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A Foundamental Evaluation of the Bmw Group

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A Fundamental Valuation of the BMW Group

Jalpesh Madlani – MSc Applied Economics and Finance
Jens Chr. Ulvestad – MSc Applied Economics and Finance
Supervisor: Jeppe Schoenfeld, Deloitte
Number of Pages and Total Characters: 120 pages, 254.877 characters
Submission Date: October 22nd 2012
Master Thesis – Copenhagen Business School 2012

This thesis conducts an in-depth analysis of the BMW Group in order to determine the fair value of the
Group’s share price and to conclude whether it is over- or undervalued. The BMW Group is one of the largest automotive manufacturers that focus on the premium segment, producing both automobiles and motorcycles. The Group is headquartered in Munich, Germany and its business operations are divided into three segments: Automotive, Motorcycle and Financial Services, where the Automotive segment provide by far the largest source of revenue.
The BMW Group is analyzed by conducting a strategic and financial analysis, where several models are applied and financial drivers thoroughly analyzed from a historical perspective. The findings from these analyses act as a foundation for forecasting the future performance of the Group. The share value is estimated by utilizing the discounted cash flow (DCF) valuation model on the forecasted figures. A multiple valuation model (EV/EBITDA) is also conducted in order to triangulate the value derived from the DCF valuation with a relative valuation based on market multiples.
Empirically, the thesis relies on both primary and secondary data such as interviews with equity analysts, annual reports, academic books and articles, research papers, news articles from approved websites and data from the Bloomberg terminal database and Thomson ONE Banker.
The automotive industry was severely hit by the financial crisis in 2008-2009, which affected global vehicle sales...

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