VALUATION OF IDEA CELLULAR

Abstract

The objective of the project is to help the investor in decision making regarding the financial position of Idea Cellular. The motive is to find out whether Idea Cellular has the strength to fulfill its obligations or not. To analyze the performance from a creditors point of view for granting credit loan, to embark upon the growth rate, to know the liquidity position and long term solvency status; To analyze the operational efficiency and to know the overall profitability of the firm. The objective of this case study is to carry out the in-depth study and analysis of Idea Cellular in order to provide insights about the company, to help decide on whether to buy or sell the share of the company. It involves building a financial model of the company in order to derive the intrinsic share price for fair valuation of the firm. The process would involve constructing a financial representation of some aspects of the firm, projecting the financial numbers of the firm, characterizing and performing calculations for making recommendations. Fundamental Analysis is used to measure the intrinsic value of the stock involving the EIC analysis. Also, the research is performed to carry out the financial statement analysis, ratio analysis, multiples analysis etc to understand how Idea Cellular works to increases the shareholder’s wealth and help an investor decide on buying or selling decision. The important findings established from the report are that the intrinsic value of the share is much higher than its market value which indicates that the actual worth of the share is more than its current selling price so the stock is undervalued and a good investor decision would be to buy and hold the stock. Also, an increasing trend in EPS suggests that Idea Cellular will outperform the market and hence the best decision at the moment is to buy and hold the stock.