NEW DELHI INSTITUTE OF MANAG

EMENT
PAPER 403
PGDM PROJECT STUDY PROPOSAL

SYNOPSIS

1. Name of the Student : Sanket Bansal

2. Roll No. : 460

3. Major 1 Area of Specialisation : Finance

4. Major 2 Area of Specialisation : Marketing

5. Title of the Project (in Major 1 Area) : Share Valuation using

DCF method
 S. Table of Contents
N. Page
No

6. Abstract 1

7. Chapter Design 2

8. Organisation / Industry etc. under 3

reference

9. Methodology to be followed 3

10. Sources of Data 3

11. Bibliographical References 3

______________________ ______________________
_____________________________
(Signature of the Student) (Signature of the Guide)
(Signature of the Director/Registrar)
Date: Date: Date:
6. Abstract:

A discounted cash flow (DCF) is a valuation method used to estimate the

attractiveness of an investment opportunity.DCF analysis uses future free cash
flow projections and discounts them to arrive at a present value estimate, which is
used to evaluate the potential for investment. If the value arrived at through DCF
analysis is higher than the current cost of the investment, the opportunity may be a
good one. DCF model is also known as Discounted Cash Flows Model.There are
several variations when it comes to assigning values to cash flows and the discount
rate in a DCF analysis. But while the calculations involved are complex, the purpose
of DCF analysis is simply to estimate the money an investor would receive from an
investment, adjusted for the time value of money. Discounted cash flow (DCF)
analysis is a method of valuing a project, company, or asset using the concepts of
the time value of money. All future cash flows are estimated and discounted by
using cost of capital to give their present values (PVs). The sum of all future cash
flows, both incoming and outgoing, is the net present value (NPV), which is taken as
the value or price of the cash flows in question.Using DCF analysis to compute the
NPV takes as input cash flows and a discount rate and gives as output a present
value; the opposite processtakes cash flows and a price (present value) as inputs,
and provides as output the discount ratethis is used in bond markets to obtain
the yield.Discounted cash flow model is used in this project to make a research of
the valuation of shares of 5 FMCG companies and thereby present the analysis of it.

1
7. Chapter Design :

i) Objective of the study: a) Understanding the concept of Discount Cash

Flow Model
b) Understand how to use its result for investment
purpose.
 c) Understand how to take buy or sell decision by using
Discount Cash Flow model.
d) Analyse, compare and interpret the price of shares in
between the current market price and the calculative
theoretical price
e) Understanding the limitation of Discount Cash Flow
Model

ii) Introduction : Discounted cash flow (DCF) analysis is a method of

valuing a project, company, or asset using the concepts of the time
value of money. All future cash flows are estimated and discounted by
using cost of capital to give their present values (PVs). The sum of all
future cash flows, both incoming and outgoing, is the net present
value (NPV), which is taken as the value or price of the cash flows in
question.Using DCF analysis to compute the NPV takes as input cash
flows and a discount rate and gives as output a present value; the
opposite processtakes cash flows and a price (present value) as
inputs, and provides as output the discount ratethis is used in bond
markets to obtain the yield.

iii) Literature Review: The capitalist system: M-C-M. The capitalist starts with
money (M) that is the essence for investment process.
Investment is essential for the functioning of the capitalist
system. Investors provide money to entrepreneurs that build
businesses to produce goods and services demanded by society.
In return, the investor is compensated with a share of profits of
the business. An investment can therefore be defined as the
current commitment of funds for a period in order to derive
future payments that will compensate the investor for the time
the funds are committed, the expected rate of inflation and the
uncertainty of future payments or risk.

iv) Research Methodology: The study is based on secondary analytical

research where, the intrinsic value of 5 different stocks
from FMCG are calculated and is compared with the
current market price to find whether the stock is
overvalued/ or undervalued/ Fair valued in the Indian
stock markets.

v) Analysis & Interpretation: After collection of data calculation will be

done with the help of excel functions and formulas after
which it can be analysed and interpret according with the
result.
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8. Organisation / Industry etc. under reference : NA

9. Methodology to be followed : Secondary Research-

a) Collection of data from
moneycontrol website
b) Collection of data from NSE website
c) Calculation and evaluation of data
by using several functions and
formulaes of MS-Excel d) Getting
final result with the help of MS-Excel
through various functions and charts
e) Analysis and interpretation of data
f) Take the final decision

10. Sources of Data : 1. http://www.moneycontrol.com/

2. https://www.nseindia.com/

11. Bibliographical References

1. Karl Marx (Marx, 1887),Capital System M.C.M :Capital, Volume I: The

Process of Production of Capital

2. Lutz Kruschwitz, Andreas Lffler(2006), Discounted Cash Flow: A Theory of

the Valuation of firms

3. Benjamin Graham(1949),The Intelligent Investor

4.Tim Koller, Marc Goedhart and David Wessels ,Valuation: Measuring and
Managing the Value of Companies
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