Equity valuation of Inditex

Abstract

In this dissertation, a valuation of Inditex group is performed. Inditex is a well-known giant in the apparel industry – it is present in the five continents, in a total of 87 markets with more than 6300 stores. The group has eight different store concepts operating in the market- Zara, which is the biggest success of Inditex, Pull&Bear, Massimo Dutti, Bershka, Stradivarious, Oysho, Zara Home and Uterqüe. Three different approaches were used to value Inditex: the Discounted Cash Flow, the Dividend Discount Model and Relative Valuation. Each approach provided different results, since they are based in different methodologies and different assumptions. At the end, the most reliable result was the one obtained through the Discounted Cash Flow valuation. The target price reached was €124,6. The results of the valuation were, at the end, compared with the ones obtained from an investment bank report, to check the values reached and to understand the main differences in the assumptions taken – BPI Equity Research, report released on 20th March 2014. It was found that the Inditex’s stock price was slightly undervalued at the valuation date, still it was in line with the market performance.

Date of Award	7 Jul 2014
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José Carlos Tudela Martins (Supervisor)