Valuation of Inditex group

Abstract

With alrnost 7,500 stores worldwide and presence in 96 different markets, Inditex has been considered to be the "perfect company" in many occasions. Strong international growth in the Iast years, an effective and efficient supply chain management and a very healthy financia! situation are sorne of the key factors that ha ve allowed the Group to become as successful as it is today. However, will Inditex continue to grow as it has been growing in the Iast years? In order to answer this question we will need to analyze the Company from a strategic point of view. In particular, sorne specific key questions to be answered will be: Which are the Company strengths? Is there potential for further expansion? Which is the degree of competition that Inditex faces nowadays? On the other hand, from a financia! point of view, it is relevant for us to know how the Cornpany's revenue and gross margin have evolved over time. Furthermore, how is it financed? Does it have enough Iiquidity? The answer to these questions will allow us to obtain a general picture ofthe Inditex financia! situation and evolution. Then, knowing the Company from a strategic and financia! perspective we will be in good position to evaluate it through the discounted cash tlow and the m u! tiples of comparable companies' methods. Thc rnarkct valucs Inditcx at 29.64€ today (61h July, 2018), butdo wc rccommcnd buying, selling or holding? The answer will depend on the results of our valuation, which will allow us to detennine the upside or downside potential of Inditex stock price.