KEPLER INC.

Equity Research Report – Google Inc.

Kepler Inc. 2

Kepler Inc.

Jitto David.

Kepler Inc. 3

Company Background: Google Inc is an Information technology company.

Google is world's largest search engine.

Google Inc company started with seed money of $100,000 from Angel investors.

Google Inc filed incorporation on 4th September 1998 in California, U.S.

Google two main source of revenue Google AdSense for Web Site Services and Google AdWords for advertisers.

Kepler Inc. 4

Google Services.Google. com for search and personalization, Google Image Search, Google Book Search, YouTube, Google Scholar, Google Blog Search, Google Webmaster Tools, Google Toolbar, Gmail, Google Talk, Orkut, Picasa Web Albums, Google Finance, Google Docs, Google Calendar, Google Translate, Google Earth, Google Mobile, Google Friend Connect, Google News Archive, Gmail Labs, Google Maps, Google Search Appliance, Google Mini and Google Search Appliance products for small and medium sized businesses.

Kepler Inc. 5

Management:

Eric Schmidt – Chairman of the Board and Chief Executive

Officer.

Larry Page - Co-Founder & President, Products.

Sergey Brin - Co-Founder & President, Technology.

Nikesh Arora - President, EMEA Operations & Senior Vice President.

Kepler Inc. 6

Key Innovation :

Developed a new kind of server setup.

Page Rank Technology.

Hypertext-Matching Analysis.

Result: In faster response times, greater scalability and lower costs in operating.

Kepler Inc. 7

Life of a Google Query:

Kepler Inc. 8

Google Inc. Listed on Nasdaq and component of Nasdaq 100 TECH Sector

Index (NDXT).

Constituent of S&P 100 and AMEX Internet.

Google Inc (GOOG).

First Initial Public Offering of 19,605,052 shares of Class A common stock.

Opening price: $85 per share.

Current market capitalization 134.541Billion (15/04/2009).

Kepler Inc. 9

Last 5 Years:

Kepler Inc. 10

Google Inc.Key Financial Facts – 31st December 2008

• Revenue - $21.795 Billion

• Gross Profits - $13.174 Billion

• Net Income - $4.227 Billion

• Total Assets - $31.767 Billion

• Total Equity - $28.239 Billion

• Total Cash & Cash Eq. - $15.846 Billion

Kepler Inc. 11

Market Share:

Kepler Inc. 12

Market Share Pie Chart:

Kepler Inc. 13

Four Methods of Valuations.

1.Dividend discount Model.

2.Discounted cash flow Model.

3.Residual Earnings Model.

4.Abnormal Earnings Growth Model.

Kepler Inc. 14

Why Residual Earnings Model?

• No dividend payment – Dividend discount model not useful.

• Discounted Cash Flow model – No consideration for value generated that doesn’t involve cash flows.

• Discounted Cash Flow model – No consideration for accrual accounting.

• Abnormal Earnings Growth model – Doesn’t give insight into drivers of growth.

• Residual Earnings model – Focuses on growth & investments and Incorporates Accounting statements rather than CF statements.

• Residual Earnings model – Forecasts can be validated in subsequent financial statements.

Kepler Inc. 15

Reformulated Balance Sheets.

Kepler Inc. 16

Reformulated Income Statements.

Kepler Inc. 17

Ratios.

Kepler Inc. 18

Common Size analysis of Income Statement:

Kepler Inc. 19

Common Size analysis of Balance Sheets.

Kepler Inc. 20

Trend Analysis of Income Statements.

Kepler Inc. 21

Trend Analysis of Balance Sheets.

Kepler Inc. 22

Valuation Essentials.

Kepler Inc. 23

Simple Forecasting.

Kepler Inc. 24

Forecasting Ratios.

Kepler Inc. 25

Forecasted Performance.

Recommendation

• Calculated value per share is $ 426.96• Market value per share $ 379.50 (April 15, 2009)• Market value per share as on 31st Dec 2008 was $ 307.65•Market value per share as on 27th April 2009 was $ 385.20

On the basis of our evaluation we strongly recommend to buy Google stock.

Kepler Inc. 27

Recommendation

In order to support our recommendation, we reproduce analysts’ recommendations from www.nasdaq.com

Kepler Inc. 28

Any Questions …. ?