Internship Report On “Fundamental Analysis & Valuation of Bangladesh Finance Limited”

Abstract

The prerequisite of buying and selling an asset profitably is to identify its value of it. Finance can value pretty much every asset. According to Finance, the fundamental rule of valuing an asset is to find out the cash flows the asset is going to generate in the near future & discounting it to landing into a number. If someone has a desire to buy an asset, he will find a way to buy the asset. But valuation of an assets gives the chance to the rational side of the human being before buying an asset. In the first part of my report I tried to define what the valuation of an asset is. Thereafter, I tried to understand the thin line between valuing a financial company & manufacturing company. In the last part of literature review section, I made a brief discussion about valuation methodologies & how they are used. The sole purpose of this report was to value a Financial Institution named Bangladesh Finance Limited. In chapter-3, I have described the nature & functions of this organization. Divisional structure, existing product & service, strategic intent & future growth potential were the main priority. Fundamental analysis begins thereafter. A top to bottom analysis were conducted before jumping into the valuation of Bangladesh Finance. At first the global & local macroeconomic variables were dissected to create a portrayal of economic volatility. Later on an industry analysis were conducted to depict a complete picture of Bangladesh Finance’s operating environment. Subsequently, financial statements of Bangladesh Finance were introduced to understand the structure & stability of Bangladesh Finance. Forecasting of key determinants began from chapter five. At the very beginning of this part, I made a model for forecasting lending portfolio of Bangladesh Finance by the help of statistical regression technique & macroeconomic variables. Subsequently, I have discussed about the fact & factors that concerns forecasting the key elements of balance sheet & profit- loss statement of Bangladesh Finance. After aligning all the facts & assumptions, models for pro-forma financial statements were developed. In the first part of chapter six, a model was developed for finding cost of equity (CAPM). That model contains estimating beta, market return & risk free rate of return for Bangladesh Finance. For valuing Bangladesh Finance Dividend Discount Model & relative valuation were chosen. A portrayal of these two model can be seen in the last part of this chapter. To conclude, a price comparison between two methods were illustrated including a buy or sell decision.