DISCOUNTED CASH FLOW (DCF) ANALYSIS OF IKS LTD.
Opening Note
This project involves the valuation of a listed company using the Discounted Cash Flow (DCF) methodology to estimate its intrinsic value. The analysis is based on historical financial performance, forward-looking projections, and well-reasoned operating and valuation assumptions. The model evaluates future free cash flows, discounts them using an appropriate WACC, and compares the derived intrinsic value with the current market price to assess valuation attractiveness.
Project Details
The analysis begins with a detailed review of the company’s business model, revenue drivers, and historical financial performance. Key financial metrics such as revenue, profitability, and margins are examined to identify long-term growth trends and operational efficiency. Based on these insights, forward-looking financial projections have been developed for a five-year forecast period, incorporating realistic assumptions for revenue growth, margins, capital expenditure, taxation, and working capital requirements.
The projected free cash flows to the firm (FCFF) are discounted using the Weighted Average Cost of Capital (WACC) to arrive at the enterprise value. The valuation further accounts for net debt to estimate equity value and derive the intrinsic value per share. Both terminal value and sensitivity analysis have been incorporated to assess the impact of key assumptions such as discount rate and long-term growth on overall valuation.
The final section of the project compares the intrinsic value derived from the DCF model with the current market price, providing insights into whether the stock appears overvalued or undervalued under reasonable assumptions. Key risks, limitations, and assumptions underlying the valuation have been explicitly highlighted to ensure transparency and analytical rigor.
Project Files
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Closing Note
It’s heartwarming to see that what started as just another excel file, trying to understand the world of Corporate Finance has now turned into a full-fledged project on one of the key valuation models in modern finance, also known as the Discounted Cash Flow Model.
The past few weeks has been a learning curve for me, taking me on a tour through the world of Cash Flows, Equity Research, Valuations, Finance and the infamous Excel Spreadsheets. During the course of this project, I had the opportunity to have a deeper dive on essential topics of Finance, honing my technical skills in this particular field. Apart from technical skills, this project indirectly contributed to my personality, giving me the confidence and ability to tackle difficult and new task with a more open mindset.
With this, I would like to thank everyone who was directly and indirectly associated with the completion of this project. I would like to thank my Parents, Mentors and Teachers for their guidance and a special thanks to the friends for their constant support during the pre, during, and post project phases.