Premium Essay

Kapco Stock Evaluation

In: Business and Management

Submitted By saniac84
Words 2726
Pages 11
1- Executive Summary

The energy supply-demand mismatch is ongoing for over a decade and the deficit has adversely affected almost all residential, industrial and commercial customers resulting in lower economic growth in Pakistan. The new government is determined to address the shortfall through various hydel, coal, solar, nuclear and wind power projects. However, due to urgency of the power requirements various private investments have been encouraged to address the instant energy needs of the country. Under the power policy of 1996 and 2002, twenty-nine Independent Power Producers (IPPs) have been introduced with gross installed capacity of 8,657 MW. KAPCO, being one of the largest IPPs, has installed capacity of 1,638 MW and dependable capacity of 1386 MW.1

This report is drafted from investor’s standpoint and can help in assessing the financials of KAPCO using following stock valuation frameworks: 1). Warren Buffett 2). Price-Earnings Multiple Approach 3). Capital Asset Pricing Model 4). Financial Ratio Analysis. Section 2 introduces the Company and gives an overview of the stock currently trading at Karachi Stock Exchange (KSE). KAPCO share analysis starts from Section 3 with Warren Buffet qualitative and quantitative pricing frameworks. Thirteen different parameters have been evaluated for qualitative analysis while three different pricing models show that it is better to invest in State Bank of Pakistan (SBP) Investment Bond than to invest in KAPCO share.

Section 4 and 5 examine the current stock price using P/E Multiple approach and Capital Asset Pricing Model. Section 6 explains the financial strength, management effectiveness and profitability, efficiency and market ratios using Ratio analysis. The report finally recommends not investing in KAPCO share due to circular debt problems resulting in potential cash-flow crunch, bullish momentum of...

Similar Documents

Premium Essay

Middle Market Investment Banking

...The media’s watching Vault! Here’s a sampling of our coverage. “For those hoping to climb the ladder of success, [Vault’s] insights are priceless.” – Money magazine “The best place on the Web to prepare for a job search.” – Fortune “[Vault guides] make for excellent starting points for job hunters and should be purchased by academic libraries for their career sections [and] university career centers.” – Library Journal “The granddaddy of worker sites.” – U.S. News & World Report “A killer app.” – The New York Times One of Forbes’ 33 “Favorite Sites.” – Forbes “To get the unvarnished scoop, check out Vault.” – SmartMoney Magazine “Vault has a wealth of information about major employers and job searching strategies as well as comments from workers about their experiences at specific companies.” – The Washington Post “A key reference for those who want to know what it takes to get hired by a law firm and what to expect once they get there.” – New York Law Journal “Vault [provides] the skinny on working conditions at all kinds of companies from current and former employees.” – USA Today Customized for: Mian Badr (mian.iftikhar@studbocconi.it) Customized for: Mian Badr (mian.iftikhar@studbocconi.it) VAULT CAREER GUIDE TO MIDDLE MARKET INVESTMENT BANKING JOE BEL BRUNO AND THE STAFF OF VAULT Customized for: Mian Badr (mian.iftikhar@studbocconi.it) Customized for: Mian Badr (mian.iftikhar@studbocconi.it) Copyright © 2009 by Vault.com, Inc. All rights reserved....

Words: 71250 - Pages: 285