Company Analysis: The Final Step in Top-Down Approach
Company analysis is the third and most granular step in fundamental analysis (Economy → Industry → Company). It involves evaluating a company's competitive position, financial health, and intrinsic value to determine if it's a good investment.
Key Questions in Company Analysis
- What is the company's competitive strategy?
- What are its strengths and weaknesses?
- What opportunities and threats does it face?
- What is the company's intrinsic value?
- Is the stock fairly priced relative to peers?
Analysis Framework
Step 1: Competitive Strategy Analysis
Step 2: SWOT Analysis
Step 3: Financial Statement Analysis
Step 4: Intrinsic Value Estimation
Step 5: Relative Valuation
Video Lecture: Introduction to Company Analysis
Video content will be added here. This section can include recorded lectures explaining company analysis concepts.
Firm Competitive Strategies
Understanding how companies compete and create sustainable advantages
Porter's Generic Strategies
Michael Porter identified three generic strategies that companies use to achieve competitive advantage: Cost Leadership, Differentiation, and Focus.
Cost Leadership
Become the lowest-cost producer in the industry while maintaining quality.
- Key Elements: Economies of scale, efficient operations, tight cost control
- Advantage: Can undercut competitors on price
- Risk: Price wars, technology disruption
Indian Examples
- Reliance Industries: Scale in refining (1.4M bpd)
- Bharti Airtel: Scale in telecom
- TCS: Labor arbitrage in IT
Differentiation
Offer unique products or services that command premium prices.
- Key Elements: Brand, innovation, quality, customer service
- Advantage: Pricing power, customer loyalty
- Risk: Imitation, changing preferences
Indian Examples
- Asian Paints: Brand + distribution
- Titan: Design, brand trust
- HUL: Brand portfolio
Focus Strategy
Target a specific market segment with tailored offerings.
- Key Elements: Niche expertise, deep customer understanding
- Advantage: Less competition, strong relationships
- Risk: Segment shrinkage, new entrants
Indian Examples
- Nestle India: Premium foods
- Page Industries: Premium innerwear (Jockey)
- PI Industries: Agri chemicals
Blue Ocean Strategy
Blue Ocean Strategy involves creating new market spaces (blue oceans) rather than competing in existing markets (red oceans filled with competition).
Red Ocean
- Compete in existing market space
- Beat the competition
- Exploit existing demand
- Make the value-cost trade-off
- Align activities with differentiation OR low cost
Blue Ocean
- Create uncontested market space
- Make the competition irrelevant
- Create and capture new demand
- Break the value-cost trade-off
- Align activities with differentiation AND low cost
Indian Blue Ocean Examples
- Reliance Jio: Created a blue ocean by offering free voice + cheap data, disrupting the telecom industry
- Zomato/Swiggy: Created food delivery market that didn't exist at scale
- Paytm: Created digital payments ecosystem before UPI became mainstream
Illustration: Identifying Competitive Strategy
Scenario: Analyze the competitive strategy of the following Indian companies.
A) Reliance Industries - Refining & Petrochemicals
B) Asian Paints - Decorative Paints
C) Page Industries - Jockey Brand Innerwear
• World's largest refining complex (1.4 million barrels per day)
• Massive scale provides 20-30% cost advantage vs global peers
• Integration from oil to chemicals to retail
• Competes on volume and efficiency, not premium pricing
• Strongest brand in Indian paints (50%+ market share)
• Premium pricing accepted due to quality perception
• Superior distribution (50,000+ dealers)
• Technology leadership (color matching, tinting systems)
• Customers pay premium for "safe choice"
• Focused on premium innerwear segment
• Jockey brand license for India
• Targets upper-middle class consumers
• Premium pricing (3-5x unbranded alternatives)
• Deep expertise in niche category
SWOT Analysis Framework
A strategic tool to evaluate Strengths, Weaknesses, Opportunities, and Threats
Understanding SWOT Analysis
SWOT is a strategic planning technique used to identify internal factors (Strengths, Weaknesses) and external factors (Opportunities, Threats) that affect a company's performance.
Strengths (Internal)
- What does the company do well?
- What unique resources does it have?
- What do customers see as strengths?
- What competitive advantages exist?
Examples: Brand, patents, skilled workforce, strong distribution
Weaknesses (Internal)
- What could the company improve?
- Where does it have fewer resources?
- What are competitors doing better?
- What causes lost sales?
Examples: High debt, weak brand, poor location, skill gaps
Opportunities (External)
- What market trends can be exploited?
- What regulatory changes help?
- What demographic shifts exist?
- What technology can be leveraged?
Examples: Growing market, competitor exit, new technology
Threats (External)
- What obstacles does the company face?
- What are competitors doing?
- What regulatory changes hurt?
- What technology threatens?
Examples: New competition, changing regulations, economic downturn
Case Study: SWOT Analysis - HDFC Bank
Strengths
- Brand: Most trusted private bank in India
- Asset Quality: Lowest NPA ratios among peers
- Technology: Best-in-class digital banking
- Distribution: 7,000+ branches, 18,000+ ATMs
- Management: Stable, experienced leadership
- CASA: High current/savings account ratio (~45%)
Weaknesses
- Rural Presence: Lower than PSU banks
- Merger Integration: HDFC Ltd merger execution risk
- Valuation: Trades at premium P/B (expensive)
- Concentration: High exposure to urban borrowers
- Size: Growth harder at large base
Opportunities
- Credit Growth: India's credit-to-GDP growing
- Digital Lending: Expand unsecured loans
- Rural Banking: Expand in underserved areas
- Wealth Management: Growing affluent class
- Merger Synergies: Cross-selling from HDFC Ltd
Threats
- Fintech: Digital lenders, BNPL competition
- Regulation: RBI norms on fees, lending
- Competition: ICICI, Axis, Kotak improving
- Economic Slowdown: NPA risk in recession
- Rate Cycle: Rising rates affect loan demand
SWOT Analysis Investment Implication
HDFC Bank Investment View: Strong fundamentals (strengths outweigh weaknesses), favorable long-term opportunities (credit growth, digital). Key risks to monitor: fintech disruption, regulatory changes. Overall: Quality franchise, premium valuation justified but limits upside.
Case Study: SWOT Analysis - Tata Motors
Strengths
- EV Leadership: #1 EV maker in India (70%+ share)
- JLR Brand: Premium global brand (Land Rover)
- CV Dominance: Market leader in commercial vehicles
- Integration: Full vertical integration
- EV Portfolio: Nexon EV, Tiago EV, upcoming models
Weaknesses
- JLR Volatility: Dependent on luxury cycle
- Debt: High consolidated debt levels
- PV Market Share: Low in ICE passenger vehicles
- Quality Perception: Historical reliability issues
- Margin Pressure: EV investments hurting margins
Opportunities
- EV Transition: First-mover advantage in India EVs
- JLR EVs: Launch of electric Range Rover
- Government Push: FAME-II, state incentives
- Export Markets: Expand EV exports
- CV Recovery: Post-COVID demand rebound
Threats
- Competition: Maruti Suzuki EVs, M&M, Hyundai
- Battery Costs: Lithium price volatility
- Subsidy Reduction: FAME-II cuts
- Global Slowdown: JLR demand risk
- Technology: Rapid EV tech changes
Investment Consideration
Tata Motors: High-risk, high-reward play on EV transition. JLR adds cyclicality and global exposure. EV leadership is key differentiator but competition intensifying. Watch for debt reduction and margin improvement.
Exercise: Conduct SWOT Analysis for Infosys
Task: Analyze Infosys and identify at least 3 items for each SWOT quadrant.
• IT Services company, $18B revenue
• Strong digital transformation capabilities
• Facing margin pressure from clients
• AI/automation changing industry
• Strong balance sheet (zero debt)
• High attrition in recent years
Strengths
- Zero debt, strong balance sheet
- Strong brand in IT services
- Digital transformation capabilities
- Global delivery model
- Strong client relationships
Weaknesses
- High employee attrition
- Lower growth than TCS historically
- Client concentration (top 10 = ~25%)
- US geographic concentration
- Margin pressure from clients
Opportunities
- AI/GenAI service offerings
- Cloud migration projects
- Cost takeout deals in recession
- India domestic market growth
- Consulting expansion
Threats
- AI automation reducing traditional IT
- Global recession reducing IT budgets
- Visa restrictions in US
- Competition from Accenture, global firms
- Currency volatility (USD/INR)
Estimating Intrinsic Value
Absolute valuation methods to determine fair value
Absolute Valuation Methods
Absolute valuation determines a company's intrinsic value based on its fundamentals, independent of market comparisons.
DCF (Discounted Cash Flow)
Present value of all future free cash flows.
Best for: Companies with predictable cash flows
DDM (Dividend Discount Model)
Present value of all future dividends.
Best for: Stable dividend-paying companies
Residual Income Model
Value based on income above required return.
Best for: Non-dividend paying companies
Asset-Based Valuation
Value based on fair market value of assets.
Best for: Asset-heavy, holding companies
DCF Valuation: Step-by-Step
Step 1: Forecast FCF
FCF = EBIT(1-Tax) + D&A - CapEx - ΔWC
Typically forecast 5-10 years
Step 2: Calculate WACC
WACC = Ke×(E/V) + Kd(1-T)×(D/V)
Use CAPM for Cost of Equity
Step 3: Terminal Value
TV = FCFₙ₊₁ / (WACC - g)
Or Exit Multiple method
Key DCF Considerations
- Terminal Value often represents 60-70% of total value - be conservative
- Sensitivity analysis: Test different WACC and growth assumptions
- Match forecast period with company's growth stage
- Use normalized FCF, not peak or trough years
Illustration: DCF Valuation of TCS (Simplified)
Problem: Calculate the intrinsic value per share of TCS using DCF method.
• Current FCF (Year 0): ₹40,000 Cr
• Expected Growth Rate (5 years): 8%
• Terminal Growth Rate: 4%
• WACC: 10.5%
• Net Debt: -₹25,000 Cr (Cash positive)
• Shares Outstanding: 370 Cr
| Year | FCF (₹ Cr) | Discount Factor | PV (₹ Cr) |
|---|---|---|---|
| 1 | 40,000 × 1.08 = 43,200 | 1/(1.105)¹ = 0.905 | 39,096 |
| 2 | 43,200 × 1.08 = 46,656 | 1/(1.105)² = 0.819 | 38,211 |
| 3 | 46,656 × 1.08 = 50,388 | 1/(1.105)³ = 0.741 | 37,338 |
| 4 | 50,388 × 1.08 = 54,419 | 1/(1.105)⁴ = 0.671 | 36,515 |
| 5 | 54,419 × 1.08 = 58,773 | 1/(1.105)⁵ = 0.607 | 35,675 |
FCF in Year 6 = 58,773 × 1.04 = ₹61,124 Cr
Terminal Value = FCF₆ / (WACC - g) = 61,124 / (0.105 - 0.04) = 61,124 / 0.065
Terminal Value = ₹9,40,354 Cr
PV of Terminal Value = 9,40,354 × 0.607 = ₹5,70,947 Cr
Enterprise Value = PV of FCFs + PV of Terminal Value
EV = 1,86,834 + 5,70,947 = ₹7,57,781 Cr
Equity Value = EV - Net Debt = 7,57,781 - (-25,000) = ₹7,82,781 Cr
(Note: Negative net debt means cash, which adds to value)
Fair Value = Equity Value / Shares = 7,82,781 / 370 = ₹2,115 per share
Compare with current market price to determine if undervalued or overvalued
Illustration: DDM Valuation of HUL
Problem: Calculate intrinsic value of HUL using Gordon Growth Model.
• Current Dividend (D₀): ₹22 per share
• Expected Dividend Growth Rate: 8%
• Cost of Equity (Ke): 10.5% (Beta = 0.45, Rf = 7%, MRP = 7%)
Ke = Rf + β × (Rm - Rf) = 7% + 0.45 × 7% = 7% + 3.15% = 10.15%
(Using 10.5% as given for simplicity)
D₁ = D₀ × (1 + g) = ₹22 × 1.08 = ₹23.76
P₀ = D₁ / (Ke - g) = ₹23.76 / (0.105 - 0.08) = ₹23.76 / 0.025 = ₹950
Note: HUL typically trades at premium valuations. If market price is ₹2,400, the stock appears overvalued by DDM. This suggests either: (1) growth expectations are higher, or (2) market is pricing in premium for quality.
Relative Valuation Ratios
Comparing valuation multiples across peers and history
Key Valuation Multiples
| Multiple | Full Form | Formula | Best Used For |
|---|---|---|---|
| P/E | Price-to-Earnings | Price / EPS | Profitable companies with stable earnings |
| P/B | Price-to-Book | Price / BVPS | Financials, asset-heavy companies |
| EV/EBITDA | Enterprise Value to EBITDA | (Mkt Cap + Debt - Cash) / EBITDA | Comparing companies with different leverage |
| PEG | Price/Earnings-to-Growth | P/E / Growth Rate | Growth companies |
| P/S | Price-to-Sales | Market Cap / Revenue | Unprofitable, high-growth companies |
P/E Ratio: The Most Common Valuation Metric
The P/E ratio tells you how much investors are willing to pay for each rupee of earnings.
When P/E is Useful
- Comparing companies in same industry
- Comparing to historical average
- Stable, profitable companies
- Mature companies with consistent earnings
P/E Limitations
- Distorted by one-time gains/losses
- Not useful for loss-making companies
- Doesn't account for growth differences
- Accounting differences affect EPS
Indian P/E Benchmarks by Sector
| Sector | Typical P/E Range | Reason |
|---|---|---|
| IT Services | 20-30x | Stable growth, high ROE |
| FMCG | 50-70x | Premium for consistency |
| Banking | 12-20x | Cyclical, capital intensive |
| Metals | 5-10x | Cyclical, commodity driven |
| Pharma | 20-35x | Growth + defensive |
PEG Ratio: Adjusting P/E for Growth
The PEG ratio divides P/E by the expected growth rate, allowing comparison across companies with different growth profiles.
PEG < 1
Potentially Undervalued
Growth not fully priced in
PEG ≈ 1
Fairly Valued
Growth priced appropriately
PEG > 1.5
Potentially Overvalued
Paying premium for growth
IT Services Sector: Relative Valuation Comparison
| Company | P/E | P/B | EV/EBITDA | PEG | ROE | Verdict |
|---|---|---|---|---|---|---|
| TCS | 32x | 12.5x | 22x | 3.2 | 48% | Premium |
| Infosys | 24x | 7.2x | 16x | 2.0 | 32% | Fair |
| Wipro | 21x | 4.1x | 13x | 2.5 | 18% | Value |
| HCL Tech | 22x | 5.8x | 14x | 1.8 | 24% | Attractive |
| Tech Mahindra | 18x | 4.2x | 10x | 1.5 | 20% | Cheap |
Analysis Insight
TCS trades at premium valuations due to consistent performance, highest ROE, and market leadership. HCL Tech and Tech Mahindra offer better value on relative basis with lower P/Es and PEG ratios. However, quality commands premium - TCS has historically delivered superior returns despite higher valuations.
Illustration: Relative Valuation Analysis
Problem: Compare HDFC Bank, ICICI Bank, and Kotak Bank using relative valuation metrics and recommend the best investment.
| Bank | Price | P/B | P/E | ROE | NPA% |
|---|---|---|---|---|---|
| HDFC Bank | ₹1,650 | 3.2x | 19x | 17% | 1.2% |
| ICICI Bank | ₹1,100 | 2.1x | 14x | 15% | 2.1% |
| Kotak Bank | ₹1,800 | 4.5x | 25x | 14% | 1.5% |
• HDFC Bank: 3.2x - Premium but justified by quality
• ICICI Bank: 2.1x - Lowest, potential value
• Kotak Bank: 4.5x - Highest, pricing in growth
Analysis: ICICI appears cheapest on P/B basis
• HDFC Bank: 19x - Moderate premium
• ICICI Bank: 14x - Lowest, value play
• Kotak Bank: 25x - Highest, growth premium
Analysis: ICICI offers best value on P/E basis
• HDFC Bank: Best ROE (17%), Best NPA (1.2%)
• ICICI Bank: Good ROE (15%), Higher NPA (2.1%)
• Kotak Bank: Lower ROE (14%), Good NPA (1.5%)
Analysis: HDFC Bank has best quality metrics
• HDFC Bank: Quality play, pay premium for safety and consistency
• ICICI Bank: Value play, improving fundamentals, higher risk
• Kotak Bank: Growth play, expensive but well-managed
• Conservative: HDFC Bank (quality at reasonable price)
• Value-seeking: ICICI Bank (cheapest valuations, improving)
• Growth-seeking: Kotak Bank (premium franchise)
Comprehensive Case Study: Tata Motors
Complete company analysis from strategy to valuation
Company Overview: Tata Motors
Tata Motors is India's largest automobile company with presence in commercial vehicles, passenger vehicles, and electric vehicles. It also owns Jaguar Land Rover (JLR), the iconic British luxury brand.
Business Segments
- Commercial Vehicles (CV): Trucks, buses - Market leader in India
- Passenger Vehicles (PV): Cars, SUVs - Growing market share
- Electric Vehicles (EV): Nexon EV, Tiago EV - 70%+ market share
- Jaguar Land Rover (JLR): Luxury vehicles - Global presence
Key Financials (FY24)
- Revenue: ₹3,45,000 Cr (Consolidated)
- EBITDA: ₹42,000 Cr
- Net Profit: ₹8,000 Cr
- Market Cap: ₹2,80,000 Cr
- Stock Price: ~₹780
Competitive Strategy Analysis
CV Business: Cost Leadership
- Scale advantages in manufacturing
- Vertical integration
- Price competitiveness vs competitors
- Wide distribution network
JLR: Differentiation
- Premium luxury positioning
- Heritage and brand value
- Design and capability leadership
- Higher pricing power
EV Business: First Mover
- 70%+ market share in India EVs
- First-mover advantage
- Brand association with EVs
- Charging infrastructure play
SWOT Summary
Strengths
- EV market leader (70%+ share)
- JLR premium brand
- CV market dominance
- Strong balance sheet post-debt reduction
Weaknesses
- JLR cyclicality and exposure
- Low PV market share in ICE
- Historical quality issues
- Margin pressure from EV investments
Opportunities
- India EV revolution
- JLR EV transformation
- CV cycle recovery
- Export market expansion
Threats
- Intensifying EV competition
- Subsidy reduction
- Global economic slowdown
- Battery cost volatility
Valuation Analysis
| Method | Assumptions | Fair Value (₹) |
|---|---|---|
| DCF (Conservative) | 8% growth, 11% WACC, 3% terminal | ₹720 |
| DCF (Base Case) | 10% growth, 10.5% WACC, 4% terminal | ₹850 |
| DCF (Aggressive) | 12% growth, 10% WACC, 4.5% terminal | ₹1,050 |
| Relative (P/E) | 18x FY25E EPS of ₹50 | ₹900 |
| Relative (EV/EBITDA) | 7x FY25E EBITDA | ₹820 |
Valuation Summary
Fair Value Range: ₹720 - ₹1,050 per share
Current Price: ~₹780
Verdict: Stock is trading near lower end of fair value range, offering potential upside for risk-tolerant investors. Key catalyst: EV volume growth and JLR margin improvement.
Investment Recommendation
Bull Case
- EV leadership translates to sustained market share
- JLR delivers strong margins as chip shortage eases
- CV cycle remains strong
- Debt continues to reduce
- Target: ₹1,000+ (30%+ upside)
Bear Case
- Competition erodes EV market share
- Global recession hurts JLR demand
- Subsidy cuts impact EV demand
- Margin pressure from competition
- Risk: ₹600 (20%+ downside)
Final Recommendation
ACCUMULATE
High-risk, high-reward bet on India's EV transition. Suitable for aggressive investors with 2-3 year horizon. Position size: 3-5% of portfolio.
Hands-On Valuation Exercises
Practice company analysis with real-world scenarios
Exercise 1: Identify Competitive Strategy
Scenario: Identify the Porter's Generic Strategy for each company.
A) DMart (Avenue Supermarts) - Offers lowest prices through efficient operations
B) Apple - Premium products with high brand loyalty
C) Indigo Airlines - Lowest cost per available seat mile in India
• Lowest prices in retail through efficient operations
• High inventory turnover, low operating costs
• "Everyday Low Cost" strategy
• Competes on price, not premium experience
• Premium pricing for unique products
• Brand loyalty and ecosystem lock-in
• Innovation and design leadership
• Customers pay premium for brand
• Lowest cost per seat mile in Indian aviation
• Single aircraft type (A320) for efficiency
• High aircraft utilization
• Passes cost savings to customers
Exercise 2: DCF Valuation Calculation
Problem: Calculate intrinsic value of Company ABC using DCF method.
• Current FCF: ₹5,000 Cr
• Growth Rate (5 years): 12%
• Terminal Growth: 4%
• WACC: 11%
• Net Debt: ₹10,000 Cr
• Shares: 100 Cr
Year 1: 5,000 × 1.12 = 5,600 → PV = 5,600/1.11 = 5,045
Year 2: 5,600 × 1.12 = 6,272 → PV = 6,272/1.11² = 5,089
Year 3: 6,272 × 1.12 = 7,025 → PV = 7,025/1.11³ = 5,134
Year 4: 7,025 × 1.12 = 7,868 → PV = 7,868/1.11⁴ = 5,180
Year 5: 7,868 × 1.12 = 8,812 → PV = 8,812/1.11⁵ = 5,227
Sum of PV = ₹25,675 Cr
FCF Year 6 = 8,812 × 1.04 = 9,165
TV = 9,165 / (0.11 - 0.04) = 9,165 / 0.07 = ₹1,30,929 Cr
PV of TV = 1,30,929 / 1.11⁵ = ₹77,588 Cr
EV = 25,675 + 77,588 = ₹1,03,263 Cr
Equity Value = EV - Net Debt = 1,03,263 - 10,000 = ₹93,263 Cr
Fair Value = 93,263 / 100 = ₹933 per share
Exercise 3: PEG Ratio Analysis
Problem: Calculate PEG ratio and determine which company offers better value.
| Company | P/E | Expected Growth |
|---|---|---|
| Company A | 30x | 15% |
| Company B | 20x | 10% |
| Company C | 45x | 30% |
Company A: PEG = 30 / 15 = 2.0
Company B: PEG = 20 / 10 = 2.0
Company C: PEG = 45 / 30 = 1.5
• Company A: PEG = 2.0 → Fairly valued to slightly expensive
• Company B: PEG = 2.0 → Fairly valued to slightly expensive
• Company C: PEG = 1.5 → Best value despite highest P/E
Despite highest P/E (45x), growth rate (30%) justifies the premium
Key Insight: High P/E doesn't always mean expensive. PEG adjusts for growth differences. Company C's high growth rate makes it relatively cheaper than A or B.
Exercise 4: DDM Valuation
Problem: Calculate intrinsic value using Gordon Growth Model.
• Current Dividend (D₀): ₹15 per share
• Dividend Growth Rate: 6%
• Risk-free Rate: 7%
• Beta: 0.8
• Market Risk Premium: 7%
Ke = Rf + β × (Rm - Rf)
Ke = 7% + 0.8 × 7% = 7% + 5.6% = 12.6%
D₁ = D₀ × (1 + g) = ₹15 × 1.06 = ₹15.90
P₀ = D₁ / (Ke - g) = ₹15.90 / (0.126 - 0.06) = ₹15.90 / 0.066 = ₹241
Exercise 5: Complete Company Analysis
Task: Perform a complete analysis of Maruti Suzuki India Limited.
1. Identify competitive strategy
2. Conduct SWOT analysis
3. Compare valuation with peers (M&M, Tata Motors PV)
4. Provide investment recommendation
• Largest car manufacturer in India (40%+ market share)
• Lowest cost per vehicle through scale and Suzuki partnership
• Focus on mass market (₹4-10 lakh segment)
• Wide distribution (3,000+ dealerships)
Strengths: Market leader, lowest costs, brand trust, distribution
Weaknesses: Late to EVs, limited premium presence, diesel exit
Opportunities: EV launch, premium segment, exports
Threats: Tata/M&M EV competition, commodity prices, regulation
| Company | P/E | P/B | EV/EBITDA |
|---|---|---|---|
| Maruti Suzuki | 28x | 4.5x | 18x |
| M&M | 22x | 4.0x | 14x |
| Tata Motors | 18x | 3.5x | 10x |
Rating: HOLD
• Quality franchise with premium valuation justified
• EV transition is key risk - late compared to Tata
• Near-term volume growth strong
• Wait for EV launch before taking fresh position
Key Catalyst: EV launch success | Key Risk: Market share loss to EV competitors
Key Takeaways
Competitive Strategy: Porter's three generic strategies (Cost Leadership, Differentiation, Focus) help understand how companies compete. Match strategy to company for better analysis.
SWOT Analysis: Internal factors (Strengths, Weaknesses) + External factors (Opportunities, Threats). Use for comprehensive company evaluation before investment.
Intrinsic Value: DCF is gold standard but sensitive to assumptions. DDM for dividend payers. Terminal value often drives 60-70% of total value.
Relative Valuation: P/E, P/B, EV/EBITDA, PEG ratios help compare companies. Always compare with peers and historical averages. Context matters!
Integration: Combine strategy, SWOT, and valuation for complete analysis. Quality companies often trade at premium - don't just buy cheapest valuations.
Indian Context: Consider promoter holding, governance, regulatory environment. Premium valuations for quality (HDFC Bank, TCS, HUL) often justified.
Knowledge Assessment
Test your understanding with 15 multiple choice questions
References & Resources
📚 Textbooks
- Competitive Strategy - Michael E. Porter
- Investment Valuation - Aswath Damodaran
- The Intelligent Investor - Benjamin Graham
- Blue Ocean Strategy - W. Chan Kim
🌐 Online Resources
- Screener.in - Financial data
- Tickertape - Stock analysis
- Damodaran Online - Valuation