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Calculating Risk and Return of Investments in a Portfolio (Part B)
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Abstract
Dilip Shangvi (Shangvi), founder of Indian pharmaceutical giant Sun Pharmaceutical Industries Ltd. (Sun Pharma), had invested his personal wealth in several companies. Some of his major investments were Rs 250 million in Natco Pharma Limited (Natco Pharma), and Rs 18 billion in Pune-based Suzlon Energy Ltd. (Suzlon). Shangvi held a 60.8 % stake in Sun Pharma and received more than Rs 12 billion as dividend from his shares between 2010 and 2015. The case discusses his investments using a risk return framework. |
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Issues
The case is structured to achieve the following teaching objectives:
- Understand Systematic Risk and how it can be measured.
- Calculate the Beta of Stocks.
- Calculate expected returns using the CAPM model.
- Position securities above or below SML on the basis of realized returns.
- Analyze whether the investments of Shangvi were undervalued or overvalued.
| Contents |
| INTRODUCTION |
| ASSIGNMENT QUESTIONS |
Keywords
Dilip Shangvi, Risk and Return, Beta, CAPM, SML, Systematic Risk, Suzlon, Natco Pharma, Sun Pharma
