PT Garuda Indonesia (PERSERO) Tbk Stock (GIAA) Fair Value Valuation Post Restructuring and Relisting on IDX

The financial difficulties experienced by PT. Garuda Indonesia, characterized by its inability to meet its obligations to several creditors, resulted in the temporary delisting of its shares from the Indonesia Stock Exchange (IDX) on June 18, 2021. This situation was further exacerbated by the impact of the Covid-19 pandemic, which led to a decline in revenue due to a decrease in passenger numbers and air traffic.

Garuda Indonesia initiated a restructuring effort through the Postponement of Debt Payment Obligations (PKPU) route with a number of creditors. This resulted in an extension of the payment terms, a conversion of debt to equity, and a modification of the debt structure. The company also implemented improvements to its operational practices aimed at reducing costs. These efforts have produced positive outcomes, including an increase in equity and a decrease in the company’s liabilities.Top of FormBottom of Form Garuda Indonesia also increased the company’s capital through Additional Capital with Pre-emptive Rights (PMHMETD), Additional Capital without Pre-emptive Rights (PMTHMETD) and investment from the government of the Republic of Indonesia through State Investment (PNM).

After completing the restructuring process, Garuda Indonesia (GIAA) shares were free from suspension and were able to return to the Indonesia Stock Exchange (IDX) with an initial price of Rp.204. This study was conducted to determine the fair value of GIAA shares upon their return to IDX in early January 2023. The study utilized two methods: the Discounted Cash Flow (DCF) method and the Relative Valuation method. The DCF method resulted in a fair value of Rp. 165.3 for the shares, implying that the initial issuance value was overvalued by 18.97%. The Relative Valuation method EV/sales ratio, yielded a fair value of Rp. 929 for the shares, suggesting that the current issuance value was undervalued by 355%.