Report on

Valuation of Rangpur Dairy & Food Product Ltd.

Submitted to
Khairul Alam Siddique
Lecturer
Department of Finance
Faculty of Business Studies
University of Dhaka

Submitted by
Suma Akter Santa
ID: 23-074
Section-A
BBA 23rd Batch
Department of Finance
University of Dhaka

Date of Submission: 12-02-2020

i
 LETTER OF TRANSMITTAL

12 February, 2020
Khairul Alam Siddique
Lecturer
Department of Finance
Faculty of Business Studies
University of Dhaka
Subject: Letter regarding submission of Report on “Valuation of Rangpur Dairy & Food Product
Ltd.”.

Dear Sir,
Here is the report on “The valuation of Rangpur Dairy & Food Product Ltd.” as you assign me to do for
the course of F-307. It is a great pleasure for me to submit this report. I have concentrated my best efforts
to achieve the objectives of the Report and hope that my endeavor will serve the purpose. I sincerely
believe that the knowledge and experience I have gathered during the preparation of the Report will
immensely help me in my future professional life.
I thank you for providing me with this opportunity and hope that you will approve my submission
cordially.

Faithfully yours
Suma Akter Santa
Id: 23-074 Section-A
Department of Finance
Faculty of Business Studies
University of Dhaka

Table of Contents

ii
Executive Summary....................................................................................................................................iv
Introduction.................................................................................................................................................5
Why analysts make valuation?................................................................................................................1
Objective of the Report............................................................................................................................1
Scope of the Report.................................................................................................................................2
Limitations of the Report.........................................................................................................................2
TOP-DOWN Approach...............................................................................................................................3
Economic analysis...................................................................................................................................4
Industry Analysis.....................................................................................................................................5
Company analysis....................................................................................................................................8
Generic Strategy of RDFood Ltd...............................................................................................................11
Sources of competitive advantage.............................................................................................................13
VRIN Model..............................................................................................................................................13
Ansoff Matrix............................................................................................................................................14
BCG Matrix...............................................................................................................................................15
Relative valuation model...........................................................................................................................17
Suggestion.................................................................................................................................................19
Conclusion.................................................................................................................................................21
Appendix...................................................................................................................................................21
Appendix-1: Income statement..............................................................................................................22
Appendix-2: Balance sheet....................................................................................................................22
Appendix-3: Pro-forma Income statement.............................................................................................23
Appendix-4: Pro-forma Balance sheet...................................................................................................23
Appendix-5: Projected Change in Working Capital...............................................................................24
Appendix-6: Projected Free Cash..........................................................................................................24
Appendix-7: Beta Calculation...............................................................................................................25
Appendix-8: Projected Dividend...........................................................................................................25
Appendix-9: DDM.................................................................................................................................25
Appendix-10: Calculation of WACC.....................................................................................................25

iii
 Executive Summary
I was asked to make a report on “Valuation of Rangpur Dairy & Food Product Ltd.”. For that
reason, I have followed the process of different valuation method such as absolute valuation
which includes DDM and FCFF model and relative valuation which includes P/E, P/B, P/S and
P/CF along with company analysis, industry analysis, economic analysis, financial analysis.
At first I have tried my best to identify the required data that is needed obtain the valuation of
RDFood Ltd. RDFood is one of the country’s light manufacturing company and its market share
is also lucrative for the investor and so valuation of this company is important to determine what
is the company’s actual worth.
I have shown the ratio analysis of RDFood for 5 accounting period. With the help of FCFF, RE
and DDM I have valued the company for 5 upcoming years with the current period. For relative
valuation I have needed to compare some common factor with the peer company. I have selected
AMCL (Pran) Ltd. for doing relative valuation. On the basis of the information I have got the
relative valuation of RDFood. After doing many analysis and based on relative valuation I have
reached in the conclusion and give some suggestion for the investors that weather they should
buy or sell the shares of RDFood.
I have tried my best to analyze the financial information to get the company’s true valuation.

iv
Introduction

v
Why analysts make valuation?
Valuation determines the economic value of a business, asset or company. Although the goal is
to determine the fair market value, there is no one way to be certain of the ultimate price paid.
Typically, it depends on many factors including industry, sector, valuation method and the
economic conditions. A company need to be valued if it is being bought, sold, or liquidated.
Sometimes a company must provide a value of its assets or company as a whole to raise debt
also. A valuation professional typically employs the financial statements, cash flow models, and
market analysis. In other words, they are going to look at the discounted cash flow market
valuation multiples, and comparable transactions. A strategic buyer will also value a company.
For all this reasons it is important for an analyst to do valuation of a company.

Objective of the Report

I prepare this report to show how valuation affects a company’s investment. Other objectives of
the report are as follows:
 To create efficient plans to guide a company’s growth.
 To provide direction.
 To reduce risks of uncertainty.
 To reduce wasteful investment activities.
 To promote innovative ideas about the company’s future investment.
 To facilitate decision making.
 To maximize the company’s and its shareholders value and wealth

Methodology
In this report I use secondary data. The data source is mainly secondary data sources.
 Gathering data from the organization’s website and other related websites
 Use of theoretical data from textbooks referred by our course instructor,
 Implementing the theoretical and practical knowledge

vi
Scope of the Report
The scope of this report paper is limited to the financial activities of RDFood ltd and valuation of
the firm. I have analyzed the secondary data that I have collected from the company website and
tried it to relate with my assigned topic.

Limitations of the Report

Research work is very much comprehensive. It is an accumulation of both information and
creative thinking. It is true that I got help from the website. But still I have faced some problems.
As I am really new in this field and it is my first report regarding valuation of a firm; I felt lack
of experience in every stage of my work. But I tried my level best to overcome this. In this
respect there may be some lacking in the report because of my knowledge limitation. I tried to
write the report in a sequential way but there may be some problems in the sequence of the report. But
all these errors are totally unintentional. At the end we are very happy to present this report to the readers
and its success will depend on the positive response.

vii
TOP-DOWN Approach

viii
Economic analysis
Economy is a crucial factor for any company. Based on the variations of economy every firm’s
performance differs. People of a country shape their demand, living standard, and ways of
spending, savings and investment depending on the economic condition they are experiencing. A
company’s investment will be worthless if people don’t have demand for the product or defer
their demand due to economic compression. Economy analysis consist of various factors such as
its changing nature, threats posing, and shading light of new opportunity for the company and try
to provide a futuristic look for the investors.
The economy of Bangladesh is on the growing trend with a positive near-term macroeconomic
outlook. The latest Development Indicators show that our economy is having declining inflation,
rising reserves, constant fiscal deficit and stable public debt along with a small variation with
previous years. Indicating a greater private investment in the economy, Private sectors have
maintained steady growth. Both domestic and external factors pose downside risk forth
economy. Also there is a declining trend on both demand and supply in international
competitiveness.

Future GDP growth rate

With the expectation that exports will grow, the GDP growth forecast for FY2020 is revised
somewhat higher (7.5%) than FY 2019. But as per Bangladesh bank, estimated GDP growth for
the FY-2020 is 8.2%, which is not contradictory to our monetary policy. Supporting the target,
Finance Minister, said the GDP may grow by 7.5%. Strong expansion in remittances will boost
consumption demand. Private and public investment will pick up as the business climate
improves under stabilizing political situation, and spending will increase under the annual
development program.
The Asian Development Outlook (ADO) projection higher inflation for the upcoming FY2020 is
6.5% which is higher than FY2019 which was 5.5%. But Bangladesh bank targeted to contained
inflation rate within the targeted ceiling of 5.5% for the FY2020. Looking forward, according to
our economic model Bangladesh estimation for export is projected to trend around 270.00BDT
Billion in FY2020.

ix
Industry Analysis

Industry overview
The milk industry has a few segments. Firstly, there are fresh milk and powder milk. Secondly
there are flavored milk segment. Finally there milk product like ghee, butter etc. among this
segment liquid and powder milk segment is the largest and is quite competitive. Competition
between liquid and powder milk is based on price and quality, and they act as substitute. While
powder milk importers focuses on creating brand image, the liquid milk importers focuses on
product purity and freshness of milk. Among the liquid milk producers, the two broad categories
are pasteurized and UHT milk. These two are basically different process of purifying milk from
bacteria. In Bangladesh all but three plants are pasteurizes. This plant requires less fixed capital
plants than UHT plants. But UHT plants provide products with longer shelf life and better
quality. Still, UHT process milk is a new concept to local users and will take some times before
establishing solid position. Again milk has a nutrition value to all human being, so the possibility
in decrease in demand is less.

Industry Life Cycle

There are five stage of industry life cycle, such as:
i. Pioneering developer
ii. Early growth
iii. Mature growth
iv. Stabilization
v. Decline
Pioneering developer (1814 to 1932): In this phase most of the industry can’t survive for many
reasons like negative profit margin, high risk, limited asset turnover and volatile sales growth
rate. In this phase there is no supply chain management. But RDFood was not established on that
time.
Early growth (1933 to 1999): In this phase risk is lower than earlier, asset turnover is limited,
sales are growing but profit margin is still negative. RDFood was not established at that time.

x
Mature growth (1999 to 2008): In this phase RDFood started its business as a private limited
company and continued it with profit every year by improving efficiency, innovation, strong
supply chain management, low risk, optimum asset turnover, growing but stable sales growth
rate, high profit margin etc. As this was the beginning phase of this company so it faced a lot of
problems but despite all these problems the company gone ahead and incorporated as public
limited company.
Stabilization (2008 to present): Now RDFood belongs to stabilization phase. Because now
RDFood’s profit margin is positive, risk is very low, asset turnover is stable, sales growth rate is
also stable.
Decline: New innovation, technological advancement may decline this industry. RDFood may
survive for many years as this is a healthy and hygienic products provider.

Industry Value Chain

Porters Five Forces Model

Porter's five force analysis is:
1. Threats of new entrants: The threat of new entrants are very much high because of high
competitors. On the other hand, new companies are allowed to enter in the market with the valid
licenses.
2. Threat of substitutes: there are so many threats of substitute are in involved in this stage as the
RDFood having various competitors. Many companies are also producing the same products, so
the RDFood need to aware of the product quality. Otherwise consumers may be switch to other
companies.
3. Bargaining power of Buyers: The bargaining power of buyer is too much high because of the
high population with different categories of the consumer level. The consumers can bargain the
prices of the products and services.

xi
4. Bargaining power of suppliers: Bangladesh is based on agriculture country where the
bargaining power of the supplier is low. There are so many suppliers are available who are
providing raw milk and other material for producing foods.
5. Current Rivalry: There are some of the companies are also having same products. Now
RDFood is facing very much rivalry at the present time in Bangladesh. So now the current
rivalry is very high here in Bangladesh.

Competitive force Threat of Industry Profitability

Low Medium High
Threat of Substitutes - - High
Threat of new entrance - - High
Rivalry among existing firms - Medium -
Bargaining power of suppliers Low - -
Bargaining power of buyers High - -

Table-1: Summary of Porters Five Forces Model of RDFood Ltd.

xii
Company analysis

Business overview:
Food industry is a rapidly growing sector of Bangladesh, employing a significant portion of labor
force in the country. Agriculture has always served a vital role in BD economy in terms og GDP
contribution, employment generation, rural development and food security. Bangladesh has
dense and large population and agriculture in there mainstay. Alternative options for livelihood
improvements are also limited. Thus, agriculture development is the top of the agenda for
government and all their development concerns to bring prosperity in our county.

Company at a Glance:
Rangpur Dairy & Food Products Limited commonly known as RD Milk was incorporated in
Bangladesh on March 16, 2004 with registration no- C-52012(2307)/2004, as a Private Limited
Company under The Companies Act 1994. It has started commercial operation on 14th April,
2007 by establishing its factory at Salaipur, Baldipur, Rangpur on 935 decimal land owned by
the Company. The location of the factory is on the Dhaka Rangpur Highway and 15 KM to the
Rangpur Municipality. The company was established under the EEF assistance of Bangladesh
Bank and project loan from NCC bank. Presently authorized capital of the Company is BDT
1,000 Million and paid up capital stands at BDT 723.5 Million. Two entrepreneurs of diverse
background are the major sponsors of the Company. The Company introduced UHT technology
with Aseptic Pouch Packaging for the first time in Bangladesh in manufacturing and marketing
of fresh milk, flavored milk and other by-products. In 2008 it introduced candy production under
the same brand name. Its annual milk processing capacity is 21.90 million liters under two shifts
of operation. The brand names of the products are “RD”Milk.

Nature of Business:
To produce or manufacturer Ultra High Temperature or UHT Fresh milk, pasteurized and
flavored milk, ghee, butter, milk candy and chocolate candy and milk products and marketing the
same in the domestic market.

xiii
Major Milestones of the Company:
2004: Incorporated as Private Limited Company
2005: Approval of EEF fund
2007: Started commercial operation with 9,500 Liter/per day
2008-09: Expansion of production capacity to 17,000 Liter/day; packing capacity: 25,000
Liter/day
2008: Introduction of Candy production
2010: Conversion to Public Limited company

Information about Directors:

Serial no. Name of Directors Present position name
1 Mrs. Runana Kabir Chairman
2 Mr. M.A. Kabir Managing Director
3 Mr. Fahim Kabir Director
4 Ms. Afrida Farnaz Director
5 Mr. Abu Hena Islam Director
Table-2: Information about directors of RDFood Ltd.

Vision:
 Bringing prosperity among rural families of Bangladesh through co-operative efforts and
providing customers with hygiene, affordable and convenient supply of fresh and healthy
food products.
Mission:
 To be the market leader in dairy industry by providing high quality dairy brand to the
market.
 To achieve this for delighting customers by providing “fresh and healthy” products with
high quality and improve nutrition standard.
 To be a preferred employer by nourishing entrepreneurship, managing career aspiration
and providing innovation avenues for employ with enhance prosperity.
 They are committed to enhance prosperity and empowerment of the firming community
through their unique relationship farming model.

xiv
Principal products and services:
The project introduced a range of products from local fresh milk. Products are:
UHT Fresh Milk: UHT processed market milk is produced under extreme hygienic condition
supported by latest processing technology to enhance the shelf life of the final product up to 3 to
6 months without cooling chain. This advance process technology has allowed the product to be
marketed in sub urban or rural area where there is not enough cooling facility.
UHT Flavor milk: The plant is also processed Mango and Banana Milk adding real fruit
compound from ORANA A/S, Denmark. Demands of these nutritious products are also
increasing very fast. The company has planned to launch more such products of local market
taste such as Jack Fruit Milk, Caramel Milk, and Coffee Milk etc
Premium Ghee & Laccha shemai: The project can also produce Ghee & Laccha shemai of local
taste to cater the consumer requirement of products making out of fresh milk.
Candy: Realizing the fact that Candy has a big market in the country and growing very fast, RD
introduced candy items in its product line.
Snacks: The demand of different types of snacks to different group of customer is increasing day
by day. For this reason the company started to make and sell of different quality snacks. Like-
Potato Chips, Jhalmuri, Chanachur, Fried dal, Fried motor, Special toast biscuits etc
Drinks: The Company now prepares and sells various types of soft drinks and Soft drink powder
for various ages of its customer. These drinks are getting popular day by day.

xv
Production & quality control:
Management is fully concerned of the operational activities performed throughout the year under
review. The market for food and beverage is significantly becoming competitive in recent years.
Products are diversified according to the customers’ requirements and eagerness.

Generic Strategy of RDFood Ltd.

Generic strategy describes how a company pursues competitive advances across its chosen
market scope. There are four generic strategies which are cost leadership, differentiation, cost
focus and differentiation focus.

Better financial strategy approach:

The better financials element of their strategy has fit their pillars, which focus us on faster-
growing markets and categories and enable them to outperform:
Organization: Organizing their business into two geographical areas helps them to allocate
resource and scale innovations. They continually evolve their organization, to ensure fast
decision making and execution.
Power brands: RDFood invests heavily in their focused portfolio market-leading power brands.
They provide over 70% of their revenue and offer higher revenue growth and margins.
Virtuous earnings model: They focus on higher-margin initiatives and rigorous control of their
costs. Through their virtuous earnings model, this funds their investment in their brands,
capabilities, and development, and enables them to deliver operating margin expansion.

Better Environment strategy approach:

The better environment element of their strategy sets out how they minimize emissions, water
use, and waste.
Greenhouse gas emissions: They reduce their emissions through manufacturing process
improvements, energy efficiency programs, investing in renewable technologies and procuring
electricity from renewable strategies. They also consider how they can reduce the carbon
footprint of their products during their innovation process.
Water: They seek to reduce their products’ water impact throughout their life cycle, from raw
materials to the way they are manufactured, used and disposed of. They also consider how they

xvi
can reduce their water consumption in manufacturing facilities, especially for water-scarce
regions.
Waste: They look to reduce their manufacturing waste. They have created a culture of zero
waste and seek new waste-related revenue streams and disposal options. Their aim is for none of
their waste to go to landfill.
Sourcing: They believe in their natural raw materials responsibly. Their policy defines the
minimum standards expected of their suppliers.

Better Society strategy approach:

A better society is about how they meet their responsibilities in the workplace and in their
communities, as they will as in relation to their products:
Workplace: They attract great people, give them global experiences in a unique culture, and
inspire them with stretching performance-based rewards. They look after their people and
contractors through high health and safety and human rights standards in addition to their Code
of Business Conduct. They expect suppliers to take similar care.
Healthier lives: How they improve Health and Hygiene behavior through their products, brand
educational programs, and corporate social investment.
Products: They advance health, consumer safety, and environmental protection by optimizing
their products and aim to increase the proportion of their revenue that comes from more
sustainable products.

Sources of competitive advantage

Rangpur Dairy and Food Product Limited’s source of competitive advantage is Differentiation.
The company does it by using a different plant for manufacturing than other competitors which
is UHT (Ultra-high-temperature) plant. This plant is very rare in Bangladesh. Only three dairy
and food product companies use this plant. UHT plant provides better quality than other plant.
As this plant is very rare in Bangladesh so it becomes harder for competitors to provide that
much quality of food to customers. Again, UHT plant has longer shelf life than others. So it
reduces the cost of buying plant few often.

xvii
 VRIN Model
Valuable?
RDFood’s prime raw material is raw milk from cows and it is procure from different district of
Bangladesh. It generally contributes to an economic improvement of rural livelihood by means
of employment generation and overall improvement of rural localities. They also import some
raw material from other countries which helps the country to generate more foreign currency.
The company believes in providing long run sustainable benefit. The company also uses UHT
plant that helps it to reduce cost. By this they differentiation than other companies and create
value for customers as well as for the country.
Rare?
With modern lab facility qualified foreign chemist RDFood performs pre-sale and post-sale taste
for every batch of production. For quality assurance RDFood tested fresh milk on various stages.
Chemist of the company conduct the comprehensive test on fat, acidity, alcohol, COB to ensure
high quality and to preserve original taste.
Costly to imitate?
RDFood produce 25 food products in 5 food categories delivering throughout the country. It will
be costly small competing companies to provide foods throughout the country. The company
uses UHT plant which is also rear in Bangladesh and costly for the competing companies to
make all arrangements for using it.
Organized to capture value?
RDFood organizes its management systems, processes, policies, organizational structure and
culture. it Is able to fully realize the potentials of its valuable by creating value for customers,
suppliers and country and also costly to imitate resources capabilities by using a rare plant. But
the company is not rare.
Sustained competitive advantage?
No, as the company does not organize to capture all the values so RDFood has “Temporary
competitive advantage”.

xviii
 Ansoff Matrix
The Ansoff Matrix is a strategic planning tool that provides a framework to help executives,
senior managers, and marketers devise strategies for future growth. It is named after Russian
American Igor Ansoff, an applied mathematician and business manager, who created the
concept. It is a strategic planning tool used to analyze and generate four alternative directions for
the strategic development of a business or corporation. There are four market strategies
according to it and those are:
1. Market penetration: It is adopted as a strategy when the firm has an existing product
and needs a growth strategy for an existing market. When the competition is higher it
becomes crucial to go out of the way to increase firm’s market share. By using market
penetration, firm’s ensured that only the existing resources of the firm are used and no
extra costs need to be incurred. There needs to be a combination of marketing and
sales promotion if it wants to grow in an existing market with an existing product.
2. Market development: Market development is the second market growth strategy which
can be adopted as per the Ansoff’s matrix. The market development strategy is used
when the firm targets a new market with existing products.
3. Product development: It refers to firms which have a good market share in an existing
market and therefore might need to introduce new products for expansion. Product
development mainly happens when the firm has a good customer base and it knows that
the existing product market has reached saturation.
4. Diversification: It is a strategy used in the Ansoff’s matrix when the product is
completely new and is being introduced in a new market. Diversification should be taken
as a last option and should be adopted only when the company is very strong financially.
In case of Diversification, both product and market are new and hence the amount of
investment required would be high thereby considerably increasing the risk factor.

xix
Ansoff Matrix of RDFood Ltd.

BCG Matrix
BCG matrix (or growth-share matrix) is a corporate planning tool, which is used to portray
firm’s brand portfolio or SBUs on a quadrant along relative market share axis (horizontal axis)
and speed of market growth (vertical axis) axis.  It is a framework created by Boston Consulting
Group to evaluate the strategic position of the business brand portfolio and it’s potential. It
classifies business portfolio into four categories based on industry attractiveness and competitive
position. There are four categories of it and those are:

1. Stars: Stars operate in high growth industries and maintain high market share. Stars are
both cash generators and cash users. They are the primary units in which the company
should invest its money, because stars are expected to become cash cows and generate
positive cash flows. 

xx
 2. Question marks:  Question marks are the brands that require much closer consideration.
They hold low market share in fast growing markets consuming large amount of cash and
incurring losses. It has potential to gain market share and become a star, which would
later become cash cow.
3. Cash cows: Cash cows are the most profitable brands and should be “milked” to provide
as much cash as possible. The cash gained from “cows” should be invested into stars to
support their further growth. According to growth-share matrix, corporate should not
invest into cash cows to induce growth but only to support them so they can maintain
their current market share.
4. Dogs: Dogs hold low market share compared to competitors and operate in a slowly
growing market. In general, they are not worth investing in because they generate low or
negative cash returns.

BCG matrix of RDFood Ltd.

Relative market share

High Low

Stars Question Marks

High

Market
Growth
Rate
Cash Cow Dogs

Low

xxi
 Relative valuation model
Relative valuation model is a business valuation method that compares a company's value to that
of its competitors or industry peers to assess the firm's financial worth. It examine what a
company is worth compared to its competitors. There are four major methods of relative
valuation model. These are:
1. Price to earnings valuation model
2. Price to book value valuation model
3. Price to sales valuation model
4. Price to cash flow valuation model
Price to earnings valuation model:
The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current
share price relative to its per-share earnings. The price-earnings ratio is also sometimes known as
the price multiple or the earnings multiple. Calculated as:
Market Value per Share / Earnings per Share.
Price to book value valuation model:
The price-to-book ratio (P/B Ratio) is a ratio used to compare a stock's market value to its book
value. It is calculated by dividing the current closing price of the stock by the latest
quarter's book value per share. It is also known as the "price-equity ratio". Calculated as:
P/B Ratio = Market Price per Share / Book Value per Share
Where, Book Value per Share = (Total Assets - Total Liabilities) / Number of shares outstanding
A lower P/B ratio could mean that the stock is undervalued. However, it could also mean that
something is fundamentally wrong with the company. As with most ratios, be aware that this
varies by industry.
Price to sales valuation model:
A stock's price/sales ratio (P/S ratio) is another stock valuation indicator similar to the P/E ratio.
The P/S ratio measures the price of a company's stock against its annual sales, instead of
earnings. Like the P/E ratio, the P/S reflects how many times investors are paying for every
dollar of a company's sales. Calculated as:
P/S Ratio = stock price per Share /net sales (revenue) per Share

xxii
Price to cash flow valuation model:
The price-to-cash-flow ratio is a stock valuation indicator that measures the value of a stock’s
price to its cash flow per share. The ratio takes into consideration a stock’s operating cash flow
(OCF) which adds non-cash earnings, such as depreciation and amortization, to net income. It is
especially useful for valuing stocks that have positive cash flow but are not profitable because of
large non-cash charges. Calculated as:
P/CF Ratio = share price / cash flow per share.

Relative Valuation of RDFood Ltd.

For doing relative valuation I have taken AMCL with Rangpur Food & Dairy limited as Peer
Company because most of the products of RD Food limited are similar to AMCL products and
both of the company is belongs to same category of Dhaka Stock Exchange (DSE).
Key assumptions:
 AMCL-PRAN is actually peering to RDFood.
 Compared stocks are fairly valued by the market.

Table-3: Relative valuation of RDFood vs. AMCL.

xxiii
 Suggestion

Decision based on Price/Earnings Ratio:

Current Price Price should be Status Decision

14.1 11.22 Overvalued Investors should sell RDFood’s shares.

Decision based on Price/Book Value Ratio:

Current Price Price should be Status Decision

14.1 33.4 Undervalued Investors should buy RDFood’s shares.

Decision based on Price/Sales Ratio:

Current Price Price should be Status Decision

14.1 4.24 Overvalued Investors should sell RDFood’s shares.

Decision based on Price/Cash flow Ratio:

Current Price Price should be Status Decision

14.1 4.1 Overvalued Investors should sell RDFood’s shares.

xxiv
 Conclusion
In this report I tried to find the share value of RDFood Ltd. using FCFF model, DDM model, and
Relative valuation model. RDFood Ltd. intrinsic value using FCFF model value per share is
28.65 and market value per share is14.1. Here I see that market is currently undervaluing. AMCL
which will be overtime adjusted and price will rise. So, an investor should buy RDFood Ltd’s
stock of share. Under relative valuation model decision based on price/ earnings ratio current
price is 14.1 and price should be 11.21 Investors should sell RDFood Ltd’s shares, decision
based on price/book value ratio price should be 33.37 and market price is 14.1. Investors should
buy RDFood Ltd’s share. Decision based on price/ sales ratio, market price should be 4.24 and
current price is 14.1, Investors should sell RDFood Ltd’s share.

xxv
Appendix

xxvi
Appendix-1: Income statement of RDFood Ltd. From 2014-2019

Appendix-2: Balance sheet of RDFood Ltd. From 2014-2019

xxvii
Appendix-3: Pro-forma Income statement of RDFood Ltd. From FY2019-20
to 2023-24

Appendix-4: Pro-forma Balance sheet of RDFood Ltd. From FY2019-20 to

2023-24

xxviii
Appendix-5: Projected Change in Working Capital of RDFood Ltd. From
FY2019-20 to 2023-24

Appendix-6: Projected Free Cash Flow and Valuation of RDFood Ltd. From
FY2019-20 to 2023-24

xxix
Appendix-7: Beta Calculation of RDFood Ltd. From FY2015 to 2018-19

Appendix-8: Projected Dividend of RDFood Ltd. From FY2019-20 to 2023-24

Appendix-9: DDM (Dividend Discount Model) of RDFood Ltd.

xxx
Appendix-10: Calculation of WACC of RDFood Ltd.

xxxi