EQUITY VALUATION MODELS Equity Valuation -Determining the total value of a company involves more than reviewing assets and revenue figures. An equity valuation takes several financial indicators into account; these include both tangible and intangible assets‚ and provide prospective investors‚ creditors or shareholders with an accurate perspective of the true value of a company at any given time Significance of Equity Valuation Model -Equity valuations are conducted to measure the value of
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2 MODELS FOR THE VALUATION OF SHARES. 2.1 The concept of a cost of equity The cost of equity is the cost to the company of providing equity holders with the return they require on their investment. The primary financial objective is to maximize the return to equity shareholders. This return is as the future dividend yield and capital growth. Until new shareholders become members of the company‚ the objective above is concerned with existing shareholders. Company management will need to offer
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Valuation models Discounted cash flow models: Dividend discount Free cash flow to the firm Residual income Multiples-based valuation: Price-earnings Value-EBITDA Value-EBIT Value-Sales Price-Book value Equity valuation In conjunction with the valuation of Coles Group‚ contained in “Excel03 Equity valuation” Real options valuation Equity markets price shares above the present value of expected future cash flows‚ due to the presence of embedded options not captured by DCF analysis Real
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A Project Report On “TO STUDY OF EQUITY VALUATION ON INDIAN CEMENT INDUSTRY” Submitted To: Bhulabhai Vanmalibhai Patel Institute of Business Management‚ Computer & Information Technology‚ Gopal Vidyanagar. Submitted By: BHAVINI SHAH T.Y BBA- I 09 BBA 11 Acknowledgement I wish to express my sincere thanks to Dr. Poonam Mittal‚ Director of Bhulabhai Vanmalibhai Patel Institute of Business Management‚ Computer & Information Technology‚ Gopal Vidyanagar‚ Tarsadi‚ who gave me the chance
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Share Valuation Valuation Situations 1. Initial Public Offerings (IPOs) An initial public offering is the first sale of shares by a company to the public. The shares then become publicly traded. 2. Management Buy-outs (MBOs) A management buy-out is a form of acquisition in which the existing managers of a company acquire a large part or all of the shares of the company. 3. Management Buy-ins (MBIs) A management buy-in is a form of acquisition in which a manager or management team from
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Equity Valuation Lecture Map Definitions of Value Book value‚ Liquidation value‚ Intrinsic value‚ Market value Dividend discount models Constant-growth Multi-stage growth Value Metrics and Determinants of Value Current earnings and growth P/E Lesmond 1 Book Value of Equity The firm’s equity value‚ or stock value‚ is stated right on the firm’s books This is NOT the market value of equity Book value per share of Equity is the value of common equity on the books‚ divided
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Valuation of equity Example based on dividend discount model : Vardhman limited’s earnings and dividends have been growing at a rate of 18% per annum. This growth rate is expected to continue for 4 years. After that the growth rate will fall to 12 % for the next 4 years. Thereafter‚ the growth rate is expected to be 6 % forever. If the last dividend per share was RS. 2.00 And the investor’s required rate of return on verdhman’s equity is 15% what is the intrinsic value per share? Step 1: the
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QUADRANT TELEVENTURES LTD. EQUITY RESEARCH REPORT August 25‚ 2013 Results Review Quadrant Televentures Ltd. Share Data Market Cap Price BSE Sensex SELL The company provides landline‚ internet‚ leased line and mobile Reuters Bloomberg Avg. Volume (30 Days) 52-Week High/Low Shares Outstanding Rs 1‚52.45 cr. Rs. 2.47 18‚519.44 (+1.13%) QUAD.BO QDTV:IN 42‚985 Rs. 4.98/2.16 61.226 cr. telephony (GSM and CDMA) services in the Punjab telecom circle. It was formerly
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Methods of Corporate Valuation Prof. Ian H. Giddy‚ New York University | What is my company worth? What are the ratios used by analysts to determine whether a stock is undervalued or overvalued? How valid is the discounted present value approach? How can one value a company as a going concern‚ and how does this change in the context of a potential acquisition‚ or when the company faces financial stress? Finding a value for a company is no easy task -- but doing so is an essential component
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INTRODUCTION TO EQUITY VALUATION Equity shares can be described more easily than fixed income securities. However‚ they are more difficult to analyse. Fixed income securities typically have a limited life and a well-defined cash flow stream. Equity shares have neither. While the basic principles of valuation are the same for fixed income securities as well as equity shares‚ the factors of growth and risk create greater complexity in the case of equity shares . As our discussion
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