You are a senior consultant of your firm and are in process of determining the valuation of KK Ltd. You have determined the valuation of the company…

CA Final · Financial Reporting · MTP · May 2024
You are a senior consultant of your firm and are in process of determining the valuation of KK Ltd. You have determined the valuation of the company by two approaches i.e. Market Approach and Income approach and selected the highest as the final value. However, based upon the discussion with your partner you have been requested to assign equal weights to both the approaches and determine a fair value of shares of KK Ltd. The details of the KK Ltd. are as follows: Particulars ₹ in crore Valuation as per Market Approach 5268.2 Valuation as per Income Approach 3235.2 Debt obligation as on Measurement date 1465.9 Surplus cash & cash equivalent 106.14 Fair value of surplus assets and Liabilities 312.4 Number of shares of KK Ltd. 8,52,84,223 shares Determine the Equity value of KK Ltd. as on the measurement date on the basis of above details.

Suggested Answer and Working Notes:

Equity Valuation of KK Ltd. Particulars Weights (₹ in crore) As per Market Approach 50 5268.2 As per Income Approach 50 3235.2 Enterprise Valuation based on weights (5268.2 x 50%) + (3235.2 x 50%) 4,251.7 Less: Debt obligation as on measurement date (1465.9) Add: Surplus cash & cash equivalent 106.14 Add: Fair value of surplus assets and liabilities 312.40 Enterprise value of KK Ltd. 3204.33 No. of shares 85,284,223 Value per share 375.72

Topics: Ind AS 113

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