Case Study - Valuation
8 questions. Each answer is explained.
Question 1 of 8Practice · Series XV — Research Analyst
0 right · 0 wrong · 8 to go
A–D or 1–4 to answer · Enter or → for the next question · ← to go back
Learn these topics
More units in NISM Series XV
- Introduction to Research Analyst Profession2
- Introduction to Securities Market3
- Terminology in Equity and Debt Markets3
- Fundamentals of Research7
- Economic Analysis7
- Industry Analysis12
- Company Analysis – Business and Governance9
- Company Analysis – Financial Analysis16
- Corporate Actions7
- Valuation Principles13
- Fundamental analysis of commodities9
- Fundamentals of Risk and Return10
- Qualities of a Good Research Report7
- Legal and Regulatory Environment15
- Technical Analysis22
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 60% · 60 of 100 marks |
| Negative marking | 25% · 0.25 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | Not published by NISM |
NISM Series XV Research Analyst
Exam rules read on NISM's site on 3 October 2026. Exam pattern revised on 20 January 2026. Check the current rules on NISM's site (opens in a new tab)
What these answers assume, and when it was last checked
Each question uses the rules listed below. We last checked them on 5 September 2026. A Budget or SEBI circular can change a rate, lot size or expiry day. If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.
- NSE uses Tuesday expiry and BSE uses Thursday expiry. This applies from 1 September 2025.
- The January 2026 index lot sizes are NIFTY 65, BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTYNXT50 25.
- The October 2024 SEBI framework sets a minimum index contract value of Rs 15–20 lakh. Each exchange may list one weekly benchmark index.
- Option buyers pay the premium upfront from 1 February 2025. A short index option has an extra 2% Extreme Loss Margin on expiry day from 20 November 2024.
- Equity short-term capital gains are taxed at 20%. Long-term gains are taxed at 12.5% above Rs 1.25 lakh. Both rates apply from 23 July 2024.
- F&O income is non-speculative business income in ITR-3. NSE equity derivatives trade from 9:15 a.m. to 3:40 p.m.
- The final ten-minute session began on 3 August 2026. It aligns with the cash market Closing Auction Session.
- Most Securities Transaction Tax questions test the base and who pays. On an option sale, it is the premium and the seller pays. On a futures sale, it is the traded value and the seller pays.
- On exercise, Securities Transaction Tax uses intrinsic value: settlement price minus strike price. The buyer pays it.
- Two questions test the current rate. From 1 April 2026, option sales carry 0.15% on the premium and futures sales carry 0.05% on traded price. The earlier rates were 0.10% and 0.02% from 1 October 2024.
- This section uses the T+1 rolling settlement cycle. Obligations are fixed on T+1. A short delivery goes to buy-in auction on T+1 and settles on T+2.
- The trade-for-trade surveillance segment uses direct close-out. Funds pay in by 10:30 a.m. and pay out on or after 1:30 p.m. on settlement day.
- Securities pay in to the settlement pool by 10:30 a.m. They pay out directly to the client’s demat account by 3:30 p.m.
- The 3:30 p.m. deadline replaced 1:30 p.m. under SEBI’s 10 October 2024 circular. Direct client credit was required by SEBI’s 5 June 2024 circular.
- The optional T+0 cycle trades until 1:30 p.m. Obligations are fixed by 2:30 p.m. on the trade day. An early pay-in shortage is closed out directly.
- Cash-market Value at Risk margin is six times exponentially weighted moving-average volatility. It has a 9% floor for Group I, a 21.5% floor for Group II, and a fixed 50% or 75% level for Group III.
- Extreme Loss Margin is 3.5% for a share and 2% for a broad-market-index exchange traded fund. Mark-to-market margin is collected before the next day’s trading. The trade-for-trade segment has 100% upfront margin.
- Close-out uses the higher of the highest price from trade day to auction day and 20% above the auction day’s official close.
- A funds shortage costs 0.07% a day. The trading facility is withdrawn at a shortage of Rs 5 lakh or more.
- SCORES allows 21 calendar days, then two 15-day review levels. Online Dispute Resolution moves from conciliation to arbitration after the market participant and SCORES steps.
- At NSE, the Investor Protection Fund limit is Rs 35 lakh per investor for each defaulting or expelled member. This applies to claims arising after 13 August 2024.
- A Basic Services Demat Account has no annual maintenance charge up to Rs 4 lakh of holdings. It costs up to Rs 100 above that, until the Rs 10 lakh eligibility ceiling. These slabs apply from 1 September 2024.
- The rupee pairs are USD-INR, EUR-INR, GBP-INR and JPY-INR. The cross-currency pairs are EUR-USD, GBP-USD and USD-JPY.
- Each contract covers 1,000 units of the foreign currency, except JPY-INR. JPY-INR covers 100,000 yen and is quoted in rupees per 100 yen.
- The tick is 0.25 paise, or Rs 0.0025. It equals Rs 2.50 a contract.
- Rupee pairs trade from 9:00 a.m. to 5:00 p.m. A monthly contract stops trading at 12:30 p.m. two working days before the expiry month’s last business day.
- Final settlement is in cash at the FBIL reference rate on expiry day. FBIL, Financial Benchmarks India, has published this rate in place of the Reserve Bank since 2018. Premium-style European options are quoted in rupees. The buyer pays the premium in cash on T+1.
- Daily settlement is on T+1 and final settlement is on T+2.
- NSE Clearing circular 026/2020 sets SPAN margin plus Extreme Loss Margin. The futures margin is 0.50% for USD-INR, 0.15% for EUR-INR, 0.25% for GBP-INR and 0.35% for JPY-INR. A short option has 0.75%. These figures apply from 1 June 2020.
- A USD-INR client may hold 6% of total open interest or USD 20 million, whichever is higher. A trading member may hold 15% or USD 100 million.
- A resident user has one USD 100 million equivalent limit across all rupee pairs and exchanges. No document is needed below that limit, but a valid underlying contracted exposure must still exist. This clarification applies from 3 May 2024.
- The currency segment has no Securities Transaction Tax.
The exam figures (questions, time, pass mark, negative marking and certificate validity) come from NISM's own pages, read on 3 October 2026. Timed practice uses the same figures. Study with the official workbook as well.
The written-out answers on this page are hidden while your timed set runs.
All 8 questions on Case Study - Valuation, with answers
Q1CASE — Orion Ltd. has a market capitalisation of ₹4,800 crore, total debt of ₹900 crore, cash of ₹300 crore and EBITDA of ₹600 crore. Assuming no other enterprise-value adjustments, what is Orion's EV/EBITDA multiple?
Option A. 7.0 times
Why it is wrong: It understates enterprise value relative to EBITDA.
Option B. 8.0 times
Why it is wrong: ₹4,800 crore is market capitalisation, not enterprise value.
Option C. 9.0 times — Correct answer
Option D. 10.0 times
Why it is wrong: It overstates the calculated multiple.
Answer: C. Enterprise value = 4,800 + 900 − 300 = ₹5,400 crore. EV/EBITDA = 5,400 ÷ 600 = 9.0 times. Remember: In enterprise multiples, first bridge equity value to enterprise value.
Hint, shown before you answer in practice mode: Common mistake: Dividing market capitalisation by EBITDA and calling the result EV/EBITDA.
XV-026hardnumerical
Q2CASE — Orion Ltd. has 6 crore shares outstanding, a market capitalisation of ₹4,800 crore and net profit attributable to ordinary shareholders of ₹240 crore. What are the share price, EPS and P/E?
Option A. ₹600, ₹30, 20 times
Why it is wrong: Both price and EPS are wrong.
Option B. ₹800, ₹30, 26.7 times
Why it is wrong: EPS is ₹40, not ₹30.
Option C. ₹600, ₹40, 15 times
Why it is wrong: The market capitalisation implies ₹800 per share, not ₹600.
Option D. ₹800, ₹40, 20 times — Correct answer
Answer: D. Share price = ₹4,800 crore ÷ 6 crore shares = ₹800. EPS = ₹240 crore ÷ 6 crore shares = ₹40. P/E = ₹800 ÷ ₹40 = 20 times. Remember: Market capitalisation, shares outstanding, earnings, EPS and P/E form a linked set of calculations.
Hint, shown before you answer in practice mode: Common mistake: Using total profit directly in the P/E denominator instead of EPS.
XV-027hardnumerical
Q3CASE — Orion Ltd. trades at 9x EV/EBITDA while a carefully selected peer group trades at a median 13x. Orion's growth, return on capital and accounting quality appear broadly comparable with the peers. What is the most defensible first conclusion?
Option A. The discount may be an opportunity, but risk and quality gaps need checking — Correct answer
Option B. Orion is certainly undervalued, and its multiple must rise to 13x
Why it is wrong: A relative multiple gap does not guarantee re-rating.
Option C. The peers are certainly overvalued and should fall to Orion's 9x
Why it is wrong: The data do not prove the peers are overvalued.
Option D. EV/EBITDA cannot be used for any peer comparison, so the gap means nothing
Why it is wrong: EV/EBITDA is commonly used in relative valuation when comparability is appropriate.
Answer: A. A lower multiple, with broadly comparable operating metrics, can flag a potential valuation difference worth investigating. It is not proof of mispricing because leverage structure, cyclicality, governance, accounting, capital intensity, risk and sustainability may still differ. Remember: Relative valuation identifies questions to investigate. It does not by itself establish intrinsic value.
Hint, shown before you answer in practice mode: Common mistake: Treating a lower multiple as automatic proof that a stock is cheap.
XV-028hardapplication
Q4CASE — Meridian Ltd. has a market capitalisation of ₹4,200 crore, total debt of ₹1,000 crore and cash of ₹400 crore. Assuming no other enterprise-value adjustments, net debt represents what proportion of enterprise value?
Option A. 12.5% — Correct answer
Option B. 14.3%
Why it is wrong: ₹600 crore ÷ ₹4,200 crore is approximately 14.3%, but the question asks for net debt as a proportion of EV, not market capitalisation.
Option C. 10.0%
Why it is wrong: It understates net debt relative to enterprise value.
Option D. 23.8%
Why it is wrong: It does not follow from the stated figures.
Answer: A. Net debt = ₹1,000 crore − ₹400 crore = ₹600 crore. Enterprise value = ₹4,200 crore + ₹600 crore = ₹4,800 crore. Net debt as a proportion of EV = 600 ÷ 4,800 = 12.5%. Remember: Keep equity value and enterprise value denominators distinct in leverage analysis.
Hint, shown before you answer in practice mode: Common mistake: Dividing net debt by market capitalisation when the question asks for net debt as a percentage of enterprise value.
XV-057hardnumerical
Q5CASE — Zenith Ltd. reports EBITDA of ₹420 crore, depreciation and amortisation of ₹120 crore, and finance cost of ₹60 crore. Using EBIT divided by finance cost, what is its interest coverage ratio?
Option A. 7.0 times
Why it is wrong: 7x would result from dividing EBITDA directly by interest, which is not the formula specified.
Option B. 3.0 times
Why it is wrong: This does not use the stated EBIT-based formula correctly.
Option C. 5.0 times — Correct answer
Option D. 9.0 times
Why it is wrong: It is not supported by the inputs.
Answer: C. EBIT = EBITDA − depreciation and amortisation = ₹420 − ₹120 = ₹300 crore. Interest coverage = EBIT ÷ finance cost = 300 ÷ 60 = 5.0 times. Remember: When a question specifies EBIT-based interest coverage, subtract depreciation and amortisation from EBITDA before dividing by finance cost.
Hint, shown before you answer in practice mode: Common mistake: Using EBITDA/interest when the question explicitly asks for EBIT/interest.
XV-059mediumnumerical
Q6CASE — Zenith Ltd. has total debt of ₹900 crore, cash of ₹300 crore and EBITDA of ₹400 crore. Its net debt-to-EBITDA ratio is:
Option A. 1.0 times
Why it is wrong: It understates net debt relative to EBITDA.
Option B. 1.5 times — Correct answer
Option C. 2.25 times
Why it is wrong: 2.25x is gross debt divided by EBITDA, not net debt divided by EBITDA.
Option D. 3.0 times
Why it is wrong: It is not produced by the stated figures.
Answer: B. Net debt = ₹900 − ₹300 = ₹600 crore. Net debt/EBITDA = 600 ÷ 400 = 1.5 times. Remember: Net leverage ratios require cash to be deducted from debt when the numerator is net debt.
Hint, shown before you answer in practice mode: Common mistake: Using gross debt rather than net debt.
XV-060mediumnumerical
Q7CASE — Zenith Ltd. reports profit before tax of ₹240 crore. Assume tax expense is 25% of profit before tax, there are no exceptional items, and average ordinary shareholders’ equity is ₹1,500 crore. What is ROE?
Option A. 12% — Correct answer
Option B. 16%
Why it is wrong: 16% is PBT divided by equity, which ignores the stated tax expense.
Option C. 9%
Why it is wrong: It understates the after-tax return on equity.
Option D. 20%
Why it is wrong: It is not supported by the inputs.
Answer: A. Profit after tax = ₹240 × (1 − 25%) = ₹180 crore. ROE = ₹180 ÷ ₹1,500 × 100 = 12%. Remember: ROE uses profit attributable to equity after tax, not profit before tax.
Hint, shown before you answer in practice mode: Common mistake: Dividing PBT directly by equity when tax must first be accounted for.
XV-061mediumnumerical
Q8CASE — Zenith Ltd. carries substantial debt, while a close operating peer is almost debt-free. Their businesses and accounting policies are otherwise reasonably comparable. Which multiple is generally more suitable for comparing operating value before differences in capital structure?
Option A. Price-to-earnings ratio
Why it is wrong: P/E uses equity value and post-interest earnings, so leverage differences can affect comparability.
Option B. EV/EBITDA — Correct answer
Option C. Price-to-dividend ratio
Why it is wrong: Dividend-based ratios are affected by payout policy rather than isolating operating value.
Option D. Dividend yield
Why it is wrong: Dividend yield depends on payout policy and is not capital-structure neutral.
Answer: B. EV/EBITDA compares enterprise value with an operating earnings measure before interest, making it less directly distorted by differences in debt financing than equity multiples such as P/E. It still requires care regarding leases, capital intensity, accounting and business comparability. Remember: Match the valuation multiple to the economic difference you are trying to neutralise.
Hint, shown before you answer in practice mode: Common mistake: Using P/E across companies with very different leverage without adjusting the interpretation.
XV-062hardapplication
Case Study - Valuation: common questions
How many practice questions are there on Case Study - Valuation?
8 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 16 practice topics for NISM Series XV, which has 150 questions in total.
Are these real NISM Series XV questions on Case Study - Valuation?
No. LearnNifty wrote every question from NISM's public syllabus. NISM does not publish its question bank, so nobody can offer you the real paper. Use these questions to check that an idea has gone in. Use the official NISM workbook to see what is examined.
Does negative marking apply to NISM Series XV?
Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1-mark question that is 0.25 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. Timed practice here uses the same rule.
Are these practice questions kept up to date?
Each question is written against the rules printed on this page, last checked on 5 September 2026. A Budget or a SEBI circular can change a rate, a lot size or an expiry day. If one of those rules changes before your exam, treat the questions that use it as out of date. Then check NISM's current workbook.
Try a paper on all of NISM Series XV
This is the last unit of Research Analyst. The series page runs one quiz across every unit.
Open the NISM Series XV practice page