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ITC Limited: Decoding Business Segment Betas

Author

Listed:
  • Shalini Talwar

    (K. J. Somaiya Institute of Management Studies & Research, Mumbai, India)

  • Anmol Garg

    (K. J. Somaiya Institute of Management Studies & Research, Mumbai, India)

Abstract

OCV was seeking to improve its processes and enhance the skills of its analysts so as to provide valuable solutions for their clients in terms of the issues related to the profitability and risk of their existing business portfolios as well as the proposed new projects. A team was formed to evaluate if breaking down the weighted average cost of capital (WACC) to the divisional level could improve the quality of investment decisions by multi-division firms. ITC was chosen to analyse the entire process of breaking down WACC to the divisional level. The team had three distinct tasks to undertake. The first was the calculation of the divisional WACC for different business segments of ITC, the second was an extensive discussion on the issues that could arise in the complex computations, and the third was to take a final call on whether the breaking down of WACC to the divisional level would really add value to the future investment decisions.

Suggested Citation

  • Shalini Talwar & Anmol Garg, 2019. "ITC Limited: Decoding Business Segment Betas," Asian Case Research Journal (ACRJ), World Scientific Publishing Co. Pte. Ltd., vol. 23(02), pages 203-235, December.
    • Handle: RePEc:wsi:acrjxx:v:23:y:2019:i:02:n:s0218927519500081
    DOI: 10.1142/S0218927519500081
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