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If the same firm's DCF value is Rs 600 crore and relative-valuation EV (peer multiples) is Rs 900 crore, the most likely interpretation is:
ADCF assumptions are universally correct
BPeers are over-extrapolating market sentiment
CAsset replacement value confirms the lower number
DRelative valuation always understates value
Answer & Solution
Correct answer: B. Peers are over-extrapolating market sentiment
1. Identify what the question asks: this concept maps to dcfrelativegap (§5).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (B).
_Source: ICAI BoS CA Final Paper 2, Ch 13 "Business Valuation"_
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