Repsol-YPF: valuation in emerging markets

The case aims to introduce MBAs and executives to the issue of valuation in emerging markets. It stresses the differences between estimating the expected cash flows and cost of capital of companies in developed markets and in emerging markets, with particular emphasis on the estimation of the cost of equity of companies in emerging markets. The case makes it possible to compute the cost of equity of the Argentine state oil company YPF using the CAPM and three alternative approaches to this model, the three of them specifically designed for emerging markets. The case also makes it possible to perform relative-valuation analyses by using price-to-earning ratios, price-to-book ratios, and some other widely-used multiples, as well as a valuation of YPF’s main asset, its reserves of oil and gas.