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Case Study Discussion with GD with Answers-marico

The document evaluates five companies (A, B, C, D, and E) based on various financial metrics, highlighting Company C as the best investment choice due to its strong product launches, sales growth, and stock price return. In contrast, Company E is recommended for sale due to its overvaluation, poor performance metrics, and lack of innovation. The analysis emphasizes the importance of P/E ratios, ROCE, and growth potential in making investment decisions.

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PRANJAL BINDAL
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25 views

Case Study Discussion with GD with Answers-marico

The document evaluates five companies (A, B, C, D, and E) based on various financial metrics, highlighting Company C as the best investment choice due to its strong product launches, sales growth, and stock price return. In contrast, Company E is recommended for sale due to its overvaluation, poor performance metrics, and lack of innovation. The analysis emphasizes the importance of P/E ratios, ROCE, and growth potential in making investment decisions.

Uploaded by

PRANJAL BINDAL
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Group Discussion Interview Case Study (FMCG Company) || CA Monk

Evaluating Companies for Investment

You are an analyst tasked with evaluating five companies (A, B, C, D, and E) based on their
financial and performance metrics. The industry average P/E ratio is 50. The following table
provides the data:

Company Company Company Company Company


Metric A B C D E
P/E Ratio 55 50 50 50 70
Industry P/E Ratio 50 50 50 50 50
No. of New Products Launched 25 40 85 6 6
ROCE 43% 16% 19% 22% 15%
Stock Price Return 11% 9% 25% 12% 8%
Sales Growth 6% 10% 15% 8% 5%
Revenue from Other Sources 25% 40% 35% 15% 5%
Promoter Holding 55% 65% 60% 75% 85%

Questions:
Based on the given data, which company would you buy?
Which company would you sell?

CA Monk Interview Training Document || By CA Shivam Palan (IIMI)


Group Discussion Interview Case Study (FMCG Company) || CA Monk

Metric Company A Company B Company C Company D Company E


55 (Slightly 50 (Fairly 50 (Fairly 50 (Fairly 70
P/E Ratio Overvalued) Valued) Valued) Valued) (Overvalued)
No. of New 25 (Moderate 40 (Good 85 (High 6 (Very Low 6 (Very Low
Products Growth Growth Growth Growth Growth
Launched Potential) Potential) Potential) Potential) Potential)
43% 19%
(Excellent 16% (Poor (Moderate 22% (Good 15% (Lowest
ROCE Efficiency) Efficiency) Efficiency) Efficiency) Efficiency)
12%
11% (Average 9% (Low 25% (Highest (Moderate 8% (Lowest
Stock Price Return Performance) Performance) Performance) Performance) Performance)
6% (Below 15% (Strong 8% (Moderate 5% (Weakest
Sales Growth Average) 10% (Good) Growth) Growth) Growth)
5%
25% 35% (Core-Focused
(Diversified 40% (High (Moderate , Low
Revenue from Revenue Reliance on Reliance on 15% (Good Diversification
Other Sources Streams) Non-Core) Non-Core) Balance) )
55% 85%
(Moderate 65% (Good 60% (Good 75% (Strong (Strongest
Promoter Holding Confidence) Confidence) Confidence) Confidence) Confidence)

Detailed Analysis:
Metric Analysis
Company E is overvalued at P/E 70, while B, C, and D are fairly valued
P/E Ratio (50). Company A is slightly overvalued. Overvalued stocks often offer
limited upside potential.
Company C leads with 85 new products, showing strong innovation.
No. of New Products
Companies D and E lag significantly with only 6 products, indicating
Launched
limited growth opportunities.
Company A has excellent capital efficiency at 43%. Company E has the
ROCE
lowest ROCE (15%), indicating poor profitability from capital employed.
Company C provides the highest returns (25%), indicating strong market
Stock Price Return sentiment. Company E lags with just 8%, reflecting poor stock
performance.

CA Monk Interview Training Document || By CA Shivam Palan (IIMI)


Group Discussion Interview Case Study (FMCG Company) || CA Monk

Company C shows the highest sales growth (15%), signaling strong


Sales Growth demand. Company E shows the weakest growth (5%), highlighting
potential stagnation.
Company B and C have high reliance on non-core revenues (40% and
35%, respectively). Company E is core-focused (5%), which may limit
Revenue from Other
revenue stability.
Sources
Company E has the highest promoter holding (85%), indicating strong
confidence, but weak financial performance undermines this advantage.
Company E has the highest promoter holding (85%), indicating strong
Promoter Holding
confidence, but weak financial performance undermines this advantage.

Question Answer Reasoning


Reasons:
- Fairly valued (P/E 50).
- Strong growth drivers: highest product launches (85) and sales
growth (15%).
Which Company Company
to Buy? C - Best stock price return (25%), reflecting strong market
sentiment.
- Good ROCE (19%) and moderate reliance on non-core
revenue (35%).
- Good promoter holding (60%).
Reasons:
- Overvalued (P/E 70), making it unattractive at the current price.
Which Company Company - Weak performance: lowest sales growth (5%), stock price
to Sell? E return (8%), and ROCE (15%).
- Very few product launches (6), showing low innovation.
- Limited diversification (5% revenue from non-core sources).

CA Monk Interview Training Document || By CA Shivam Palan (IIMI)

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