Yes, you can apply this formula for companies with good consistent future growth. Also Nest is a company like that. But i think the assessed growth rate is too much. It's always better to apply a growth rate 60 % of last decade growth rate ( 10 years may be good), So it gives a valuation of Rs 1400. But with high dividend it gives some extra value as well so Rs1500 may be the suited value. But your valuation is correct. Thanx for giving a great answer and probably the best justification with facts and figures. Thx mate@Dileepa wrote:On a P/E based valuation, yes NEST is over valued.
But on a intrinsic valuation NEST is not over valued.
Eg: graham formula gives about 1900/=.
#55 (8 + 2 * 14) = 1980
I personally believe that NEST will stable around 1900 by the end of this year.
It is true that in terms of DY(2.9%), there are better counters.
But the dividend growth rate of last 5 years is over 20%.
Therefore current yield should double in every 3.5 years.
#ln(2)*100/20 = 3.47
Also following record is unmatched by any counter.
PS. my views may be bit biased here. I'm long on NEST
I do reinvest all my dividends on NEST irrespective of the current price.
I entered at 900 level and currently my gain is over 1M. My DY is 3.6%
This is a great share to start DRiP investing.
1800 is not too high to enter,
but you have to go slowly, building up a safety buffer during the process.
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