INVESTMENT CASE STUDY
Equity Structures: Reverse Convertible Structure on Zomato Ltd
A 12-month reverse convertible note on Zomato (Eternal) combining a contracted coupon with a maturity-only downside barrier check.
At-a-Glance
The Opportunity
This structured note was built around a deliberate trade-off: our investors' capital was positioned for a steeper coupon and a deeper downside barrier than a typical blue-chip structure could support, by selecting Zomato specifically for its high implied volatility. Higher-volatility, high-growth stocks command steeper option premiums in the market, and it was that premium that funded both the contracted coupon and the 25% downside barrier below strike, wider than a comparable structure on a lower-volatility underlying would typically allow.
That structure also meant interim price action was, by design, irrelevant to the outcome. The note used a European-style, maturity-only barrier check, so even as the underlying stock moved through a volatile period and touched an intra-year low of ₹212.60, well below the ₹245.50 strike, that movement had no bearing on the result. What determined the outcome was solely where the stock closed on the final valuation date, giving our investors a single, defined settlement point rather than exposure to every swing along the way.
The Rationale
The default approach to a high-volatility growth stock is a binary choice: direct equity exposure, accepting full downside risk in exchange for uncapped upside, or fixed income, sacrificing upside entirely for principal safety. This structure occupied a middle path, exchanging unlimited upside participation for a contracted coupon and a defined downside buffer, sized specifically against the underlying's volatility profile. The maturity-only barrier check meant the structure was built to look through interim price swings entirely, so the outcome was determined by a single data point, the closing price at maturity, rather than by how the stock behaved in between.
₹1,00,00,000
Initial capital returned in full at maturity
₹21,50,000
Gross coupon inflow received per the note's contracted terms
75% of Strike
Downside barrier level (₹184.12) that determined settlement
1.77x
Multiple on capital invested
Mechanics
On the final valuation date, the underlying closed at ₹315.60, above both the initial strike of ₹245.50 and well clear of the ₹184.12 barrier. Because the barrier remained intact through the sole assessment point at maturity, the note settled on its contracted terms rather than converting into the underlying shares.
Strike & Barrier Fixing
Strike (₹245.50) and barrier (₹184.12, 75% of strike) were both fixed on the execution date, ahead of any market movement.
Maturity-Only Barrier Check
Settlement was assessed solely against the closing price on August 7, 2026, independent of intra-tenure lows.
Contracted Coupon
A fixed coupon rate, agreed at issuance, applied for the full 12-month tenure regardless of how far the underlying moved above the strike.
Risk Factors: Managing the Downside
Track Record
For an investment structured around trading equity-linked coupon income for a defined downside buffer, this note played out largely as designed. The underlying moved through a materially volatile twelve months, testing levels well below the strike at points during the tenure, but the maturity-only barrier check meant only the final closing price was assessed against the barrier. With the barrier intact at maturity, the note settled by returning full principal along with the contracted coupon, the outcome this type of structure is built to deliver when the barrier holds. Past performance is not indicative of future results, and this case study is not a recommendation or projection of future outcomes.
This case study is shared for informational and illustrative purposes only. It describes a specific past transaction or structure and does not constitute investment advice, a recommendation, an offer, or a solicitation to invest in any security, scheme, or product. Cambridge Wealth (Baker Street Fintech Pvt. Ltd.) is a SEBI-registered Mutual Fund Distributor (ARN 172841) and does not provide investment advisory services; nothing in this document should be construed as personalized advice or a substitute for independent professional advice suited to your specific financial situation. This placement, where referenced, was made via Taksh India Enterprising Fund. Details of the underlying structure, terms, risks, and eligibility criteria are governed solely by that vehicle's private placement memorandum, offer document, or scheme information document, which should be read in full before making any investment decision. Figures, dates, and outcomes described are historical and specific to this transaction. Past performance, whether of this transaction, this asset class, or any comparable strategy, is not indicative of, and does not guarantee, future results. Any market or industry data cited is drawn from third-party or publicly available sources believed to be reliable but not independently verified by Cambridge Wealth, and is subject to change. No representation is made that any investor will or is likely to achieve outcomes similar to those described. Investments of the type described carry risk, including but not limited to market, credit, liquidity, currency, and regulatory risk, and may result in partial or total loss of capital. This document does not account for the objectives, financial situation, or needs of any specific investor. Prospective investors should independently assess suitability and consult their own legal, tax, and financial advisors before proceeding.