Institute of Chartered Financial Analysts of India (ICFAI) University 2007 Certification Certified Financial Planner Investment Banking and Financial Services - Question Paper
Monday, 17 June 2013 10:35Web
ques. paper
Investment Banking and Financial Services - II (MSF2K2): July 2008
part D : Case Study (50 Marks)
· This part consists of ques. with serial number one - 4.
· ans all ques..
· Marks are indicated against every ques..
· Do not spend more than 80 - 90 minutes on part D.
Case Study*
1. CRISIL’s IPO Grading is based on the assessment of a company’s fundamentals by mainly taking into account
five parameters i.e., Business Prospects, Project Related Risk, Financial Performance, Management Quality and
Corporate Governance. You are needed to grade the IPO of KNR Construction Limited based on the detail
valuation of every of the factors listed above and also justify your grading.
( 20 marks)
2. Mr.Bimal, a CFA working in KK Consultancy, an Investment Advisory Consultancy firm, is involved in the job of
advising his clients in their investment decisions and hence he decided to judge the problem price of stock of KNR
Construction Limited. To conduct the evaluation of stock of KNR Construction Limited, he proposed to use Price/
Earning Multiple approach and also decided to apply avg. P/E multiple of industry peers and EPS of the
company for the year 2008-09. He forecasted that the company can maintain its performance in generating
restated profits in the 2nd half of financial year 2007-08 as it did during the 1st half of the year. He also
estimated that the growth rate in the earnings of the company on the existing capital depends on the retention
policy of the company during the year 2006-07, as the company is expected to maintain the identical retention policy
even in future. Furthermore, he also forecasted that the funds realized from the proposed IPO will be operative
since April 2008 and will generate return of 15% during the year 2008-09.
Based on the above information, calculate the value of the share and also observe whether problem is over priced or
under priced.
( 10 marks)
3. The allotment price of Rs.170 has been determined by the company in consultation with the BRLMs on the basis
of assessment of market demand for the offered Equity Shares by the Book Building Process. Delineate and justify
the basis for problem price furnished in the final offer document based on Qualitative and Quantitative factors.
( 10 marks)
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