Equity valuation: Ibstock PLC

• Autor(a) principal: Silva, João Figueiredo da
• Data de Publicação: 2022
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/28302
• topic: Equity valuation; DCF Discounted Cash Flow --; Relative valuation; Ibstock; Avaliação de empresas -- Business valuation; Múltiplos; Ações

The goal of this project is to assess the correct value of Ibstock shares as of 31st December of 2021. Ibstock PLC was founded in 1825 and is headquartered in Ibstock, being responsible for the manufacture of clay and concrete building products. It owns a market share of c90% alongside two additional competitors being divided between two business units, clay, and concrete. In 2019, Ibstock was responsible for the acquisition of Longley Concrete Limited, a UK based precast concrete supplier for a consideration of £14m. Two distinct valuation methods will be applied, the first being the Discounted Cash Flow (DCF) approach and the second being a Relative Valuation. Several assumptions will be made and backed by the analysis of company’s historical financial performance and statistics related to the Construction Industry, emphasizing a focus on the UK. Once applied, the result yielded by the different valuation methods will be compared to an equity report from J.P. Morgan dated as of 20th January of 2022 and a conclusion about the reasonableness of both prices will be conducted, allowing to assess if the investment decision is either to buy, sell or hold Ibstock shares and support the theory that its shares are either undervalued or overvalued in the market. Possible justifications that support the differences will be stated and analysed. A focus was attributed to the considerations obtained through DCF model, yielding a share price of £2.20, 16.4% above its fair value.