Inditex valuation thesis 2019

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University Degree in Business Administration
Academic Year (2018-2019)
Bachelor Thesis
“Valuation of Industria de Diseño
Textil S.A.”
Miguel Tejada Méndez
Tutor: José Luis Hernández Sánchez
Madrid. July 2019
[Include this code in case you want your Bachelor Thesis published in Open
Access University Repository]
This work is licensed under Creative Commons Attribution – Non Commercial
– Non Derivatives

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Abstract
This main purpose of this thesis is to calculate the share value of Industria de Diseño
Textil S.A. at the beginning of year 2019, in order to determine if they are being
overvalued or undervalued as compared to the market. To this end, the Discounted Free
Cash Flow has been used as the reference and principal valuating method.
Prior to the application of this methodology an analysis of the macroeconomic
environment and the sector has been made, thus being able to extract the hypotheses to
project the future flows of the entity between the years 2019 - 2023. Subsequently, the
cash flows and residual value have been calculated. Being this last parameter the one that
reflects the value of the company beyond the established period.
The addition of these flows together with the residual value discounted at the WACC
(Weighted Average Cost of Capital) discount rate allows the value of the company to be
obtained. This value was reduced by the net financial debt discounting the cash, thus
obtaining the value of shareholders' equity. The price per share is determined by dividing
shareholders equity by the total number of shares outstanding.
Comparable companies analysis and precedent transactions valuation have been used as
complementary methodologies, in order to compare the result with the one obtained in
the Discounted Free Cash Flow Method. In addition, the price of the Inditex will be
compared with the valuations of other analysts.
Key words: fashion, retail, apparel, valuation, projections, enterprise value.

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Contents
1. INTRODUCTION .............................................................................................................. 7
2. MACROECONOMIC ANALYSIS......................................................................................... 9
1. International Analysis............................................................................................ 9
2. Domestic Analysis............................................................................................... 11
3. GROUP AND INDUSTRY ANALYSIS ................................................................................ 13
1. Group Description ............................................................................................... 13
2. Industry Description ............................................................................................ 18
4. FINANCIAL AND ECONOMIC ANALYSIS ......................................................................... 23
1. Income Statement ................................................................................................ 23
2. Balance Sheet ...................................................................................................... 25
3. Overview ............................................................................................................. 30
5. MODEL ASSUMPTIONS ................................................................................................. 33
1. Projected Income Statement ................................................................................ 33
2. Projected Balance Sheet ...................................................................................... 35
6. DISCOUNTED CASH FLOWS VALUATION...................................................................... 37
1. Methodology........................................................................................................ 37
2. Application .......................................................................................................... 39
3. Results ................................................................................................................. 42
7. COMPARABLE COMPANIES VALUATION ...................................................................... 43
1. Methodology........................................................................................................ 43
2. Application .......................................................................................................... 43
3. Results ................................................................................................................. 45
8. PRECEDENT TRANSACTION ANALYSIS ......................................................................... 47
1. Methodology........................................................................................................ 47
2. Application .......................................................................................................... 48
3. Results ................................................................................................................. 48
9. CONCLUSIONS.............................................................................................................. 51
10. GLOSSARY ................................................................................................................. 53
11. APPENDIX 1: DISCOUNTED CASH FLOW ................................................................. 55
12. APPENDIX 2: COMPARABLE COMPANIES ................................................................ 56
13. APPENDIX 3: PRECEDENT TRANSACTIONS .............................................................. 57
14. APPENDIX 4: INCOME STATEMENT AND PROJECTIONS ........................................... 58
15. APPENDIX 5: BALANCE SHEET AND PROJECTIONS.................................................. 59
16. BIBLIOGRAPHY .......................................................................................................... 61

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Introduction
The main purpose of thesis is to determine the value per share of the group Industria de
Diseño Textil (from now on “Inditex”) at the beginning of year 2019 in order to
determine the whether it is either overvalued or undervalued.
For this, Discounted Cash Flows has been used as the principal valuation method.
Comparable Companies analysis and Precedent Transactions Analysis have been used
as alternative methodologies to contrast the information obtained in the Discounted
Cash Flows valuation.
To perform this analysis public information disclosed by the group, equity reports as
well as financial news have been consulted. This information was key to study the
macroeconomic environment in which Inditex is operating. In addition, a study about
the fashion and apparel sector has been made, analyzing the current situation as well as
future trends.
At the same time, the financial statements from 2012 to 2018 have been extracted and
analyzed to identify patterns and behaviors and have a better understanding of how the
company could perform in the future. Finally, a comparison will be carried out of the
prices obtained according to different forms of valuation.
The motivation behind this thesis has been to have a better understanding of how a
company is valued in order to assess investment decisions. The group Inditex has been
chosen for this valuation as it is the most representative company in the Spanish market,
having the largest market cap (Statista, 2019).
The access to new technologies has opened the door to a new market in which cost
efficiency is key, increasing competition and therefore reducing the market share of the
biggest players. It could be interesting to observe how a market leader like Inditex
adapts to this challenge.

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Macroeconomic analysis
1. INTERNATIONAL ANALYSIS
Market Analysis
The U.S.-China trade war and the uncertainty surrounding Brexit have been two of the
most prominent market focuses of the second half of the year 2018. In terms of trade,
the increase in US tariffs on China has affected a total of $250 billion in imports
(Bloomberg, 2019). China has retaliated and the situation is beginning to affect some
trade flows between the two countries.
Regarding Brexit, the European Union (EU) and the United Kingdom have reached an
Exit Agreement, although May is finding it very difficult to approve it in the British
Parliament and the vote has been delayed until the beginning of 2019 due to lack of
support. Euro-sceptic parliamentarians are demanding greater EU guarantees that the
default solution to avoid a physical border in Ireland, which is to remain in the Customs
Union, will not last forever. (The Guardian, 2018).
The Italian government has been forced to decrease its public deficit target to a 2% of
Gross Domestic Product (GDP), as their budgets for 2019 have been rejected by the
European Commission. The uncertainty about the possible responses of the Italian
Government have negatively impacted the country´s risk premium as well as other
financial indicators (Financial Times, 2018).
In France, citizens protested against president Macron and some economic factors like
the increase in oil price or the loss in the purchasing power, creating the yellow vest
movement. This has created skepticism about the ability of the country to comply with
the European rules.

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Economic Analysis
The overall economy continues to grow but at more moderate levels. Economy growth
will slow down in the following years, dragged by the first world countries. Global
economy is expected to grow at a rate around 3 percent in the following years leaded by
emerging countries, predominantly in the Asia-Pacific region, with rates close to 7
percent (Worldbank, 2019).
Table 1: World Growth (Worldbank)
2015 2016 2017 2018 2019 2020 2021
World 2,9 2,6 3,1 3,0 2,6 2,7 2,8
Advanced economies 2,3 1,7 2,3 2,1 1,7 1,5 1,5
Emerging markets 3,8 4,1 4,5 4,3 4,0 4,6 4,6
There is a decline in the United States projected GDP growth that can be understood
with the abandonment of expansionist monetary policies. Accompanying this, is the
saturation in demand for housing, cars and durable goods. The situation has also been
aggravated by Trump's intrusive foreign policy, entering into a trade war with China.
Accordingly, inflation will decrease in the Eurozone from a 1,8 in to a 1,3 in 2019 and
to 2020, threatened by uncertainty of political factors such Brexit, and a slowdown in
global trade. However, analysts expect a recovery from 2021 onwards (Goldman Sachs,
2018).
Table 2: Europe inflation (Goldman Sachs Research)
2018 2019 2020 2021 2022
Growth Inflation Growth Inflation Growth Inflation Growth Inflation Growth Inflation
Euro area 1,9 1,8 1,6 1,3 1,6 1,2 1,5 1,4 1,4 1,4
Germany 1,7 1,8 1,9 1,4 1,6 1,4 1,3 1,6 1,2 1,6
France 1,6 2,1 1,7 1,3 1,6 1,2 1,7 1,3 1,8 1,2
Italy 1,0 1,3 0,4 1,1 1,1 1,2 1,0 1,2 1,0 1,2
Spain 2,5 1,8 2,3 1,3 2,1 1,3 2,0 1,4 1,5 1,4
UK 1,3 2,5 1,5 1,9 1,4 1,9 1,6 2,0 1,7 2,0
In order to stimulate the economy, central governments are opting to lower interest rates
further, putting more money into circulation, shifting the loan offer and thus, increasing
consumption.

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An inverting U.S Treasury yield curve has been drawn in the last months. Normally
investors seek for higher returns in the long run in order to offset inflation effects. Short
term rates are being higher than the ones in long run, possible anticipating an incoming
recession.
2. DOMESTIC ANALYSIS: SPAIN
Industria de Diseño Textil has its headquarters in Spain where it produces more than the
half of their products. It is logical therefore, to study the Spanish economy for a better
understanding of Inditex group.
Political Analysis
In the political spectrum, the socialist political Spanish party (PSOE) leaded by Pedro
Sánchez organized a motion of censure in which Mariano Rajoy was dismissed as
president of the government.
PSOE is governing with the support of its main rival in the left wing Podemos and the
nationalist parties. The government has been unable to fulfil Catalan separatist´s
demands. As a consequence, PDeCAT and ERC have decided not to approve
State's general budgets, and new elections have been called for 28th
April (The
Economist IU, 2019).
Economic Analysis
Spain has enjoyed a strong recovery reaching growth levels similar to those before the
crisis. GDP slowed down its growth to an annual rate of 2,6% in 2018, but it is still
being above the EU average for the fourth year in a row. The slowdown in GDP has
been largely caused by a reduction in private consumption. Investment is expected to
diminish in the incoming years while the exports will strengthen (European Comission,
2017).

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Figure 1: European Commission
Despite the slowdown, GDP growth is still strong, underpinned by rising wages caused
by the increment in the minimum salary. The possibility of an increase in the minimum
professional salary have a negative impact on the job creation rate predictions.
However, employment growth is expected to continue during next year.
In terms of consumer prices forecasts have been considered downwards, mainly due to
the drop of the oil price in recent months. As a consequence, a deceleration of the
Consumer Price Index (CPI) linked to a contribution of the energy component is
expected. Inflation forecasts for 2019 place it around 1,1%.
Spain closed the year 2018 with a
gross debt of 97% of GDP (Bank of
Spain, 2019), that is €1.17bn.
Although public debt has been
slightly decreasing since 2014, the
current levels are far from the figures
that were handled before the outbreak
of the crisis, when Spain supported a
debt of around 30% of GDP.
Taking all these factors together, it seems reasonable to think that the economy may be
approaching a downturn.
Figure 2: Statista

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Group and industry
analysis
1. GROUP DESCRIPTION
Inditex is one of the biggest companies in the fashion industry. It has been operating
since 1963 selling key elements of fashion production. It was founded as a family
business who sold women´s cloth. Today it has 8 brands (Zara, Pull&Bear, Massimo
Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe) selling in 96 countries
with more than 7.000 stores.
Each of these brands have its own management, independently taking decision and
managing resources. Being part of the group Inditex gives them access to synergies and
specific know-how. Each company manages its business focused on maximizing their
performance knowing that certain activities will be covered by the group.
Inditex has an administrative role, centralizing corporate services and giving support to
each of the subsidiaries. Some of the activities it performs are the leveraging financial
capacities, providing legal advisory, human resources and the technology installations
among others.
Table 3: Own construction with data from Inditex website
Business model
Inditex has a highly integrated model, carrying out most of the activities in the value
chain. Design of the products, purchase of materials, production and quality control,
distribution and selling through physical and online shop, are all done by the group,
Zara Pull & Bear Massimo Dutti Bershka Stradivarius Oysho Uterqüe
Sales 18.021 1.862 1.802 2.240 1.534 585 10
Stores 2.862 974 766 1.107 1.011 678 92

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having a greater control of their business structure and thus easily adapting to the
changing market demands.
The point of sale is a key element of Inditex's business model. Both online and physical
stores have been carefully designed to optimize the customer experience. Having a
vertically integrated model allows much greater flexibility by adapting the offer to the
customer's demands. By means of a reduced inventory, the risk exposure of the fashion
sector can be minimized. There is a special emphasis on choosing the right design of
shops to personalize as much as possible the experience of the target customer. Inditex
plans to make all it shops eco-efficient for 2020.
The main expansion strategy of Inditex is based on the opening of stores managed by
entities from which Inditex acquires complete or most of the ownership. In developing
countries or with difficult access, the group partners with local company via
franchising. At the end of 2018, there were 1.078 franchise stores in a total of 7.490
stores.
The success of collections lay on the ability to spot trends and underlying needs in
customers, designing the right product that best suits these demands. The flexibility of
the business model gives the possibility to adapt to any changes that may arise during a
campaign and react, in this way, by launching new products into the market through
physical and online stores. The models are designed by the teams of each brand based
on market trend analysis and feedback received from the sales points.
To produce the clothes Inditex works with suppliers from 47 different nationalities.
Nevertheless, 57% of these suppliers are located next to headquarters in Arteixo
(Galicia, Spain). In order to work with Inditex, providers have to follow the code of
conduct of the group, ensuring the production of high-quality products respecting
human rights and labor conditions.
Part of the production takes place in the 11 factories belonging to the group,
specialized mainly in products with a greater fashion component. Production is in any
case limited to a number of units and gradual with short runs, ensuring sustainability.

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Logistics are intended to comply with this strategy. Inditex has 10 centers of
distribution being able to deliver anywhere in the world in less than 48h. Physical and
online collections are refreshed twice a week.
Figure 3: Inditex annual report
Diversified Portfolio
While Inditex is mainly know for Zara, who conserves the initial spirt of the group
developing clothing for the average citizen, there are other seven different brands
belonging to the group. Those are Pull and Bear (dynamic, young), Massimo Dutti
(elegant, premium), Bershka (high fashion, trendy), Stradivarius (fashion, young),
Oysho (comfortable, women), Zara Home (home products) and Uterqüe (high quality).
Each brand has its own management and designers. This allows them to specialize in
different markets, thus acquiring a larger potential audience.
Ownership
The board provides expertise from many different areas and industries. At 31 January
2019, the Inditex share capital was €94M, and was divided into 3.116M shares of €0.03
each. All the shares are of a single class with the same voting and dividend rights.

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The principal members of the board of directors are Pablo Isla, CEO and chairman of
Inditex, where he holds 1.9M shares; Amancio Ortega member of the board and
founder, being the majority shareholder of the company with a total of 1.848M; and
Pontegadea Inversiones S.L., represented by Flora Pérez, holding 50,01% of share
capital.
Swot Analysis
An analysis of the company's weaknesses, strengths, opportunities and threats is
explained below.
Among the strengths we find agility. Inditex has a model based on the proximity of
supplies. This enables a quick adaptation to changing trends. Another advantage is the
size of the group, which allows to take advantage of economies of scale both in
manufacturing and in gathering information from customers through artificial
intelligence.
The centralized model, channeling all stocks in Spain, is another noteworthy factor.
This gives the group a greater control over its stock. Inditex operates under 8 brands in a
wide range of segments, this allows it to address a more open public while balancing the
structure of the group.
It is worth mentioning the implementation of RFID technology to manage products by
radiofrequency from production to sale. This allows a dedication of staff to more
productive tasks.
Another of its strengths is based on its prime real estate portfolio, with stores located in
strategic points of large cities. There is the low marketing expenditure too. Its
promotion is based on word of mouth, which creates greater loyalty. Finally, it’s worth
mentioning their balance sheet structure, with more than €5bn cash, that provides a safe
net in case of unforeseen circumstances.

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Regarding the weaknesses is the network of stores, which was not designed for the
centralized logistics model. The group is having to build new supply centers to cover
operational capacities. There is also a lot of exposure to EUR. Devaluations of the euro
have a very noticeable effect on profits. Margins are also reduced by the cost of
hedging.
Another problem is the excessive concentration of sales in Zara, the rest of the
companies only add up to around 1/3 of the profits. In addition, some of the brands
might be overlapping, addressing similar audiences. Finally, having a centralized
system in Spain works well for Europe but complicates expansion to other continents.
There are a few opportunities currently available. Inditex increased its online sales by
41% in 2018. This suggests that it may be selling below what the market demands
(online sales account for only 10% of the total). The digital transition also provides an
opportunity to lower costs by cutting its physical presence in a market with rising rental
costs.
There is also the possibility of expanding into other sectors such as sports or low-cost
clothing, not covered by the group yet.
Greater possibility of penetration in markets such as China where it has a market share
less than 1% (sales in this region last year accounted for 10% of group sales) or the
American where they have less than 100 stores in a market that covers 20% of total
sales in the clothing sector (UBS Evidence Lab, 2019).
Among the main threats are high operating costs due to increased salaries. Personnel
costs in 2018 accounted for 15% of sales. The centralized model also has an impact in
this sense, as peer companies have their production facilities in other countries with
cheaper labor.
Higher consumer expectations are also observed. Internet access has changed the
mentality of the customer who now expects to find the exact product that satisfies his
demands at the most competitive price possible.

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There has also been an increase in competition. Companies such as Asos, Bohoo or
Zalando with extremely fast supply chains put at risk the operational flexibility
competitive advantage that Inditex have. Lastly, the decrease in store sales can do a
great deal of damage to the group as it sells 90% through this channel.
2. INDUSTRY DESCRIPTION
Inditex can be classified into the retail sector, in the subdivision of fashion and apparel.
This is a very cyclical and dynamic environment that has been being affected by the
implementation of new technologies, transforming its traditional business models into
more efficient and competitive ones.
Industry analysis
A new wave of changes will come along 2019, where the ability of companies to
quickly adapt to market needs will be key. This set of changes mean new opportunities
for entrants and challenges for the companies currently operating.
Consumers realize there is a huge demand covering all their wants. They expect
companies to know about their needs and satisfy them. Data collection will be very
important for companies in order to personalize their service. Nevertheless, this should
be done very carefully as the clients are starting to think more about their privacy.
Internet is allowing smaller tech-implemented companies get access to the industry.
This results in an increase of competition where smaller brands are decreasing market
share of big companies.
The way companies invest their money has also changed. Investment in properties is
starting to lose weight, whereas innovations in digital processes or business platforms
are gaining higher relevance. As a result, cost to increase market share in companies is
getting steeper.
If we take look on ROA (return on assets), a common ratio of the sector used to
measure the efficiency, a decreasing pattern can be observed since 2012. Sales are still
high in the sector, but the appearance of new challenges require higher spending.

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This decline on ROA is caused due to a dispersed distribution of the costs all along the
value chain, as many companies try to lead in all its different areas.
Figure 4: Deloitte analysis of more than 100 US retailers
Consumer spending has mixed stimulus. On the one hand the increase in salaries have
benefited disposable income. Central banks are also trying to incentive consumption by
easing loan facilities and cutting taxes as it happened in United States.
On the other hand, these expansive policies are only a palliative trying to mitigate the
effects of a mature cycle with lowered growth. Sales are expected to decrease to
somewhere between 3,4% and 4,1% in 2019. Previous year was 5,5% (Sides & Furman,
2019).
Consumer Confidence Index (CCI) has been recovering from the steep declines suffered
between 2007 and 2009 due to the financial crisis. This year 2019 began in 100,4%,
level of cautious optimism, similar as the one before last recession.
Figure 5: OECD

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Loyalty programs have so far been an effective method of attracting customers.
However, due to low switching costs, it is becoming increasingly challenging to retain
consumers. Retailers should look beyond traditional point-based incentive programs and
try to offer a differentiated experience.
Artificial intelligence (AI) plays a key role in gathering information about buyers'
characteristics, categorizing them and offering them personalized rewards.
The most valued prizes are those that enjoy the greatest exclusivity. It is also important
that the prizes are easily redeemable.
There is a tendency for consumers to support causes such as climate change or social
integration. For this reason, the company's values must be aligned with those of the
buyer.
Relevant factors
The revenue of the industry at the end of 2018 was €346.256M (12,9%YoY) and the
revenue growth was of 9,9%. As it can be seen in the graph is expected to decrease in
the following years (Statista, 2018). Based on an study of the 50 most representative
companies in the sector the CAGR of the last 5 years were 20,06% (Damodaran,
Historical Growth Rates by Sector, 2019).
This decrease in revenue growth is contradictory with the penetration rate. The share of
active paying customers (or accounts) from the total population of the selected market
(market segment, region) for each year is growing. This has to do with decrease in the
barriers to enter in the industry.
E-commerce and online shops are letting lower income companies compete with bigger
ones, based on more efficient business models and reduced transacction costs. Therefore
market share is reduced.

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Figure 6: Statista
Based on a survey made to consumers by statista in 2017 there were a higher number
women users (55.9%) than males (44,1%). The results shown also that the amount of
customers with low incomes accounted for a total of 29.1%, those with medium
incomes for 33.2% and the ones with greater purchasing power for 33.7%. The most
active age range was from 25-34 years with a total of 32,6%; the second one was from
35-44 years with a 24,0%. People below 25 years old summed a total of 22,3% and the
rest was comprised by people above 45 years (Statista, 2018).
If we take a look on where the revenue was generated we reach to the conclussion that
China was the country with higher revenue of the industry ($183.181M), followed by
EEUU ($69.621M), UK ($15.710M), Germany ($14.134M) and India ($9.931M).
The ranking of companies according to its market share was as follows. The first
company according to sales revenue in 2018 was TJX Companies Inc with €33.9M
(market share: 9,8%), followed by Inditex with €26.1M (market share: 7,55%) and
H&M with €20.4M (market share: 5,89%). Industry average of the top ten selling
companies was €14.4M (Osiris Database, 2019).
Figure 7: Osiris
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Financial and economic
analysis
Before analysing the financial situation of the company, it is necessary to indicate that
all the tables and graphs that appear below are of your own elaboration based on the
data published in the annual report. The number are in million EUR.
1. INCOME STATEMENT
Sales has been growing at a compounded annual growth rate (CAGR) of 7,73% in the
last 6 years. In FY2018 online sales grew by 27% compared to the €23,128M made the
previous year. Online sales represent a total of 12% of net sales.
Cost of sales had been increased at a rate proportional to sales growth, keeping the gross
margin for FY2018 similar to previous years margins. Nevertheless, the overall activity
expansion of the group for this year has been significantly lower.
million EUR FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Net Sales €16.724 €18.117 €20.900 €23.311 €25.336 €26.145
Sales growth (%) N/A 8,3% 15,4% 11,5% 8,7% 3,2%
Cost of sales €6.802 €7.548 €8.811 €10.032 €11.076 €11.329
COGS growth (%) N/A 11,0% 16,7% 13,9% 10,4% 2,3%
Gross profit €9.923 €10.569 €12.089 €13.279 €14.260 €14.816
Gross margin 59,33% 58,34% 57,84% 56,96% 56,28% 56,67%
A clear example of Inditex's good management can be seen below, adapting its
operating costs to the amount of income generated. In FY2018, operating costs grew by
4%, less than in the two previous years when it increased its costs by 10%. Therefore
we can see very similar EBITDA margins in the last financial years.
Almost half of the operational expenditure came from staff costs (€4.136€). Inditex
ended the year 2018 with 174.386 employees (Women: 131.385/ Male: 43.001).

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An amount of €2.392M of the expenses came from the rental of properties to carry out
the commercial operation. The remaining amount were incurred in administrative
activities or maintenance of utilities.
million EUR FY2017 FY2018
Personnel expenses €3.961 €4.136
Operating leases €2.358 €2.392
Other operating expenses €2.625 €2.801
Operating Expenses €8.944 €9.329
Net profit has been solid over time. Despite having grown this year to only 2.25% the
CAGR of the last 6 years has been 6.36%.
Net income €2.382 €2.510 €2.882 €3.161 €3.372 €3.448
% growth N/A 5,37% 14,82% 9,68% 6,68% 2,25%
Finally, a table with the main data of the consolidated income statement is presented. It
can be seen that Inditex expansion is done progressively using the avalaible resources
the company generates. The decrease on sales growth since 2015 had made margins
slightly decrease overtime.
If one look at other companies in the sector, it can be seen that the decline has been
generalised. The average profit margin of the 10 most representative companies in the
sector fell by 12% in 2018, including Inditex, (Osiris Database, 2019).
Compared to last year, the group had a good return on financial interests (exchange rate
gains and interest accrued on assets) and, on the other hand, slightly higher D&A
(depreciation and amortization) costs and taxes.
The general sensations are positive, with constant and sustained sales over time, Inditex
is being able to maintain very competitive margins within the industry.

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Net Sales €16.724 €18.117 €20.900 €23.311 €25.336 €26.145
Operating cash flow (EBITDA) €3.926 €4.103 €4.699 €5.083 €5.277 €5.457
%margin over sales 23,48% 22,65% 22,48% 21,81% 20,83% 20,87%
Operating Income (EBIT) €3.071 €3.198 €3.677 €4.021 €4.314 €4.357
Net income €2.382 €2.510 €2.882 €3.161 €3.372 €3.448
2. BALANCE SHEET
In order to achieve a better understanding of the structure of the balance sheet and its
change in recent years a vertical comparison has been carried out. According to this
study it can be seen how distribution has remained constant despite increasing year after
year.
Assets in at the end of FY2018 were €21.684M. Current and non-current assets had
almost the same weight in recent years with distributions of 50/50 in 2016 and 2017 and
49/51 in the last fiscal year respectively.
Similar pattern can be observed in the group's equity and liabilities. There is very little
debt in relation to equity. Total liabilites by equity in FY2018 was 0,48 (with an
average of 0,50 between 2012-2017). This goes in line with other leading companies
like Fast Retailing (0,53) or Hennes and Mauritz (0,51).
€0
€5,000
€10,000
€15,000
€20,000
€25,000
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Total Asset
Distribution (M€)
CURENT ASSETS NON CURRENT ASSETS

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Most of the financing is carried out with current assets, with only 23% of long-term
debt in the last fiscal year.
By breaking down the balance sheet into sections the following information can be
extracted.
Total Assets amounted a total of €21.684M in FY2018 (7,2% more than previous year).
This was caused mostly by the increase in Current Assets (+9,7% YoY).
million EUR FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Non Current Assets €6.198 €6.991 €8.271 €8.908 €9.723 €10.084 €11.064
Current Assets €6.692 €6.765 €7.106 €8.449 €9.898 €10.147 €10.620
TOTAL ASSETS €12.890 €13.756 €15.377 €17.357 €19.621 €20.231 €21.684
Current assets were €10.620M at the end of 2018 growing at a 4,6% YoY. The CAGR
of the past 6 years were 6,8%.
The biggest increase of current assets were in FY2015 (+18,9% YoY) and FY2016
(+17,1% YoY) caused by the rise in short-term investments, comprising investment
funds and high rated fixed income instruments with maturities lesser than a year.
It shall be noted that the large cash balance the company has. The €4.866M of cash can
be used to offset all the long term liabilites and more than the half of the short term
liabilities. This is a clear symptom of solvency.
€0
€5,000
€10,000
€15,000
€20,000
€25,000
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Shareholder´s equity & Liabilites
Distribution (M€)
SHAREHOLDERS' EQUITY NON CURRENT LIABILITIES CURRENT LIABILITIES

27
It can be argued that such an excessive cash flow can lead to inefficiencies as the
opportunity to invest in higher yielding assets as well as further expansion through debt
is lost (this will be discussed in the liabilities analyisis).
The inventory reached a total of €2,716M in 2018, confirming the sustained growth it
has been making in recent years. The inventory breakdown was €111M in the total
value of raw materials, €35M in WIP (“Work in progress”) products and €2570M in
final products ready for sale. This last figure serves as an indicator of the company's
strategic management as well as the possible decrease in consumer demand. The
maintenance of these products is also expensive, Inditex takes out an insurance policy to
protect itself against possible damage. However, we see that the final products amount
barely increased in the last year (only 0,55% growth).
Under the concept “Other” there are tax benefits to be received, profits from hedging
instruments such as otc derivatives, exchange rate forwards or options as well as other
liquid assets.
Inventories €1.581 €1.677 €1.860 €2.195 €2.549 €2.685 €2.716
Receivables €848 €815 €862 €669 €861 €778 €820
Short term investments €261 €213 €222 €1.086 €2.037 €1.472 €1.929
Cash & equivalents €3.843 €3.847 €3.798 €4.226 €4.116 €4.931 €4.866
Other €160 €213 €364 €274 €336 €282 €289
CURENT ASSETS €6.692 €6.765 €7.106 €8.449 €9.898 €10.147 €10.620
Non current assets were €11.064M in the last fiscal year, that is 9,72% more than the
results of FY2017, outperforming the CAGR betweeen FY2012-18 of 8,63%.
Intangible assets grew significanty in the last year (+10,6% YoY) pushed by the rights
over leased assets, which amounted a total of €464M. Goodwill barely changed with
respect to previous year (FY2017: €207M / FY2018: €206M).

28
Property Plant and Equipment (PP&E) in FY2018 was €8.339M, that is and increase of
8,3% compaired to previous year caused by a strong investment in software and digital
tools (total investment of FY2018 amounted €70M).Financial investments amounted
€267M, increasing past year result by €30M.
Behind the concept “Others” include deferred tax assets and guarantees and deposits of
the owners of commercial facilities under lease as a guarantee of compliance with the
conditions stipulated in the rental contracts.
Intangible assets €820 €846 €882 €888 €911 €919 €1.016
Tangible assets €4.745 €5.220 €6.122 €6.619 €7.305 €7.664 €8.359
Financial investments €4 €21 €151 €184 €231 €237 €267
Other €629 €905 €1.116 €1.217 €1.276 €1.264 €1.422
NON CURRENT ASSETS €6.198 €6.991 €8.271 €8.908 €9.723 €10.084 €11.064
On the other side of the balance sheet there is shareholders equity. Common stock of the
Company at 31 January 2019 was the same as the one of 2018 and amounts to €94M,
divided into 3.116M shares of 0,03€ par value each, all belonging to a single class
confering the same voting rights.
The parent company's share premium of FY2018 and FY2017 amounted to €20M,
while accumulated earnings amounted to €12.130M and €3.918M respectively. The
Company's legal reserve amounts to €19M, which is the minimum limit established by
the Spanish Corporations Law, which stipulates that this amount must be equal to 10%
of profit for the year.
Dividends paid by the parent company in FY2018 amounted to €2.335M, corresponding
to a payment of EUR 0,75 per share. Finally, the company's treasury shares at 31
January 2019 were 2.950.143, representing 0,095% of the common stock.
Equity attributable to the Group €8.446 €9.246 €10.431 €11.410 €12.713 €13.497 €14.653
Minority interests €36 €32 €38 €41 €38 €25 €30
SHAREHOLDERS' EQUITY €8.482 €9.278 €10.469 €11.451 €12.752 €13.552 €14.682

29
Current liabilities were €5.383M this year 2018. A anarquic growth pattern can be
observed during the last years. The company is using current liabilities to finance short
term operations (Financial Debt) an hedging (Other), where the results are somewhat
unstable and can suffer variations year over year.
One key figure to discuss is the company´s payables (€5.383M in FY2018). The averge
time of payment to suppliers ratio in FY2018 was 35,5 days.
Financial instruments used to hedge Inditex financial possition against fluctuations in
interest rates (Foreign Currency Forwards and Cross Currency Swaps) can be found in
the concept “Other” and decreased compared to previous year being €47M.
Financial Debt €2 €3 €8 €10 €62 €12 €84
Payables €3.409 €3.421 €3.658 €4.591 €5.325 €5.057 €5.251
Other €74 €38 €83 €69 €64 €105 €47
CURRENT LIABILITIES €3.485 €3.462 €3.749 €4.670 €5.451 €5.173 €5.383
Non current liabilities had a positive growth rate in the last years but it has been being
reduced in for the last 3 years (FY16:+14,8% YoY / FY17: +8,2% YoY/ FY18: +5,3%
YoY).
Non current liabilites follow a similar structure than current liabilities, altough they are
significantly lower. Long term liabilites represent only a 7,5% of the total liabilities and
equity of the company. Longer term financial debt is being kept at really small levels.
This numbers are indicating that the company is not financing its activities using long
term liabilities, most of the investments are done with cash.
This could be positive as it gives more flexibility to take new opportunities arising in a
very volatile sector at the same time it provides Inditex with a safety net in case of
adverse economical contidions. Nevertheless it can be argue that the company might be
losing tax shield benefits (although they are currently being minimized by the low
interest environment).

30
High levels of lease incentives are being used as displayed under the concept “Others”
with a CAGR of 8,7% in the last seven years.
Deferred taxes €192 €217 €241 €285 €257 €268 €312
Financial Debts €4 €2 €2 €1 €0 €4 €5
Other €727 €796 €916 €950 €1.162 €1.264 €1.301
NON CURRENT LIABILITIES €923 €1.016 €1.159 €1.236 €1.419 €1.536 €1.618
3. OVERVIEW1
The company has been growing year after year its sales at levels close to 7,0%. It is a
very solid business that has been keeping its profitability margins very stable. Net
Margin for FY2018 was 13,2%. For every euro received on sales the company earned
€0,13 of Net Income. Inditex is leading in this aspect compared to their peers (H&M:
6,0; Fast Retailing: 7,3; Gap: 6,1).
Inditex is also outperforming other companies in the sector in its operating margins with
a ratio of 16,4 (H&M: 7,4; Fast Retailing; 11,8; Gap:8,0). The company is performing
an efficient production with low cost of good sold as compared to sales.
ROE (Return on equity) was 24,5%, signaling an efficient use of the shareholders funds
in order to generate profits and grow the company. This goes in line with other
companies in the industry (H&M: 21,4; Fast Retailing: 19,4; Gap: 29,9).
ROA (Return on assets) it is quite significant in apparel companies as it measures how
the company is using its assets to generate profits. This ratio has been growing during
the last years (FY2012/18), keeping an average growth rate of 16.5%. Inditex ended
FY2018 at 16,4. This results highlight the profitability of Inditex assets compared to
their peers (H&M: 11,2; Fast Retailing: 9,3; Gap: 12,5).
1
Most of the ratios have been retrieved from the Wall Street Journal (08/07/19)

31
There are also two important ratios that we must take into account very useful for the
retail industry that are current ratio and inventory turnover.
Current ratio measures the availability of a company to pay its short term obligations
(Gorton, 2019). For the FY2018 current liabilities could be paid 1,97 times with current
assets proving the great solvency of the company. Nevertheless this a bit weak
compared to other peers in the industry (Fast Retailing: 3,24; Gap: 1,96; Abercrombie:
2,39). High volume of current assets (powered by cash) and low debt can be observed in
big apparel companies.
Also there is inventory turnover ratio, which explains how a company is managing its
inventory with respect to sales. According to this ratio in FY2018 Inditex sold its entire
inventory 9,62 times.
Inditex has a very particular stucture regarding debt. Total Liabilities were just 0,4 of
total assets in FY2018 (H&M: 16,6; Fast Retailing: 27,8; Gap: 15,5; Abercrombie:
12,4). On the other hand Total Liabilities were 0,61 compared to Total Equity (H&M:
33,8; Fast Retailing: 63,1; Gap: 35,1; Abercrombie: 24,6).

33
Model Assumptions
As it has already been observed in the previous chapter in which a financial analysis of
the entity was carried out, Inditex has a model of sustained growth in with costs always
are increased in similar proportions than revenues. That is why the projections will
always be calculated with the aim of respecting these margins.
The total projection time will be 5 years. This time interval has been carefully chosen in
order to reflect possible variations throughout an economic cycle, which, if projected
for less time, could give rise to a bias as it is a very cyclical company. If this had not
been done, it could have been possible that only a specific moment of that cycle was
being reflected.
The first three years followed the estimates of various analysts including JP Morgan,
Credit Suisse, Societe Generale, HSBC, Santander, Kepler Cheuvreux, UBS, Macquaire
and RBC. Finally, the last two years have focused on the group's growth patterns and
trends.
1. PROJECTED INCOME STATEMENT
Sales growth is expected to slower down in the next years for the whole industry. The
increase in competition will diminish market share of big companies. Other economic
factors such as the risk of an economic downturn in 2020 had been taken into account.
(Page, 2018). In this model sales are expected to grow at a CAGR of 4,8% along the
projected period, a little bit over COGS. A gradual transition from in-store sales to
online sales is expected. Gross margin will average a growth rate close to 57%.
Million EUR FY2019E FY2020E FY2021E FY2022E FY2023E
Net Sales €28.454 €30.589 €32.485 €34.400 €36.000
8,83% 7,50% 6,20% 5,90% 4,65%
Cost of sales €12.327 €13.251 €14.073 €14.850 €15.500
8,81% 7,50% 6,20% 5,52% 4,38%
Gross profit €16.128 €17.337 €18.412 €19.550 €20.500
Gross margin 56,68% 56,68% 56,68% 56,83% 56,94%

34
Operating expenses are expected to decrease progressively, resulting in EBITDA
margins between 21% and 22%. Here we highlight the positive effect of RFID
technology in sales and operating expenses (Beck, 2018). This technology makes it
possible to control stock losses in detail, regardless of whether they are due to theft or
internal faults, which cost the group almost 170 million euros (EFE, 2016). In addition,
this system allows a greater efficiency of the personnel reducing thus the personnel
expenses.
Gross profit €16.128 €17.337 €18.412 €19.550 €20.500
Gross margin 56,68% 56,68% 56,68% 56,83% 56,94%
Opex €10.092 €10.723 €11.387 €12.000 €12.550
7,83% 6,25% 6,19% 5,38% 4,58%
EBITDA €6.036 €6.614 €7.025 €7.550 €7.950
EBITDA margin 21,21% 21,62% 21,63% 21,95% 22,08%
Amortization and depreciation costs will significantly reduce its growth as a
consequence of the reduction in PP&E. According to the group, the idea is to leave only
strategically shops in important cities, caring a lot about the design and customer
experience, providing a premium service. Brick and mortar shops will be slowly
reduced, increasing the proportion of franchises, and reducing the risks.
Tax rate could be slowly increasing over the years reaching a maximum rate of 23,3%.
This calculations take into account all the most representative countries in which the
group operates (KPMG, 2019) Net income of the 5 projected years is estimated to grow
at a CAGR of 6,4%. The profit margin of the group will be 14,1% in 2023.
EBITDA €6.036 €6.614 €7.025 €7.550 €7.950
EBITDA margin 21,21% 21,62% 21,63% 21,95% 22,08%
Amortization and depreciation €1.167 €1.193 €1.202 €1.210 €1.214
6,09% 2,23% 0,75% 0,67% 0,33%
EBIT €4.869 €5.421 €5.824 €6.340 €6.736
EBIT Margin 17,11% 17,72% 17,93% 18,43% 18,71%
Financial results €29 €45 €64 €70 €73
Income before taxes €4.840 €5.376 €5.760 €6.270 €6.663
EBT margin 17,01% 17,57% 17,73% 18,23% 18,51%
Taxes €1.115 €1.243 €1.338 €1.470 €1.580
Tax Rate 23,04% 23,12% 23,23% 23,44% 23,71%
Net income €3.725 €4.133 €4.422 €4.800 €5.083
Net income margin 13,09% 13,51% 13,61% 13,95% 14,12%

35
1. PROJECTED BALANCE SHEET
Only the items needed to calculate and analyze the cash flow forecast have been
projected. The rest have been held constant.
Inditex management has been very serious over the last years by keeping its capital
structure very stable. Although this model believes that some changes towards a less
capital-intensive business model will occur, it is assumed that this process will be a
slow transition. For this reason, margins have been tried to maintain as close as possible
to those of previous years.
Current assets together with current liabilities are the most unpredictable side of the
capital structure of Inditex, mostly caused by the volatility of results in financial
investments. The company has been severely punished during the last few years by
interest rates. It is believed this has been an anomalous situation. Therefore, an
improvement is expected in this aspect from now on.
According to Inditex calculations, it is forecasted that the negative impact of
fluctuations in the exchange rate could entail costs of up to 256 million euros at 31
January 2019 (Industria de diseño textil, 2019). Improvements are expected in this area
over the next few years.
Due to the business model, cash flow is expected to continue to rise. An average growth
of 7,9% for current assets has been forecasted.
Balance Sheet (€m) FY2019E FY2020E FY2021E FY2022E FY2023E
NON CURRENT ASSETS €11.319 €11.594 €11.887 €12.125 €12.345
2,30% 2,43% 2,53% 2,00% 1,81%
Tangible assets €8.361 €8.358 €8.345 €8.335 €8.320
Other €2.958 €3.236 €3.542 €3.790 €4.025
CURENT ASSETS €11.926 €12.862 €13.792 €14.693 €15.558
12,30% 7,85% 7,23% 6,53% 5,89%
Inventories €2.955 €3.177 €3.374 €3.550 €3.700
Receivables €893 €964 €1.021 €1.075 €1.120
Cash & equivalents €5.860 €6.503 €7.179 €7.850 €8.520
Other €2.218 €2.218 €2.218 €2.218 €2.218
TOTAL ASSETS €23.245 €24.456 €25.679 €26.818 €27.903
7,20% 5,21% 5,00% 4,44% 4,05%

36
On the other side of the balance sheet there is shareholder´s equity which is expected to
increment at a 3,8% CAGR quite below income growth. Inditex has progressively
increased its dividends, in line with the high returns generated, reaching the payout of
69,3% in FY2017 and 79,6% in FY2018. According to J.P. Morgan payout might rise to
91,3% in FY2019 and 88,1% in FY2020 (J.P. Morgan Cazenove, 2019).
The group may decide to further increase its cash returns policy, either through
buybacks or special dividend. However, it does not seem that a buyback is the option to
take as this will reduce the free float while accreting Amancio Ortega´s stake.
As it could have been previously observed the group ensures to keep long term debt at
moderate levels, no further growth is expected in the long run. A different case is that of
current liabilities that fluctuate according to the needs of the group for each fiscal year.
The decrease in revenues growth will affect payables that will start to stagnate (CAGR
of current liabilities for the projected period of 4,5%) and so do will current assets.
Balance Sheet (€m) FY2019E FY2020E FY2021E FY2022E FY2023E
SHAREHOLDERS' EQUITY €15.782 €16.559 €17.402 €18.214 €18.999
7,49% 4,92% 5,09% 4,67% 4,31%
NON CURRENT LIABILITIES €1.666 €1.671 €1.670 €1.670 €1.670
2,97% 0,30% -0,06% 0,00% 0,00%
Financial Debts €5 €5 €5 €5 €5
Other Long Term Liabilities €1.661 €1.666 €1.665 €1.665 €1.665
CURRENT LIABILITIES €5.797 €6.226 €6.607 €6.934 €7.234
7,69% 7,40% 6,12% 4,95% 4,33%
Financial Debt €84 €84 €84 €84 €84
Payables €5.713 €6.142 €6.523 €6.850 €7.150
TOTAL LIABILITIES & SHAREHOLDERS EQUITY €23.245 €24.456 €25.679 €26.818 €27.903
7,20% 5,21% 5,00% 4,44% 4,05%

37
Discounted Cash Flows
Valuation
1. METHODOLOGY DESCRIPTION
Discounted Cash Flow analysis (“DCF”) is a valuation method that aims to estimate a
company value through his future cash flows. The future Free Cash Flows (FCF) are
discounted to the present at the Weighted Average Cost of Capital (WACC).
This concept represents the company´s cost to borrow money based on its capital
structure (Hargrave, 2019). It can also be thought as an opportunity cost of capital, in
order words, what would and investor expect to earn in an alternative investment with
similar risk profile (Rosenbaum & Pearl, 2013)
WACC can be calculated under this formula:
Where:
D = Market Value of Debt
E = Market Value of Equity
Ke = Cost of Equity
Kd = Cost of Debt
T = Marginal Tax Rate

38
To determine the cost of the equity (Ke) the "Captial Asset Pricing Model" (CAPM)
method has been used:
Where:
β = Levered Beta
Rf = Risk Free Rate
Rm = Expected Return on the Market
(Rm – Rf) = Market Risk Premium
Beta is the measure of the covariance between the rate of return of a company´s stock
and the overall market return. Risk free rate is the expected rate of return of a security
bearing zero risk. Market risk premium is the spread of the expected market return over
the risk free rate (Rosenbaum & Pearl, 2013).
To dermine the cost of debt (Kd) analysts look at ratings of top credit rating agencies
like Moodys, Standard and Poors and Fitch and taking its corresponding spread.
Another common approach is done by looking publicly traded bonds. Nevertheless,
Inditex neither has credit rating nor has been any bond issuance of the company, due to
the fact that they finance its projects with cash instead. Being a top company in the
market with very solid financials, cost of debt has been calculated by adding 50bps to
the risk free rate.
Since it is impossible to project the present value of all future FCFs, a terminal value
will be used to estimate the company's behavior from the last projected FCF. The
residual value has been calculated with the perpetuity growth method (PGM) that
calculates the terminal value treating the FCF of the termianal year as an increasing
perpetuity at an assumed rate, and its calculated with the given formula:

39
Where:
Vr = Residual Value / Terminal Value
FC = Free Cash Flow
g = Perpetuity Growth Rate
n = Terminal year of the projection period
WACC = Discount Rate
Therefore the value of a company can be defined as follows:
2. APPLICATION
Following is the Discounted Cash Flow Analysis with an explanation of the procedures
that have been taken into account to obtain the enterprise value.
First step will be to do a projection of the company´s cash flows with the values
previously calculated in the annual accounts. They can be seen below. The CAGR of
the FCF is 6,9% from year FY2019 to FY2023.
Inditex Proyection period CAGR
DCF Analysis (€m) FY2019E FY2020E FY2021E FY2022E FY2023E ('19 - '23)
Sales €28.454 €30.589 €32.485 €34.400 €36.000 5%
% growth 8,83% 7,50% 6,20% 5,90% 4,65%
EBITDA €6.036 €6.614 €7.025 €7.550 €7.950 5,66%
%margin 21,21% 21,62% 21,63% 21,95% 22,08%
Depreciation & Amortization €1.167 €1.193 €1.202 €1.210 €1.214
EBIT €4.869 €5.421 €5.823 €6.340 €6.736 6,71%
%margin 17,11% 17,72% 17,93% 18,43% 18,71%
Taxes €1.115 €1.243 €1.338 €1.470 €1.580
EBIAT €3.754 €4.178 €4.485 €4.870 €5.156 6,55%
Plus: Depreciation & Amortization €1.167 €1.193 €1.202 €1.210 €1.214
Less: Capital Expenditures €1.423 €1.468 €1.494 €1.540 €1.580
Less: Changes in NWC €151 €140 €124 €97 €105
Unlevered Free Cash Flow €3.347 €3.763 €4.069 €4.443 €4.685 6,96%

40
Subsequently, cash flows will be discounted to their present value. This requires the
calculation of the terminal value as well as the WACC discount rate.
Below is described a calculation of Inditex WACC, which it has been determined to be
7,2%. This result is quite in line with other analysts estimates.
Cost of debt is typically obtained from the current yields of long-term loans or notes.
As there is no credit rating available for the company from which we can obtain the
spread, it has been estimated a cost of debt (Kd) of 0,75%. This has been done by
adding 50 bps to the risk-free asset rate (Rf). This is the equivalent as a downgrade of
two positions in the rating scales of top agencies like Moody’s or Standard and Poor’s
(Damodaran, Riskfree Rates and Default Spreads, 2019).
Cost of equity has been calculated in accordance with CAPM formula (see previous
chapter). A risk-free rate of 0,25% has been assumed based on 10-Year German Bond
yield at 31st
of December 2018. Which is presumed to be one of the safest securities in
the market. Market risk premium has been placed a little bit above the average returns
of the S&P 500 at 11,7%. The beta for the company has been retrieved from Investing
Database and it is 0,86 (Investing, 2019).
Perpetuity growth of 2% has been selected for this valuation, in line with the long-term
inflation target of most countries.
4
4.5
5
5.5
6
6.5
7
7.5
8
8.5
WACC(%)
Analysts Wacc

41
Subsequently, the cash flows have been discounted to the present value together with
the residual value, thus obtaining the enterprise value.
Discounted FCF
(€m)
FY2019E FY2020E FY2021E FY2022E FY2023E TV
€3.122 €3.275 €3.303 €3.365 €3.310 €91.926
According to the Discounted Cash Flows methodology the Enterprise Value of Industria
de Diseño Textil S.A. for FY2018 is €108.300M. Once the cash and the debt have been
subtracted, we can obtain the implied value of equity €106.165M, that which divided by
the number of shares outstanding gives us the value per share.
Present Value of Free Cash Flows
EV (proyection) €108.300
Less: Total Debt €7.001
Plus: Cash and Equivalents €4.866
Implied Equity Value €106.165
Number of shares 3.114
Price per-share €34,06
EV/EBITDA 19,5x
Additionally, a sensitivity analysis has been carried out in order to obtain an indicator of
the possible variations in the price per share due to changes in the model's key valuation
drivers. The two outputs that has been chosen are WACC and perpetuity growth, in
such a way that they have been modified both upwards and downwards by 1% and 0.5%
respectively.
Price per-share
WACC
TerminalGrowthRate
€34,06 7,10% 7,15% 7,20% 7,25% 7,30%
1,0% 29,48 29,27 29,06 28,86 28,66
1,5% 31,83 31,58 31,34 31,10 30,86
2,0% 34,65 34,35 34,06 33,77 33,49
2,5% 38,09 37,72 37,36 37,01 36,66
3,0% 42,36 41,89 41,44 41,00 40,57

42
3. RESULTS
The result obtained in this methodology indicates the company is undervalued at the
time of 31st
of December of 2018. The stock price at this date was at 22,39€ with an
EV/EBITDA ratio of 13,2x. There is an upside potential of 52,1%.
Maket Valuation
Market Cap €69.722
Plus: Total Debt €7.001
Less: Cash and Equivalents €4.866
Adjusted Equity Value €71.726
EV/EBITDA 13,2x

43
Comparable Companies
Valuation
1. METHODOLOGY
Comparable companies analysis (“trading comps”) is common valuation technique that
provides a benchmark which can be used to calculate the enterprise value of a company
at a given moment in time. Valuation by multiples of comparable public traded
companies is obtained by applying certain multiples to magnitudes of the company to
be valued.
This method is based on the fact that the market is efficient and therefore the values
obtained from the application of the methodology constitute a sound approximation of
the price of the company to be measured.
To make a trading comps valuation first the universe of comparable companies will be
selected based on factors like market cap, business type or structure; in second place
financial information will be obtained in order to calculate de key trading multiples; in
third place a benchmark will be stablished; and finally Inditex will be compared with
the benchmark in order to calculate its company value.
To calculate the price per share the difference between debt and cash will be added,
obtaining equity, which by being divided by the total number of shares outstanding will
give the price per share.
2. APPLICATION
To create the universe of comparable companies a first filter has been carried out by
companies in the sector. Of all these, only those with the highest stock market
capitalization and similar business models have been left. Other factors such as
international presence, market share, stage of the company or growth profile have also
been taken into account.

44
Below are the ten companies that has been selected to carry out this valuation. The
ratios used to compare the companies are EV/Sales, EV/EBITDA, EV/EBIT and P/E.
Nevertheless, only EV/EBITDA will be taken into account when performing the
valuation as it is independent from the capital structure of the companies avoiding non-
homogeneous elements such as amortization and depreciation to be taken into acount.
Comps (31/12/18) Valuation
EV/Sales EV/EBITDA EV/EBIT P/E
Company Name x x x x
H&M 0,3x 2,1x 3,4x 16,7x
Fast Retailing 2,7x 20,3x 23,5x 35,1x
Gap 0,8x 6,7x 9,7x 9,9x
Zalando 1,2x 31,3x 54,1x 114,8x
Next 0,6x 3,0x 3,5x 0,9x
Asos 0,3x 4,3x 6,5x 2,3x
Hugo Boss 1,7x 9,7x 13,1x 17,1x
Adidas 2,0x 15,5x 18,7x 20,4x
Urban Outfitters 0,9x 6,9x 9,0x 12,5x
Moncler 0,3x 0,9x 1,0x 1,2x
Average 1,1x 10,1x 14,3x 22,7x
Median 0,8x 6,8x 9,4x 14,6x
Industria de Diseño Textil S.A. 2,7x 13,2x 16,5x 20,2x
Due to the fact that Inditex is the leading company in the sector, it is difficult to find
companies with better multiples, this is why the results of this assessment are biased
downwards. Furthermore, not all companies have the same degree of similarity with
Inditex. For this reason, the benchmark has been recalculated allocating different
weights to the comparables according to their degree of similarity.
Comps (31/12/18) Valuation
Company Name Weight EV/Sales EV/EBITDA EV/EBIT P/E
% x x x x
Adidas 50% 2,0x 15,5x 18,7x 20,4x
Fast Retailing 25% 2,7x 20,3x 23,5x 35,1x
Gap 5% 0,8x 6,7x 9,7x 9,9x
Hugo Boss 5% 1,7x 9,7x 13,1x 17,1x
H&M 3% 0,3x 2,1x 3,4x 16,7x
Zalando 3% 1,2x 31,3x 54,1x 114,8x
Next 3% 0,6x 3,0x 3,5x 0,9x
Asos 3% 0,3x 4,3x 6,5x 2,3x
Urban Outfitters 2% 0,9x 6,9x 9,0x 12,5x
Moncler 1% 0,3x 0,9x 1,0x 1,2x
Industria de Diseño Textil S.A. 2,7x 13,2x 16,5x 20,2x
Weighted Average 1,9x 15,0x 18,6x 24,6x
Enterprise Value 48.673 € 81.976 € 80.943 € 84.865 €
Price per share 14,94 € 25,64 € 25,31 € 26,57 €

45
3. RESULTS
It can be observed that companies in the sector are quoted at a multiple EV/EBITDA of
15x (higher than that of Inditex 13.2x). Therefore, the value of the company according
to the market should be 81,976€.
Having an EV/EBITDA ratio below the market indicates that the company may be
undervalued, that its market value is not the one this multiple reflects and should
therefore rise in the future from the current price of 22,39€ to 25,64€ (upside potential
of 14,5%).
Other multiples like EV/EBIT or Price to Earning (P/E) are in line with this result,
supporting the idea that the company is undervalued. However, the multiple EV/Sales
of the sector is below the one of Inditex which indicates that with the same level of sales
the market is assigning a higher valuation to Inditex.
This may be explained by the fact that investors may be giving greater importance to
Inditex's sales factor than to other comparable companies.

47
Precedent Transaction
Analysis
1. METHODOLOGY
Precedent transaction analysis (“transaction comps”) is a multiple based valuation
which aims to obtain the enterprise value of a company based on the price paid in prior
M&A transactions of comparable companies.
In order to carry out this type of valuation, the transactions occurring in the sector
between 2012 and 2018 will be studied, selecting those in which the acquired company
resembles Inditex. Data like the dynamics of the deal or type of buyer will be taken into
account. The market conditions at the time of the transaction will also be considered,
which is why closeness in time will be positively valued.
Other factors such as whether it was a friendly or hostile takeover, whether it was sold
after a previous negotiation or by auction process or whether it is a merger of similar
companies (MOE) or if on the contrary they are engaged in different activities, will be
important when making the selection.
Once the list of comparable transactions has been selected, each one will be assigned a
weight according to its similarity with the entity to be compared. From there, a
benchmark will be extracted with which to compare the multiples of Inditex and then
the calculation of its company value will proceed.
The multiples that have been selected in this analysis have been EV/Sales and
EV/EBITDA, the latter being the chosen one to carry out the valuation.

48
2. APPLICATION
After having screening, the transactions that happened in the sector between 2012 and
2018 eleven comparable deals have been chosen. Among them some are more
representative than others, for this reason different weights have been assigned.
In the following table an extract of the result of the application of the multiples
EV/EBITDA and EV/Sales of the transactions of comparable companies can be
observed (see the appendix for the full table).
Date Weight Target Name Acquiror name
Acquired
Stake
(%)
EV/Sales EV/EBITDA
2017 9% Agent Provocateur Ltd Four Holdings Ltd 100% 1,9x 21,3x
2017 9% YEAH! AG (Mc Trek) A.S. Adventure 100% 0,7x 7,2x
2015 6% J Jill Group Inc. Towerbrook Cap. 100% 0,8x 13,8x
2015 22% Hugo Boss AG Zignago Holding 7% 2,9x 12,8x
2015 10% Douglas Holding AG CVC Capital 85% 1,1x 10,9x
2013 7% Esotiq & Anderson SA Dictador Global 50% 0,6x 8,4x
2013 11% Rue21 Inc. Apax Partners LLP 70% 1,7x 14,9x
2013 3% Runners Point Foot Locker Inc. 100% 0,4x 9,5x
2012 4% Charming Shoppes Inc. Ascena Retail 100% 0,4x 10,0x
2012 13% Hang Ten Group Holding Ltd. Perfect Lead 100% 0,9x 7,1x
2012 6% Douglas Holding AG Advent Internat. 80% 0,5x 8,2x
Weighted Average 1,5x 15,4x
Median 0,8x 10,0x
Based on these multiples an enterprise value of €39.218M for EV/Sales and €84.038€
has been calculated, that is a price per share of 12,59€ and 26,99€ respectively.
3. RESULTS
According to comparable transactions analysis, the EV/EBITDA of the company should
be 15,4 times instead of 13,2 times (market valuation), meaning Inditex is undervalued
as compared to the market. Therefore, the value of the company should be €84.038M
with a price per share of 26,99€ (upside potential 20,5%).

49
This method yields higher valuations than “Comparable Companies Analysis” due to
the emergence of possible synergies between companies that allow the buyer to pay a
higher price as well as the payment of premiums of control in order to acquire the
shares.
However, it can be detected that this does not occur in the multiple EV/Sales, which
gives a result less than that obtained in the previous analysis. This could be due to the
fact that, as a result of the loss of market share and the weak sales growth prospects,
companies are paying less for this dimension of the company.

51
Conclusions
Other methodologies like comparable companies analysis or precedent transactions
valuation are supporting this result.
According to the main valuation method of this thesis (the DCF) the target price is
€34.06 per share, which represents a potential return of 52.1% over the current share
price at 31 December 2018. It can also be observed that the target price is close to that
predicted by analysts. The range of estimates from 3Q18 to 1Q19 fluctuate around a
target price range of 32€-35€.
Figure 8: Thomson Reuters
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
Comps Precedents DCF Market
Valuation
Valuation Comparison
EV/EBITDA
€30.00
€31.00
€32.00
€33.00
€34.00
€35.00
€36.00
JP Morgan Model Societe
Generele
HSBC UBS Santander RBC
Analysts Estimates
Based on the analysis conducted and taking into account the enterprise value
obtained from the EV/EVITDA multiple, it can be concluded that the share price of
the group Industria de Diseño Textil S.A. as of December 31, 2018 is undervalued
and therefore an investment opportunity is presented.

52
Additionally, it can be observed that the share has decreased significantly since 2017
when it reached it historical maximum of 36,42€ per share. There is also a strong
correlation with the IBEX 35 which, however, has been moving away over time.
Figure 9: Inditex Investor Relations
Today the industry is highly dependent on factors such as flexibility and speed in
response to changing market trends as well as adaptation to an increasingly more
demanding customer. Inditex not only meets these parameters but also is number one in
the sector. This was seen in the last 5 years with solid results consistently outperforming
its competitors.
Its good performance, not only in sales, but also in the management of resources, an
increasingly cash, the strong investment in digitalization and enhancing of product
quality, as well as the improvement in FX conditions, lead Inditex to be thought of as a
very attractive investment choice.

53
Glossary
CAGR Compounded Annual Growth Rate
CCI Consumer Confidence Index
COGS Cost of Goods Sold
CPI Consumer Price Index
DCF Discounted Cash Flow
EV Enterprise Value
FCF Free Cash Flow
GDP Gross Domestic Product
Kd Cost of Debt
Ke Cost of Equity
MOE Merge of Equals
MRP Market Risk Premium
PP&E Property, Plant and Equipment
Rf Risk Free
RFID Radio Frequency Identification
ROA Return on Assets
ROE Return on Equity
VR Residual Value
WACC Weighted Average Cost of Capital
WIP Work in Progress

55
APPENDIX 1: Discounted Cash Flow
Inditex Historical period CAGR Capital structure
Discounted Cash Flow Analysis FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 ('13 - '18) Total Debt €7.001
Sales €16.724 €18.117 €20.900 €23.311 €25.336 €26.145 7,73% Total Equity €14.682
% growth 8,33% 15,36% 11,54% 8,69% 3,19% Total Assets €21.684
EBITDA €3.926 €4.103 €4.695 €5.083 €5.278 €5.457 5,64% D/E 0,48
%margin 23,48% 22,65% 22,46% 21,81% 20,83% 20,87% D/V 0,32
Depreciation & Amortization €855 €905 €1.022 €1.063 €963 €1.100
EBIT €3.071 €3.198 €3.673 €4.020 €4.315 €4.357 6,00% Cost of capital
%margin 18,36% 17,65% 17,57% 17,25% 17,03% 16,66% Risk free rate (Rf) 0,246%
Taxes €671 €735 €861 €917 €979 €980 Levered beta (βL) 0,86
EBIAT €2.400 €2.463 €2.812 €3.103 €3.336 €3.377 5,86% Expected return on the market (Rm) 12,00%
Plus: Depreciation & Amortization €855 €905 €1.022 €1.063 €963 €1.100 Cost of equity (Re) 10,35%
Less: Capital Expenditures €1.250 €1.797 €1.518 €1.432 €1.772 €1.621 Cost of debt (Rd) 0,746%
Less: Changes in Net Working Capital €121 €101 -€602 €275 €449 -€349
Unlevered Free Cash Flow €1.884 €1.470 €2.918 €2.459 €2.078 €3.205 9,26%
Inditex Proyection period CAGR Present Value of Free Cash Flows
Discounted Cash Flow Analysis FY2018 FY2019E FY2020E FY2021E FY2022E FY2023E ('19 - '23) EV (proyection) €108.300
Sales €26.145 €28.454 €30.589 €32.485 €34.400 €36.000 5% Less: Total Debt €7.001
% growth 3,19% 8,83% 7,50% 6,20% 5,90% 4,65% Plus: Cash and Equivalents €4.866
EBITDA €5.457 €6.036 €6.614 €7.025 €7.550 €7.950 5,66% Implied Equity Value €106.165
%margin 20,87% 21,21% 21,62% 21,63% 21,95% 22,08% Number of shares 3.114
Depreciation & Amortization €1.100 €1.167 €1.193 €1.202 €1.210 €1.214 Price per share €34,06
EBIT €4.357 €4.869 €5.421 €5.823 €6.340 €6.736 6,71% EV/EBITDA 19,5x
%margin 16,66% 17,11% 17,72% 17,93% 18,43% 18,71%
Taxes €980 €1.115 €1.243 €1.338 €1.470 €1.580 Maket Valuation
EBIAT €3.377 €3.754 €4.178 €4.485 €4.870 €5.156 6,55% Market Cap €69.722
Plus: Depreciation & Amortization €1.100 €1.167 €1.193 €1.202 €1.210 €1.214 Plus: Total Debt €7.001
Less: Capital Expenditures €1.621 €1.423 €1.468 €1.494 €1.540 €1.580 Less: Cash and Equivalents €4.866
Less: Changes in Net Working Capital -€349 €151 €140 €124 €97 €105 Adjusted EV €71.857
Unlevered Free Cash Flow €3.205 €3.347 €3.763 €4.069 €4.443 €4.685 6,96% EV/EBITDA 13,2x
Perpetuity growth rate (g) 2,00% Discounted Cash Flows TV
WACC 7,20% €3.122 €3.275 €3.303 €3.365 €3.310 €91.926

56
APPENDIX 2: Comparable Companies
Comps (31/12/18) Other Info. Market Data Financial Data
Ponde
ration
Valuation
Debt
Cash &
Equivalents
Shares
outstanding
Share Price
Market
Cap
EV Sales EBITDA EBIT EPS Weight EV/Sales EV/EBITDA EV/EBIT P/E
Company Name Millions Millions Millions
per share
(31/12/18)
Millions Millions Millions Millions Millions per share % x x x x
H&M $60.244 $11.590 1.655 $2,84 $4.705 $53.359 $210.400 $25.164 $15.493 $0,17 3% 0,3x 2,1x 3,4x 16,7x
Fast Retailing
¥1.050.68
8
¥999.697 106 ¥53.300
$5.649.80
0
¥5.700.79
1
¥2.130.06
0
¥281.267 ¥242.678 ¥1.518 25% 2,7x 20,3x 23,5x 35,1x
Gap $4.496,00 $1.370,00 378 $25,76 $9.737
$12.863,2
8
$16.580 $1.910 $1.327 $2,59 5% 0,8x 6,7x 9,7x 9,9x
Zalando € 1.685 € 995 251 € 22,96 $5.755 € 6.445 € 5.388 € 206 € 119 € 0,20 3% 1,2x 31,3x 54,1x 114,8x
Next £2.258 £156 134 £3,99 $535 £2.636 £4.167 £872 £760 £4,33 3% 0,6x 3,0x 3,5x 0,9x
Asos £568 £53 84 £2,28 $190 £705 £2.417 £164 £109 £0,99 3% 0,3x 4,3x 6,5x 2,3x
Hugo Boss € 915 € 147 70 € 54,70 $3.851 € 4.619 € 2.796 € 476 € 353 € 3,19 5% 1,7x 9,7x 13,1x 17,1x
Adidas € 9.248 € 2.880 200 € 182,40 $36.557 € 42.925 € 21.915 € 2.765 € 2.295 € 8,94 50% 2,0x 15,5x 18,7x 20,4x
Urban Outfitters $671,00 $637,00 104 $33,20 $3.440 $3.473,52 $3.951 $501 $385 $2,65 2% 0,9x 6,9x 9,0x 12,5x
Moncler € 557 € 546 258 € 1,62 $417 € 428 € 1.420 € 471 € 414 € 1,31 1% 0,3x 0,9x 1,0x 1,2x
Industria de Diseño
Textil S.A. 7.001 € 4.866 €
3.114
22,39 € 69.722 € 71.857 € 26.145 € 5.457 € 4.357 € 1,11 €
100% 2,7x 13,2x 16,5x 20,2x
Weighted Average 1,9x 15,0x 18,6x 24,6x
Average 1,1x 10,1x 14,6x 23,3x
Median 0,8x 6,8x 9,4x 14,6x
EV 48.673 € 81.976 € 80.943 € 84.865 €
Price per share 15,63 € 26,32 € 25,99 € 27,25 €

57
APPENDIX 3: Precedent transactions
Precedent Transactions (Mergermarket) Target
Country Target Business Description Acquiror name
Acquiror
Country
Acquired
Stake (%)
EV (EUR
m)
EBITDA
margin (%) Weight EV/Sales EV/EBITDADate Target Name
2017 Agent Provocateur Ltd GB Luxury female lingerie retailer Four Holdings Ltd GB 100% 38 9% 25% 1,9x 21,3x
2017 YEAH! AG (Mc Trek) DE Outdoor clothing A.S. Adventure BE 100% 34 9% 1% 0,7x 7,2x
2015 J Jill Group Inc. US Women´s clothing retailer
Towerbrook Capital
Partners LP
US 100% 318 6% 30% 0,8x 13,8x
2015 Hugo Boss AG DE
Manufacturer of sportswear, apparel
and cosmetic products
Zignago Holding S.p.a IT 7% 7.342 22% 10% 2,9x 12,8x
2015 Douglas Holding AG DE
Retailer of perfume, body care,
jewelry, fashion and sports products
CVC Capital Partners
Ltd.
UK 85% 2.800 10% 2% 1,1x 10,9x
2013 Esotiq & Anderson SA PL Underwear retailer Dictador Global Ltd. GB 50% 13 7% 1% 0,6x 8,4x
2013 Rue21 Inc. US Clothing retailer Apax Partners LLP - 70% 1.115 11% 25% 1,7x 14,9x
2013
Runners Point
Warenhandelsgessellschaft GmbH
DE
Sport shoes, sports apparel and
other fitness accesories
Foot Locker Inc. US 100% 72 3% 1% 0,4x 9,5x
2012 Charming Shoppes Inc. US Women´s clothing retailer
Ascena Retail Group
Inc.
US 100% 689 4% 2% 0,4x 10,0x
2012 Hang Ten Group Holding Ltd. BM Clothing retailer
Perfect Lead
Investments Ltd.
VG 100% 214 13% 1% 0,9x 7,1x
2012 Douglas Holding AG DE
Retailer of perfume, body care,
jewelry, fashion and sports products
Advent International
Corporation
US 80% 1.641 6% 2% 0,5x 8,2x
Weighted Average 1,5x 15,4x
Median 0,8x 10,0x
Enterprise Value 39.218 € 84.038 €
Price per share 12,59 € 26,99 €

58
APPENDIX 4: Income Statement and Projections
Grupo Inditex
Profit & loss statement (€m) Forecast
Million EUR FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019E FY2020E FY2021E FY2022E FY2023E
Net Sales €16.724 €18.117 €20.900 €23.311 €25.336 €26.145 €28.454 €30.589 €32.485 €34.400 €36.000
15,36% 11,54% 8,69% 3,19% 8,83% 7,50% 6,20% 5,90% 4,65%
Cost of sales €6.802 €7.548 €8.811 €10.032 €11.076 €11.329 €12.327 €13.251 €14.073 €14.850 €15.500
16,73% 13,86% 10,41% 2,28% 8,81% 7,50% 6,20% 5,52% 4,38%
Gross profit €9.923 €10.569 €12.089 €13.279 €14.260 €14.816 €16.128 €17.337 €18.412 €19.550 €20.500
Gross margin 59,33% 58,34% 57,84% 56,96% 56,28% 56,67% 56,68% 56,68% 56,68% 56,83% 56,94%
Operating Expenses €5.999 €6.466 €7.394 €8.196 €8.982 €9.359 €10.092 €10.723 €11.387 €12.000 €12.550
14,35% 10,85% 9,59% 4,20% 7,83% 6,25% 6,19% 5,38% 4,58%
Operating cash flow (EBITDA) €3.926 €4.103 €4.695 €5.083 €5.278 €5.457 €6.036 €6.614 €7.025 €7.550 €7.950
EBITDA margin 23,48% 22,65% 22,46% 21,81% 20,83% 20,87% 21,21% 21,62% 21,63% 21,95% 22,08%
Amortisation and depreciation €855 €905 €1.022 €1.063 €963 €1.100 €1.167 €1.193 €1.202 €1.210 €1.214
12,93% 4,01% -9,41% 14,23% 6,09% 2,23% 0,75% 0,67% 0,33%
Operating Income (EBIT) €3.071 €3.198 €3.673 €4.020 €4.315 €4.357 €4.869 €5.421 €5.824 €6.340 €6.736
EBIT Margin 18,36% 17,65% 17,57% 17,25% 17,03% 16,66% 17,11% 17,72% 17,93% 18,43% 18,71%
Financial results -€18 €14 €10 €10 -€5 €17 €29 €45 €64 €70 €73
Results from companies consolidated by equity method €0 €32 €56 €48 €42 €54
Income before taxes €3.053 €3.245 €3.743 €4.078 €4.351 €4.428 €4.840 €5.376 €5.760 €6.270 €6.663
EBT margin 18,26% 17,91% 17,91% 17,49% 17,17% 16,94% 17,01% 17,57% 17,73% 18,23% 18,51%
Taxes €671 €735 €861 €917 €979 €980 €1.115 €1.243 €1.338 €1.470 €1.580
Net income €2.382 €2.510 €2.882 €3.161 €3.372 €3.448 €3.725 €4.133 €4.422 €4.800 €5.083

59
APPENDIX 5: Balance Sheet and Projections
Grupo Inditex
Balance Sheet (€m) Forecast
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019E FY2020E FY2021E FY2022E FY2023E
Assets Assets
NON CURRENT ASSETS €6.198 €6.991 €8.271 €8.908 €9.723 €10.084 €11.064 €11.319 €11.594 €11.887 €12.125 €12.345
12,79% 18,31% 7,70% 9,15% 3,71% 9,72% 2,30% 2,43% 2,53% 2,00% 1,81%
Intangible assets €820 €846 €882 €888 €911 €919 €1.016
Tangible assets €4.745 €5.220 €6.122 €6.619 €7.305 €7.664 €8.359 €8.361 €8.358 €8.345 €8.335 €8.320
Financial investments €4 €21 €151 €184 €231 €237 €267
Other €629 €905 €1.116 €1.217 €1.276 €1.264 €1.422 €2.958 €3.236 €3.542 €3.790 €4.025
CURENT ASSETS €6.692 €6.765 €7.106 €8.449 €9.898 €10.147 €10.620 €11.926 €12.862 €13.792 €14.693 €15.558
1,09% 5,04% 18,90% 17,15% 2,52% 4,66% 12,30% 7,85% 7,23% 6,53% 5,89%
Inventories €1.581 €1.677 €1.860 €2.195 €2.549 €2.685 €2.716 €2.955 €3.177 €3.374 €3.550 €3.700
Receivables €848 €815 €862 €669 €861 €778 €820 €893 €964 €1.021 €1.075 €1.120
Short term investments €261 €213 €222 €1.086 €2.037 €1.472 €1.929
Cash & equivalents €3.843 €3.847 €3.798 €4.226 €4.116 €4.931 €4.866 €5.860 €6.503 €7.179 €7.850 €8.520
Other €160 €213 €364 €274 €336 €282 €289 €2.218 €2.218 €2.218 €2.218 €2.218
TOTAL ASSETS €12.890 €13.756 €15.377 €17.357 €19.621 €20.231 €21.684 €23.245 €24.456 €25.679 €26.818 €27.903
6,72% 11,78% 12,88% 13,04% 3,11% 7,18% 7,20% 5,21% 5,00% 4,44% 4,05%
Total Liabilities & Shareholder´s Equity Total Liabilities & Shareholder´s Equity
SHAREHOLDERS' EQUITY €8.482 €9.278 €10.469 €11.451 €12.752 €13.552 €14.682 €15.782 €16.559 €17.402 €18.214 €18.999
9,38% 12,84% 9,38% 11,36% 6,27% 8,34% 7,49% 4,92% 5,09% 4,67% 4,31%
Equity attributable to the Group €8.446 €9.246 €10.431 €11.410 €12.713 €13.497 €14.653
Minority interests €36 €32 €38 €41 €38 €25 €30
NON CURRENT LIABILITIES €923 €1.016 €1.159 €1.236 €1.419 €1.536 €1.618 €1.666 €1.671 €1.670 €1.670 €1.670
10,08% 14,07% 6,64% 14,81% 8,25% 5,34% 2,97% 0,30% -0,06% 0,00% 0,00%
Deferred taxes €192 €217 €241 €285 €257 €268 €312
Financial Debts €4 €2 €2 €1 €0 €4 €5 €5 €5 €5 €5 €5
Other €727 €796 €916 €950 €1.162 €1.264 €1.301 €1.661 €1.666 €1.665 €1.665 €1.665
CURRENT LIABILITIES €3.485 €3.462 €3.749 €4.670 €5.451 €5.173 €5.383 €5.797 €6.226 €6.607 €6.934 €7.234
-0,66% 8,29% 24,57% 16,72% -5,10% 4,06% 7,69% 7,40% 6,12% 4,95% 4,33%
Financial Debt €2 €3 €8 €10 €62 €12 €84 €84 €84 €84 €84 €84
Payables €3.409 €3.421 €3.658 €4.591 €5.325 €5.057 €5.251 €5.713 €6.142 €6.523 €6.850 €7.150
Other €74 €38 €83 €69 €64 €105 €47
TOTAL LIABILITIES & SHAREHOLDERS EQUITY €12.890 €13.756 €15.377 €17.357 €19.621 €20.231 €21.684 €23.245 €24.456 €25.679 €26.818 €27.903
6,72% 11,78% 12,88% 13,04% 3,11% 7,18% 7,20% 5,21% 5,00% 4,44% 4,05%

61
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63
Final annex
ORIGINALITY DECLARATION
Hereby I, Miguel Tejada Méndez, certify that the bachelor thesis titled "Inditex
Valuation" is totally original mine, that has not been presented in any other university as
a bachelor thesis and that all sources that have been used have been properly cited and
appear in the references.
Getafe, 1st of July 2019
Signature:

Inditex valuation thesis 2019

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