Technically speaking, a property's value is defined as the present worth of

future benefits arising from the ownership of the property. Unlike

many consumer goods that are quickly used, the benefits of real property are
generally realized over a long period of time. Therefore, an estimate of a
property's value must take into consideration economic and social trends, as
well as governmental controls or regulations and environmental conditions
that may influence the four elements of value:

 Demand: the desire or need for ownership supported by the financial

means to satisfy the desire
 Utility: the ability to satisfy future owners' desires and needs
 Scarcity: the finite supply of competing properties
 Transferability: the ease with which ownership rights are transferred

Source: https://www.investopedia.com/articles/realestate/12/real-estate-valuation.asp

The main challenge in valuating real estate sector is the changing regulations and market prices in
the sector. It is better to use relative valuation rather than DCF valuation because relative valuation
provides better results in volatile industries. DCF approach fails to capture the market reality after a
year or two.

Broad revenue drivers for Cement industry are the cement bags sold in the market. Sale of different
grade cements and exported cement will be the split up under the revenue drivers. Growth rate of
number of cement bags sold will the revenue projection for the future.

Broad cost drivers include the raw materials used like limestone, coal, power, diesel, freight and
wages to employees. The balance sheets of Ambuja and ultratech cements clearly reflect these
drivers clearly.

B2C companies that run mainly on subscriptions can be evaluated using projected cash flows (DCF
method). When it comes to businesses like gym centres, the key revenue drivers are the subscribers,
may be split into weekly, monthly and yearly subscribers. The key cost drivers would be wages to
gym trainers and capex. These values can be projected for the future say 10 years with an assumed
growth rate from the past and discounted at the cost of capital. This will provide us the NPV of the
company.

The idea to raise debt and expand would make sense only if the company has a proper business plan
that would workout in the future and eventually the company can go public to raise fund from
equity after it becomes quite large enough. For Talwalkers, this plan has worked out successfully.

UDAN scheme announced by the government will enable middle class population to access the
airways for travel. Launching new airports and new routes are on the government’s agenda. For
airline companies, this is a opportunity for expanding their operations.

When it come to p&l statement, the revenue growth will be slightly higher than projected as new
operating routes will increase the revenue. The expenses are also going to increase, thus cost drivers
projection also will increase.

Capital Expenditure will be high for the next couple of years, there is a high probability of buying or
leasing new aircrafts for expanding operations and the working capital also will increase and new
hiring might be done. Profit is expected to go down in the near future as there might be increased
debt and higher interest payments.
In 2005, Eicher Motors Ltd sold their tractors and engines business to TAFE Tractors of
[Chennai] , the Indian licensee of Massey Ferguson tractors. In July 2008, EML and Volvo
Group's 50:50 joint venture VE designs, manufactures and markets commercial vehicles,
engineering components and provides engineering design. The Eicher Group has diversified
business interests in design and development, manufacturing, and local and international
marketing of trucks, buses, motorcycles, automotive gears, and components. Eicher has
invested in the potential growth areas of management consultancy services, customised
engineering, and maps and travel guides.
Source: Wikipedia

Eicher motors stock is currently selling at 17720 rupees in BSE. The stock price has skyrocketed from
20 rupees in 2002 go 30000 in 2017. But in the last 2 years the stock price fell by almost 50%. This
is because the stock was overpriced and still it is overpriced (p/e=24) when compared to the
industry average which is p/e=24. Investors believed that the company would do well but once
the stock was price 33 times its book value in 2014. This was a bubble. Now investors realize
that it was heavily overpriced and are selling the stock.

The joint venture with Volvo and entering into the market when the economy was doing well were
the signs that could have helped investors predict the remarkable growth. The near future threat is
the global slowdown and reducing demand for commercial vehicles. In the short teen BS4 regulation
also could be attributed for the drop in sales.