JAIPURIA INSTITUTE OF MANAGEMENT

PGDM; TRIMESTER V; ACADEMIC YEAR 2019-20

Course Code and title FIN 501 Corporate Valuation

Credits 3
Term and Year IV Term, 2019-20
Course Pre-requisite(s) Accounting Fundamentals and Corporate
Finance
Course Requirement(s) Knowledge of Spreadsheet
Course Schedule (day and time of class) As per academic time table
Classroom # (Location) 203
Course Instructor Prof Ravi Agarwal
Course Instructor Email Ravi.Agarwal@jaipuria.ac.in
Course Instructor Phone (Office)
Student Consultation Hours Friday
Office location Faculty cabins on 1st floor

1. Course Overview

The course primarily covers the two valuation approaches that are popularly used to value an asset in
corporate world. The first, discounted cash flow valuation, relates the value of an asset to the present value
of expected future cash flows on that asset. Fundamental analysis is covered in detail as a part of this
approach. The second, relative valuation, estimates the value of an asset by looking at the pricing of
'comparable' assets relative to a common variable like earnings, cash flows, book value or sales. The basis
of this approach is that we essentially put our trust in markets getting the values right, at least on average.
The course also covers an introduction to the latest approach to corporate valuation, i.e. Real Options
Analysis. The course is designed to enable students to analyze the factors, which drive corporate value,
and to develop strategies to enhance company’s value.

This course is fusion of learnings acquired in prior course of accounting, finance and strategy. Hence, it
further cultivates the graduate attributes of the student. This course is an application-based course so it
serves as an essential premise for building career in investment banking, financial planning, personal
investing and the likes.

2. Course Learning Outcomes (CLO)

At the end of the course, the students should be able to:

CLO 1: Explain the basic framework of Valuation and various approaches to valuation.
CLO 2: Interpret historical financials of the company to forecast future financials.
CLO 3: Compute value of firm and equity.
CLO 4: Defend the value of firm and equity using the concepts learned in the
Course.

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3. Mapping of CLOs with PLOs
PLO-1 PLO-2 PLO-3 PLO-4 PLO-5 PLO 6 PLO-7 PLO-8
CLO1

CLO2 X(M) X(L)

CLO3 X(H)
CLO4 X(L) X(M)

4. Mapping of CLOs with GAs

GA 1 GA 2 GA 3 GA 4 GA 5 GA 6 GA 7 GA 8

CLO 1

CLO 2 X

CLO 3 X X

CLO 4 X X

5. Text Book
Damodaran, Aswath (2012), Investment Valuation, 3rd Edition, Wiley India (E-book)

6. Assessment Tasks

Assessment Item Description Weightage CLO

Quiz There shall be three quizzes, to be conducted at 20% CLO 1
equal interval, on non-cumulative basis
News Analysis The student is required to apply the concept(s) 10% CLO 4
learned in the course to a relevant news article
from business press. The student shall submit a 1-
2 pages write up on the same.
Case Analysis Each student in the group will analyze a leading 10% CLO 2,
case study on valuation; the group will prepare CLO 3
the case analysis on a spreadsheet and send for
evaluation. The detailed guidelines of case
analysis shall be shared on MOODLE
Group Project Each student in the group will value an existing 10% CLO 2,
listed company; the group will prepare the project CLO 3
report on detailed fundamental analysis &
valuation and investment recommendation. The
detailed guidelines of group project assignment
shall be shared on MOODLE

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 Viva based on Each Student will be facing the viva-voce of 10% CLO 4
Group Project approximately 6-8 minutes. The student will be
Assignment required to defend the value of the company and
(Individual) the assumptions taken in valuing the company.
End- term It will be hall examination after 24 sessions. The 40% CLO 3
question paper will comprise of questions on
DCF and RV approaches.

7. Rubrics for Assessment Tasks

(1) RUBRICS FOR QUIZZES

CLO 1: Explain the basic framework of Valuation and various approaches to valuation.

Criteria Exceed Meet Expectation Below

Expectation Expectation
Demonstrate the level Answers 80% or Answers 40% or Answers less than
of understanding of more questions more but less than 40% questions
concepts learned. correctly 80% questions correctly
correctly

(2) RUBRICS FOR NEWS ANALYSIS

CLO 4: Defend the value of firm and equity using the concepts learned in the course.

Criteria Rating Score

Below Meets Expectations Exceeds Maximum
Expectations (4-7 points) Expectations Score
(0-3 points) (8-10 points) (10)
Selection of Not relevant to Relevant to assigned Highly relevant to 2
article- assigned subject subject matter; assigned subject
Relevance matter; Little matter and peer
(20% weight) understanding of Adequate understanding interest; displays
article’s relevance to of article’s relevance to good understanding
topic topic of article’s
relevance to topic

Review of the Missed the gist of the Does not focus on major Major points 2
article article; poor content; issues but selects minor selected and
Content is not issues; Content is discussed; In- depth
(20% weight) organized; Incomplete adequately organized and well-organized
summary; Evidence of and comprehensive; content; Excellent
plagiarism Adequate summary summary

Evaluation of Fails to identify and Identifies and evaluates Not only identifies 2
Assumptions evaluate any of the all the important and evaluates all
(20% weight) important assumptions assumptions, but not the the important
behind the claims and ones deeper in the assumptions, but
recommendations background – the more also some of the
made. abstract ones.

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 more hidden, more
abstract ones.
Evaluation of Fails to identify Identifies and briefly Identifies and 2
implications, implications, discusses implications, thoroughly
conclusions, and conclusions, and conclusions, and discusses
consequences consequences of the consequences implications,
issue, (OR) the key considering most but not conclusions, and
(20% weight) relationships between all the relevant consequences,
the other elements of assumptions, contexts, considering all
the problem, such as data, and evidence. relevant
context, assumptions, assumptions,
or data and evidence. contexts, data, and
evidence.
Articulation of Does not write any of Brief mention of Articulates own 2
own thoughts own thoughts or ideas thoughts, but did not thoughts on the
and opinions on about what is elaborate. No mention of article in clear
the contents discussed in the article. learning from reading manner. Discusses
(20% weight) the article. what was learned
from reading the
article or ideas that
might be of use in
the future.

(3) RUBRICS FOR WRITTEN CASE ANALYSIS

CLO 2: Interpret historical financials of the company to forecast future financials.

CLO 3: Compute value of firm and equity.

Criteria RATING SCORE

Exceeds Meets Below Expectations Maximum
Expectations Expectations (0-3 points) Score
(7-10 points) (4-6 points) (10)
Structure of Follows completely/ Follows majorly Follows hardly the flow 1.5
analysis mostly the flow of the flow of of information advised
(15% information advised in information in the project guidelines
weightage) the project guidelines advised in the
guidelines
Comprehensive Reasonable and valid Expresses valid Interpretation of data, 4
Analysis of interpretations of data, interpretations reports, facts,
financial reports, facts, of data, reports, assertions, etc. is
assertions, etc. facts, assertions, unclear and incomplete.
performance of
etc. in an
firm valued unclear fashion.
(40%
weightage)

Precision in High level of accuracy Moderate level Very low level of 1.5
Forecasting in forecasting the of accuracy in accuracy in forecasting
(15% future financials. forecasting the future financials.
weightage Clear articulation of future the future Articulates very few
assumptions used in financials. assumptions used in
Articulates the

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 forecasting with assumptions forecasting in
proper rationale. used in ambiguous manner.
forecasting but
not in a clear
manner and with
no/ improper
rationale.

Usage of excel All calculations done Most of the Some/none of the 2

(Computational using formulae calculations calculations done using
skills) accurately. done using correct formulae.
correct
(20% Appropriate and formulae. Partially correct
weightage) professional presentation of data in
presentation of tables Correct tables.
used. presentation of
data in tables Few/no charts are used.
Charts are used but not in a
extensively. presentable
manner.

Considerable
number of
charts are used.

Participation Participates actively. Participates in Participates minimally. 1

(based on peer Helps direct the group in group. Shows Shows a little concern for
review) setting goals. concern for goals. goals. Watches but doesn't
(10% Helps direct group in Participates in participate in goal setting.
meeting goals. goal setting. Completes assigned tasks
weightage)
Thoroughly completes Participates in late or turns in work
assigned tasks. meeting goals. incomplete.
Actively participates in Completes
helping the group work assigned tasks.
together better. Demonstrates
effort to help the
group work
together.

(4) RUBRICS FOR GROUP PROJECT REPORT

CLO 2: Interpret historical financials of the company to forecast future financials.

CLO 3: Compute value of firm and equity.

Criteria RATING SCORE

Exceeds Meets Below Expectations Maximum
Expectations Expectations (0-3 points) Score
(7-10 points) (4-6 points) (10)
Structure of Follows completely/ Follows majorly Follows hardly the flow 1
Report mostly the flow of the flow of of information advised
(10% information advised in information in the project guidelines
weightage) the project guidelines advised in the
guidelines

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 Comprehensive Reasonable and valid Expresses valid Interpretation of data, 2
Analysis of interpretations of data, interpretations reports, facts,
financial reports, facts, of data, reports, assertions, etc. is
assertions, etc. facts, assertions, unclear and incomplete.
performance of
etc. in an
firm valued unclear fashion.
(20%
weightage)

Precision in High level of accuracy Moderate level Very low level of 1

Forecasting in forecasting the of accuracy in accuracy in forecasting
(10% future financials. forecasting the future financials.
weightage Clear articulation of future the future Articulates very few
assumptions used in financials. assumptions used in
forecasting with Articulates the forecasting in
proper rationale. assumptions ambiguous manner.
used in
forecasting but
not in a clear
manner and with
no/ improper
rationale.

Usage of excel All calculations done Most of the Some/none of the 4

(Computational using formulae calculations calculations done using
skills) accurately. done using correct formulae.
correct
(40% Appropriate and formulae. Partially correct
weightage) professional presentation of data in
presentation of tables Correct tables.
used. presentation of
data in tables Few/no charts are used.
Charts are used but not in a
extensively. presentable
manner.

Considerable
number of
charts are used.

Participation Participates actively. Participates in Participates minimally. 2

(based on peer Helps direct the group in group. Shows Shows a little concern for
review) setting goals. concern for goals. goals. Watches but doesn't
(20% Helps direct group in Participates in participate in goal setting.
meeting goals. goal setting. Completes assigned tasks
weightage)
Thoroughly completes Participates in late or turns in work
assigned tasks. meeting goals. incomplete.
Actively participates in Completes
helping the group work assigned tasks.
together better. Demonstrates
effort to help the
group work
together.

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 (5) RUBRICS FOR PROJECT BASED VIVA

CLO 4: Defend the value of firm and equity using the concepts learned in the
Course.

Criteria Exceeds Meets Below Maximum

Expectations Expectations Expectations Score
(7-10 points) (4-6 points) (0-3 points) (10)
Overall Portrays a robust Portrays a Portrays a 2
understanding of understanding of the satisfactory limited/no
project topic understanding of understanding of
(20% weightage) the topic the topic
Articulation There is a logic in the There is some There is 2
(20% weightage) progression of sub- disjointedness in disjointedness in
topics progression of sub- progression of sub-
topics, although all topics, limited
sub-topics are number of sub-
covered topics are touched
upon
Question handling Prompt and accurate Fairly responsive to Inadequate 5
(50% weightage) response to questions questions, very few response to
in consistent manner opportunities questions, most of
missed the questions
unanswered
Body language Reflects high level of Reflects moderate Reflects reluctance 1
(10% weightage) comfort level of comfort to face viva

(6) RUBRICS FOR END-TERM

CLO 3: Compute value of firm and equity.

Criteria Exceeds Meets Expectations Below Expectations Maximum

Expectations Score (40)

More than 75% of 40 -75% of Less than 40%

the questions are questions are correct questions are correct
correct
Application of Students depict Students depict fair Students depict poor
appropriate sound understanding understanding of understanding of
formula and of the valuation valuation models valuation models
model models and their and their and their
application. application. application.
.
Accuracy in Most of the Many calculations
calculations calculations are are correct, few Few calculations are
correct. errors in calculation correct.
exist.

Presentation Information is well Information is fairly Information appears

organised, proper organised, but no to be disorganised
sub-heads used. sub-heads used.

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7. Session Plan

Session Topic/Sub Session Details

No. Topic
1 Introduction of Text Chapter 1 & 2
Course: (course Book/
overview, Reading
assessment Pedagogy Class discussion
scheme, CLO 1
instructor’s
SLO At the end of the session, the student will be able to understand the
expectations) need for valuation, methods of valuation and appropriateness of
Introduction to valuation approaches for different contexts.
Valuation
Approaches to
valuation
2 Understanding Text Walmart Annual Report
Business Model Book/
(KYC): Reading
Products(s) Pedagogy Class discussion
Cost
CLO 2
Operations
Financing
Strategy SLO At the end of the session, the student will be able to develop an
understanding about the business model of the company he/she
intends to value
3 Estimation of Text Chapter 7&8
WACC Book/
(Cost of equity, Reading Pre-reads: Basics of Risk, Risk Premium, Risk free rates
cost of debt, Class discussion, Spreadsheet
overall cost of Pedagogy
capital) CLO 3

SLO At the end of the session, the student will be able to analyze equity
risk and measure it; measure default risk and default spread; measure
overall cost of capital for a company.
4 Historical Text Walmart Case
Financial Book/
Statements Reading
Analysis Pedagogy Spreadsheet exercise, Discussion

(Profitability, CLO 2
Liquidity, SLO At the end of the session, the student will be able to analyze the key
Dupont, ratios of the company
Efficiency
ratios)

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5 Estimating Text Chapter 11
Growth Book/
Reading
Pedagogy Class Discussion

CLO 3,4

SLO At the end of the session, the student will develop the capability to
ascertain growth drivers in an industry and a company and forecast
the company’s future growth chart.

6 Forecast Text Walmart Case

Future Book/
financial Reading
statements Pedagogy Class discussion, spreadsheet application

(Forward CLO 2
looking ratios;
Extrapolate SLO At the end of the session, the student will be able to project the
trends; market demand for a product.
Forecasted
Income
Statement,
Balance Sheet,
Cash Flow
Statement)
7 Measuring & Text Chapters 9 & 10, Walmart Case
Forecasting Book/
Cash flows: Reading
Pedagogy Class discussion, Spreadsheet exercise
FCFF
FCFE
CLO 3

SLO At the end of the session, the student will be able to measure free cash
flows from the point of view of firm and equity holders.
8 Estimating Text Chapter 12, Walmart case
Terminal Book/
Value Reading
Pedagogy Lecture, Spreadsheet exercise

CLO 3

SLO At the end of the session, the student will be able to calculate terminal
value with appropriate set of assumptions.
9 Enterprise Text Chapter 15, Walmart Case
Value Book/
Reading

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 (Firm valuation Pedagogy Class discussion, spreadsheet exercise
using FCFF
approach) CLO 3

SLO At the end of the session, the student will be able to value the
operating assets of the firm
10 Equity Value Text Chapter 14, Walmart Case
Book/
(FCFE model of Reading
equity Pedagogy Class discussion, spreadsheet exercise
valuation;
CLO 4&5
Equity
Valuation SLO At the end of the session, the student will be able to value the equity
through FCFF using DCF approach.
approach)
11 Sensitivity Text Walmart Case
Analysis Book/
(Testing Reading
underlying Pedagogy Class discussion; spreadsheet exercise
assumptions
sensitivity; CLO 5, 6, 7
identifying
crucial variables SLO At the end of the session, the student will be able to identify the most
sensitive inputs to valuation model
based on range
of values
obtained by
running the
models for
various values
of inputs)
12 Review and Text Chapter 7 to 15
Consolidation Book/
–I Reading
(based on
session 2-11)
13 Dividend- Pedagogy Class discussion, exercises
Discount
Models CLO 3
(1-stage, 2-
stage, 3-stage, SLO At the end of the session, the student will be able to apply the concepts
n-stage models and tools learnt in session 4-11.
for equity SLO At the end of the session, the student will be able to do equity
valuation) valuation using DDMs.
14 Basic Text Chapter 17
principles of Book/
relative Reading
valuation Pedagogy Quiz based on Video

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 CLO 3

SLO At the end of the session, the student will be able to understand the
process of relative valuation technique; he/she will be capable to use
relative valuation multiples wisely.
15 Earnings Text Chapter 18, 19, 20
multiples, Book Book/
Value Reading
Multiples, Pedagogy Class discussion/ Case discussion
Revenue
Multiples CLO 3

SLO At the end of the session, the student will be able to derive fundamental
earnings based/ book valued based/revenue based multiples; he/she
will be able to ascertain the value drivers for the earnings/book
value/revenue multiples
16 Book Value Text Chapter 19-20
and Revenue Book/
Multiples Reading
Pedagogy Class discussion, Case discussion
CLO 4, 6, 7
SLO At the end of the session, the student will be able to derive fundamental
book value based multiples; he/she will be able to ascertain the value
drivers for the book value multiple
17 Review and Pedagogy Class discussion, Exercises
Consolidation
– II CLO 4, 6, 7

SLO At the end of the session, the student will be able to apply the concepts
(based on
and tools learnt in session 15-17.
session 14 -17)

18 Valuing Text Chapter 21

Financial Book/
Services Firms Reading
Pedagogy Class discussion and Exercises
(Uniqueness of
financial CLO 4
services firms;
SLO At the end of the session, the student will be able to value financial
DCF Valuation)
services firm using DCF approach
19 Valuing Text Chapter 21
Financial Book/
Services Firms Reading
Pedagogy Class discussion and exercises
(Relative
CLO 4
Valuation)

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 SLO At the end of the session, the student will be able to value financial
services firm using relative valuation approach

20 Valuing Start- Text Chapter 23

up Firms Book/
Reading
Pedagogy Written case analysis

CLO 3,4

SLO At the end of the session, student will be able to apply valuation
concepts for valuing start-up firms.
21 Real Options Text Chapter 27-28
Analysis Book/
(ROA) Reading
Pedagogy Class discussion and Exercises

CLO 3,4

SLO At the end of the session, the student will be able to apply option
pricing theory to valuing contingent assets.
22 Real Options Text Chapter 29-30
Analysis Book/
(ROA) Reading
Pedagogy Class discussion, exercises
Expanding and
abandoning CLO 3, 4
project and
stressed assets SLO At the end of the session, the student will be able to apply option
pricing theory to capturing value of projects with embedded options
and stressed assets.
23 Comprehensive Text Chapter 23, Handout
valuation case Book/
Reading
Pedagogy Case study

CLO 2,3
SLO At the end of the session, the student will be able to consolidate the
learnings gained from sessions 4-20

24 Session wind up, Feedback and Learning Integration

N.B. - Two of the sessions will be engaged by practitioners from the industry, working in the
domain of valuation and corporate finance, to share the intricacies and practical aspects of
valuation.

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Time budgeting in course planning:

Please note that while assigning activities and planning teaching schedules following table may
be of help. The weightage of items in the table is prescriptive and may vary according to course
requirement. Yet it is indicative of how student time per course can be budgeted:

Time
Activity Description
Budgeted
Classes 3-4 hours per week for 10 weeks 30 hours
Reading Prescribed readings and making notes 10 hours
Preparation of set questions,
Including shared and group exercises 15 hours
exercises and problems
Preparation of assignment Reading and writing 25 hours
Study and revision for test and end
Self-preparations 25 hours
of Trimester examination
TOTAL 105 hours

Reference books:

• Palepu, Healy, Bernard (2013): Business Analysis & Valuation, CENGAGE Learning, 5th
edition
• Damodaran, Aswath (2002): Damodaran on Valuation, Wiley, New Delhi, 2nd edition
• Tim Coller, et al (2015): Valuation: Measuring and Managing the Values of Companies,
Wiley USA, 6th edition
• Rosenbaum, J and P Rosenbaum (2013): Investment Banking, Wiley, USA, 2nd edition
• Chandra, Prasanna (2011): Corporate Valuation and Value Creation, McGraw-Hill, Delhi

Web Resources:

• http://pages.stern.nyu.edu/~adamodar/New_Home_Page/spreadsh.htm#valinputs
• http://pages.stern.nyu.edu/~adamodar/
• https://www.youtube.com/watch?v=znmQ7oMiQrM
• Students are also advised to go through the free Valuation Online Class offered by NYU Stern
School of Business

• www.coursera.org
Students are advised to join a course on Coursera – “Accounting Analytics” taken by
Brian J Bushee from Wharton (University of Pennsylvania) - The course imparts learning
on how data is used to assess what drives financial performance and to forecast future
financial performance. In case the said course is not live, they may choose an equivalent
course from the coursera menu.

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 Instructions -

Students will be expected to maintain a daily log of their learning and make an action plan. Students are
encouraged to visit videos available on Impartus, Youtube on TED talks, and readings available at
websites like course-era, damodaranonline, SSRN, etc.

Institute’s Policy Statements

It is the responsibility of every student to be aware of the requirements for this course, and understand
the specific details included in this document. It is emphasized that this course requires a significant
commitment outside of formal class contact. The learning tasks in this course may include classes
(lectures or seminars), required reading, the preparation of answers to set questions, exercises and
problems, and self-study. In addition, students may be required to complete an assignment, test or
examination.

LMS-Moodle/Impartus

LMS-Moodle/Impartus is used to host course resources for all courses. Students can download lecture,
additional reading materials, and tutorial notes to support class participation.

Late Submission

Assessment tasks submitted after the due date, without prior approval/arrangement, will be not be
accepted. Requests for extension of time must be made with the faculty member concerned and based on
Special Consideration guidelines.

Plagiarism

Plagiarism is looked at as the presentation of the expressed thought or work of another person as though
it is one's own without properly acknowledging that person.

Cases of plagiarism will be dealt with according to Plagiarism Policy of the institute. It is advisable that
students should read the relevant section of Student Handbook for detailed guidelines. It is also
advisable that students must not allow other students to copy their work and must take care to safeguard
against this happening. In cases of copying, normally all students involved will be penalised equally; an
exception will be if the student can demonstrate the work is their own and they took reasonable care to
safeguard against copying.

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