Rawdah DCF valuation

The engagement

An investment committee is considering a minority stake in Rawdah Home Retail Co. (a fictional home-furnishings retailer; all figures in SAR millions except per-share values). You have been asked for an intrinsic valuation with a cross-check against the market. The committee wants to see the value per share, how much of it rests on the terminal value, how sensitive it is to the discount rate and long-term growth, and how it compares with what listed peers trade at.

All assumptions are on the Inputs tab: five years of revenue growth, margins and reinvestment, CAPM inputs, terminal assumptions and Rawdah's FY2025 actuals (revenue 1,497.0, EBITDA 187.1, borrowings 355.0, cash 87.5, 120 million shares). The five peers on the Comps tab are also fictional.

Deliverables

Complete every white cell with a formula linked to Inputs or to other tabs — no typed numbers. The model will be re-tested with different assumptions.

Conventions (follow exactly)

• Valuation date: the end of FY2025. FY2026 is period t = 1 and FY2030 is t = 5 (FCF row 2).
• Revenue grows at each year's rate from the prior year (FY2025 actual is the base).
• EBIT = revenue × EBIT margin. NOPAT = EBIT × (1 − tax rate). D&A and capex = % of the same year's revenue.
• Change in NWC = NWC % × (revenue this year − revenue last year).
• Unlevered FCF = NOPAT + D&A − capex − change in NWC. Capex and the change in NWC are entered as positive amounts and deducted.
• Discounting: year-end convention — PV = FCF ÷ (1 + WACC)^t. No mid-year adjustment.
• WACC = equity weight × cost of equity + debt weight × pre-tax cost of debt × (1 − tax rate), with cost of equity = risk-free rate + beta × equity risk premium, and the target debt weight on Inputs (equity weight = 1 − debt weight).
• Gordon terminal value at the end of FY2030 = FCF₂₀₃₀ × (1 + g) ÷ (WACC − g), discounted 5 years with the FY2030 year-end factor.
• Exit-multiple terminal value = FY2030 EBITDA (EBIT + D&A) × exit multiple, also discounted 5 years. Its implied perpetual growth = (TV × WACC − FCF₂₀₃₀) ÷ (TV + FCF₂₀₃₀). The implied EV/EBITDA of the Gordon terminal value = Gordon TV ÷ FY2030 EBITDA.
• Net debt = FY2025 borrowings − FY2025 cash. Equity value = EV − net debt. Value per share = equity value ÷ shares outstanding (in SAR, as figures are in millions).
• Sensitivity grid: each cell is the Gordon-method EV recomputed at the WACC in column A and the terminal growth in row 19 (one formula, copied with mixed references).
• Comps: EV/EBITDA = EV ÷ EBITDA. Use QUARTILE(range,1), MEDIAN and QUARTILE(range,3). Implied EV = multiple × Rawdah's FY2025 EBITDA; implied value per share uses the same net debt and share count.
• No rounding. Results are graded to within 0.05%.