared
to those trading at high P/S multiple For startups, where there is negative
meaning, the P/S ratio becomes useful to calculate intrinsic value. Formula -
Stock price per Share/ Sales per share

PRICE TO CASH FLOW (P/CF RATIO)-

The price to cash-flow ratio is a multiple that compares a company's share price
in the market to operating cash flow per share. Operating cash flow per share is
calculated by dividing the operating cash flow generated by the no. of share
outstanding.

The P/CF ratio measures how much cash a company generates relative to its

stock price. A lower P/CF multiple implies that a stock may be undervalued and a
 higher P/CF multiple implies that a stock may be over-valued.

Formula: - Stock price per Share/ Cash flow per Share

Conclusion:
As per the conclusion After doing the analysis or gathering all the financial data he
comes to know that the ultra tech cement is overvalued so he finds it very risky to invest
in ultra tech cement so he will not put his money on ultra tech cement. And he later on
decided that he will invest in another peer company. Like Shree cements so, from the
peer analysis and valuation he comes to know that Ultra tech cement is not a good
choice for the investment so, the first reason that’s it overvalued and if we talk about its
other valuation ratio like EV/sale is also not doing good if we compare to its peers.