Valuation of Kaspi.kz JSC upon listing on the US Stock Exchange

Abstract

Kaspi.kz JSC has conducted an IPO on the US stock exchange at the beginning of the 2024. IPO is a promising decision for the company, which involves increasing shareholder value, publicity and transparency, as well as providing capital opportunities for the realization of the company's strategy. An initial public offering provides insight into how much a company is valued based on the company's past, current and projected macroeconomic and internal factors. Moreover, IPO offers investors access to promising companies seeking to grow and create long-term profit. Therefore, the IPO of Kaspi.kz JSC in the U.S. market opens potential opportunities both for the company itself and for investors. This study aims to perform an analysis of Kaspi.kz JSC by estimating its intrinsic value in order to detect the true value of the company, compare it with the market’s perception and examine the financial performance of the company. For the purposes of company valuation, financial statements for the period of 2021-2023 were taken to calculate the value of Kaspi.kz JSC. Intrinsic value calculation was performed to conduct a comparison with its current market price in the NASDAQ Composite, the stock market index where the company has been listed, and to analyze its financial performance for assessment of the company’s ability to generate profits and sustainability in growth. The discounted Cash Flow (DCF) model via Free Cash Flow of Equity determination was used for financial valuation as this method is commonly used for companies that are expected to generate stable returns over the long-term perspective. In addition, this method of valuation provides a more explicit and direct approach to measuring the returns available to investors and is not sensitive to changes in debt and capital structure. The findings of this paper show that Kaspi.kz JSC's intrinsic value is USD 113,26 or KZT 51 170,47 (1 USD = 451,8) which is concluded to be undervalued compared with IPO, which was on January 18, 2024 the price was USD 92,5 or KZT 41 791,5 (1 USD = 451,8). However, this price lies within the band of 40% considering that the lowest price since the IPO was USD 87,02 or KZT 38 906,64 for February 12, 2024 (1 USD = 447,1), and the highest price was USD 135,14 or KZT 60 479,20 for April 3, 2024 (1 USD = 447,53). These implications can be beneficial source to investors, buyers, suppliers and other related parties of the Kaspi.kz JSC and may be applied in decision-making, analyzing the investment and the company's prospects.