Case for Round 1

IPDC Finance Ltd. has decided to allocate their idle fund of BDT 10 million in a portfolio of stocks of
some renowned companies in Bangladesh. The top management of IPDC Finance Ltd. wishes to invest
in two of the four certain companies of their interest. In order to achieve their desired wish, they have
submitted the names of the four companies mentioned below to their investment department. The
investment department of IPDC Finance Ltd. must look into these 4 companies and come up with the
best two companies whose stocks the company should invest their idle fund in. The investment
department is to prepare all the analysis of the companies financials and prospects, following its
recommendation of the best two companies whose stocks are expected be the most profitable to
invest in.

Now, you are to act as the team of the investment department and prepare your analysis based on the
guidelines provided below.

Companies to be chosen from:

1) Square Pharmaceuticals
2) Beximco Pharmaceuticals
3) The City Bank
4) Mercantile Bank

** Prepare your investment strategy. Choose one company from companies 1, 2 and one from
companies 3, 4. You are advised to follow the below steps:

1. Choose one company from each of the two subsets, based on their companies financial
performance and subjective judgement of the companies growth potential based on internal and
external factors. Consider important policies such as tax rates and other regulations.
a. For analysis purposes, assume that the funds are to be invested on July 30, 2017. You
must provide expected share prices on:
i. December 31, 2017
ii. December 31, 2018
b. The objective at the end of this stage is to quantify expected returns from each possible
investments over the investment horizons. Hence, begin each companys report with
these information. You may use prices on July 27, 2017 as base prices.
c. Calculations are to be prepared in MS Excel. Assumptions and descriptive portrayal of
key drivers and risk factors should be provided in MS Word.

2. Use movement in the companies share prices to quantify risks. You may incorporate qualitative
risk factors and subjectively manipulate the quantified risk figure to account for them. Rationales
for the final quantitative derivation should be provided in MS Word.

3. Optimize your portfolio based on a capital allocation strategy that maximizes your risk-return
tradeoff.
* The analysis should be based on data from published reports for the 3 most recent years. The
values for at least 3 forthcoming years should be forecasted on the basis of the companies
performance in the past 3 years and other factors deemed relevant.

Based on all the above factors, select the two best companies to invest over the investment horizon.

* All calculations should be done in MS Excel files. The justifications and descriptive content must
be provided in an MS Word file.

Mark Distribution:
Judgement Criteria Broad Breakdown
Weightage
Company-specific considerations 34
Identification and analysis of companies' revenue, growth & cost drivers, risk 20
factors and opportunities
Financial statement analysis 8
Corporate governance and other relevant considerations 6
Industry-specific and other external considerations 20
Values considered for relevant financial ratios applicable to the industry 8
Consideration of laws and policies applicable to the industry; such as tax rates, 12
monetary policy, etc
Consideration of qualitative factors and their quantification where 6
relevant and significant
Techniques used for valuing companies 10
Capital allocation and techniques used for optimizing reward and risk 10
Organization of reports 10
Organization of Excel files 10
Bonus (simulation using crystal ball or any other approach) 10
Total Weight 100

It is advised that teams go for bonuses only after completing all the requirements using the basic
techniques discussed in the workshop.
Submission Rules:
1. The name of your university, team name or a participants name should not be mentioned
anywhere in the files. Any mention of the above items will lead to disqualification of the team.
2. All files (PDFs and Excel worksheets) must be submitted to the following email address:

nsufinanceclub@gmail.com
3. All files must be renamed in this manner: Team Name_Optimity 2017_Round 1
Submission_ Square/Beximco/City/Mercantile/Portfolio/Investment Rationale.
Note:

1) Separate Excel files to be prepared for each company for expected return calculations -> 4 Excel files

2) Separate Excel file for risk calculation and capital allocation of all companies -> 1 Excel file

3) Separate Word file for all descriptive material and rationales -> 1 Word file. Please apply heading
styles for easy navigation.

4. The subject if the email must be in this manner: Team Name_Optimity 2017_Round 1
Submission.
5. The body of the email must contain the following details:

Team name

Team members names (all members) and University IDs

Team leaders contact number