Discounted cash flow method
This query is : Resolved
20 November 2012
Dear All
Pls advice how pricing of shares is to be done under discounted Cash Flow Mehtod in case of newly incorporated company. 100% investment in the company is being done by a foreign company. There are no outstanding shares in the company thus making it impossible to do the valuation under DCF. RBI is not accepting any other Valuation except for DCF
Pls advice how pricing of shares is to be done under discounted Cash Flow Mehtod in case of newly incorporated company. 100% investment in the company is being done by a foreign company. There are no outstanding shares in the company thus making it impossible to do the valuation under DCF. RBI is not accepting any other Valuation except for DCF
20 November 2012
Ask the management to give you the FUTURE CASH FLOWS for 5 years. (This is very important. Management normally tends to request you to decide the future cash flows. Please avoid doing it.) These future cash flows are then discounted at the rate appropriate to the said industry (ranging from 10 to 30). Accordingly calculate the value of share.
20 November 2012
Sir what should be kept as the no of shares as there wont be any shares outstanding
21 November 2012
Authorised capital. (As it is a NEWLY incorporated company)
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