ITC Stock Valuation

This repository provides a suite of stock valuation models Discounted Cash Flow (DCF), Dividend Discount Model (DDM), and Relative Valuation to help you estimate the intrinsic and relative value of a publicly traded company. Whether you want to analyze a dividend-paying stock or benchmark against peers, this toolkit offers practical, customizable templates for your analysis.

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Overview of Valuation Methods

1. Discounted Cash Flow (DCF)

DCF valuation estimates a company's intrinsic value by projecting its future free cash flows and discounting them to the present using an appropriate discount rate (typically the Weighted Average Cost of Capital, or WACC).

• Best for: Companies with predictable cash flows.
• Key Inputs: Revenue growth, margins, capital expenditures, working capital changes, discount rate, terminal growth rate.

2. Dividend Discount Model (DDM)

The DDM is a method used to value companies that pay regular dividends. It estimates the value of a stock based on the present value of expected future dividend payments.

• Best for: Mature, stable companies with consistent dividend payouts.
• Key Inputs: Expected dividends, dividend growth rate, required rate of return.

3. Relative Valuation

Relative valuation compares the target company’s valuation multiples (such as P/E, EV/EBITDA, P/B) to those of similar companies in its peer group. This method assesses whether a stock is undervalued or overvalued relative to comparable businesses.

• Best for: Benchmarking against industry peers.
• Key Inputs: Peer group selection, financial metrics, multiples.

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Directory Structure

/stock-valuation-models
│
├── README.md                    # This file
│
├── dcf/
│   ├── DCF_Model.xlsx
│   └── README.md
│
├── ddm/
│   ├── DDM_Model.xlsx
│   └── README.md
│
├── relative/
│   ├── Relative_Valuation_Model.xlsx
│   └── README.md
│
└── src/
    ├── dcf_model.py
    ├── ddm_model.py
    └── relative_valuation.py

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Getting Started

Prerequisites

• Excel

How to Use

1. Clone the repository:

   git clone https://github.com/yourusername/stock-valuation-models.git

2. Select a Model:

   • For DCF analysis, go to /dcf/DCF_Model.xlsx.
   • For DDM analysis, go to /ddm/DDM_Model.xlsx.
   • For Relative Valuation, go to /relative/Relative_Valuation_Model.xlsx.

3. Input Data:

   • Fill in the required financial and market data for the target company.
   • For DDM, provide dividend forecasts, growth rates, and required return.

4. Review Outputs:

   • Each model provides implied valuation outputs and summary tables.
   • Use built-in sensitivity analysis features to test different scenarios.

5. Python Option:
   Navigate to /src and run the corresponding script for each model if you prefer a programmatic approach.

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Example Scenarios

• DCF Example: Project free cash flows for five years, apply a terminal growth rate, and discount at WACC to get intrinsic value.
• DDM Example: Estimate the present value of all expected future dividends for a dividend-paying stock.
• Relative Example: Compare your target’s EV/EBITDA to peers, then apply the median multiple to your target’s EBITDA.

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When to Use Each Model

Model	Best For
DCF	Companies with stable, predictable cash flows
DDM	Mature, stable, dividend-paying companies
Relative	Peer benchmarking and market positioning

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Contributing

Contributions are welcome! Please open an issue or submit a pull request for improvements or new features.