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BV PPT 8

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Irine Anto
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37 views12 pages

BV PPT 8

Uploaded by

Irine Anto
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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BUSINESS

VALUATION
SESSION SLIDE: 08
24/07/2024
BY - A RC H A N A S
(2327511)
ASSUMPTIONS FOR MEDDEAL PRIVATE
LIMITED

• Order per customer :

The average order size per customer could go down. This might happen because
clinics might also buy from other companies similar to Meddeal . Example: Amazon
and Flipkart. Yet, given that this is a perfectly competitive market with low-
involvement products, this is not likely to occur.

• Average Mileage :

Mileage of the bike will reduce over time.

• Commission :

Due to its robust network, Meddeal holds a strong bargaining position, hindering the
likelihood of a commission decrease from 3% to 2%.
DIFFERENCES
MEDDEAL PRIVATE AVENUE SUPERMART
LIMITED
• Start-up • Well established
• B2B • Retail - B2C
• Products - Syringe, Needle, • Products - Foods, kitchenware,
Catheters garments, footwears, toys,
• Industry - Medical Devices and games, bath linen, stationery,
Consumables grocery, household, and
electronic products.
• Industry - Consumer Staples
Distribution
DIFFERENCES
MEDDEAL PRIVATE AVENUE SUPERMART
LIMITED
• Low inventory , low Capex • Hight inventory and Capex
• Not Listed • Listed
• Imaginary company • Live company - Information
available publicly
• Revenue Driver
• Revenue Driver
(GMV * Commission)
(Total business area*Revenue per
square feet)
REVENUE DRIVER
Two ways to understand Revenue.
A) How does the company make money?
From the sale of 3 types of Merchandise through their stores.
Namely, food, non-foods, general merchandise and apparel.
B) How to project the company revenue - FY 2025
• No of stores * Revenue per store.
• Total Business area (Space used to display the products) *
Revenue per square feet.
• Revenue per square feet = Total revenue/Total square feet.
INDUSTRY ANALYSIS

Why is industry analysis critical?


To effectively value a company and project its financials

• Industry of Avenue supermarkets - Retail

Types of retail models in India :


• Unorganised (Kirana stores)
• Organized (Avenue Super Mart)
BACKGROUND FOR
INDUSTRY ANALYSIS
1) INDUSTRY STRUCTURE :

Why is it important?
To understand the competition and the pricing power.

• Monopoly: A single firm dominates the market, enjoying significant pricing power and
barriers to entry. It can charge a premium because of the reputation of the brand.
• Duopoly: Two firms dominate the market, often leading to intense competition and
price wars.
• Oligopoly: A few large firms dominate the market, with high barriers to entry and
strategic interdependence.
• Perfect Competition: Numerous small firms compete, with only some firms having
significant market power.
BACKGROUND FOR
INDUSTRY ANALYSIS
2) PORTER’S FIVE FORCES :
• Threat of New Entrants
• Bargaining Power of Suppliers
• Bargaining Power of Buyers
• Threat of Substitute Products or Services
• Industry Rivalry

Relationship between Accounts payable and Suppliers


bargaining power :

• If Suppliers' bargaining power is High, Accounts payable days will be


Low

• We have to analyse if the Suppliers' bargaining power is a


high/medium /low force
BACKGROUND FOR
INDUSTRY ANALYSIS
3) PESTEL Analysis :
• Political Factors
• Economic Factors
• Social Factors
• Technological Factors
• Environmental Factors
• Legal Factors

Have to decide which power is high :


Example:
In the mining industry, Political and environmental factors are high
Retail – Economics, Social and technological factors are high
BACKGROUND FOR
INDUSTRY ANALYSIS
4 ) MARKET CONCENTRATION
Is the market dominated by a large number of small players or a Few
large players?

• A Concentration market is when only a few people dominate the market


share (Avenue Super Mart)
• If the industry is not concentrated, then lot of people own a small market
share

Problem with a nonconcentrated market :


No industry leader nor industry movers

Market concentration can be measured by the Herfindahl-Hirschman Index


(HHI)
BACKGROUND FOR
INDUSTRY ANALYSIS
5) INDUSTRY REGULATOR
Is the industry regulated or non-regulated?

A regulator is generally a person, organization, or device that controls or


supervises a system, process, or activity.
Example – SEBI, RBI , TRAI, IRDAI

Would I want the market to be regulated or nonregulated as a business


owner?

Less regulated, because a regulated market would tie my hands


THANK YOU

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