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HFCL: valuing a high growth company

Alok Kastia (Department of Finance, Institute of Management Technology Ghaziabad, Ghaziabad, India)

Emerald Emerging Markets Case Studies

ISSN: 2045-0621

Publication date: 28 July 2017


Subject area


Study level/applicability

This case can be taught in the Finance area as a part of the course on “Valuation” in a postgraduate program. MBA/EMBA/MBF.

Case overview

Himachal Futuristic Communications Ltd. (HFCL) discontinued all of its old products and entered into manufacturing of telecom products for mobile telephony and turnkey projects. This complete change in product line was like a re-birth for the company. HFCL grew tremendously between FY 2012 and FY 2015. Its sales grew from Rs 2,638m in FY 2012 to Rs 26,129m in FY 2015, an increase of 114 per cent CAGR (compound annual growth rate). HFCL stock price increased from Rs 11.75 in March 2012 to Rs 19.90 in September 2014 because of this tremendous growth. The stock price came down to Rs 13.35 in March 2015, as the market was sceptical about HFCL sustaining this growth. In March 2015, Choudhary, an equity analyst, was wondering how to value this high growth company. If somehow he could ascertain the intrinsic value of the stock properly, he would be able to appropriately advise his clients about the HFCL stock.

Expected learning outcomes

The case learning objectives are as follows: to scan the competitive landscape of telecom equipment manufacturing industry and gauge the competitive advantages enjoyed by HFCL; to size the potential market of the industry and predict the level of sustained profitability for HFCL; to develop multiple scenarios based on key drivers and compile projected financial statements for each scenario; and to value the company using the scenario-based discounted cash flow technique by assigning probabilistic weights to each scenario.

Supplementary Materials

Teaching notes are available for educators only. Please contact your library to gain login details or email to request teaching notes.

Subject code

CSS 1: Accounting and finance.



Kastia, A. (2017), "HFCL: valuing a high growth company", Emerald Emerging Markets Case Studies, Vol. 7 No. 3.



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