Kaival Brands Innovations Group Inc (KAVL)

[daiello]

We think that Kaival Brands’ market cap near $150 million does not adequately reflect prospects for the expanded market adoption and distribution of BIDI® products. We note that the current market cap is less than one-time our 2021 revenue estimate, while the average market cap in the tobacco industry is 4-times revenue

In comparing Kaival Brands with a hybrid basket of global distributor and tobacco stocks, we use a blended forward EV/revenue multiple near 3.0 (this assumes a multiple of 0.6 for distributors, weighted at 33%, and a multiple of 4.3 for tobacco stocks, weighted at 67%). Applying this blended multiple to our fiscal 2022 revenue estimate of $460 million, discounted back one period at 20%, and adjusting for the share count, we arrive at a fair value estimate for KAVL of $22 per share.