Cash Flow Valuation Technique

The aim of this research is to empirically enquire into how to value a company using discounted cash flow valuation technique within its real life context in an uncertain environment of emerging markets, to what extent theoretical concepts are useful in valuing a company in the real world and to what extent a discounted cash flow valuation is subjective to assumptions used in arriving at the valuation. A case study approach is used to investigate the process of valuation of a company within its real life context. Robson (2002:178) defines case study as "a strategy for doing research which involves an empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence". According to Saunders et al (2007) case study strategy of research has considerable ability to generate answers to the research question „why??, „what?? and „How?? Indian Telecom sector is chosen for studying and in this sector a company is selected as a case study. After this the chosen company is valued based on the publically available information. A top down approach is used to estimate the future path of the company. First of all national and international macroeconomic factors are assessed. After that the factors related to the industry in which the company operates are analysed. Than an understanding is developed about the business of the company chosen for valuation. In this dissertation, a combination of qualitative and quantitative studies is undertaken. Qualitative analysis is used to understand the company?s strategy, industry and economic environment and to forecast future growth. Quantitative analysis is done to value the company, forecast the growth, and predict in the change in the valuation of the company with change in assumptions.