Abstract

Dilip Shangvi (Shangvi), founder of Indian pharmaceutical giant Sun Pharmaceutical Industries Ltd. (Sun Pharma), had invested his personal wealth in several companies. Some of his major investments were Rs 250 million in Natco Pharma Limited (Natco Pharma), and Rs 18 billion in Pune-based Suzlon Energy Ltd. (Suzlon). Shangvi held a 60.8 % stake in Sun Pharma and received more than Rs 12 billion as dividend from his shares between 2010 and 2015. The case discusses his investments using a risk return framework. Part B of the case attempts to understand the systematic risk in Shangvi’s investments (Suzlon and Natco Pharma) and whether the investments were overvalued or undervalued.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand Systematic Risk and how it can be measured.
• Calculate the Beta of Stocks
• Calculate expected returns using the CAPM model.
• Position securities above or below SML on the basis of realized returns
• Analyze whether the investments of Shangvi were undervalued or overvalued.

Keywords

Dilip Shangvi, Risk and Return, Beta, CAPM, SML, Systematic Risk, Suzlon, Natco Pharma, Sun Pharma