Calculating The Fair Value Of SKS Technologies Group Limited (ASX:SKS)

Simply Wall St.

Nov 13, 2025

AdvertisementKey Insights Using the 2 Stage Free Cash Flow to Equity, SKS Technologies Group fair value estimate is AU$2.87 With AU$3.24 share price, SKS Technologies Group appears to be trading ...

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Using the most recent financial data, we'll take a look at whether the stock is fairly priced  by projecting its future cash flows and then discounting them to today's value.  We will use the Discounted Cash Flow (DCF) model on this occasion.  Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow.  We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws.  For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. The Calculation   We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase.  In the first stage we need to estimate the cash flows to the business over the next ten years.   Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.   Generally we assume that a dollar today is more valuable than a dollar in the future,  so we need to discount the sum of these future cash flows to arrive at a present value estimate:  10-year free cash flow (FCF) forecast  2026202720282029203020312032203320342035 Levered FCF (A$, Millions) AU$20.9mAU$21.9mAU$23.7mAU$22.3mAU$21.6mAU$21.3mAU$21.3mAU$21.6mAU$21.9mAU$22.4mGrowth Rate Estimate SourceAnalyst x2Analyst x2Analyst x2Est @ -5.89%Est @ -3.13%Est @ -1.20%Est @ 0.15%Est @ 1.09%Est @ 1.76%Est @ 2.22% Present Value (A$, Millions) Discounted @ 8.7% AU$19.2AU$18.5AU$18.4AU$16.0AU$14.2AU$12.9AU$11.9AU$11.1AU$10.4AU$9.8(\"Est\" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = AU$142m The second stage is also known as Terminal Value, this is the business's cash flow after the first stage.  The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 3.3%. We discount the terminal cash flows to today's value at a cost of equity of 8.7%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = AU$22m× (1 + 3.3%) ÷ (8.7%– 3.3%) = AU$431mPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$431m÷ ( 1 + 8.7%)10= AU$187m The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value,  which in this case is AU$330m.  To get the intrinsic value per share, we divide this by the total number of shares outstanding.  Relative to the current share price of AU$3.2, the company appears   around fair value    at the time of writing.   The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. ASX:SKS Discounted Cash Flow November 12th 2025  The Assumptions  The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows.  If you don't agree with these result, have a go at the calculation yourself and play with the assumptions.  The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance.  Given that we are looking at SKS Technologies Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt.  In this calculation we've used 8.7%, which is based on a levered beta of 1.279. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.   View our latest analysis for SKS Technologies Group SWOT Analysis for SKS Technologies GroupStrength Earnings growth over the past year exceeded the industry. Currently debt free. Dividends are covered by earnings and cash flows.  Dividend information for SKS. Weakness Dividend is low compared to the top 25% of dividend payers in the Electrical market. Expensive based on P/E ratio and estimated fair value.  What are analysts forecasting for SKS? Opportunity Annual earnings are forecast to grow faster than the Australian market. ThreatNo apparent threats visible for SKS. Next Steps:  Although the valuation of a company is important, it  ideally won't be the sole piece of analysis you scrutinize for a company.  The DCF model is not a perfect stock valuation tool.  Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued.  If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different.  For SKS Technologies Group, we've compiled three  important  elements  you should consider:   Risks: For instance, we've identified   1 warning sign for SKS Technologies Group  that you should be aware of.   Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for SKS's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.  Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!   PS. Simply Wall St updates its DCF calculation for every Australian stock every day, so if you want to find the intrinsic value of any other stock just search here.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"}}}