A retail investor’s predicament: the JPA story
Publication date: 16 March 2022
Abstract
Learning outcomes
The case intends to achieve the following objectives with the audience: Apply the knowledge of fundamental analysis to select good companies for investment; analyse companies for investment through the contrarian strategy; and appreciate the need of own research before investing.
Case overview/synopsis
This case study provides an insight into the general process around investment for a retail investor. The protagonist of the case, Rajdeep Sharma, is a middle-class, salaried IT consultant from India. He has taken inspiration from Rakesh Jhunjhunwala, a renowned investor in India, and started his journey on the road to generate wealth. He decides to adopt the contrarian strategy and identifies Jaiprakash Associates Limited (JPA) to invest his savings. JPA is a large conglomerate with decades of experience, which has diversified business across multiple sectors. However, JPA’s pursuit of growth and expansion has created financial issues because of a large amount of debt it has amassed over the past few years. The company has been unable to repay its interest and principal obligations to the debt holders, making it consider a restructuring plan to meet these responsibilities. Meanwhile, Rajdeep has been optimistic about his investments but must experience excessive turmoil due to the high volatility in the company’s share prices. The case highlights the value of sound analysis, along with the impact of information on retail investors’ decision-making process. It will help prospective investors appreciate the importance of economic, sectoral and financial statement analysis before making any investments.
Complexity/academic level
Fundamental analysis for MBA students majoring in Finance.
Supplementary materials
Teaching notes are available for educators only.
Subject code
CSS 1: Accounting and Finance.
Keywords
Acknowledgements
Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision-making. The authors may have disguised names; financial and other recognisable information to protect confidentiality.
Citation
Mohanty, R. and Mohanty, B.K. (2022), "A retail investor’s predicament: the JPA story", , Vol. 12 No. 1. https://doi.org/10.1108/EEMCS-07-2021-0214
Publisher
:Emerald Publishing Limited
Copyright © 2022, Emerald Publishing Limited