Case studies

This case study enables participants to:▪ To understand the fintech landscape in India and assess how market dynamics can impact Paytm’s valuation.▪ To evaluate the drivers affecting the value of Paytm and arrive at Paytm’s valuation.▪ To critically appraise the investment decision made.

Rajani Chandran, a seasoned financial analyst, relooks her recommendation of Paytm in light of the recent revocation of its Payment Bank License. Paytm, the flagship service of One97 Communications Ltd., a financial technology company, is a pioneer in the Indian digital payments and financial services market. However, the developments post going public in 2021 were not always favorable. The frequent fallout with Reserve Bank of India brought restrictions on onboarding new customers and ultimately the revocation of the license. This drastic move is of huge concern to those who have invested in the company. Thus, given this backdrop, Rajani initially explored the dynamic landscape of the Indian digital payments and fintech industry, considering macroeconomic factors, competition and regulatory dynamics. She delved into Paytm’s financial performance to gauge its position in the market. The next phase of the careful scrutiny involved arriving at the equity value of the venture using the discounted cash flow model. Finally, Rajani critically appraised the drivers of valuation, incorporating both quantitative and the story she has crafted around Paytm. Consequently, participants in this case study are prompted to evaluate Paytm and arrive at a valuation and furnish a comprehensive recommendation based on their analyses, thus understanding the intricacies of evaluating a fintech company with immense potential. This case study serves as a valuable resource for students seeking to comprehend the complexities of financial analysis and valuation within the context of a dynamic and evolving industry landscape.

The case is best suited for a course on Financial Statement Analysis while discussing how the financial statements of new-age tech companies can be analyzed and Business Valuation while introducing DCF valuation. The case serves as a comprehensive example of the multifaceted challenges and considerations that a buy-side analyst should have while valuing a company and pitching an investment within the fintech industry. Designed for second-year MBA students, the case assumes familiarity with financial reporting and strategic management concepts such as Political, Economic, Social, Technological, Legal and Environmental (PESTLE) and strength, weakness, opportunity and threat (SWOT) analyses and Business Canvas Model.

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CSS 1: Accounting and Finance.

1. Understand the impact of macroeconomic factors on investment portfolios:Students will learn how macroeconomic conditions, such as changes in policy rates by central banks, influence investment decisions and portfolio performance. They will analyze how these factors can lead to significant financial challenges for managed funds.2. Develop strategic financial decision-making skills:Through examining the case, students will practice making strategic financial decisions under uncertain and volatile market conditions. They will explore various options for managing an underperforming investment fund and the potential outcomes of these choices.3. Evaluate risk management techniques:The case provides a platform for students to understand different risk management strategies, including the trade-offs between holding long-term bonds versus reinvesting in short-term securities. They will assess the risks and benefits of these strategies and how they impact fund stability and performance.4. Enhance skills in portfolio management:Students will gain practical experience in portfolio management by examining the fund’s investment decisions, performance metrics and the process of presenting and defending investment proposals. This will involve analyzing the financial and strategic implications of different asset allocations.5. Apply theoretical concepts to real-world scenarios:The case encourages students to apply theoretical concepts such as yield to maturity (YTM) calculation, discounted cash flow analysis, capital asset pricing models and benchmarking against indices to real-world scenarios. This helps bridge the gap between academic principles and practical application in finance.

The case study centered on the Sukkur IBA University in Pakistan, highlighting the challenges faced by its student-managed fund (SMF). From November 2015 to January 2023, the case study offers a comprehensive examination of the fund’s activities in the financial services and higher education domains. Mr Shankar Talreja, the fund manager, contemplating with significant investment losses because of macroeconomic fluctuations, specifically the rising policy rates by the State Bank of Pakistan. These losses challenge the sustainability of the SMF, which serves as a practical learning platform for students. The primary dilemma revolves around whether to continue operating the fund amid consistent losses or to dissolve it, redirecting resources to other educational programs. This case focuses on financial decision-making, risk management and investment strategies, tailored for academic settings.

This case study is intended for use in graduate- and undergraduate-level courses on corporate strategy, investment management and finance. It is appropriate for graduate students who are looking to apply these concepts more deeply as well as undergraduate students who have a strong foundation in finance due to the complexity of the financial concepts involved, such as risk management, portfolio strategy and macroeconomic impacts.

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CSS1: Accounting and Finance.

After completion of the case study, the students will be able to analyze the overall competitive environment for telecom sector in India with the use of Herfindahl–Hirschman index tool, execute the fundamental analysis of Jio Platforms Limited (JPL) company, understand the concept of net neutrality and its implications for India market, understand the concept of “Zero debt company” and its implication for companies and understand data privacy concerns.

In early September of 2020, Ashish Aggarwal, a businessman in the northern state of Punjab, India with his usual habit of turning the pages of newspaper on hand and sipping morning chai got excited while reading newspaper with recent investment of Meta Platforms via Facebook buying 9.99% stake in reliance JPL. He explored and saw the potential for small businesses to invest in this and earn money, as a finance-inclined individual Aggarwal thought why not invest and earn from this opportunity. So he started googling and saw all the reviews of analysts on investment site and investors predicted that the deal could be a game changer that would further transform the existing telecom and social media platforms in India. The deal would further open doors for a new market “JioMart” which could be a futuristic design for a “one-stop-shop for e-commerce, social media consumption, instant messaging, and also digital payments”. Mukesh Ambani’s intentions to make the company zero net debt company within next 18 months fascinated him too. All this made Aggarwal interested in investing in JPL on behalf of his company as this investment option was only for business investors. So he called his financial manager, Mr Anish Mahajan for discussing the issue and both started discussing what could be the future of investment, then he told Mahajan to do the complete analysis. Also, Aggarwal was perplexed about the impact that Meta’s investment in Jio would have on consumers, especially in India. How would the telecom regulatory authority in India view it? Aggarwal felt that how the telecommunication industry would plunge into disruption mode in future. What would be the competitors’ stance in India? Would it trigger other players for strategic alliances? Aggarwal was in a dilemma whether he should invest his money in JPL company or not with controversial discussion on net neutrality and data privacy concern?

This case study is suited to master degree programs.

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CSS 1: Accounting and Finance.

After completion of the case study, the students will be able to assess Paytm’s share buyback in the context of conventional practices, especially for loss-making firms, analyze the influence of initial public offering (IPO) performance on market sentiments and the role of subsequent events in shaping investor confidence, explore the regulatory framework for share buybacks in India and its impact on Paytm’s decision, scrutinize Paytm’s post-IPO financials and evaluate the board’s rationale for the share buyback and examine the factors influencing Paytm shareholders’ decisions amid the buyback, considering market conditions and the company’s outlook.

This case study discusses the unorthodox choice made by Paytm, a leading Indian digital payments and financial services provider, to begin a share repurchase program just one year after its substantial IPO. Paytm encountered difficulties as its stock price experienced a sharp decline of 74% following the IPO, which raised concerns among shareholders and elicited mistrust from analysts. This case study explores the reasoning for the buyback, the legislative framework of share buybacks in India and the diverse viewpoints of analysts regarding the company’s financial strategy. This case study provides not only ample opportunity to discuss ethical issues around managers’ corporate actions but also brings investors a dilemma.

This case study is suited to Master of Business Administration/Master of Science/Bachelor of Business Administration/Bachelor of Science.

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CSS 1: Accounting and Finance.

This case study aims to equip students with the skills to evaluate the rationale behind a demerger decision, derive the enterprise value and equity value of the conglomerate using the discounted cash flow valuation modelling and assess the company’s value based on qualitative parameters using economy industry company analysis and strengths, weaknesses, opportunities and threats analysis.

This case study delves into the demerger of the financial services arm of Reliance Industries Limited into a separate unit named Jio Financial Services Limited. The independence of this unit is anticipated to enhance shareholder value and unlock the conglomerate discount. In light of these factors, a fundamental analysis of the firm is conducted to determine whether it presents a viable investment opportunity.

This case study is suitable for -graduate and postgraduate courses in financial management.

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CSS 1: Accounting and finance.

The learning outcomes are as follows: to evaluate the suitability of Surplus business model from accounting, finance, strategy and cultural perspectives; to identify the factors that contribute to the reluctance of business partners to join Surplus ecosystem and to suggest solutions; to identify the factors that contribute to the reluctance of consumers to join Surplus ecosystem and to suggest solutions; and to address unique funding and financial challenges faced by Surplus.

This case study discussed the challenges faced by Surplus Indonesia, a company founded upon the belief that a harmonious balance can be achieved between profitability and environmental stewardship. Stemming from the founder’s encounter with leftover food going to waste after buffets, Surplus embarked on a pioneering initiative using an application technology to address food wastage at the consumer level. Collaborating with various stakeholders such as retail outlets, restaurants, bakeries, cafes and hotels, the goal was to combat food waste while supporting Sustainable Development Goals 2, 12 and 13: Zero Hunger, Responsible Consumption & Production and Climate Action, respectively. Each meal saved through the Surplus app not only translated to reduced expenses for businesses but also contributed to reducing greenhouse gas emissions from landfills. Surplus’ overarching mission was to cut food waste and loss in Indonesia by half by 2030, fostering an environment where food waste is virtually nonexistent in the nation.

Undergraduate as well as graduate courses that focus on sustainability, accounting, financing and strategy

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CSS 1: Accounting and Finance.

After completion of the case study, the students will be able to define and compute equivalent units of production, apply management accounting procedures for manufacturing businesses (Furqani Sugar Mills), calculate product cost and track product cost flows and prepare process cost summary using the weighted average method. By studying this case, learners will gain insights into the challenges and financial complexities faced by a sugar mill and how strategic decisions and economic analysis can impact the sustainability and profitability of such businesses.

This case study explained the problem Mr Zoraiz, chief financial officer (CFO) of Furqani Sugar Mill, was facing. The problems started in the month of November 2020. Mill’s owner Mr Jabbar asked him for suggestions that employees should not be laid off. So he was analysing and estimating the cost of production when increasing production. He was focusing on cost reduction in process or increasing production, and utilization of resources efficiently and effectively. This case study focused on the market segment of the sugar industry for process costing. Furqani Sugar Mill, founded in 1992 in Pakistan (Company Document), had a noble mission to improve the lives of local peasants by producing sugar and molasses. Pakistan heavily relied on agribusiness, particularly sugar production, which contributed significantly to manufacturing. However, Furqani Sugar Mill faced a dire situation despite its vital role. During the sugarcane season, it struggled due to a shortage of raw materials, primarily sugarcane. Zoraiz, the CFO, grappled with running the mill below total capacity in recent years due to two significant issues: government-fixed sugar prices and limited sugarcane supply from local farmers. The high cost of sugarcane hindered Zoraiz’s desire to operate at total capacity. Zoraiz, Furqani’s CFO, must decide what he can do so that the mill can operate at its total capacity. The future of Furqani Sugar Mill hung in the balance as Zoraiz navigated complex financial decisions while striving to uphold the mill’s legacy and commitment to the local community.

This case study is suitable for teaching in several modules, notably managerial accounting and control systems, management accounting decision-making and cost and management accounting. Specifically, it covers performance management and process costing in management accounts. It is appropriate for teaching at the undergraduate and postgraduate levels.

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The case study’s primary learning objectives are to develop a number of professional competencies, such as personal ethics and citizenship, decision-making acumen and business acumen. Students deal with a novel situation, underpinned by four Sustainable Development Goals (reduced poverty, quality education, decent work and economic growth, and reduced inequalities) and are required to consider a broad range of historical and cultural nuances in a resource-constrained environment, to address the dilemma at hand.

This case study tracks the efforts of a non-profit company called Just Grace, which was established in 2012 in Cape Town. Just Grace’s mission is to uplift the Langa community, an underprivileged urban suburb in Cape Town, via educational, career development and social programmes. Just Grace’s programmes have achieved success in Langa. The dilemma now facing Just Grace is whether their existing model is transferable to a rural community in the Eastern Cape in South Africa.

The case study is aimed at both local and international postgraduate students studying an honours or master’s degree in a business-related field such as accounting or an MBA.

CSS 1: Accounting and finance.

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Upon completion of the case study, student will be able to discuss valuation of new-age ventures and understand how it is different from the valuation of organisations with a longer history; analyse the considerations (quantitative and qualitative) while evaluating investments in new-age ventures; and develop a framework involving the various dimensions of investment readiness.

The fintech space in India has seen an upsurge of activities since 2016. The growth of Paytm, RazorPay and many such ventures and the drastic improvements in this ecosystem have been significant catalysts for this segment of new-age tech companies. Funding and valuations have seen a sharp increase, especially when businesses worldwide felt the after-effects of the pandemic, with India being home to a large number of unicorns, second only to the USA. Open Financial Technologies Ltd (OPEN TECH) is one such venture that claimed its spot as the 100th unicorn of India within a span of five years since inception. With a strong focus on disrupting the banking sector in India, this neo-bank aspires to be the equivalent of Stripe in India and eventually be a strong competitor in the international market.

Richard O’Neil is an active investor in the fintech space, based out of the UK, and he is currently looking to expand the market by considering investment options. In the process, Richard and his team have identified India as a viable and competitive market, as new venture support and funding are increasingly emphasized through policies such as Startup India, Make in India and many such more to sustain and propel its benefits. As the team was exploring ventures worth investing, Open Financial Technologies caught their attention. However, Richard, given his experience across fields and being a seasoned private equity investor, realised that valuing new-age companies is as much an art as it is a science. Multiple quantitative and qualitative aspects need to be considered while relevance of traditional valuation techniques to put a value on such entrepreneurial ventures is questioned. At this juncture, he finds it crucial to evaluate the investment readiness of OPEN TECH.

This case allows students to understand how valuation of new ventures is different from that of established companies and analyse the crucial factors worth considering while evaluating an investment proposal as a venture capitalist, which eventually helps shape the funding pitch of an entrepreneur in the space.

This case study can be useful for students undertaking graduate- and executive-level courses on business valuation and strategy and entrepreneurship, as well as entrepreneurial finance elective at the undergraduate level. One could use this case in courses on entrepreneurship and innovation, such as an introductory course on entrepreneurial finance and a course on venture capital and private equity. It also allows discussion on fintech and neobanking and the valuation of privately held companies.

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CSS 1: Accounting and finance.

This case aims to introduce students to the social sector financing (internal and external) landscape, and its nuances. It specifically provides material to enable critical evaluation and decision-making around financing a for-profit social enterprise and its associated challenges.

The case highlights the fundraising options available to a social enterprise in an emerging economy like India. EnglishHelper Technologies Private Ltd. (EH) commenced operations in 2011 as a subsidiary of its parent Boston-based company, to provide technology-based learning solutions primarily to the underserved segments of the country’s population. Sanjay Gupta, co-founder and CEO, EH Inc., wanted to explore funding options suitable for the company’s next growth stage. The existing funding sources of equity from its parent company, grants and revenues (mainly from product sales to government schools) had worked well for EH in the initial years of its growth. But its financial performance was being impacted, and, additionally, further scaling up would require sources that could give a much larger quantum of funds and add support to EH’s operations. EH would also need to revisit its revenue model to strengthen its financial sustainability, by drawing lessons from the other prevalent ones in the ed-tech sector and make it more effective. The case encourages students to assess the various funding alternatives, internal and external, for a social sector private company with a for-profit model like EH, to enable it to achieve its scaling-up plans while serving its social mission.

The case is relevant for both undergraduate and postgraduate students and can be used in business administration programs.

CSS 1: Accounting and finance.

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