Valuation-Introduction.pptx

valuation

1. Introduction to Corporate Valuation Dr. Kameshwar Rao XIMR, Mumbai

2. What is Value? Perceived happiness derived out of benefits generated by Possessing/giving away some resource In Finance, Value is Aggregate Present Value of all future benefits derived out of owning real or financial assets, d iscounted at a rate c ompensating for Pure Time Value and Risks

3. Value and Price

4. What is Corporate Valuation? Body of knowledge with theories, models , methods , inputs , biases , and limitations that can be utilised to value Business Entities

5. Myths about Valuation Valuation is Objective Valuation exercise is forever Valuation is a precise estimate Quantitative Valuation is Accurate Valuation identifies the Undervalued Valuation Output is its Test

6. The Valuation Process

7. Why Valuation?

8. Principles of Valuation – to Follow

9. Premises of Value – What is your Assumption?

10. The Standard of Value – To Arrive

11. Methods

12. Popular Relative Valuation Methods Multiple % Analysts using it P/E Ratio 55% EV/EBITDA 33% Residual Income 32% EV/ EBITDAGrowth 25% DCF 19% P/BV 17% FCF 13% EV/SALES 7% P/SALES 5% EV/FCF 4% PER / GROWTH 3%

13. Biases in Valuation Value First, Valuation next Choices already Made Cherry Picking Lopsided Rewards Institutional Pressure Tinker or Leave it Unknown Buy Sell