Equity valuation Davide Campari­-Milano N.V.

Abstract

This dissertation aims to determine the value of the equity of Campari, a leading company in the branded spirits industry. Among the set of valuation techniques presented, the FCFF version of the Discounted Cash Flow model resulted to be the most appropriate methodology to derive the price target for Campari. In addition, market multiples have been considered by focusing on forward P/E and forward EV/EBITDA. Furthermore, precedent transactions have been analysed in three different periods, highlighting the respective EV/EBITDA and EV/Sales. The resulting price target from the DCF is € 11.27 as of December 31st, 2022, which corresponds to a 10.9% upside potential compared to the closing price of € 10.16 as of 13th December 2022. The buy recommendation is based on a solid growth and risk profile of the projected cash flows of the company. Given the challenging macroeconomic landscape, scenario analysis has been included to account for a slower recovery from the Ukraine crisis. In addition, sensitivity and Monte Carlo analyses have been incorporated to assess the elasticity of the result to changes in key inputs. The outcome suggests a wider price range between € 8.11 and € 15.63, which in 50.4% of the simulations corresponds to a buy recommendation. Lastly, the result and the main assumptions have been compared to an equity report issued by Bank of America.

Date of Award	1 Feb 2023
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José Carlos Tudela Martins (Supervisor)