Some times you compare the company with it’s peers then try to see p/e, ev/ebitda, mcap/sales etc.
for Bank and Nbfc PB ratio works best. As a rule of thumb a Bank or NBFC with good roe and asset quality will have high pb ratio. For similar roe, and asset quality a retail focused institutions will get higher valuation than that of a wholesale focused player because of inherent risk with wholesale type of book.
DCF won’t work for a company in growth phase. Then u can use the Cash flow from operations instead of FCF to do the reverse DCF.
Watch this video by @harsh.beria93 to understand valuation. It’s very difficult yet the most important part. Estimating the future growth is something a lot of analysts do and it’s no big deal but valuation is.
https://www.youtube.com/embed/psMhSmVz-2A
One more thing valuation method taught by western books doesn’t work much on Indian companies I’ve seen. A person who read Intelligent Investor would try to buy low pe stocks.but most of the times it’s cheap for a reason.
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