FIRST SEMESTER 2025-2026
Course Handout Part II
Date: 01-08-2025
In addition to part-I (General Handout for all courses appended to the time table) this portion gives further
specific details regarding the course.
Course No. : ECONF355
Course Title : Business Analysis & Valuation
Instructor-in-Charge : Dr. Nivedita Sinha
1. Brief Course Description:
The fundamental goal of an organization is either to maximize shareholder value or stakeholders
value depends on their geographical location. The former has been highly emphasized by the top
management of corporates in the most powerful capitalistic economy in the world - USA and the
latter is weighted by the corporates in continental Europe and Japan with short-sighted, inefficient,
simplistic, and even antisocial approach towards shareholders value maximization. But
globalization of financial markets has forced corporates financial systems to focus on maximizing
shareholder value otherwise they will be starved of capital – Indian corporates cannot be an
exception to this.
The recent trend of consolidations, mergers & acquisitions and other forms of strategic alliances
for sustainable growth have warranted finance domain experts of investment banks, investment
and consulting firms, research wing of corporates both in private and public sectors, government
agencies, etc. to analyze entire business constituents as to how to manage present, selectively
forget past and create for future. The course has been designed to help the students interested in
the area of investment banking, consultancy -mergers & acquisitions and equity research
(investment analysis). The broad objective of the course is to sensitize students to the various
frameworks of business analysis such as business strategy, accounting, financial and prospective,
and valuation approaches and which will help to take the right decision at the right time and place.
2. Scope and Objective of the Course:
This course attempts to examine the role of accounting information and intermediaries in the
economy, and how financial analysts can create in well functioning markets. Primarily four key
components such as business strategy, accounting, financial and prospective of
effective financial statement analysis will be discussed to have better understanding and evaluation
of the business from internal and external stakeholders’ perspectives. The
objectives of the course are as under.
▪Sensitize students to the various frameworks of business analysis such as business strategy,
accounting, financial and prospective.
▪Critical Analysis and Application of various valuation approaches and methods.
▪Understanding and evaluating various limitations of valuation methods, and provide solutions.
3. Textbooks:
1. Palepu, Healy & Bernard, Business Analysis & Valuation - Using Financial Statements, Text &
rd
Cases, Cengage Learning Publisher, 3 Edition.
nd
2. Damodaran A, Damodaran on Valuation, Wiley India Pvt. Ltd. 2 Edition.
4. Reference books
1. Damodaran A, The Dark Side of Valuation: Valuing Young, Distressed and Complex
nd
Businesses, 2 Edition, Pearson Education, 2010.
2. Titman S., Martin J.D. &Anshuman R. Valuation Analyzing Global Investment Opportunities,
Pearson Addison Wesley, 2008
5. Course Plan:
Chapter in Sessions
Lecture
Learning objectives Topics to be covered the Text
No.
Book
Framework for 1
What is valuation and the process of
1 Business Analysis & TB-1, Ch1
valuation?
Valuation
Pre-money valuation, Post money valuation, 4
Valuation in a venture Reference
2 Startup valuation, Valuation using
capital setting book 2 – Ch 8
comparable, Deal structuring
Accounting analysis, Application of 2
3 Accounting analysis TB-1, Ch 3,4
accounting, Prospective analysis
Incremental cash flows, Projections of Free 2
4 Relevant Cash flows TB-1, Ch 6,8
cash flow to the firm, Free cash flow to equity
Cost of capital calculation, Cost of equity 2
5 Cost of Capital TB-2, Ch 2
capital, cost of debt, WACC
Discounted Cash flow Intrinsic value calculation, WACC method of Reference 6
5
(DCF) analysis valuation, FTE method of valuation book 2, Ch 2
Valuing standalone target, valuing synergies, 4
Valuation in an M&A
6 Stock versus cash payment methods in TB-2, Ch 11
setting
Valuation and risk assessment
Valuation in an LBO setting, Valuation in a 6
changing capital structure setting, LBO
Adjusted Present value Reference
7 transactions and their valuation, Valuation of
(APV) valuation book 2, Ch 2
unlevered firm, valuation of financing side
effects
Python 2
8 Risk analysis Simulation in the Valuation setting
exercise
What are real options and contingent claims? 4
Reference
9 Real option valuation -I What is the value of options to wait, expand,
book 2, Ch 10
abandon, and timing options?
Certainty equivalent cash flow, valuing real 6
Real option valuation - options using the Black Scholes Model, Reference
10
II Valuing real options using the Binomial book 2, Ch 11
Option pricing model
Dealing with Practical considerations in valuation, EPS 2
TB2, Ch
11 limitations: EPS versus versus NPV, Economic profit calculation,
10,11,12
NPV Economic depreciation, EVA
Why does the valuation make sense? Analyze 1
12 Strategy analysis using strategy frameworks like Porter’s five TB1, Ch 2
forces, BCG matrix
Total Planned Sessions: 42
Evaluation:
Component Duration Weightage Date & Time Nature of
Component
Mid Sem Test 90 30 09/10 - 9.30 - CB
Minutes 11.00AM
Quiz (2) 20 CB
Assignment 10 OB
Comprehensive 180 40 08/12 FN 30% CB +
Examination Minutes 10% OB
Chamber consultation hour: With prior intimation during office hours
Notices: Notices will be displayed on Course Learning Management System.
Minimum pass mark criteria: A student should obtain 30% of the average of the 'A' graders in
the class, or 40% of the median marks of the class or 20% of the overall marks, whichever is lower
to clear the course. If the above requirement is not met, the students will be awarded 'NC'. If any
student gets the marks lower than the prescribed standard mentioned above, he/she may be
awarded NC.
Make-up Policy: Students should submit their makeup requests (except in case of medical
exigency) with the IC at least 6 hours before the exam.
● For medical exigencies, the following are applicable
o In case of hospitalization (24-48 hours or more), a make-up request shall be placed by
the Student, or a parent, or a friend at the earliest.
o In case of consultation with the Doctor within the campus (i.e., in the Medical Center),
the student should submit the Medical Certificate (yellow slip) issued by BITS Medical
Center.
● Makeup for any reasons other than the above: Students shall submit their requests to the IC as
soon as possible.
● There will be no makeup for Quizzes and Assignment
Academic Honesty and Integrity Policy: Academic honesty and integrity are to be maintained by
all the students throughout the semester and no type of academic dishonesty is acceptable.
Dr. Nivedita Sinha
INSTRUCTOR-IN-CHARGE
