Maruti Suzuki India Limited manufactures, purchases, and sells motor vehicles and spare parts primarily in India and internationally. It offers 15 brands and approximately 150 variants, primarily including passenger cars, vans, utility vehicles, sedans, SUVs, MUVs, and life utility vehicles. The company is also involved in the facilitation of preowned car sales, fleet management, and car financing. It operates through a sales network of 1,100 outlets 801 cities; and 2,958 service points in 1,408 cities in India. The company, formerly known as Maruti Udyog Limited, was founded in 1981 and is headquartered in New Delhi, India. Maruti Suzuki India Limited is a subsidiary of Suzuki Motor Corporation. Headquarters: New Delhi
Products: Automobiles
Revenue: 37522 crs.
Net income: 2288 crs.
Website: www.marutisuzuki.com
Following data for Maruti Suzuki has been assumed and obtained: * The share prices of maruti Suzuki listed on NSE have been considered for the past five years taken monthly. * The NSE index has also been considered for the past five years taken monthly. * The growth rate for both share price of maruti Suzuki and NSE has been obtained using formula =LN(price of current period/price of previous period). * Then an average for both has been calculated and subsequently variance has been calculated. Also, Covariance of both the growth rate series has been calculated. The average growth rate of NSE index is the Return of market denoted by Rm. * Then, BETA is calculated by dividing Covariance by variance of market. * Now, The CAPM model is applied to calculate Cost of capital of Equity i.e. Ke= Rm(RmRf) BETA. The riskfree rate is assumed to be 7.5%. * The capital structure of maruti Suzuki is drawn and subsequently the WACC is calculated taking cost of capital which has been calculated using CAPM model. * Now, we apply the dividend discounting model to calculate the present value of the share; The...
... 2.1 Background of the Studies
Valuation is the first step toward intelligent investing. When an investor attempts to determine the worth of her shares based on the fundamentals, it helps her make informed decisions about what stocks to buy or sell. Without fundamental value, one is set adrift in a sea of random shortterm price movements and gut feelings.
Before we can value a share of stock, we have to have some notion of what a share of stock is. A share of stock is not some magical creation that ebbs and flows like the tide; rather, it is the concrete representation of partial ownership of a publicly traded company. If XYZ Corporation has 1 million shares of stock outstanding and we hold a single, solitary share, that means we own a millionth of the company.
There are some stockvaluation methods that we can use in valuing company’s stock. For instance: Discounted Cash Flow Model (DCFM), Dividend Discount Model (DDM) and Earnings Growth Model (EGM).DDM is the valuation method that we use in this paper.
2.2 Problem Statement and Objective
This research is mainly to value Public Bank Bhd stock through Dividend Discount Model (DDM).
2.3 Research Question
* What is the value of Public Bank Bhd stock?
* Is Public Bank Bhd stock a worth...
...Questions – StockValuation
1. How much should you pay for the preferred stock of the Dakota Doorknob Company if it has $100 par value, pays $8.50 a share in annual dividends, and your required rate of return is 10 percent?
2. NDV Corp.'s common stock is expected to pay a $2 dividend, which will grow at a compound rate of 4 percent indefinitely.
a. If the market requires a 14 percent return, what should be the current market price of the stock?
b. If the current market price of the stock is $40, what rate of return is the market requiring?
3. The stock of Macbeth Cleaning Corp. is currently selling for $25 a share. The company is expected to pay a dividend of $0.75 at the end of this year. If you bought Macbeth stock today and sold it for $29 after receiving the dividend, what rate of return would you earn?
4. Sooty Iron Works, Inc. has had declining sales and increasing expenses over the last decade and expects this trend to continue. As a result, the company predicts that earnings and dividends will decline indefinitely at a rate of 4 percent per year. Sooty's last dividend (D0) was $2 per share. If the market required rate of return is 12 percent, estimate the value of Sooty's common stock.
5. You are interested in purchasing the common stock of Azure Corporation. The firm paid...
...How To Choose The Best StockValuation Method
When trying to figure out which valuation method to use to value a stock for the first time, most investors will quickly discover the overwhelming number of valuation techniques available to them today. There are the simple to use ones, such as the comparable method, and there are the more involved methods, such as the discounted cash flow model. Which one should you use? Unfortunately, there is no one method that is best suited for every situation. Each stock is different, and each industry sector has unique properties that may require varying valuation approaches. The good news is that this article will attempt to explain the general cases of when to use most of the valuation methods.
Two Categories of Valuation Model.
Valuation methods typically fall into two main categories: absolute and relative valuation models. Absolute valuation models attempt to find the intrinsic or "true" value of an investment based only on fundamentals. Looking at fundamentals simply mean you would only focus on such things as dividends, cash flow and growth rate for a single company, and not worry about any other companies. Valuation models that fall into this category include the dividend discount model, discounted cash flow model, residual income models and...
...Common StockValuation
Chapter 10
Fundamental Analysis Approaches
Present value approach
1 Capitalization of expected income
2 Intrinsic value based on the discounted value of the expected stream of cash flows
Multiple of earnings (P/E) approach
• Stock worth some multiple of its future earnings
Present Value Approach (Capitalization of Income)
Intrinsic value of a security is
[pic]
Ke = appropriate discount rate
In using model, to estimate the intrinsic value of the security must:
2 Discount rate (Capitalization Rate, Required Rate of Return)
1 Required rate of return: minimum expected rate to induce purchase given the level of risk
2 The opportunity cost of dollars used for investment
3 Expected cash flows and timing of cash flows
1 Stream of dividends or other cash payouts over the life of the investment
2 Dividends paid out of earnings and received by investors
1 Earnings important in valuing stocks
3 Retained earnings enhance future earnings and ultimately dividends
1 If use dividends in PV analysis, don’t use retained earnings in the model
• Retained earnings imply growth and future dividends
• Compared computed price to actual price...
...Corporate Governance
MarutiSuzuki India Limited (the Company) is fully committed to practising sound corporate governance and upholding the highest business standards in conducting business. Being a valuedriven organisation, the Company has always worked towards building trust with shareholders, employees, customers, suppliers and other stakeholders based on the principles of good corporate governance, viz., integrity, equity, transparency, fairness, disclosure, accountability and commitment to values.
The Company fosters a culture in which high standards of ethical behaviour, individual accountability and transparent disclosure are ingrained in all its business dealings and shared by its board of directors, management and employees. The Company has established systems and procedures to ensure that its board of directors is wellinformed and wellequipped to fulfil its overall responsibilities and to provide the management with the strategic direction needed to create longterm shareholder value.
In India, 'Corporate Governance' standards for listed companies are stipulated by Securities and Exchange Board of India (SEBI) through a special provision Clause 49 of the Listing Agreement.
As a conscious and vigilant organization, MarutiSuzuki had initiated good 'Corporate Governance' practices even before Clause 49 became applicable and these practices form an integral part of the company’s governance...
...Valuation of Common Stock
Ashok Banerjee
Common (Equity) Stocks
• Because common stock never matures, today’s
value is the present value of an infinite stream of
cash flows (i.e., dividend).
• But dividends are not fixed.
• Not knowing the amount of the dividends—or
even if there will be future dividends— makes it
difficult to determine the value of common stock.
• So what are we to do?
Valuation Models
• Dividend Valuation Model (DVM):
– Constant dividend: Let D be the constant
DPS:
The required rate of return (re) is the return shareholders
demand to compensate them for the time value of money tied
up in their investment and the uncertainty of the future cash
flows from these investments.
Valuation Models
• Dividend growth at a constant rate (g):
(also known as Gordon Model)
OR
OR
Exercise 1
• You buy a stock for Rs.230 and you
expect the next year’s dividend to be
Rs.12.42. Furthermore, you expect the
dividend to grow at a constant rate of 8%
p.a.
– What is the expected return of the stock?
– What is the dividend yield?
– What is the expected price of the stock in five
years?
Dividend and Earnings Growth
• Growth in dividends occurs primarily as a result
of growth in EPS.
• Growth in earnings, in turn, results from a
number of factors, including (1) inflation, (2)
retention ratio; and (3) ROE.
•...
...StockValuation project 
IVR Great Value 

Invesco mortgage a RealEstate investment trust company is a company that provides adjusted risk, to its customers primarily through dividend payout and secondly through capital appreciation. IVR isn’t the company seeking a favorable positive image in the community. Ivrs sole purpose is to generate profit and distribute it to the shareholder. As a mortgage specialist, Invesco has been well positioned to capitalize on the rebound in home values, rising mortgage volumes and lower delinquency rates. That has analysts looking for fullyear earnings of $2 a share this year. With a pricetoearnings (P/E) ratio of 8 times, below its peer average of 10, Invesco has value in addition to a serious yield of 13%.
Upon further analysis of IVR and the company’s financial statements one can view a hybrid financial culture that some conventional ratio analysis doesn’t lend itself too. For instance generally one major ratio that can identify a company’s current capability to meet all of its financial obligations is the acid ratio test. IVR has an Acid ratio test of 1.17.
A company’s profit before depreciation and amortization to current liabilities indicates the companies’ ability to satisfy its short term obligations, the higher the PDACL ratio the better. PDACL ratio can be calculated by taking the company’s profit before depreciation and amortization divided by the company’s current...
...LECTURE
STOCKVALUATION
1. Common stockvaluation
A share of common stock is more difficult to value in practice than a bond, for at least three reasons. First, with common stock, not even the promised cash flows are known in a advance. Second, the life of the investment is essentially forever, since common stock has no maturity. Third, there is no way to easily observe the rate of return that the market requires. Nonetheless, as we will see, there are cases in which we can come up with the present value of the future cash flows for a share of stock and thus determine its value.
Cash Flows
Imagine that you are considering buying a share of stock today. You plan to sell the stock in one year. You somehow know that the stock will be worth $70 at that time. You predict that the stock will also pay a $10 per share dividend at the end of the year. If you require a 25 percent return on your investment, what is the most you would pay for the stock? In other words, what is the present value of the $10 dividend along with the $70 ending value at 25 percent?
If you buy the stock today and sell it at the end of the year, you will have a total of $80 in cash. At 25 percent:
Present value = ($10 + 70)/1.25 = $64
Therefore, $64 is the value you would assign...