Discounted cash flow valuation of Mr.D.I.Y. group

Abstract

This paper evaluates the intrinsic value of MR D.I.Y. Group (M) Berhad, Malaysia’s largest home improvement retailer, through a discounted cash flow (DCF). The objective is to assess whether the current market price of RM 1.62 per share as of July 2025 is supported by fundamentals or reflects market optimism.The DCF model is constructed using a free cash flow to firm (FCFF) framework, applying a weighted average cost of capital (WACC) of 10.05% and a perpetual growth rate of 2.0%. Under these assumptions, the intrinsic value is estimated at RM 1.09 per share, approximately 32% below the prevailing market price. Sensitivity analysis reveals that reconciling to RM 1.62 would require either a WACC as low as 7.65% or a growth rate closer to 4.9%, both of which lie outside conservative academic parameters. This indicates that current market pricing embeds a more optimistic outlook on risk and growth than assumed in the base case. This paper focuses exclusively on discounted cash flow (DCF) analysis. While relative valuation could be applied as a cross-check, it is deliberately excluded here to ensure clarity and focus on intrinsic cash flow fundamentals. On a strict DCF basis, MR D.I.Y. is overvalued, with an intrinsic value of RM 1.09 per share compared to the market price of RM 1.62, leading to a SELL recommendation.