Valuation of the food industry company (plc rusagro group” case)

Issue № 5, 2020, article № 7, pages 69-78

Language: Russian

Original language title: ОЦЕНКА СТОИМОСТИ КОМПАНИИ ПИЩЕВОЙ ПРОМЫШЛЕННОСТИ НА ПРИМЕРЕ ООО «ГК «РУСАГРО»

Keywords: FOOD INDUSTRY, COMPANY VALUE, METHOD OF DISCOUNTED CASH FLOWS, SUSTAINABLE GROWTH

Abstract: The growth of the Russian agriculture and food industry after 2014 poses questions about the sustainability of this growth. In order to evaluate this sustainability it is necessary to evaluate the efficiency of companies of these industries. The most popular index that is now used for evaluation of business efficiency is the company value. We will use the method of discounted cash flows for calculation of this index. The object of valuation is PLC “Rusagro Group”. This choice is based on the fact that it is a big vertically integrated company and one of the leaders of the national food industry. In addition, it is a publicly traded company, which means that the market capitalization of this company can be used as a benchmark. Our results demonstrated that the market capitalization of PLC “Rusagro Group” exceeds the company value calculated on the basis of discounted cash flows. It corresponds to the results obtained by other researchers for other leading Russian food industry companies. It allows us to formulate a hypothesis that there is a stable trend for overestimation of market value of leading Russian food industry companies. It can be an indicator that the investors evaluate the prospects of this industry as favourable which can be seen as a confirmation of the sustainability of its growth.

Authors: Vertakova IUliia Vladimirovna, Maltseva Irina Fedorovna, IAroshenko Evgeniia Igorevna