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Vol 1, Issue 03, Aug 2019
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Credit Rating Agencies (CRAs) play a crucial role in reducing the asymmetry in the information available to the issuer and the investor. This role gains even more significance when rating is for sovereign entities and their securities. The CRAs like S&P, Moody’s, and Fitch, which rate sovereign entities, consider a number of variables both qualitative and quantitative to assess the creditworthiness and rating of these entities and their securities.
Modeling Sovereign Credit Score of US and UK
This case is about Saloni Hasija (Hasija) and her internship project on ratio analysis at RS Education Solutions Pvt. Ltd. The company guide of an intern had given her the task of comparing her company (RS Education Solutions Pvt. Ltd.) with that of the competitor named ARG Learning Pvt. Ltd. Saloni was wondering whether ratio analysis would be the right approach to do the comparison and what ratios she could analyze, given the data she had.
Comparative Ratio Analysis: A Case Study on RS Education Solutions Pvt. Ltd.
Godrej Consumer Products Limited (GCPL) is one of India’s most popular and largest FMCG companies and is promoted by India-based global conglomerate, the Godrej Group. The company has 1.15 bn consumers globally with operations in more than 90 countries. It has shown strong financial performance with a steady increase in PAT and EBDITA. The case study helps to analyze the financial performance of GCPL using ratio analysis, the DuPont model, Common Size, and Common Base and to analyze the Degree of Financial Leverage of GCPL.
Financial Statement Analysis of Godrej Consumer Products Ltd
Climbing on the growth drivers, Tencent’s stock price reached its peak in January 2018, but investor sentiments soured after a series of troubles cropped up for the company including a drop in its profits and a regulatory crackdown on gaming in China. Additionally, Tencent’s growing debt position, massive investments, overseas marketing strategy, and trade war fears all contributed to the decline in its stock price value. Investors voiced doubts about the firm’s declining profit margins and its ability to keep innovating. Analysts were optimistic about Tencent’s future and hoped that its strong long-term growth prospects would help the company bounce back in the coming days.
Can Tencent Holdings Rebound from its Fall?
Through the buyback, L&T planned to achieve two things – distribute capital to its shareholders and improve its ROE by reducing the number of outstanding shares. However, L&T’s plans came to nought with the SEBI, the stock exchange regulator of India, rejecting its buyback proposal on the grounds of high debt-to-equity ratio. The L&T management was left with the task of re-planning its strategy to distribute excess cash to the shareholders and achieve the targeted 18% return on equity by 2021.
SEBI’s Rejection of Larsen & Toubro’s Buyback Offer
It was early January 2017 and the fund manager of ICICI Prudential Value Fund Series 7 (D), Atul Patel (Patel), was worried about protecting the Net Asset Value of his fund. All the stocks listed in the fund portfolio had been chosen with care and he was sure that the fund was fundamentally strong. In fact, he wanted to hold the current positions at least for the next three months. However, his worry was that the prevailing market conditions, economic environment, and global political conditions could lead to fluctuations and adversely impact the fund portfolio value. To buck this trend, he was looking for instruments to hedge against market risks associated with his fund portfolio.
Portfolio Hedging – The Case of ICICI Value Fund Series 7(D)
The management of Vardhman Textiles Ltd.’s (VTL) believed that the company was doing well on the basis of various financial parameters, but its share price did not reflect the correct value of the company. Also, VTL had sold its stake in one of its joint ventures and got cash of Rs. 4.13 billion. The growing cash balance and reserves and low debt to equity ratio motivated the management of VTL to go in for a share buyback in place of a regular dividend. The case provides information to understand the complete process of share buyback and to analyze whether the decision taken by VTL’s management was the right one or not.
Vardhman Textiles Ltd.’s Buyback of Shares

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