A REPORT

ON
“Stock valuation of National Tube Ltd”
 A Report
On
“Stock valuation of National Tube Ltd”
Course Name: Financial Statement Analysis & Valuation
Course Code: F-401

SUBMITTED TO
Dr. Mahmood Osman Imam
Professor
Department of Finance
Faculty of Business Studies
University of Dhaka

SUBMITTED By
GROUP: 3
Section: A
Batch: 19th
Department of Finance
University of Dhaka

Date of Submission: 03.05.2016

 Group profile

SL.No. ID NO. Name Remarks

1 19-017 Khadiza Hossain
2 19-025 Rubel Hossain
3 19-043 Md. Abul Ala
4 19-073 Shamim Hasan
5 19-079 Quazi Nur Alam
 Acknowledgement

First of all we express our gratitude from heart to the Beneficent, the Merciful, & Almighty
Allah for giving us the strength and patience to prepare this report within the programmed time.

We would also like to thank the employees of Brac Bank for their generous help.

We are deeply indebted to our course teacher, Dr. Mahmood Osman Imam, Professor,
Department of Finance, University of Dhaka for his cooperation and precious contribution in
preparing the report.
LETTER OF TRANSMITTAL

May 03, 2016

Dr. Mahmood Osman Imam
Professor
Department of Finance,
Faculty of Business Studies,
University of Dhaka.

Subject: Submission of Report entitled to “Stock valuation of National Tube Ltd.”

Dear Sir,
It is an immense pleasure for us to submit the Report on “ Stock valuation of National Tube Ltd”
which is prepared as a partial requirement of the course named “Financial statement analysis &
valuation (F-401)” of BBA program under Department of Finance of the Faculty of Business
Studies, University of Dhaka.

The experience that we gather through this study will help us in our career indeed. It was an
opportunity of rediscovering our potentials and full of excitements. This report gave us an
occasion to apply our theoretical expertise, sharpen our views, ideas, and communication skills,
and bridge them with the real world of practical experience, which will be a good head start for
our future professional career.

We would like to convey our special thanks and gratitude to you for patronizing our effort & for
giving us proper guidance and valuable advice. We have tried our best to cover all the relevant
fields. We earnestly request you to call upon us if you think any further work should be done on
the topic that you have chosen for us.

Yours Sincerely,
Quazi Nur Alam
On the behalf of the group
Signature:
Executive summary

For Financial Statements to reveal the true picture of a firm, these need to be analyzed. In this
report, the financial statements of National Tube Ltd. have been reformulated for the purpose of
profitability and growth analysis.

The analysis indicated the prospect of the company and based on that indication, pro forma
income statements, pro forma balance sheets have been built to value the company.We have also
figured out the cost of equity (ke) by applying Capital Asset Pricing Method (CAPM). For this
purpose, we calculated Beta (β) through coefficient of variation between Stock Return and Index
Return on monthly basis. Then we filtered the Beta (β) in Blame’s Adjustment.

Then with the help of Market Return (Rm) and Risk Free Rate (Rf) with the Beta (β), we figured
out the cost of equity (Ke).Later we calculated the cost of debt. For that, we found out average
interest rate and average total loan from historical years.Then we easily found Weighted Average
Cost of Capital (WACC).From above information, we processed valuation for Aftab
Automobiles Ltd on different valuation techniques such as Dividend Discount Model, FCF
Valuation, Residual Earnings Valuation and Abnormal Earnings Valuation.
Table of contents

Chapter Contents page no.

Chapter1

Report preliminaries Origin of the study 2

Importance of this Study 2

Objectives of the study 2

Scope of study 3

Methodology: 3

Limitations of the study 3

Chapter2

Description part company overview 5

Company analysis 5-10

Industry analysis 11-18

Economy analysis 19-23

Chapter3

Analytical part
 Dividend discount model 22,23

Residual earning model 24,25

Abnormal earning growth model 26

Free cash flow 27

Simple free cash flow model 28

Approximate free cash flow model 29

Relative valuation 30,31

Results from different methods 32

Related assumptions 33

Chapter4

Ending parts Conclusion 35

Bibliography 35

Appendix 36