DCF valuation of a listed Indian company from its annual report

Meridian Family Office invests the wealth of one Gujarati business family. It holds about ₹420 crore in listed Indian shares and wants to add one mid-cap or large-cap company from the consumer, auto or industrial sector. The investment committee meets in six weeks. They have broker reports, but each one uses different assumptions and none shows its workings.

The chief investment officer, Mr Desai, wants an independent view he can question line by line. He has set three rules: - every number must trace back to a published annual report, an exchange filing or a stated assumption; - the model must show the value per share under a base, a weak and a strong case; - the memo must say what has to be true for the share to be worth more than today’s price.

You pick the company. It must have at least five years of annual reports on the BSE or NSE website or its own investor page, and it must not be a bank or insurer, because those need a different method.

Your work will be a five-year free cash flow forecast, a cost of capital you can defend, a terminal value, sensitivity tables on growth, operating margin and WACC, and a three-page investment memo. Mr Desai will judge it on whether the assumptions are sensible and sourced, whether the model is free of errors, and whether the memo is honest about what could go wrong. He does not want a buy call dressed up as analysis.