The Infosys Technologies, Ltd. ("Infosys") case provides students with a view of company valuation in an emerging market context. Among others, the case's learning objectives include the following:

• Estimating discount rates in emerging market countries
• Estimating discount rates for companies operating in emerging markets
• Calculating Value at Risk (VaR) for an investment

The Infosys case presents the background surrounding Infosys (India country information, India IT industry data, company history) and addresses Infosys' anticipated, April 1999 issue of 1,800,000 American Depository Shares (ADSs) - representing 900,000 equity shares. The case provides projections and relevant information for students to attempt to value this ADS issue by computing a cost of equity. Students may also assess the Value at Risk of the total issue.

The case's learning objectives include:

• Estimating discount rates in emerging market countries, India specifically
• Estimating discount rates for companies operating in emerging markets
• Establishing and assessing the risks of emerging markets vs. developed markets (particularly India vs. US)
• Introducing India as a potential emerging market investment opportunity
• Calculating Value at Risk (VaR) for an investment

In addition, the Infosys case provides (i) an opportunity to explore the IT industry in India and (ii) a chance to analyze the differences between an ADR - or here, an ADS - vs. a regular equity share. The case allows instructors to explore potential, additional issues regarding the valuation of IT companies, intangible (IT) assets, applying average, "market" betas to an atypical company within that market, and others.

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Infosys Technologies Ltd., started in 1981, is the largest professional-owned software company in India, providing quality software services and products to customers across the globe. With offices in North America, Europe, Japan and India, Infosys has established a strong reputation via a highly competent management, dedication to quality, employee satisfaction, and investment in infrastructure. In 1997 & 1996, the readers of Asiamoney voted Infosys "The best managed company in India".

The ADS issue highlighted in the case is anticipated for April 1999. It entails an issue of 1,800,000 American Depository Shares (ADSs) - representing 900,000 equity shares. The Registration Statement filed with the SEC in February 1998 notes an estimated offer price of $55.76, making the offer size approximately $50.18 million. Based upon the students' calculated discount rate, the value of the total issue will be computable. With this as a base, a VaR analysis may be determined.

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