Vidrala, S.A. equity evaluation

Abstract

The goal of this academic dissertation is to assess the correct value of Vidrala S.A. shares on the 1st January 2022. Two distinct valuation methods are applied, the first being the Discounted Cash Flow (DCF) approach, and the second the relative valuation methodology, with a variety of Multiple used, but favoring the ones based on Enterprise Value. Afterwards, the result yielded by the DCF valuation approach is stressed in a sensitivity analysis and compared to an equity research report made by BPI Equity Research. The conclusion of this dissertation is that Vidrala is marginally undervalued in the market, being the fair value of one unit of common stock estimated to be €110,29 at the beginning of 2022, while the share is traded at €104,2 on the 2nd July 2021 (with less than 15% up price variation). Hence, the recommendation given in this dissertation is that investors should hold Vidrala´s shares. This recommendation is solely based on the DCF methodology, since the relative valuation produced inconsistent results across the different Multiples and peer groups used. BPI Research estimates the value of one unit of common stock at the end of 2021 to be €109, which is a lower valuation than the one expected by this dissertation, but BPI Research also advises to hold Vidrala’s stock. This difference can be justified by different assumptions regarding the calculation of WACC, especially in the value of the risk-free rate.

Date of Award	2 Feb 2022
Original language	Portuguese
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Mário Meira (Supervisor)