ECONOMYNEXT – Melstacorp Limited (MCRP), currently a 100% subsidiary of Distilleries Company of Sri Lanka, which will become the latter’s parent in a share swap, is to be listed on the Colombo bourse at a reference price of Rs69.
According to a stock exchange filing, the fair value of MCRP’s share ranges from Rs65.52 to Rs74.94 with an average price per share of Rs69.78, based on several valuation methodologies used.
The valuation, done by brokerage CT CLSA Capital (Pvt) Ltd., used the Relative Price to Earnings Method (PE), Relative Price to Book Value Method (PBV), Market Price Method and the Sum of the Parts Method (SOTP), to derive a fair value for MCRP.
“SOTP and PE are the two preferred valuation methods for a conglomerate where the value is driven as a combination of business units,” the research report said.
Discounted Cash Flow (DCF) valuation was used to value the beverage segment of the group within the SOTP method.
With MCRP group having two companies in the financial services sector, DCF valuation was considered less applicable for MCRP overall.
According to a stock exchange filing, the fair value of MCRP’s share ranges from Rs65.52 to Rs74.94 with an average price per share of Rs69.78, based on several valuation methodologies used.
The valuation, done by brokerage CT CLSA Capital (Pvt) Ltd., used the Relative Price to Earnings Method (PE), Relative Price to Book Value Method (PBV), Market Price Method and the Sum of the Parts Method (SOTP), to derive a fair value for MCRP.
“SOTP and PE are the two preferred valuation methods for a conglomerate where the value is driven as a combination of business units,” the research report said.
Discounted Cash Flow (DCF) valuation was used to value the beverage segment of the group within the SOTP method.
With MCRP group having two companies in the financial services sector, DCF valuation was considered less applicable for MCRP overall.
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