Jindal Steel and Power Valuation Excel Model and Intrinsic Value of Shares

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Jindal Steel and Power Valuation : About the Company

Jindal Steel and Power Limited is an Indian steel and energy company based in Hisar. The company is a leading player in steel, power, mining, oil, gas and infrastructure in India. It is a part of the $ 22 billion OP Jindal Group and is continuously scaling its capacity utilization and efficiencies to capture opportunities across global markets. The company operates in the metals, mining and utility industry where market dominance comes through scale, level of integration, capacity and cost structure.  From here, we go ahead with Jindal Steel and Power Valuation and Intrinsic Value of its shares.

Read more here: Jindal Steel and Power Shares Fundamental Analysis 

Methodology Used:

Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its expected future cash flows. DCF analysis attempts to figure out the value of an investment today, based on projections of how much money it will generate in the future. The following step by step procedure is followed.

  1. Determining the Revenue Growth Rates
  2. Forecasting the Financial Statements
  3. Deriving the FCFF and FCFE
  4. Calculating the Terminal Value
  5. Calculating the Discount Rate
  6. Discounting the Cashflows
  7. Arriving at the Intrinsic Value of the Shares
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You can also get the formula based DCF Excel Model from below (Use code “BDV25” to get 25% off)



Step 1: Determining the Revenue Growth Rates

We arrive at the below table by using the past and expected future performance of both the company and the economy. This along with adjustments to changes in the management expectations, extraordinary events and other macro factors give the revenue growth rates for Jindal Steel and Power Valuation.

Financial Year Revenue Growth Rate
Year 1 -5%
Year 2 3%
Year 3 15%
Year 4 8%
Year 5 5%
Revenue Growth Rates: Jindal Steel and Power Valuation

Step 2: Forecasting the Financial Statements

The financial statements are forecasted for a period of 5 years using the annual report data of the company. The assumptions used for forecasting are tabulated below. The Excel model is completely editable and can be adjusted for specific changes which may happen over a period of time.

Financial Statements Forecast : Jindal Steel and Power Valuation
Financial Statements Forecast : Jindal Steel and Power Valuation



Step 3: Deriving the FCFF and FCFE

Free cash flow to the firm (FCFF) represents the amount of cash flow from operations available for distribution after accounting for depreciation expenses, taxes, working capital, and investments. FCFF is a measurement of a company’s profitability after all expenses and reinvestments. It is given as follows.

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Free cash flow to equity (FCFE) is a measure of how much cash is available to the equity shareholders of a company after all expenses, reinvestment, and debt are paid. FCFE is a measure of equity capital usage.

F/S Items (INR Millions) Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
Free Cash Flow to Firm 22430 33119 36746 39557 42884
Free Cash Flow to Equity 402096 -81430 -37697 -38041 -29751
FCFF and FCFE values: Jindal Steel and Power Valuation

Step 4: Calculating the Terminal Value

Terminal value (TV) is the value of a business or project beyond the forecast period when future cash flows can be estimated. It assumes that a business will grow at a set growth rate forever after the forecast period. Terminal value often comprises a large percentage of the total assessed value.

Terminal Value Calculation Units INR Millions
Free Cash Flow to Firm 42884.13
Growth Rate 5.00%
Cost of Capital 14.23%
Terminal Value 488054.59
Terminal Value: Jindal Steel and Power Valuation

Step 5: Calculating the Discount Rate

DCF analysis helps assess the viability of a project or investment by calculating the present value of expected future cash flows using a discount rate. Here we use the Weighted average cost of capital (WACC) to discount the cash flow. The below table from the excel model shows the calculation of WACC for Jindal Steel and Power Valuation.

Jindal Steel and Power Valuation
WACC Calculation for Jindal Steel and Power Valuation.



Step 6: Discounting the Cashflows

The WACC and the Cost of Equity for the company calculated in the above step are then used to discount the FCFF, FCFE and Terminal Value calculated in Step 3 and 4. In our case, we’ll only consider the FCFF based Intrinsic price of the shares as it represents the cash flow to all the suppliers of capital and not only to the equity shareholders. Thus we arrive at Present value of future FCFF for Jindal Steel and Power Valuation. (Units are INR Millions)

PV of FCFF and FCFE  for Jindal Steel and Power Valuation.
PV of FCFF and FCFE for Jindal Steel and Power Valuation.

Step 7: Arriving at the Intrinsic Value of the Shares

Dividing the PV of the FCFF and Terminal Value (the Value of the entire firm) by the number of outstanding shares we get the per share intrinsic value. We can compare this price with the current market price of the stock to get the Discount or Premium to its intrinsic price.

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Jindal Steel and Power Valuation Units
PV in INR Million 365945
No of Shares Outstanding (In Million) 968
Intrinsic Value 378.04
Current Market Price of Share 233.00
Current Discount/Premium -38%
Intrinsic Value of the Shares: Jindal Steel and Power Valuation

Jindal Steel and Power Valuation and Intrinsic Share Price = INR 378.04

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References: Investopedia
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You can read more about the company on its website!
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(Note: All the research done by me is only for educational purposes and should not be seen as Investment recommendations. I am a Research analyst and not a SEBI registered Investment Advisor. My research completely reflects my personal opinions and not of my employers. Kindly do your own due diligence before Investing)



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