DCF valuation method used to estimate the attractiveness of an investment opportunity based on expected future cashflow projection of the assets and discounts them to arrive at present value, i.e. the maximum price we can offer for the assets based on the module assumption, which is used to evaluate the potential for investment. If the value is higher than the current cost of the investment, the opportunity seems good to invest.
BASNCO equity research team is aware about the complexity of the models assumptions and calculations involved. Our team does in depth analysis of underlying assumption we use and try to grab the root of each driver while projecting future cash flow as well as appropriate discount rate based on the degree of uncertainty of the future cash flow as well as availability of capital. To minimize short come of this model and relevance of the assumption we put reasonable care.