Interesting. To me it looks like an attempt to give a ball park fair value to the stock rather than deriving it. There is nothing wrong in the method but think of it like this. if you have to give a desired fair value what are the levers that you can use here to move the fair value up!
- For market price method i just need to select the last trading days when the stock has done well or atleast giving me the desired fair value.
- For comparable companies, if they are considering Genesys and Map My India as comparable then we need to also compare the projected growth. To the extent i understand both the companies are trading at higher PE due to projected future growth.
- DCF is sometimes used like goal seek. Check for PAT growth if its reasonable (try to back calculate the revenue for the given PAT and see if its achievable), also check the reasonableness of other items that leads to free cash flow calculations and check the discount rate that’s been used and if its reasonable. I can see that PAT has jumped 10x in FY25 and is something that you should be comfortable with if you want to believe the DCF…
| Subscribe To Our Free Newsletter |
