Investigating Firms Intrinsic Value Using Fundamental Analysis : Cement Sector in Pakistan

Abstract

This paper studies the fundamental analysis use to investigate intrinsic value of a company, particularly in the cement industry of Pakistan. Study sample was based on five companies for which recent five year secondary data was taken. Investment decision are taken by either fundamental analysis or fundamental analysis however in this study, research is only limited to fundamental analysis factors. Fundamental analysis has three phases Economic, Industry and Company analysis i.e., EIC model. The paper uses analytical techniques to study relating factors to find intrinsic value and on analyst’s investment decision. Data was taken from reliable sources in Pakistan that includes economic survey in Pakistan, PAKRA rating and company five year historic financial performance to analyze results. Based on results and finding by analyzing all factors study conclude that fundamental analysis use both current and historic data to produce valid results that depicts real value of the company or intrinsic value. Intrinsic value along with company factors proved to be the game changer since it made the final rationale for investment decision. It further strengthens to determine that intrinsic value has an impact on both market value and performance of the company. Moreover company related factors have the highest valued in fundamental analysis followed by industrial and economic factors.