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Case studies

Each case uses a fictional company, fund or IPO so the numbers can show one lesson clearly. Real financial data is never invented. Where possible, a link takes you to a real stock or fund on MojoStox to repeat the same checks on live numbers.

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10 stock analysis case studies

1. "Steady Foods Ltd": the quality compounder

Lesson: Consistent growth with high returns on capital and little debt.

Fact (fictional)Value
Revenue CAGR (5 yrs)12%
Profit CAGR (5 yrs)14%
ROE / ROCE24% / 30%
D/E0.05
CFO ÷ net profit (5-yr avg)1.05
P/E45 (industry 40)
Think about:
  • Is growth consistent?
  • Are profits backed by cash?
  • Is the high P/E justified?
Show analysis

High quality, but already priced richly. A good business, but returns depend on paying a sensible price. Consider buying gradually (SIP-style) rather than all at once.

Practise on real data: ITC stock pageCompare ROE, margins and P/E with this example

2. "PaperProfit Industries": profits without cash

Lesson: Reported profit rising, operating cash flow negative.

Fact (fictional)Value
Profit (3 yrs)₹80 → ₹120 → ₹170 cr
Operating cash flow−₹40, −₹65, −₹90 cr
ReceivablesUp 140% in 2 yrs (sales up 30%)
AuditorResigned last year
Think about:
  • Why is cash negative while profit grows?
  • What do rising receivables suggest?
Show analysis

Major red flags: profits may not be real or collectable. Avoid.

3. "HeavyDebt Infra": growth on borrowed money

Lesson: Debt rising faster than profit.

Fact (fictional)Value
Revenue growth25% a year
Debt₹2,000 → ₹6,500 cr in 3 yrs
D/E3.2
Interest coverage1.4×
Promoter pledge45% of holding
Think about:
  • Can it survive a slowdown?
  • What does 45% promoter pledge imply?
Show analysis

Very fragile. A small dip in profit can make interest unpayable; pledged shares can be sold, crashing the price. High risk.

4. "OldCo Textiles": the value trap

Lesson: Looks cheap, but the business is shrinking.

Fact (fictional)Value
P/E6
Dividend yield9%
Revenue trendFalling 8% a year for 5 yrs
Price−60% in 3 yrs
Think about:
  • Why is the yield so high?
  • Is a low P/E enough?
Show analysis

High yield comes from a crashed price. Shrinking revenue means profits and dividends may fall further. Cheap for a reason.

5. "SteelCycle Ltd": the cyclical

Lesson: Profits swing with commodity prices; P/E can mislead.

Fact (fictional)Value
Profit (5 yrs)₹200, ₹1,800, ₹3,000, ₹600, ₹400 cr
P/E at peak profits5
P/E at trough35
Think about:
  • Why is the lowest P/E often the riskiest time to buy a cyclical?
Show analysis

For cyclicals, low P/E often appears at peak profits, just before they fall. Judge on mid-cycle earnings and balance-sheet strength.

6. "TrustBank": reading a bank

Lesson: Banks need different ratios.

Fact (fictional)Value
ROA1.8%
ROE16%
Gross NPA / Net NPA1.3% / 0.3%
P/B2.6
Loan growth16% a year
Think about:
  • Which ratios matter for banks?
  • Is P/B 2.6 reasonable with ROE 16%?
Show analysis

Healthy: strong ROA, low NPAs, steady growth. P/B is in line with quality. Watch NPAs every quarter.

Practise on real data: HDFCBANK stock pageFinancials → ROA, Gross/Net NPA, P/B

7. "FastGrow Tech": high growth, high valuation

Lesson: Using PEG and reality-checking growth.

Fact (fictional)Value
EPS growth (3 yrs)35% a year
P/E70
PEG2.0
Customer concentrationTop client 40% of revenue
Think about:
  • What if growth slows to 15%?
  • What does customer concentration add?
Show analysis

Priced for perfection. If growth slows, P/E can halve and so can the price. Losing the top client would be severe. Only a small position, if any.

Practise on real data: INFY stock pageCompare growth and P/E with an established IT company

8. "DilutionCo": shrinking ownership

Lesson: Frequent share issuance.

Fact (fictional)Value
Shares outstanding50 → 85 cr in 4 yrs
Net profit₹200 → ₹300 cr
EPS₹4.0 → ₹3.5
Think about:
  • Profit rose 50%; why did EPS fall?
Show analysis

Shareholders were diluted faster than profits grew. Per-share value matters, not total profit.

9. "Monopoly Exchange": the moat

Lesson: Regulatory and network moats.

Fact (fictional)Value
Market share85%
Operating margin55%
DebtNil
Main riskRegulatory changes
Think about:
  • What is the moat?
  • What could break it?
Show analysis

Strong moat (network effects, licences) and superb economics, but regulation can change fees or volumes overnight. Watch policy news.

Practise on real data: CDSL stock pageA real depository: look at margins and debt

10. "Hype Microcap": the pump

Lesson: Social media hype in a tiny stock.

Fact (fictional)Value
Market cap₹120 cr
Price+400% in 4 months
Revenue₹8 cr, loss-making
NewsTelegram groups with "target ₹500"
Circuit5% band, many upper circuits
Think about:
  • What do repeated upper circuits with no fundamentals suggest?
Show analysis

Classic pump-and-dump warning signs. Avoid; report suspicious tips to SEBI.

5 mutual fund evaluation case studies

1. Star last year vs steady performer

Lesson: Don’t chase 1-year returns.

Fact (fictional)Value
Fund A: 1Y / 5Y CAGR48% / 10%
Fund B: 1Y / 5Y CAGR20% / 15%
BothMid-cap category
Think about:
  • Which shows more consistency?
Show analysis

B. A’s one great year hides a weak record. Check rolling returns before deciding.

Practise on real data: Top funds: compare categories

2. Direct vs regular plan

Lesson: Same portfolio, different cost.

Fact (fictional)Value
Regular TER1.7%
Direct TER0.6%
Investment₹10,000/month for 20 yrs
Think about:
  • How much could the 1.1% difference cost?
Show analysis

Over 20 years, the gap can run into several lakh rupees. Choose direct unless you get advice worth the fee.

Practise on real data: Compare a real direct vs regular NAV

3. Index fund vs active large-cap

Lesson: Benchmark comparison.

Fact (fictional)Value
Active fund 5Y CAGR12.5%, TER 1.0%
Nifty 100 TRI 5Y13.2%
Index fund 5Y13.0%, TER 0.2%
Think about:
  • Is the active fund earning its fee?
Show analysis

No. It trails the index after fees. A low-cost index fund may be the better core holding.

Practise on real data: A real Nifty 50 index fund

4. Risk-adjusted choice

Lesson: Sharpe and drawdown.

Fact (fictional)Value
Fund X16% return, SD 22%, max drawdown −45%
Fund Y14% return, SD 13%, max drawdown −25%
Risk-free6%
Think about:
  • Compute both Sharpe ratios.
Show analysis

X: (16 − 6) ÷ 22 = 0.45. Y: (14 − 6) ÷ 13 = 0.62. Y gives better return per unit of risk and is easier to hold.

5. Over-diversified portfolio

Lesson: Overlap.

Fact (fictional)Value
Holdings4 large-cap funds + 2 flexi-caps
Overlap~70% common stocks
Average TER1.2%
Think about:
  • Is this diversified?
Show analysis

Not really: six funds behaving like one expensive index fund. Simplify to 2–3 funds across categories.

5 IPO evaluation case studies

1. "BrightPay Ltd": hype vs valuation

Lesson: Great growth, expensive price.

Fact (fictional)Value
Revenue growth60% a year
ProfitJust turned profitable
IPO P/E180 (peers 50)
GMP+40%
OFS share80%
Think about:
  • Who is mainly selling?
  • Does GMP change the valuation?
Show analysis

Mostly early investors exiting at a rich price. GMP is noise. High risk of falling after listing.

2. "SolidChem Ltd": boring but reasonable

Lesson: Steady business at a fair price.

Fact (fictional)Value
Revenue CAGR (3 yrs)15%
ROCE22%
D/E0.2
IPO P/E28 (peers 32)
Fresh issue70% for new plant
Think about:
  • Is money going into the business?
  • How does valuation compare?
Show analysis

Fundamentally sound and priced below peers, with fresh capital for growth. Reasonable for long-term investors (risks still apply).

3. "QuickRetail Ltd": window dressing?

Lesson: Sudden improvement just before IPO.

Fact (fictional)Value
Profit FY-2, FY-1, FY0₹5, ₹8, ₹60 cr
Other income₹45 cr in FY0
CFONegative
Think about:
  • What explains the profit jump?
Show analysis

The jump is mostly one-time other income with negative cash flow. Core business hasn’t improved. Avoid.

4. "GreenPower Ltd": debt-repayment IPO

Lesson: Reading "objects of the issue".

Fact (fictional)Value
Fresh issue₹2,000 cr
Use₹1,600 cr to repay debt
Post-IPO D/E3.5 → 1.4
Interest saving≈ ₹160 cr/yr
Think about:
  • How does debt repayment change the picture?
Show analysis

Using IPO money to deleverage can lift profits and reduce risk. Still check the business quality and valuation.

5. "FamilyGroup Holdings": promoter risk

Lesson: Litigation and related-party deals.

Fact (fictional)Value
Promoter cases3 regulatory proceedings
Related-party purchases35% of costs from promoter firms
Post-IPO promoter holding42%
Think about:
  • What could go wrong for minority shareholders?
Show analysis

Governance red flags: money could leak to promoter entities. Avoid unless these are convincingly resolved.