Reading a report - found some important parameters for a Bharti valuation:
WACC - 11.6%
Beta - 1.2
The assumption is strong cash flow growth till '15, medium term growth rate of 5% from 15-30, and a terminal growth rate of 3%.
Tuesday, April 24, 2007
Friday, April 13, 2007
RIM
I'm back after a long hiatus and with a host of things to update on. Forget the Hong Kong trip and forget about the rest of the time in India. We're now in London. Job applications and studies for Level2 take up most of my time. There are new learnings every day which are forgotten in two days time. So I had better start jotting them down for an easy referral.
Like today - there has been all this talk about the Palm acquisition. Why not RIM? I did an approximate valuation exercise. Now, I know, the biggest lacuna for me is the paucity of industry data but from whatever I have, the stock looks expensive for an acquisition. Some key figures -:
The enterprise value is 24 billion USD
EV/ EBITDA ratio is 28.5
P/E (trailing/ forward) is 53.99/ 28.25
Palm, on the other hand, has an Enterprise Value/ EBITDA ratio of 9.9 (Enterprise value of 1.26 billion USD)
P/E (trailing/ forward) is 26.67/ 23.66
PEG is 2.5 while RIM is 1.5
I'm not sure which would be the best comparables for this scenario but it was the EV/ EBITDA ratio which caught my eye.
And before leaving, the Vodafone valuation had hit me with the complexity and well, have to confess, I have temporarily put it on hold. But here are some notes for when I re-start:
I dont need to reiterate that sum-of-parts is the way to go. Thats simple enough. To be noted is that - For fixed lines, I should use a WACC of 8% and terminal growth of 2%. For mobile, WACC would be 8.5% and terminal growth at 3%. These are the recommended numbers from a report by one of the bulge bracket I-firms. If I come across something different, will update it here.
Like today - there has been all this talk about the Palm acquisition. Why not RIM? I did an approximate valuation exercise. Now, I know, the biggest lacuna for me is the paucity of industry data but from whatever I have, the stock looks expensive for an acquisition. Some key figures -:
The enterprise value is 24 billion USD
EV/ EBITDA ratio is 28.5
P/E (trailing/ forward) is 53.99/ 28.25
Palm, on the other hand, has an Enterprise Value/ EBITDA ratio of 9.9 (Enterprise value of 1.26 billion USD)
P/E (trailing/ forward) is 26.67/ 23.66
PEG is 2.5 while RIM is 1.5
I'm not sure which would be the best comparables for this scenario but it was the EV/ EBITDA ratio which caught my eye.
And before leaving, the Vodafone valuation had hit me with the complexity and well, have to confess, I have temporarily put it on hold. But here are some notes for when I re-start:
I dont need to reiterate that sum-of-parts is the way to go. Thats simple enough. To be noted is that - For fixed lines, I should use a WACC of 8% and terminal growth of 2%. For mobile, WACC would be 8.5% and terminal growth at 3%. These are the recommended numbers from a report by one of the bulge bracket I-firms. If I come across something different, will update it here.
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