Valuation of Sharia Stocks Using the Discounted Cash Flow Method with the Free Cash Flow to Firm and Relative Valuation Approaches (Case Study on the IDXHIDIV20 Index for the Period 2019–2023)

The growing interest in Sharia-compliant investments has intensified the need for in-depth analysis of Islamic stocks, particularly those offering consistently high dividends. Despite the challenges posed by the COVID-19 pandemic, geopolitical conflicts, and political instability, several listed companies have demonstrated solid financial performance. This study aims to assess the intrinsic value  prominent Sharia-compliant stocks listed in the IDXHIDIV20 index using the Discounted Cash Flow (DCF) method with a Free Cash Flow to Firm (FCFF) approach. To validate the findings, the Relative Valuation method is employed, utilizing the Price to Earnings Ratio (PER) and Price to Book Value (PBV). The valuation is conducted under three scenarios pessimistic, moderate, and optimistic based on financial reports from 2019 to 2023, projecting FCFF for the 2024 period. The valuation outcomes are then compared to the actual stock prices as of December 2023. The findings indicate that INDF stock is consistently undervalued across all scenarios and valuation approaches, making it a strong investment recommendation. Conversely, ICBP stock tends to be overvalued under the optimistic scenario, reflecting greater sensitivity to market expectations. This study contributes theoretically to the development of valuation methodologies in Islamic finance and offers practical insights for investors seeking value based, Sharia-compliant investment decisions.