| Summary: | The aim of this Master thesis is to present a fair valuation of Inditex, a Global Fashion Retail group, headquartered in Spain, and operating in a completely new era of fast fashion, where technology leads the sector ahead of time. The Group is a recognized giant of the Apparel industry, performing its activity in 92 markets, with more than 7300 stores, where almost 4900 are located in Europe. Not to mention, the diversified concept inherent to each of the eight brands owned by Inditex, from more accessible to exclusive high-quality products: Zara, Bershka, Pull & Bear, Stradivarius, Zara Home, Oysho, Massimo Dutti and Uterqüe. Highlight, that Zara is responsible for almost 70% of the total revenues generated. Following the initial purpose, it was performed an extensive investigation on Inditex, analysing the current macroeconomic situation, together with the industry mains risks and future perspectives of growth, not disregarding the Group’s key competitors and its influence on the market. All of this, in order to be able to ground the two valuation approaches, Discounted Cash Flow and the Multiples valuation, although only the last one is developed in this report. Leading us to choose a TOP 6, of comparable companies grounded on the EBITD A margin, Revenue growth and Debt-to-Equity factors, which highlighted the fact that the market is undervaluing the stock and, that the comparables are providing biased results, influenced by the current Pandemic crisis. As a projected target price varying from 15,33€to 23,48€,according to the EV/EBIT multiple, much below the perspective price. In this way, the results were challenged through a sensitivity analysis, where the major risks where considered, culminating into the conclusion that only another wave of the COVID-19 virus, the prolongation of the economic recover until 2023, or an increase in Cost of Goods Sold mainly due to cost inefficiency and sustainability expenses, could lead the recommendation to change, to Sell and Hold, respectively .In addition, we considered a delay in the vaccine efficacy, which led us to conclude the delay cannot be higher than 6 months for the investor to profit in terms of capital and dividend gains. Leading to the affirmation that Inditex will be able to overcome these uncertainties and deliver a 17,40% return to the investors at the end of 2021, through our main valuation approach, analysed in the principal report (annexed).Hence, we reinforce our Buy recommendation.
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