Reference no: EM132404533

Question 1

Consider the following three stocks listed on the National Stock Exchange, India:
1. Infosys (NSE Ticker: INFY)
2. ITC (NSE Ticker: ITC)
3. Maruti (NSE Ticker: MARUTI)
4. HDFC Bank (NSE Ticker: HDFCBANK)
Perform the following tasks on these stocks:
19. Compute two year returns and standard deviation of their stock prices from 01 Jan'18 - 30 Sep'19.
20. Compute the realized return of an equal weighted portfolio of these four stocks.
• If an investor asks you to create a portfolio of best two of these four stocks, which combination of stock would you choose? Justify your answer.
1. Compute the realized return and standard deviation of the portfolio you recommended in point (iii).

Question 2
Please Refer: TMA 02 Q 02 Data Sheet.xlsx
Dabur Ltd is a listed company on the National Stock Exchange, India (NSE Ticker: DABUR). Refer to the attached excel for a snippet of the Balance Sheet and Income Statement of Dabur for FY2017-2019.
Being the finance manager, you are required to prepare a cash flow forecast for Dabur using the Discounted Cash Flow (DCF) approach and come up with a meaningful estimate of its share price.
In addition to the financial statement data, the following is the relevant information is also available about the business:
• Forecast period: 5 years
• Revenue growth from next year onwards: 10%
• Expenses/Sales ratios for forecast period to be same as average expense/sales ratio for last three years
• Tax rate to be computed as %EBT of last year and is to be continued for forecast period
• Forecast change in working capital to be same as difference of working capital for last two years
• Forecast depreciation to be same as last year's depreciation
• No additional capital expenditure to be made during the forecast period
• Cost of debt may be taken as 6% for the business
• Weights of debt and equity to remain same as those of last year
• Beta of the stock to be computed using the share price and Nifty index data for last three years also provided in the excel document. Necessary adjustments to be made in the beta computation.
• Risk-free rate, Rf: 6%, Market Return, Rm: 8%
• No of Shares outstanding: 1,767,063,892
• Terminal growth rate: 4%
Compute the following:
1. Beta of the DABUR stock
2. Weighted average cost of capital of the company
• Terminal value of the projection period
1. Enterprise value of the firm
2. Implied share price as per your calculations

Question 3
• a.Using the Asian Paints Ltd (NSE Ticker: ASIANPAINT) 2019 annual report and financial statements (appended), define economic value and explain how an adjusted book value approach to valuing assets and liabilities moves book value nearer to economic value.
You are required to provide a written response which highlights four specific elements in Asian Paints' balance sheet that might need to be adjusted to arrive at an economic value.
For each element, explain the type of adjustment and the type of information that might be required before an adjustment could be made to arrive at an economic value for Asian Paints at its 2019 financial year end.
1. Calculate the following market multiple ratios for Asian Paints Ltd. at its 2019 financial year-end:
• i. EV/EBITDA
• ii. Price-to-earnings ratio (PE ratio)
• iii. Price-to-cash-flow ratio
• iv. Price-to-book ratio
• v. Contrast and explain the results of the different market multiple ratios that you calculated. Evaluate the usefulness of market multiple ratios in company valuation.

Attachment:- Corporate Finance.rar