Following information is given in respect of Alpha Ltd., which is expected to grow at a rate of 20% p.a. for the next three years, after which the…

Following information is given in respect of Alpha Ltd., which is expected to grow at a rate of 20% p.a. for the next three years, after which the growth rate will stabilize at 8% p.a. normal level, in perpetuity. For the year ended March 31, 2023 Revenues ₹ 15,000 Crores Cost of Goods Sold (COGS) ₹ 6,000 Crores Operating Expenses ₹ 4,500 Crores Capital Expenditure ₹ 1,500 Crores Depreciation (included in Operating Expenses) ₹ 1,200 Crores During high growth period, Revenues & Earnings before Interest & Tax (EBIT) will grow at 20% p.a. and capital expenditure net of depreciation will grow at 15% p.a. From year 4 onwards, i.e. normal growth period revenues and EBIT will grow at 8% p.a. and incremental capital expenditure will be offset by the depreciation. During both high growth & normal growth period, net working capital requirement will be 25% of revenues. Out of total capital, 60% constitute Equity and rest is Debt. The cost of equity is 17.53% and pre-tax cost of debt is 16%. Corporate Income Tax rate is 30%. Required: Estimate the value of Alpha Ltd. using Free Cash Flows to the Firm (FCFF). The PVIF @ 15 % for the three years are as below: Year t 1 t 2 t 3 PVIF 0.8696 0.7561 0.6575 Note: Carry out calculation in ₹ Crore and round off figures upto two decimal points.