VALUATION PROJECT GUIDELINES PGP INVESTMENTS-TERM 3, 2016

1. All teams will have three members. Please notify me if there are special situations.

2. One of the members will be the leader. The team will collectively specify one sector
for the attached list. Sector allocation is FIFO.

3. Sample companies appear on the tab for each sector. Teams are free to choose firms
that do not appear on this list, subject to the following rules.
a) The company should not be a conglomerate or part of a group, For example, avoid
companies that belong to a group say Tata, Reliance etc.
b) Try to avoid companies with multiple lines of business. If it has, then a substantial part
of its revenue should be from a single line of business
c) The company must be actively traded in the market. Active trading is defined as the
company being traded for at least 200 trading days in the previous calendar year.

4. Teams will be allocated their company choice on a FIFO basis.

5.Team, sector and company lists shall be updated daily until all the teams have made
their choices. Once made, choices can be changed only at the discretion of the instructor.

6. A team participation form is available. After the presentation, each team member will
fill out this form individually and submit it to the instructor.

GUIDELINES FOR INDUSTRY ANALYSIS

The purpose of this portion is to identify industry specific characteristics (and metrics if
any) that can enable a more informed analysis of companies in the industry. As relevant,
items that could be included are:

a) Brief overview of industry (size, products, markets, distribution), sub-sectors

if any.
b) Identify linkages within and across sectors.
b) Key indicators of industry health.
c) Few industry-level financial ratios
d) Identify the major companies and their level of dominance
e) Identify mid and small-cap companies and their degree of dependence on the
large-caps.
f) Provide comparative ratios of financial health for the leaders (or by market-cap
group).
g) As available and relevant, identify valuation metrics common to this sector (e.g
retail uses same-store-sales, semiconductors use book-to-bill ratios, airlines use
CASM (cost per available seat mile), hotels use CPOR (cost per occupied room)
etc. for these companies, (EPS, EBITDA, P/B etc).
h) Others as you see fit.
GUIDELINES FOR COMPANY ANALYSIS

1. Both technical and fundamental analysis of the companies is expected. Within the latter,
comparables (relative) and DCF valuation are acceptable. For the latter, a two-stage process is
sufficient.

2. In your analysis, consider a minimum of four years as your in-sample dataset which you use as
the input for your analysis. Then use the 5 th year will be your out-of-sample dataset which you
use to see the effectiveness of your model. Five and beyond will work for a two-stage model.

EVALUATION GUIDELINES

Teams will be permitted FIVE minutes to make their presentations. Your audience comprises portfolio
managers who are busy people, and listen to such presentations all day long. Some of them are global
managers with little knowledge of or interest in the niceties of Indian rules and regulations. Be
precise, and to the point and make a recommendation succinctly. Offer limited slides, each on making
a key point. Try to memorize what you will say and do not seek the assistance of note-cards. That is
the kiss-of-death.
 SELF EVALUATION OF SECTOR TEAM

THIS EVALUATION IS CONFIDENTIAL. (Please return to instructor).

Evaluate the contribution of each of your group members (including yourself), by

assigning points, for a total of 100. For example, if you feel that every member in a
group of two did an equal amount of work, you would assign 33.33 points to each. If you
feel that every member in a group of 4 did an equal amount of work, you would assign 25
points to each member.

Number of members: _____________

Your Name: ______________________ Score: ___________

Member Name: ______________________ Score: ___________

Member Name: ______________________ Score: ___________

Member Name: ______________________ Score: ___________