A Case Study on Valuation of Tata Motors Ltd.

Abstract

In this case study, the fundamental value of Tata Motors has been calculated using one of the most popular techniques of valuation,
Discounted Cash Flow Valuation. Ravi Nigam, who is an equity analyst has been given the task to calculate the value of Tata Motors.
The first step taken to calculate the value was to prepare the forecasted income statement and balance sheet. In order to do so, the first task was to forecast the sales of Tata Motors for the next coming five years. On the basis of forecasted sales, various items of expenses like the cost of goods sold and selling, general & administrative expenses were forecasted. Subsequently, Free Cash Flow to the Firm was calculated which was discounted by a weighted average of the cost of capital to arrive at the present value of Tata Motors. The terminal value and its present value has been also calculated to complete the valuation process.