Who can do Valuation in India?

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 Valuation in India 

Valuation Methods 

Valuation is a necessary and no so necessary thing. It totally depend on the situation the company is in. You may not know this, but most the valuation is done for internal management needs.

But yes valuation is seen in IPO and Other Equity related activities being conducted by the company.

In this blog we will understand who is eligible to do valuation according to Income Tax Act, 1961 and further amendments.


There are three methods of valuation-
  • Net Asset Value 
  • Discounted Cash Flow 
  • Market Comparison

According to Rule 11UA of IT Act 1961, Net Asset Value that is 'NAV' can be done by a Accountant or a Merchant Banker and the methodology and format are very clearly given by the Income Tax Department of India.

Whereas Discounted Cash Flow that is 'DCF' can only be done by a Merchant Banker who will adapt the best methodology known to him/her.

NAV is quite a stiff but easy valuation methodology and is very well dependent on the financial statement and balance sheet. That makes it a valuation based on past and present scenario or condition of the company.

But DCF is very much dependent on the future, that is the calculation is based on projections. And the act has given liberty to the merchant banker to use there own methodology to calculate DCF. It's quite a difficult method and requires a deep understanding.

DCF is based on projections and yes a lot of market available data, presented and used in an understandable and useful manner.

That's a really short information about about valuation do follow for further information of same domain topic.

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