Federal Bank: Dividend Discount Valuation

Name: Federal Bank: Dividend Discount Valuation (English version)
SKU: 9B17N005

Debasish Maitra; Varun Dawar

Product #:9B17N005

Supplier:Ivey

Discipline:Finance, International Business

Setting:India, 2014

Details:Case (PDF) • 10 pages • 2017-02-28

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In mid-2014, an investor was examining Federal Bank stock and its valuation. In order to fund her children’s educational savings for the future, the investor had been looking for high-growth but undervalued investment stocks. Based on her current market analysis, she had narrowed her search to Federal Bank Limited. Could Federal Bank be the undervalued stock that the investor was looking for? What would be the fair fundamental value of the bank? The dividend discount valuation model, a technique to identify and value undervalued stocks, would determine whether Federal Bank was a potential investment target.

Learning Objectives

The case allows students to identify a potential investment target using the dividend discount valuation method. After completion of this case, students will be able to

assess the opportunities and risks associated with a potential investment target using a strengths, weakness, opportunities, and threats analysis;
understand the key assumptions and mechanics of dividend discount valuation methodology; and
perform valuation of a stock using dividend discount valuation methodology.

Federal Bank: Dividend Discount Valuation

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Learning Objectives