Valuation of Indian Companies--an Analytical Perspective‪.‬

This research paper focuses on an analytical valuation perspective of Indian companies. Five top companies from each of these sectors were selected on the basis of cumulative sales in the last ten-year period (1997-2006). These five top companies in each sector were selected from the total sample of 8500 companies. The companies were valued on the basis of eight financial parameters. The IT sector and infrastructure sectors have the highest average sales growth rate with three companies from each sector figuring in the top ten list. Idea Cellular had the highest average growth rate in sales for the past decade. The most valuable company in terms of average market capitalization was ONGC followed by Reliance Industries Ltd. and Hindustan Lever Ltd. respectively. On the basis of Tobin q ratio, TCS is the most valuable company followed by Infosys, Wipro and Satyam respectively. The regression results show that that the value of a firm is positively related to sales growth and asset growth. Higher the debt component of the capital structure of a firm, lower will be the value of firm. Introduction