Valuation of NNIT: A Valuation Assessment of the Fair Value of NNIT

Jekaterina Habadajeva

Student thesis: Master thesis


The thesis in your hands is a compilation of methodology, theoretical frameworks and a practical investigation. The main purpose of the thesis is to provide the fair value per share of NNIT as of May 20th 2016. Along that, the analysis of a company and the industry it operates in has been undertaken. The report is written from an investor’s point of view solely based on publicly available information. Information Technology today is vital for any business. IT is used for fast communications, data processing and data storing. Information technology enables businesses to view global markets and to keep up with customer needs. Businesses employ IT to become more cost effective and more productive. Most importantly, information technology helps driving business innovation and growth. The report has analysed one of the biggest IT consultancies in Denmark - NNIT. The strategic analysis have applied the PEST framework to research macro-environment and the Porter’s Five Forces framework to study industry environment. Political, economic, social and technological factors have an impact on demand and returns of NNIT. The competition among IT consultancy firms do exist, and NNIT has to stay proactive and respond towards technological developments. Additional and up-to-date services that differentiate from the competitors is one of the keys attracting new and keeping existing customers. In the financial analysis, historical performance of NNIT was studied. Reformulated financial statements have revealed that NNIT should focus on its expenses in order to improve its NOPAT, and thus operating efficiency. The free cash flow to the firm has indicated that large outsourcing contracts lead to a decreased free cash flow as new agreements require higher investments. Findings from the strategic and the financial analyses were then utilized in preparing budgets for NNIT. Multiple scenarios were established in order to forecast NNIT’s performance under various circumstances. After all three scenarios were defined, the valuation has taken place. The discounted cash flow model has determined the fair value of NNIT for each scenario and the weighted share price was then applied, resulting in DKK 198.73 per share. NNIT’s market share price per May 20th 2016 was DKK 200.50. Taking into account the amount of newly signed contracts, the difference between the estimated and the market share price is insignificant. The sensitivity analysis has inferred that the WACC and the share price are sensitive to the different input factors, thereby indicating an existing uncertainty in the valuation.

EducationsMSc in Accounting, Strategy and Control, (Graduate Programme) Final Thesis
Publication date2016
Number of pages132