Financial Modelling with AI

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How to use, put case study and prompt both.

CASE STUDY 1 — DCF VALUATION (WORD-TO-WORD)

Valuing a Consumer Goods Company — DCF

Fundamental intrinsic valuation · Entry-to-mid level interview · Foundational

You are a junior analyst at a bulge bracket bank. Your MD hands you a task: value BeverageCo, a mid-size FMCG company generating ₹2,400 Cr in revenue. Management projects 12% revenue CAGR over 5 years with gradual margin expansion. Your job is to build a DCF model, arrive at an equity value per share, and present a bull/base/bear scenario.

Company Financials (LTM)

  • Revenue (₹ Cr): 2,400
  • EBITDA Margin: 18%
  • EBIT Margin: 12%
  • D&A (₹ Cr): 145
  • Capex (₹ Cr): 210
  • Net Debt (₹ Cr): 380
  • Shares Outstanding (Cr): 50
  • Tax Rate: 25%

DCF Assumptions

ParameterBearBaseBull
Revenue CAGR (Yr 1–5)8%12%16%
Terminal EBITDA Margin17%20%23%
WACC13%11%10%
Terminal Growth Rate4%5%6%
Implied EV/EBITDA (exit)~10x~13x~16x

Questions you must answer

  1. Build the 5-year free cash flow to firm (FCFF) projection. What are your Year 1–5 unlevered FCFs in base case?
  2. Calculate WACC using CAPM.
    • Beta = 0.95
    • Risk-free rate (Rf) = 7.2%
    • Equity Risk Premium = 5.5%
    • Cost of Debt (pre-tax) = 9%
    • Debt/Total Value (D/V) = 20%
  3. Arrive at Enterprise Value using both:
    • Gordon Growth Model
    • Exit Multiple Method
      How different are they? Which do you trust more and why?
  4. Bridge EV to Equity Value per share.
    • What’s the implied P/E and EV/EBITDA multiple?
    • How does it compare to listed peers trading at 14x–18x EV/EBITDA?
  5. What is the single biggest lever that swings valuation the most — growth rate, WACC, or terminal margin?
    • Run a sensitivity table

Curveball

The MD asks:

“Your model gives a base case equity value of ₹680/share but the stock trades at ₹420 on NSE. Walk me through three reasons why the market might be discounting this company, and whether that represents an opportunity or a value trap.”


Prompt  

You are a senior financial analyst and my interview coach.

I want you to guide me through this financial analyst case study in a structured, interview-style format.

Instructions:

  • Present the case exactly as given, without simplifying or skipping any details
  • Ask me questions one at a time, not all at once
  • Wait for my response before proceeding to the next question
  • After each answer, provide structured feedback:
    • What I got right
    • What I missed
    • What a top-tier analyst would additionally consider
  • For all quantitative questions, show complete step-by-step calculations after my attempt
  • Challenge my assumptions and reasoning where necessary
  • Maintain an interview-like environment (focused, slightly rigorous)
  • Use Indian financial context (₹, NSE, etc.) wherever relevant

Goal:

Help me think like a top-tier financial analyst and perform strongly in real interviews.

Start with Question 1 only and wait for my response.

CASE STUDY 2  Strategic Acquisition: Accretion/Dilution Analysis

M&A Deal Structuring · Mid-level Analyst / Associate Interview · Intermediate

Scenario

TechRetail Ltd (Acquirer) is a listed Indian e-commerce firm evaluating the acquisition of LogiSwift Pvt Ltd (Target), a last-mile logistics startup.

The transaction is being considered under two deal structures:

  • 100% Cash Deal
  • 50% Cash + 50% Stock Deal

Your task is to model the EPS accretion/dilution impact and advise the CFO on the optimal deal structure.

Deal Parties

TechRetail Ltd (Acquirer)

  • Revenue: ₹8,500 Cr
  • EBIT: ₹510 Cr
  • Net Income: ₹360 Cr
  • Shares Outstanding: 120 Cr
  • EPS: ₹3.00
  • Market Cap: ₹18,000 Cr
  • P/E Multiple: 50x
  • Cash on Balance Sheet: ₹2,200 Cr
  • Incremental Debt Capacity: ₹3,000 Cr at 9% cost

LogiSwift Pvt Ltd (Target)

  • Revenue: ₹950 Cr
  • EBITDA: ₹95 Cr
  • Net Income: ₹28 Cr
  • Negotiated Deal Price (Enterprise Value): ₹1,800 Cr
  • Net Debt: ₹120 Cr
  • Equity Value: ₹1,680 Cr
  • Implied EV/EBITDA Multiple: 18.9x

Synergy Assumptions

Synergy TypeYear 1Year 2Year 3 (Steady State)
Revenue Synergies (logistics efficiency)₹40 Cr₹90 Cr₹150 Cr
Cost Synergies (infra, headcount)₹20 Cr₹50 Cr₹80 Cr
One-time Integration Costs(₹60 Cr)(₹25 Cr)—
Net Synergy (Pre-Tax)₹0 Cr₹115 Cr₹230 Cr

Questions You Must Answer

  1. EPS Accretion/Dilution Analysis
    Model EPS impact under:
    • Structure A: 100% cash (funded by ₹1,680 Cr new debt at 9%)
    • Structure B: 50% stock + 50% debt
      Show:
    • Pro-forma combined net income
    • New share count
    • Resulting EPS for Year 1 and Year 2
  1. Hurdle Synergy Analysis
    • At what level of synergies does the deal break even on EPS in Year 1 under each structure?
    • What is the required “hurdle synergy”?
  1. Goodwill Calculation & Risk
    • Calculate goodwill created in the transaction
    • Explain how goodwill impairment risk impacts the deal thesis
  1. Earnout Structuring
    • The target promoter demands a 20% earnout linked to EBITDA targets over 2 years
    • How do you account for this contingent consideration on Day 1?
  1. Stock vs Cash Logic (Valuation Insight)
    • TechRetail trades at 50x P/E — why do high P/E acquirers prefer stock deals?
    • If the deal is executed as 100% stock, what is the implied exchange ratio?

Curveball (Due Diligence Shock)

During diligence, you uncover:

  • ₹180 Cr of off-balance-sheet operating lease obligations
  • ₹45 Cr GST dispute with a 50% probability of loss

Questions:

  • How do you adjust:
    • Purchase price
    • Enterprise value
    • Deal structure
  • Would you still recommend proceeding with the acquisition? Why or why not?

PROMPT M&A ACCRETION/DILUTION CASE

You are a senior financial analyst and my interview coach.

I want you to guide me through this M&A accretion/dilution case study in a structured, interview-style format.

Instructions

  • Present the case exactly as provided, without simplifying or omitting any details
  • Ask questions one at a time, not all at once
  • Wait for my response before proceeding to the next question
  • After each answer, provide structured feedback:
    • What I got right
    • What I missed
    • What a top-tier analyst would additionally include
  • For all quantitative questions, show full step-by-step calculations after my attempt
  • Challenge my assumptions and reasoning where necessary
  • Maintain a realistic interview environment (focused and moderately rigorous)
  • Use Indian financial context (₹, listed markets, taxation, etc.) where relevant

Case Objective

Help me:

  • Build a complete accretion/dilution model
  • Understand deal structuring trade-offs (cash vs stock)
  • Analyze synergies, goodwill, and transaction risks
  • Think like a high-performing M&A analyst in an interview setting

Execution

  • Start with Question 1 only
  • Do not move ahead until I answer
  • Treat this like a live investment banking interview 

CASE STUDY 3 Private Equity Buyout (LBO Model)

Leveraged Buyout · Senior Analyst / Pre-MBA Associate Interview · Advanced

Scenario

A mid-market private equity fund is evaluating the acquisition of PharmaPackaging Ltd, a specialty packaging manufacturer serving pharmaceutical companies.

The fund is targeting a 5-year investment horizon with a 20–25% IRR. You are required to:

  • Build a complete LBO model
  • Conduct scenario and stress testing
  • Present an Investment Committee (IC) recommendation

The transaction is being negotiated at an entry multiple of 9x EV/EBITDA.

Company & Deal Parameters

  • LTM EBITDA: ₹220 Cr
  • Entry Multiple: 9x
  • Entry Enterprise Value: ₹1,980 Cr
  • Net Debt at Entry: ₹180 Cr
  • Equity Contribution (Equity Cheque): ~₹900 Cr

Debt Structure

  • Senior Debt: 4.5x EBITDA
  • Mezzanine Debt: 1.0x EBITDA
  • Cost of Debt:
    • Senior: 10%
    • Mezzanine: 14%

Operating Projections (Base Case)

MetricY1Y2Y3Y4Y5
Revenue Growth8%9%10%10%9%
EBITDA Margin20%21%22%22.5%23%
Capex / Revenue6%5.5%5%4.5%4.5%
Change in NWC / Revenue2%1.5%1.5%1%1%
Mandatory Debt Repayment (₹ Cr)9090100100100

Key LBO Mechanics You Must Model

  1. Sources & Uses Table
    • Build the complete transaction structure
    • Calculate total debt raised, equity contribution, and fees
    • Assume:
      • 2% financing fee
      • 1% advisory fee
    • Clearly explain:
      • Which fees are capitalized
      • Which are expensed
  1. Debt Schedule & Cash Sweep Mechanics
    • Model full debt repayment schedule
    • After mandatory repayments, 75% of excess FCF is used to repay senior debt
    • Project:
      • Year-end debt balances
      • Interest expense (cash vs PIK)
      • DSCR (minimum covenant: 1.25x)
    • Identify if and when covenants are breached
  1. Exit Analysis (Year 5)
    • Exit multiple: 8.5x EV/EBITDA
    • Build full exit waterfall:
      1. Senior debt repayment
      2. Mezzanine debt repayment
      3. Management equity pool (5%)
      4. PE fund equity proceeds
    • Calculate:
      • MOIC
      • IRR

  1. Scenario Analysis
    Evaluate three cases:

    • Base Case: As provided
    • Downside Case:
      • Revenue growth: 5%
      • EBITDA margin: flat at 20%
    • Stress Case:
      • Revenue growth: 2%
      • EBITDA margin: 18% (due to raw material inflation)

    Determine:

    • Does the company breach debt covenants?
    • In which year does this occur?
  1. Management Incentive Plan (MIP)
    • ₹40 Cr structured as sweet equity
    • Equivalent to 10% of entry equity value
    • Analyze:
      • Dilution impact on PE IRR
      • At what equity proceeds level the MIP fully vests

Curveball

In Year 3, a strategic buyer (a listed pharma company) offers to acquire the business at 11x EBITDA.

However, the PE fund’s LP agreement requires a minimum 3-year holding period.

Analyze:

  • (a) IRR comparison: Exit at Year 3 vs Year 5
  • (b) Legal/structural mechanisms that may allow early exit
  • (c) How a dual-track process (IPO + strategic sale) would impact negotiation dynamics and valuation.

PROMPT — CASE 3: LBO MODEL

You are a senior private equity analyst and my interview coach.

I want you to guide me through this Leveraged Buyout (LBO) case study in a structured, interview-style format.

Instructions

  • Present the case exactly as provided, without simplifying or omitting any details
  • Ask questions one at a time, not all at once
  • Wait for my response before proceeding to the next question
  • After each answer, provide structured feedback:
    • What I got right
    • What I missed
    • What a top-tier PE analyst would additionally include
  • For all quantitative questions, show full step-by-step calculations after my attempt
  • Challenge my assumptions and reasoning where necessary
  • Maintain a realistic private equity interview environment (rigorous and detail-oriented)
  • Use Indian financial context (₹, transaction structuring, etc.) where relevant

Case Objective

Help me:

  • Build a complete LBO model from scratch
  • Understand debt structuring and cash flow mechanics
  • Evaluate IRR, MOIC, and return sensitivities
  • Analyze downside risks and covenant breaches
  • Think like a private equity investor in an IC setting

Execution

  • Start with Question 1 only
  • Do not proceed until I answer
  • Treat this like a real PE interview (high depth, high precision expected)

CASE STUDY — Distressed Debt & Corporate Restructuring (Expert Level)

InfraGroup Ltd is a large road and port infrastructure developer that expanded aggressively between 2015–2019 using debt.

Post-COVID:

  • Toll collections collapsed
  • Capex overruns hit key projects
  • The company has defaulted on ₹9,200 Cr of financial debt across 6 lenders

The company has filed under the Insolvency and Bankruptcy Code (IBC).

You are advising the lead lender (SBI), which holds ₹3,100 Cr of claims.

Your task:

  • Build a restructuring framework
  • Evaluate recovery scenarios
  • Recommend whether to support a resolution plan or push for liquidation

Debt Capital Structure (Pre-Restructuring)

CreditorTypeClaim (₹ Cr)Security
SBI (Lead)Term Loan A3,1001st charge
Consortium BanksTerm Loan B2,8001st charge (pari passu)
NCD HoldersListed NCDs1,5002nd charge
NCLT-admitted FCWorking Capital900Unsecured
ICD / Trade CreditorsOperational900Unsecured
Total—9,200—

Asset Recovery Estimates

  • HAM Road Projects: ₹4,200 Cr
  • Port Concession (30 years): ₹2,800 Cr
  • Real Estate Assets: ₹780 Cr
  • Equipment & Plant: ₹320 Cr
  • Cash & Receivables: ₹190 Cr
  • Equity in SPVs: ₹150 Cr

Total Asset Value: ₹8,440 Cr
Liquidation Haircut: 35–45%

Resolution Plan (GIP — GlobalInfra Partners)

  • ₹4,800 Cr upfront cash (to financial creditors, pro-rata)
  • ₹1,200 Cr zero-coupon NCDs (7-year maturity)
  • ₹600 Cr operational creditor claims assumed
  • ₹800 Cr fresh equity infusion

Implied haircut to financial creditors: ~38%

Questions You Must Answer

  1. Build a full recovery waterfall under:
    • GIP plan
    • Liquidation (35% haircut)
    • OTS (₹5,600 Cr recovery)
  2. SBI decision:
    • Voting share in CoC
    • Recovery comparison
    • NPV under delay
  3. Value zero-coupon NCDs (₹1,200 Cr, 7 years, 14% discount rate)
  4. Treatment of ₹340 Cr NHAI claim
  5. Operational creditor strategy (10% vs 20%)
  6. InvIT exit strategy (structure + returns)

Curveball

Late competing PSU bid → litigation → 180-day delay + 8% asset erosion

Analyze:

  • Recovery under each scenario
  • Final recommendation
  • SBI negotiation leverage

✅ NOW — PROMPT (what you actually wanted)

You are a senior restructuring banker and my interview coach.

Walk me through this distressed debt case like a real VP-level interview. Present the case clearly and then ask me to solve it step-by-step. Do not give answers immediately — wait for my response after each question.

When I answer:

  • Evaluate my approach (what I got right / wrong)
  • Point out missing insights
  • Show the ideal structured answer with step-by-step calculations
  • Challenge my assumptions like an interviewer would

Focus on:

  • IBC framework and creditor hierarchy
  • Time value of money and NPV thinking
  • Practical deal-making judgment (not just textbook answers)

Let’s proceed one question at a time.


PROMPT — Distressed Debt & Corporate Restructuring (Expert Level)

You are a senior restructuring banker and my interview coach.

I will give you a real-world distressed debt case under India’s Insolvency and Bankruptcy Code (IBC). Your role is to conduct this like a VP-level interview at a top investment bank or restructuring advisory firm.

Instructions for You (AI):

  • Present the case exactly as given
  • Then guide me question-by-question (one at a time)
  • Do NOT give answers immediately

After I respond to each question:

  • Evaluate my answer rigorously
  • Tell me:
    • What I got right
    • What I missed
    • What is incorrect or weak
  • Then show the ideal structured answer with full step-by-step workings
  • Challenge my assumptions like a real interviewer

Focus Areas:

  • IBC framework and creditor hierarchy
  • Recovery waterfall logic
  • Time value of money (NPV-based decision making)
  • Practical restructuring judgment (not just formulas)
  • Trade-offs between resolution vs liquidation

Case Handling:

Start with Question 1 (Recovery Waterfall) and proceed sequentially.

Pause after each question and wait for my answer before continuing.

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