Newrotechnologies Limited is a tech company that needs to find out its valuation for next round of funding. To estimate its fair value, it is planning to use Market Comparable Approach, which involves comparing it with c

CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · June 2025
Newrotechnologies Limited is a tech company that needs to find out its valuation for next round of funding. To estimate its fair value, it is planning to use Market Comparable Approach, which involves comparing it with companies which are similar in size, industry and financial characteristics. The chief financial officer has gathered the following information for this purpose: Comparable Companies in the market: Company A: P/E Ratio = 18 Company B: P/E Ratio = 20 Company C: P/E Ratio = 22 Company D: P/E Ratio = 21 The financials of Newrotechnologies Limited for the year ending 31st March, 2024 are as follows : Net income is ₹20,00,000. Total number of shares is 50,000 Using the above information, calculate the estimated price per share and estimated value of Newrotechnologies Limited.

Answer & Explanation:

1. Calculate Average P/E Ratio of Comparable Companies: Average P/E ratio = (18 + 20 + 22 + 21) / 4 = 81 / 4 = 20.25 2. Calculate Earnings Per Share (EPS) of Newrotechnologies Limited: Net Income = ₹20,00,000 Total Number of Shares = 50,000 EPS = Net Income / Total Number of Shares = ₹20,00,000 / 50,000 = ₹40 per share 3. Estimate Price Per Share (PPS) of Newrotechnologies Limited: Estimated PPS = Average P/E Ratio * EPS = 20.25 * ₹40 = ₹810 per share 4. Estimate Total Value of Newrotechnologies Limited: Estimated Value = Estimated PPS * Total Number of Shares = ₹810 * 50,000 = ₹4,05,00,000 Therefore, the estimated price per share is ₹810 and the estimated value of Newrotechnologies Limited is ₹4,05,00,000.

Topics: Valuation

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