Valuation of PT Vale Indonesia TBK (IDX: INCO) using Discounted Cash Flow with Free Cash Flow to Equity Approach
DOI:
https://doi.org/10.55324/josr.v5i10.3467Keywords:
discounted cash flow, cost of equity, capital asset pricing model, free cash flow to equity, terminal valueAbstract
The objective of this research is to evaluate the fair value (intrinsic value) of PT Vale Indonesia Tbk (IDX: INCO) shares using the Discounted Cash Flow (DCF) model with Free Cash Flow to Equity (FCFE). This study employs a descriptive quantitative design grounded in financial modeling. Historical secondary data were processed to project future cash flows and estimate the equity fair value. Incorporating a Cost of Equity of 14.95% derived from the Capital Asset Pricing Model (CAPM) and a Terminal Value calculated via the Gordon Growth Model, the FCFE valuation yields an intrinsic value of IDR 5,400 per share for the 2026–2031 forecast period. Compared against the market closing price of IDR 4,120 on June 30, 2026, INCO shares are deemed undervalued, prompting a BUY investment recommendation. The primary contribution of this research is providing empirical justification for investment decisions, incorporating a required rate of return of 14.95% as fair compensation for risk. Practically, the findings demonstrate a potential risk-adjusted return upside. Investors are advised to consider purchasing INCO shares while aligning the decision with their individual risk profiles and maintaining continuous market monitoring.
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Copyright (c) 2026 Robert J. S. Najoan
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