Valuation and consulting for financial reporting, federal, state and local tax, investment and risk management purposes.Valuation Advisory
Aviral Jain, Managing Director in the Valuation Advisory Services practice for Duff & Phelps India, was featured in The Economic Times Prime for his views on valuation in context of the Air India disinvestment. The question about Air India’s actual worth can be deciphered in multiple ways, such as calculating an estimate based on relative comparables or valuing it based on intrinsic and contingent claim basis. The government is trying all permutations and combinations to attract bids that will allow them to retain a 24% stake in the company.
According to Mr. Jain, “The industry is operating at about five to six times debt/EBITDA. With Air India’s current 19x debt/EBITDA and financing cost of about 11%, the bidder needs to have a strong balance sheet (zero to low debt) to fund the transaction and refinance the high-cost debt to manage the profitability in future. This may be difficult to achieve without the backing of a foreign airline or a strong financial institution that has access to a much lower cost of funds.”
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