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Assume a stock is currently selling for Rs 44.62 per share at the start of 2022. For this company, the analysts' consensus regarding annual growth
Assume a stock is currently selling for Rs 44.62 per share at the start of 2022. For this company, the analysts' consensus regarding annual growth rate of dividend is 4.6%, and it is likely to remain constant for the foreseeable future. The dividend payment for next year is expected to be Rs 1.74 per share. The company currently has total assets of Rs 18 million, with an asset turnover of 1.2. The firm's total number of shares outstanding is 500,000. The company's ability to pay all its liabilities using its total assets is decent having Rs 1.5 of assets for every rupee of liabilities (or company's total liabilities to total assets ratio is 0.67). The company's current net profit margin is 7%. A. Considering the above data is going to hold for the foreseeable future, compute whether the stock is currently undervalued or overvalued using dividend discount valuation model. (5) B. Are the analysts estimate regarding the growth rate of the company in line with the growth rate as per the financial statement data given above. Show calculations to support your
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