VALUATION OF MARKET SATURATION LEVEL AND COMPANY’S INVESTMENT ATTRACTIVENESS BY APPLYING FINANCIAL MODELING

Abstract

The subject of current research is valuation of investment attractiveness of the company and determining its target share price by the example of “Magnit” retail chain. Also article includes the estimation of Russian retail market saturation level and its importance in the strategic planning of company`s future activity. In order to obtain the most accurate results the management must take into account not only the company’s activities, but also its place among competitors on the local and global levels. Concerning the determination of market saturation level, it will allow the company’s management to develop a competent policy for further development by transition from organic development to the strategy of M&A transactions, which will provide the company a significant competitive advantage and will help to keep revenues at the same level during reduction of the potential market size. Results of our research include: calculation of the target share price for Magnit retail chain by the end of 2016 year applying Discounted Cash Flow analysis, Relative multiple valuation approach, Dividend discount model and further confirmation of our recommendation by carrying out a Monte-Carlo simulation. Moreover, article involves analysis and determination of Russian retail market size and its saturation level, calculation the target share price of Magnit retail chain after Dixy acquisition in 2019 year.