There is also cash at bank which needs to be given some value. Also their dominance in the market needs some value to be attached.
I too valued Maruti at 4250-5100 per share, however I am still learning valuations. Can you please share your cost of capital ?
Market share is already discounted in a dcf while assuming a growth rate that can only be achieved at current market share and actual growth of market.
It is not just the growth, you also need to look at the longevity of growth and possibility of us being right. So we may have to adjust margin of safety accordingly.
Also you must consider the 1000 bucks a share (or whatever it is now) bank balance when you look at current market price.
that’s how the value goes to 5100 from 4250, I have considered cash.
I considered Free Cash Flow for DCF Valuation. However I am seeing Cash and bank balances as Rs. 711000000 and the total number of shares is 302080060 . Per share the value would be Rs. 2.35. This is very less.
I used Free Cash flow to value in DCF.
For Market share and presence of MOAT, DCF is not the correct valuation technique in my view. We have to Consider EPV (Earning Power Value) which is a Combination of Earning Value + Asset Value + Growth. Generally Growth is put as 0. I did a calculation and it stands at 4,402. Clearly Market has put 3.5 K extra for Growth.
This is how I would probably value Maruti Suzuki:
At an even lower level of MoS of 10%, the value is ~Rs. 5700. I wouldn’t mind purchasing Maruti Suzuki at this level too and then averaging down if it goes below that. The company has an excellent and consistent operating history–so much so that there’s probably no need for a Margin of Safety at all. But hey, at this point, it’s a force of habit for me.
There is 34000 crores in debt funds. So please recheck.
The recent auto slowdown is bring touted as 1st time phenomenon. Media making most out of it taking to another level. Below is 12 year monthly YoY growth of PV sales chart at 6 month moving average to make it smooth. As u can see, 1. Happens every few years with poor macro specially during poor macro financial situation 2. Longevity of correction may last from 6 to 24 months 3. Around 14-15% growth for 6-12 months , tops r created 4. Poor financial macro always played around fall. 5. Even the best of businesses could be semi cyclic ,so look to history. Every cycle has new narrative 6. Also, seeing the width and depth of correction, one can interpret about bottom formation
I think we need to factor historical behavior to arrive at normalized growth rate, normalized margins, valuation band at peak of optimism and pessimism and where we are comfortable at and then look into latest developments like EV, Shared mobility and factor in how future could be different from history to make best judgement
Data Source: Aceequity
When i checked the Annual Report this information is scattered. Where did you get the exact figure from?
Sheet looks good. Is this an Automated template? or you fill in the details?
Automating a valuation is the worst thing someone can do. Yes, I do fill in the Numbers myself and the assumptions used are personal to me. This is a compact version of the model I’ve discussed here:
If you want more details, feel free to DM me. Let’s not derail this thread with an unrelated conversation.