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Vol 1, Issue 04, Nov 2019
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Finance
Tata Consultancy Services Limited (TCS) is a global Indian IT company and a leading company in the Indian IT space. TCS enjoys a high net profit margin and has a liquid and debt-free balance sheet. This case study covers the background of TCS and highlights its financial performance. The case provides sufficient information for a ratio analysis to be done of TCS. Additionally, it helps to analyze the financial performance of TCS through common size analysis, common base analysis, and DuPont analysis. This case helps students to understand the financials of Information Technology companies.
Financial Statement Analysis of Tata Consultancy Services Limited
This case provides scope for assessing and analyzing the liquidity position of Infosys Limited during the fiscal year 2018-19, and also helps to understand the perception of the management on the liquidity position of the company. The short-term liquidity position of the company can be assessed by analyzing various components of current assets and current liabilities using liquidity ratios. The case also provides scope for a discussion on the broader perspective of liquidity management at software companies.
Liquidity Assessment of Infosys Limited
Started in 2001 as a not-for-profit enterprise that stood for financial inclusion and women empowerment, Bandhan turned into an NBFC and a few years later transformed itself into a universal bank. Bandhan commenced its banking operations and joined the league of big banks in August 2015. Its unique business structure focuses on serving under-banked and under-penetrated markets in India with its offerings of a variety of asset and liability products and services. Bandhan remained a strong compounding story given its potential to play on the vast rural opportunity, best operating metrics, and robust capital base. In less than three years of operation, the bank went public to meet regulatory compliance and priced its issue four times the book value. This made the bank’s valuation more expensive than established Indian banking peers. Within five months of its public listing, Bandhan Bank’s sharp jump on the stock market made it the costliest banking stock in the sector in terms of price-to-book value ratio. After meeting the regulatory mandate of public listing, Bandhan Bank has been struggling to comply with the licensing requirement of bringing down promoter holding in the bank. India’s central bank, the Reserve Bank of India, imposed strictures on Bandhan Bank for failing to reduce promoter shareholding. The RBI decision has left the stakeholders apprehensive and affected the shares of the bank, which have plunged to their lowest, since its market debut in March 2018. Notwithstanding the bank’s scale of operation, enviable track record in micro loans, and future business potentials, expensive valuation was the key issue for the bank. The bank was also vulnerable to the risks associated with its geographical concentration, micro-lending focus, asset quality deterioration, and asset-liability mismatch.
Bandhan Bank’s Valuation and Sustainability: Beyond the IPO
The case study ‘Weighted Average Cost of Capital of Shree Cement Limited’ provides a fundamental understanding of the Weighted Average Cost of Capital (WACC), cost of equity, and cost of debt. The case helps to understand various methods of calculating the cost of equity such as the Capital Asset Pricing Model (CAPM) and the Dividend Discounted Model (DDM). It also covers the estimation of cost of equity using fundamental beta which is applicable in case of an unlisted firm. The case is based on a discussion between a group of first-year MBA students and Dr. John Martin (Martin), a professor of Finance. The discussion starts with the concept of cost of equity and gradually leads to WACC. The case concludes with parameters being set for the students to calculate the cost of equity using various methods, cost of debt, and ultimately WACC for Shree Cements Limited.
Weighted Average Cost of Capital for Shree Cement Limited
The case discusses the inventory management issues faced by Super Cement Private Limited (Super Cement). It starts with the dilemma faced by S Lakshmi, founder of the company. Lakshmi was concerned with the rising cost of maintaining inventory, especially limestone, the main raw material used in producing cement. She wanted to optimize the cost of inventory for the company. She was also concerned about the gap between the time the order was placed for limestone and the time it was received. She called Minal, Finance Manager with Super Cement, and asked her to come up with the solution for various issues related to inventory management at Super Cement. The case helps students understand various concepts related to inventory management like how to calculate Economic Order Quantity (EOQ), Modified EOQ, re-order point, and safety stock.
 Inventory Management Dilemma at Super Cement
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