Initial Investment: Rs.10Mn Duration of the Investment: 1 month Assignment Guideline – Part A ➢ You are required to develop a model equity portfolio with minimum 5 stocks. Total of Rs. 10 Mn to be...

Assignment A
Justifications on why you picked each company, with relevant calculations
1. Commercial Bank of Ceylon PLC: The reason to choose this banking institution was their mission statement which was to provide a reliable, customer-friendly, and customer-focused bank. It is known for its honesty, integrity, fairness, and accountability. The bank has diversified itself into many diversifications. It has developed itself an app to be certified and launched under the LANKAQR standards of the CBSL and became the first bank in Sri Lanka to accept digital signatures from business customers using LankaSign, improving the customer experience of the Bank’s retail and corporate customers.
The PE ratio of a commercial bank is 2.64 times which means the market rate or market price per share is 2.464 times greater than the earnings price per ratio and EPS is 16.34. It denotes the market price per share is Rs.43 approx. which denotes that the price for a share is overvalued and should be sold in terms to get profit. The total debt to equity ratio is 135.19% or 1.35 times the ideal ratio of total debt to equity ratio is 1 to 1.5 times which is nearby the commercial Bank of Ceylon PLC. The total debt-to-equity ratio denotes how much the equity is able to pay off the debt in case of liquidation. 1.35 times represents that we have 1.35 times equity to pay off our debt in case there is a compulsion to repay it. The quick ratio of this bank is 0.12 times which is not considered good in terms of ideal quick ratio which is 1:1. The bank needs to work on its quick ratio so that the current assets less inventory or quick assets would be easily recovered by the current liabilities. If we talk about the technical analysis of the commercial bank is saying that we should buy this stock as the moving average is nearby to this purchase price which is in the range of 52 to 56 rupees. The volatility of the stock is high so there are chances of risk also we should purchase this in order to gain profit as all the technical analysis which includes MACD, Trend Oscillators, ADX, ROC, etc are on the positive side.
2. Richard Pieris Exports PLC: Richard Pieris and Company (ARPICO) established in 1940 it is one of Sri Lanka's largest conglomerates with interests in manufacturing, engineering, retail and plantation industries. It is a pioneer in the tire, plantation, and rubber industries of Sri Lanka. With a staff strength of more than 25,000, the company's major brands include Arpitec, Arpidag, and Arpico.
The beta of this company s 0.6 times which means that if the market goes up the stock of Richard will also go up by 0.6 times. It happens when the beta is not negative. If the beta is positive, it means if the market goes up, the stock will also go up and vice versa. The PE ratio of Richard is 3.18 and EPS is 190.08. From here, we can derive the market price per share or MPs by multiplying the PE ratio and EPS which will be around ₹604.77. the current price of the stock is ₹600 which is nearby to the price which we have calculated. It is presumed that the stock is not overvalued or undervalued it is correctly valued. So we are not paying less or much amount for the stock so we should buy this stock. If we talk about the technical analysis Richard Pieris Exports PLC or the company is saying that we should buy this stock as the moving average is nearby to this purchase price which is in the range of 160 to 400 rupees. The volatility of the stock is high so there are chances of risk also we should purchase this in order to gain profit as all the technical analysis which includes MACD (12,26), Trend Oscillators, ADX, ROC, etc are on the positive side. The MACD (12,26) is valued itself at approximately 70.170whichh is an indicator to buy the stock.
3. John Keells Holdings PLC: John Keells Holdings PLC (JKH) is one of the largest conglomerate companies in Sri Lanka. From managing hotels and resorts in Sri Lanka and the Maldives to providing port, marine fuel and logistics services to IT solutions, manufacturing of food and beverages to running a chain of supermarkets, tea broking to stock broking, life insurance and banking to real estate, the Group of companies has made its presence felt in virtually every...