Fall 2023

FALL 2023
INVESTMENT ANALYSIS & PORTFOLIO MANAGEMENT (FIN630)
*ASSIGNMENT # 1*
Case: Total Marks (10)
The Cable & Electrical Goods sector within the Pakistan Stock Exchange holds significant
importance in the nation's economy. It presents investment opportunities for both individual and
institutional investors trading on the Pakistan Stock Exchange, with the potential to drive capital
inflow and stimulate economic activity.
However, it's imperative for investors to diligently conduct a comprehensive analysis of individual
stocks within the Cable & Electrical Goods sector. This entails assessing the current market price
in relation to the intrinsic value of the stock, allowing for the identification of potential
undervaluation or overvaluation. Furthermore, seeking guidance from financial analysts provides
a more holistic understanding of the stock's fair value.
Let's consider a hypothetical scenario where your role is a financial analyst at ABC Investments
Limited. An investor, Mr. Muhammad has expressed a keen interest in investing in a company
from the Cable & Electrical Goods sector of the Pakistan Stock Exchange. Specifically, he is
considering investments in either Electric Link Cables Ltd. or Voltik Tech. Ltd. He has entrusted
you with the task of conducting a thorough analysis and recommending the more favorable
investment option.
To provide further insight, the shares of Electric Link Cables Ltd. are currently trading at Rs. 60
per share in the market. The company anticipates that its dividend for the next year will amount to
Rs. 3, with an expected annual growth rate of 4% for the foreseeable future. The required rate of
return for investors is 10%.
In contrast, Voltik Tech. Ltd. paid a most recent annual dividend of Rs. 2 per share. It is estimated
that these dividends will increase at a 4% annual rate for the next one year only. Afterwards, the
growth rate will drop to 3% per annum for the foreseeable future. At present, the market price of
this stock is Rs. 20. The required rate of return for investors is 10%.
Required
a) Calculate the intrinsic value of stock of Electric Link Cables Ltd. on the basis of Constant
Growth Dividend Discount Model - The Gordon Growth Model.
b) Determine the intrinsic value of Voltik Tech. Ltd. stock using the Variable Growth Model.
(Multistage Dividend Discount Model)
c) Based only on the calculations performed in above parts, mention clearly which stock is
overvalued and which stock is undervalued. Moreover, given this analysis, which stock would
you suggest Mr. Muhammad invest in?
NOTE: Provide complete necessary workings supported by the related

formulae, resulting figures with proper measuring units and to the point
interpretation as these all carries marks. Irrelevant details won’t get any
marks nor will copied or cheated assignments. Moreover, any mistake in
any part will be awarded zero marks in that part. So be careful while
solving the assignment.
IMPORTANT:
Grace period of extra 24 hours after the due date is usually available to overcome uploading
difficulties. This extra time should only be used to deal with emergencies and due dates should
always be treated as final to avoid any inconvenience.
IMPORTANT INSTRUCTIONS
▪ Take help from internet for collecting the information.
▪ Carefully watch relevant lectures and consult the relevant material from handouts along
with recommended books.
▪ Attempt the assignment yourself.
OTHER IMPORTANT INSTRUCTIONS:
DEADLINE:
▪ Make sure to upload the solution file before the due date on VULMS.
▪ Any submission made via email after the due date will not be accepted.
FORMATTING GUIDELINES:
▪ Use the font style “Times New Roman” or “Arial” and font size “12”.
▪ It is advised to compose your document in MS-Word format.
▪ You may also compose your assignment in Open Office format.
▪ Use black and blue font colors only.
RULES FOR MARKING

Please note that your assignment will not be graded or will be graded as Zero (0), if:
▪ It is submitted after the due date.
▪ The file you upload does not open or is corrupt.
▪ It is in any format other than MS-Word or Open Office, e.g., Excel, PowerPoint, PDF etc.
▪ It is cheated or copied from other students, internet, books, journals etc.
Note related to load shedding: Please be proactive.
Dear students!
As you know, Pre-Mid-Term semester activities have been started and loadshedding problems are
also prevailing in our country these days. Keeping in view the fact, you all are advised to post your
activities as early as possible without waiting for the due date. For your convenience, the activity
schedule has already been uploaded on VULMS for the current semester, therefore no excuse will
be entertained after due date of assignments, quizzes or GDBs.

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INVESTMENT ANALYSIS & PORTFOLIO MANAGEMENT (FIN630)

Case: Total Marks (10)

NOTE: Provide complete necessary workings supported by the related

▪ Take help from internet for collecting the information.

▪ Attempt the assignment yourself.

OTHER IMPORTANT INSTRUCTIONS:

▪ It is advised to compose your document in MS-Word format.

▪ You may also compose your assignment in Open Office format.

▪ Use black and blue font colors only.

RULES FOR MARKING

▪ It is submitted after the due date.

▪ The file you upload does not open or is corrupt.

▪ It is cheated or copied from other students, internet, books, journals etc.

Note related to load shedding: Please be proactive.

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