In early 2016, Naresh Jain was busy looking at various rental properties on popular real estate listing websites. Because of a sudden downturn in business conditions and an immediate need for money, Jain’s landlord wanted to sell the property and therefore had asked Jain to vacate the premises within 30 days. Jain had been living in the spacious, two-bedroom apartment in North West Delhi for the past five years as it was within a reasonable commuting distance to his workplace. After looking at various rental properties, Jain had come across a furnished apartment identical to his, next door, and met with a broker to discuss it. During the discussion, it came up that an identical apartment in an adjoining locality was for sale at ?12.5 million. Jain was thus faced with a quantitative finance decision of buy versus rent to arrive at the right option for him given his current financial conditions and the potential future benefits.
In early 2016, Naresh Jain was busy looking at various rental properties on popular real estate listing websites. Because of a sudden downturn in business conditions and an immediate need for money, Jain's landlord wanted to sell the property and therefore had asked Jain to vacate the premises within 30 days. Jain had been living in the spacious, two-bedroom apartment in North West Delhi for the past five years as it was within a reasonable commuting distance to his workplace. After looking at various rental properties, Jain had come across a furnished apartment identical to his, next door, and met with a broker to discuss it. During the discussion, it came up that an identical apartment in an adjoining locality was for sale at ₹12.5 million. Jain was thus faced with a quantitative finance decision of buy versus rent to arrive at the right option for him given his current financial conditions and the potential future benefits.
In 2014, an analyst with a leading investment company wanted to evaluate the financial performance of a kitchen appliances company, TTK Prestige Ltd., headquartered in Bangalore, India. To accomplish this task, the analyst decided to use the economic value added (EVA)-based performance measure, which accorded importance to value creation by management for its shareholders. Recently, there had been a shift away from traditional approaches of measuring shareholder value creation (e.g., earning capitalization and present value of estimated cash flow) towards more value-added approaches like EVA, which offered a more effective method for evaluating financial performance.
In 2014, an analyst with a leading investment company wanted to evaluate the financial performance of a kitchen appliances company, TTK Prestige Ltd., headquartered in Bangalore, India. To accomplish this task, the analyst decided to use the economic value added (EVA)-based performance measure, which accorded importance to value creation by management for its shareholders. Recently, there had been a shift away from traditional approaches of measuring shareholder value creation (e.g., earning capitalization and present value of estimated cash flow) towards more value-added approaches like EVA, which offered a more effective method for evaluating financial performance.
In early 2013, an analyst at an insurance company was examining whether IndusInd Bank, a mid-size bank in India, would be a good investment for the insurance fund’s equity portfolio. From January 2008 until March 30, 2013, the bank’s stock had tripled under its new management. The analyst wondered whether deploying funds in the bank would yield any significant returns. He decided to use the available financial information and the residual income valuation method to forecast the company’s stock price.
In early 2013, an analyst at an insurance company was examining whether IndusInd Bank, a mid-size bank in India, would be a good investment for the insurance fund's equity portfolio. From January 2008 until March 30, 2013, the bank's stock had tripled under its new management. The analyst wondered whether deploying funds in the bank would yield any significant returns. He decided to use the available financial information and the residual income valuation method to forecast the company's stock price.
In early March 2012, an investor sat at home in Gurgaon, India examining the latest financial information about Apollo Tyres Limited, India’s leading tire manufacturer. Over the past decade, the company had significantly diversified its product and geographic mix through organic investment and strategic acquisitions and had experienced superior growth opportunities. Yet, after almost doubling between 2007 and 2010, its share price had not seen any significant appreciation in the last two years, delivering only 12 per cent return between 2010 and 2012. Would this be a good investment? He decided to use the free cash flow discounting valuation technique to identify and value this high growth but undervalued stock.
In early March 2012, an investor sat at home in Gurgaon, India examining the latest financial information about Apollo Tyres Limited, India's leading tire manufacturer. Over the past decade, the company had significantly diversified its product and geographic mix through organic investment and strategic acquisitions and had experienced superior growth opportunities. Yet, after almost doubling between 2007 and 2010, its share price had not seen any significant appreciation in the last two years, delivering only 12 per cent return between 2010 and 2012. Would this be a good investment? He decided to use the free cash flow discounting valuation technique to identify and value this high growth but undervalued stock.