RAK Ceramics (Bangladesh) Limited - DSE

IPO process under Book Building Method:Valuation of RAK Share:RAK considered valuation based on P/BV to be the Primary Valuation Methodfor the company. However, they have also applied other suitable and frequentlyreferred methods, i.e. valuation based on P/E Multiple and Dividend DiscountModel (DDM), to have full spectrum of valuations.A. Primary Valuation Method: Valuation based on P/BV multiple ofsimilar stocksThe average NAV growth rate of RAK over the last five years was 18.77%. Theincreasing trend of NAV per share reflects that RAK has been consistentlyinvesting in fixed assets. Therefore, an acceptable value may be derived bymultiplying NAV by a representative P/BV multiple.Findings and Calculation of Representative P/BV MultipleCategories of Comparable CompaniesAvg.P/BVRatioAssignedWeightWeightedP/BValueCompanies having Turnover of BDT 2,000 M to 3,600 4.43 0.2 0.886MCompanies having Equity of BDT 1,750 M to 3,300 M 2.60 0.2 0.520Companies having Net Profit of BDT 270 M to 450 M 4.83 0.2 0.966Listed MNCs 4.59 0.2 0.918Similar Equity Risk Class 4.24 0.2 0.848P/E Multiple 1.00 4.14