ANVESHAK-International Journal of Management

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Intrinsic Valuation by Two Stage Growth Model:Study of Oil Marketing Companies in India


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1 L. J. Institute of Management Studies, Ahmedabad, 382210, Gujarat, India
     

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In capital market many fundamental valuation methods are used by financial analysts and professionals to value stocks and explore their performance over time and various economic conditions. This research work is done to know about the intrinsic value of shares of Oil marketing companies listed on NSE by applying Two- Stage Growth Dividend Discount Model. For the analysis intrinsic values of four companies; Reliance Industries, Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL) are calculated and compared with their market prices. This comparison determines whether the stock is overvalued or undervalued and investors can take decision regarding investment in particular stock. From the study it was found that the equity prices of selected oil marketing companies are undervalued in the Indian stock markets after comparing the intrinsic values of the stocks found in the study by Two-Stage Growth Model.

Keywords

Dividend Discount Model, Intrinsic Value, Market Price Valuation.
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  • Intrinsic Valuation by Two Stage Growth Model:Study of Oil Marketing Companies in India

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Authors

Disha Mehta
L. J. Institute of Management Studies, Ahmedabad, 382210, Gujarat, India
Sweety Shah
L. J. Institute of Management Studies, Ahmedabad, 382210, Gujarat, India

Abstract


In capital market many fundamental valuation methods are used by financial analysts and professionals to value stocks and explore their performance over time and various economic conditions. This research work is done to know about the intrinsic value of shares of Oil marketing companies listed on NSE by applying Two- Stage Growth Dividend Discount Model. For the analysis intrinsic values of four companies; Reliance Industries, Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL) are calculated and compared with their market prices. This comparison determines whether the stock is overvalued or undervalued and investors can take decision regarding investment in particular stock. From the study it was found that the equity prices of selected oil marketing companies are undervalued in the Indian stock markets after comparing the intrinsic values of the stocks found in the study by Two-Stage Growth Model.

Keywords


Dividend Discount Model, Intrinsic Value, Market Price Valuation.

References





DOI: https://doi.org/10.15410/aijm%2F2018%2Fv7i1%2F119883