Abstract
The case examined the investment dilemma faced by the portfolio manager Mr Thomas George of a leading wealth management company regarding investments in VRL Logistics Limited, a leading logistics company in India. As part of the portfolio evaluation and rebalancing exercise, the portfolio manager had to take a call on whether to retain VRL Logistics Limited in the portfolio or exit the stock. The share price had seen a drastic increase from ₹161.55 to ₹282 at the time of reviewing the portfolio. The logistics sector was one of the major sectors affected due to the lockdown announced by the Government on account of the global pandemic. With the imminent threat of multiple waves and lockdowns, determining the intrinsic value amidst the global pandemic poses a challenge to the portfolio manager. The case employed different methods of valuation, such as discounted cash flow and relative valuation, to arrive at the fair value of the stock. The case also discussed incorporating ‘risk’ in the valuation exercise by performing a sensitivity analysis of key variables.
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