Case 067Comps and relative valueWarm up

Irvat Chemicals has a March year end and its peers report to December. Calendarise its EBITDA to the twelve months to December 2025 and compare the multiple with the one on its last fiscal year.

The situation

Irvat Chemicals' financial year ends in March. FY25, the year to March 2025, had EBITDA of Rs 400 crore. Its latest results cover the nine months to December 2025, with EBITDA of Rs 330 crore against Rs 290 crore in the same nine months a year earlier.

Irvat's enterprise value is Rs 4,400 crore. You are building a comps table in which every peer reports on a calendar year, and the peers trade at a median of 10.5x calendar 2025 EBITDA.

Your task

Calendarise Irvat's EBITDA to the twelve months to December 2025, and compare its multiple on that basis with the multiple on FY25.

Quick check

Irvat is on 11.0x FY25 EBITDA and peers are on 10.5x calendar 2025. Is Irvat dearer than its peers?

Worked solution

Try it on paper, then open one step at a time.

30-second answerThe answer to give first

Calendarised EBITDA is Rs 440 crore, so Irvat trades at 10.0x, not 11.0x. Take FY25's Rs 400 crore, add the latest nine months of Rs 330 crore and take off the prior nine months of Rs 290 crore. On FY25, Irvat looks dearer than peers at 10.5x; on the same twelve months it is cheaper. The difference is nine months of growth.

Step 1Why do the twelve months have to match?

Compare two cricketers' batting averages, one from last season and one from this season. If the first has improved since, the old number undersells him. A multiple compares price today with earnings over a period, so every company in a comps table must use the same period, or growth shows up as a difference in value. Irvat's FY25 ended in March 2025; the peers' year ends in December 2025. Nine months of Irvat's growth are missing from its denominator.

Step 2How do you build the twelve months to December?

Start with the last full year and roll it forward with the interim results. LTM EBITDA = last fiscal year + year-to-date this year - same period last year. FY25 of Rs 400 crore covers April 2024 to March 2025. Take off April to December 2024, Rs 290 crore, which leaves January to March 2025, Rs 110 crore. Add April to December 2025, Rs 330 crore. The result, Rs 440 crore, covers January to December 2025, exactly the peers' calendar year.

Build the twelve months peers report: FY25 plus nine months, less the prior nine1 Apr 241 Jan 251 Apr 2531 Dec 2531 Dec 25FY25 reported: 400less 9M to Dec 24: -290plus 9M to Dec 25: +330= LTM Dec 25: 440Peers: calendar 2025, same 12 monthsQ4 FY25 = 110
Irvat's FY25 EBITDA of Rs 400 crore, less Rs 290 crore for April to December 2024, plus Rs 330 crore for April to December 2025, gives Rs 440 crore for the twelve months to December 2025, the same period its peers report.
The relationship
LTMDec 25=400+330−290=440EVEBITDA=4,400440=10.0×\text{LTM}_{\text{Dec 25}} = 400 + 330 - 290 = 440 \qquad \frac{EV}{\text{EBITDA}} = \frac{4{,}400}{440} = 10.0\times
400FY25 EBITDA, April 2024 to March 2025
330nine months to December 2025
290nine months to December 2024
What it says in wordsRoll the last full year forward by swapping last year's nine months for this year's, then divide enterprise value by the matched figure.
Step 3What does the matched multiple tell you?

On FY25, Irvat is at 11.0x against peers at 10.5x and looks about 5% dear. On the twelve months to December 2025, it is at 10.0x and looks about 5% cheap. The verdict flips without anything changing except the period. At the peer multiple, Irvat's EV would be Rs 4,200 crore on FY25 but Rs 4,620 crore on the matched figure, a gap of Rs 420 crore created by a reporting date.

Same EV, two denominators: the stale year makes Irvat look dearIrvat on FY25 (to Mar 25)11.0xPeers on calendar 202510.5xIrvat on LTM Dec 2510.0x
Irvat trades at 11.0x its stale FY25 EBITDA but 10.0x its EBITDA for the twelve months to December 2025, so against peers at 10.5x calendar 2025 it moves from looking dear to looking cheap once the periods match.

Two refinements show depth. For forward years, calendarise by weighting: calendar 2026 for a March year-end company is roughly a quarter of FY26 plus three quarters of FY27, because January to March 2026 falls in FY26 and April to December 2026 in FY27. And check that the nine months are comparable: a one-off gain or a plant shutdown in either period distorts the roll-forward, so adjust for it first. Irvat's nine-month growth of 13.8% is the number to ask about next.

Where candidates lose it

The common slip is adding the nine months to the full year without taking off the prior nine months, which gives Rs 730 crore, twenty-one months of EBITDA.

The other is calendarising only the target and leaving one peer on a stale year. Every row in the table needs the same twelve months, or the comparison is still broken.

What the interviewer asks next

  • Irvat's analysts forecast FY26 EBITDA of Rs 460 crore and FY27 of Rs 520 crore. What is calendar 2026 EBITDA?
  • A peer had a Rs 30 crore one-off insurance gain in its latest nine months. How do you treat it?
  • Why might you calendarise net debt as well as EBITDA, and how?

Company names and figures are illustrative.