Grade "A+" Accredited by NAAC with a CGPA of 3.46
This Paper will enable the students to analyse the health of a company through their annual reports, through management quality analysis, and will equip them to understand what an asset is worth and what determines that value. It will also discuss the issues and challenges faced during the valuation of assets especially in the conditions of uncertainties.
At the end of the course, students should be able to:
Unit I (3 weeks)
Analysis of Corporate Financial Statements: Income statements and Balance sheets through ratio analysis and analyzing the Chairman’s statement, Directors’ report, management discussion & analysis, report on corporate governance, auditor’s report to evaluate the financial soundness of the company. Financial statements analysis of manufacturing, service organisations and Bank & NBFC’s (Using Excel).
Beyond Balance Sheet: How to analyze management quality that is most often regarded by investment greats like Warren Buffet as the single biggest determinant of investment success means what are the desirable traits in managers running different kind of companies that are absolutely essential to the company and shareholder investment success. How certain type of management transformation can create massive wealth for shareholders
References:
Foster, George Financial Statement Analysis, Pearson Education Pvt Ltd [Chapter 3,4,6 and 7]
Unit II (3 weeks)
Introduction to Valuation: Component of valuation process- the Bias that analysts bring into the process, the uncertainty that they have grapple with, and complexity that modern technology and easy access to information have introduced into valuation. Approaches to valuation: Discounted cash flow valuation- basis for DCF, classification of DCF models, inputs to DCF models, and pluses and minuses of DCF models. Relative valuation – basis for approach, variations on relative valuation, and applicability of multiples and limitations. Role of valuation.
References:
Damodaran, A. Damodaran on Valuation, Security Analysis for investment and Corporate Finance (2nd ed.). Wiley India Pvt. Ltd. [Chapter 1]
K. G., CA, & Sehrawat, N. K. Handbook on Valuation- Concept & Cases. New Delhi, Bharat Law House Pvt. Ltd, ISBN: 978-93-5139-497-6. [Chapter 1 and 2]
Unit III (3 weeks)
Discounted Cash flow Valuation: Estimating discount rates- cost of equity and cost of capital, measuring cash flows, and forecasting cash flows. Equity discounted cash flows models. Firm valuation models.
Applied Valuation – valuation of a real company through DCF (matured company) using excel.
References:
Damodaran, A. Damodaran on Valuation, Security Analysis for investment and Corporate Finance (2nd ed.). Wiley India Pvt. Ltd. [Chapter 2,3,4,5 and 6]
K. G., CA, & Sehrawat, N. K. Handbook on Valuation- Concept & Cases. New Delhi, Bharat Law House Pvt. Ltd, ISBN: 978-93-5139-497-6. [ Chapter 3,4 ,5 and 10, Appendix II]
Unit IV (4 weeks)
Relative Valuation: What is relative valuation. Reasons for popularity and potential pitfalls. Standardized values and multiples- Earnings multiples, book value multiples, revenue multiples, and sector-specific multiples. Equity and Value multiples. Basic steps to using multiples. Reconciling relative and discounted cash flow valuation.
Applied Relative Valuation – valuation of a real company through relative valuation method (matured company) using excel.
Loose ends in valuation: Cash, cross holdings, and other assets. Valuation of Intangibles. Value of Synergy. Valuing real Options. Cost of Distress. Valuation of start-ups.
References:
Damodaran, A. Damodaran on Valuation, Security Analysis for investment and Corporate Finance (2nd ed.). Wiley India Pvt. Ltd. [Chapter 7,8,9,1012,15 and 17]
K. G., CA, & Sehrawat, N. K. Handbook on Valuation- Concept & Cases. New Delhi, Bharat Law House Pvt. Ltd, ISBN: 978-93-5139-497-6 [Chapter 5]
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