Stock Valuation and Business Performance of PT Indo Tambangraya Megah, Tbk.

Abstract

The aims of this study are to recalculate intrinsic value of ITMG with the factors that might affect the valuation in mind and evaluating its business performance. External, internal, and business model analysis were carried out to know about the business from top to down. Linear regression modelling is used to know the effect of global coal price to ITMG’s revenue. Absolute valuation model such as DCF analysis was conducted to know the intrinsic value of ITMG stock price. Relative valuation model such as PER and EV/EBITDA were used to compare ITMG with its peers. Based on DCF analysis, the intrinsic value per share of ITMG is IDR 15,910 per share and it has margin of safety 34% to the current market price with close price at 26 April 2021. Current market price for ITMG is IDR 11,850 and since the intrinsic value is higher than the current market price then the stock is undervalued. For the PER, ITMG is the highest in 2020, and for the EV/EBITDA is the second lowest in 2020 compared to its peers. The recommendation for the investor would be to buy ITMG stocks.

Keywords: Absolute valuation, DCF, intrinsic value, relative valuation, stock.