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After analyzing the
research paper, it tells us that there are two approaches to Valuation.  The
first and most fundamental approach is discounted cash flow valuation, which
extends the present value principles used to analyze projects to value a firm. The
second way of valuing a firm or is equity is based on how the market is valuing
similar or comparable firms. This is called relative valuation.

The following were the valuation
parameters for the study:-

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Average Growth Rate – Sales figure from last ten years were taken for
analysis. First the growth rate for each year was calculated and the average of
the growth rates for all years were taken.

Valuation on basis of Sales – The methodology involved finding out the
cumulative sales for the companies to determine the top ten companies in terms
of sales for the past ten year.

Valuation on basis of Market Capitalization – Companies were valued on the basis of their
market capitalization and the company having the highest market share was
valued at top.

Valuation on based of Cash Flow – Cash Flow Statement of companies is analyzed and
the company having high cash flow was valued higher.

Valuation based on the ratio of Cash
Flow to market value of assets – Cash flow is defined as profit before depreciation, interest and
taxes. Market value of assets equals the market value of common equity in terms
of market capitalization plus book value of assets. All the
companies have very low cash flow when compared to the market value of the
company. That is why the values are very less.

Valuation based on Tobin’s Q Ratio – Tobin’s q is defined as the market value of assets
divided by replacement cost of assets. This ratio can also be used in the valuation
of a company. This ratio is based on the investment opportunities of companies.
Ratio greater than 1 indicates the firm has better investment opportunities.

 Valuation on basis of General Ratio – The ratios used were categorized into liquidity,
efficiency, profitability and solvency ratios. The companies were ranked on the
basis of each ratio type, points were given to the companies in each ratio

Valuation on based of Profitability
– The three ratios of Return on equity (ROE), Return
on Capital Employed (ROCE), Return on Investment (ROI) were taken as indicators
of profitability. All the three ratios were given equal weightage in arriving
at a single figure called profitability score that will signify the
profitability of the company.


Richard E S Boulton, Barry D Libert, Steve M Samek,
(2000), Cracking the Value Code, H w successful are creating wealth in the New


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