Financial analysis of cipla ltd

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Financial analysis of cipla ltd

  1. 1.  The Indian pharmaceutical sector is highly fragmented, with more than 20 000 registered companies, with the top 250 companies controlling 70% of the market. These companies can currently meet about 70% of the countries demands for drugs; this is mainly through the Maharashtra and Gujarat regions, which account for 45% of the total number of pharmaceutical manufacturing units in India.
  2. 2. The Indian pharmaceuticals industry has grown from a mere $0.3billion in 1980, to $12 billion in 2012. Branded generics dominate the market, making up 7080% of it. The price of drugs is very low, due to intense competition. While India is 10th globally in terms of value, it is 3rd in term of volume of drugs produced.
  3. 3. CURRENT RATIO: YEAR 2011 2012 2013 CURRENT RATIO 2.43 2.61 1.94  Interpretation : The current ratio of Cipla Ltd is above the standard norm of 2:1 for the years 2011 and 2012 i.e 2.43 and 2.61. But for the year 2013 it has come down i.e 1.94. Hence It is adequately liquid from the point of view of its ability to satisfy the claims of short term creditors.
  4. 4. CURRENT RATIO 3 2.5 2.43 2.61 2 1.94 1.5 CURRENT RATIO 1 0.5 0 2011 2012 2013 INTERPRETATION: The Current ratio of Cipla ltd is showing a decreasing trend. i.e it has decreased from 2.43 to 1.94
  5. 5. YEAR 2011 2012 2013 QUICK RATIO 1.98 1.56 1.64 INTERPRETATION: The industry standards say 1:1 ratio is preferable but in case of Cipla Ltd the quick ratio is more than the standard norm therefore the company meets its obligation.
  6. 6. QUICK RATIO 2.5 2 1.98 1.56 1.5 1.64 QUICK RATIO 1 0.5 0 2011 2012 2013 INTERPRETATION: The quick ratio of cipla Ltd is showing decreasing trend. It has decreased from1.98 to 1.64.
  7. 7. DEBT EQUITY RATIO: YEAR DEBT-EQUITY RATIO 2011 2012 2013 0.09 0 0.11 INTERPRETATION: The debt equity ratio of cipla Ltd is 0.09, 0 and 0.11 for the years 2011, 2012 and 2013 respectively
  8. 8. DEBT-EQUITY RATIO 0.12 0.1 0.08 DEBT-EQUITY RATIO 0.06 0.04 0.02 0 2011 interpretation 2012 2013
  9. 9. GROSS PROFIT MARGIN YEAR 2011 2012 2013 Gross profit margin 17.17 18.8 21.96 Interpretation:  There are high overheads it should be reduced  The processes should be optimized.  Higher values indicate that more cents are earned per dollar of revenue which is favourable because more profit will be available to cover non-production costs.
  10. 10. Gross profit margin 25 21.96 20 18.8 17.17 15 Gross profit margin 10 5 0 interpretation 2011 2012 2013
  11. 11. YEAR 2011 2012 2013 Net Profit Margin 15.45 15.98 18.17 Interpretation:  Percentage of revenue remaining after all operating expense, interest, taxes and preferred stock dividends (but not common stock dividends) have been deducted from a company's total revenue has increased very highly in the year 2013.
  12. 12. Net Profit Margin 18.5 18 17.5 17 16.5 Net Profit Margin 16 15.5 15 14.5 14 2011 interpretation 2012 2013
  13. 13. YEAR 2011 2012 2013 RETURN ON ASSETS 82.91 95.14 112.32 Interpretation:  The assets gave good return in the year 2013  And the same has maintained constantly in an increasing way  This situation is quite good.  Shows the assets are giving good returns.
  14. 14. RETURN ON ASSETS 120 112.32 100 95.14 82.91 80 60 RETURN ON ASSETS 40 20 0 2011 Interpretation: 2012 2013
  15. 15. INVENTORY TURNOVER RATIO YEAR INVENTORY TURNOVER RATIO 2011 2012 2013 3.7 3.85 3.47 Interpretation:  It is an activity ratio measuring the number of times per period.  The company doesn’t have retained earnings to reinvest it showing constant fluctuation from year to year.  It has to really work hard to survive in the market.
  16. 16. INVENTORY TURNOVER RATIO 3.9 3.85 3.8 3.7 3.7 3.6 3.5 3.47 3.4 3.3 3.2 2011 interpretation 2012 2013 INVENTORY TURNOVER RATIO
  17. 17. YEAR DEBTORS TURNOVER RATIO 2011 2012 2013 4.14 4.61 5.14 Interpretation:  It is showing constant increase from year to year.  Credit period is very strict.
  18. 18. DEBTORS TURNOVER RATIO 6 5.14 5 4.61 4 4.14 3 DEBTORS TURNOVER RATIO 2 1 0 2011 Interpretation: 2012 2013
  19. 19. YEAR ASSETS TURNOVER RATIO 2011 2012 2013 0.96 0.94 0.94 Interpretation:  The asset turnover ratio is not maintaining a trend instead its fluctuating  This shows that the company has not used its assets more effectively in order to generate its revenue.
  20. 20. ASSETS TURNOVER RATIO 0.965 0.96 0.96 0.955 0.95 ASSETS TURNOVER RATIO 0.945 0.94 0.94 0.94 0.935 0.93 2011 Interpretation: 2012 2013
  21. 21. CIPLA LTD DR REDDY’S LAB YEAR 2013 2013 CURRENT RATIO 1.94 1.48 QUICK RATIO 1.64 1.6 DEBT EQUITY RATIO 0.11 0.5 GROSS PROFIT MARGIN 22.55 18.33 NET PROFIT MARGIN 18.17 12.74 RETURN ON ASSETS 112.32 375.01 INVENTORY TURNOVER RATIO 3.47 5.51 DEBTORS TURNOVER RATIO 5.14 4.14 ASSET TURNOVER RATIO 0.94 1.33
  22. 22. Sources Of Funds Rs crore Total Share Capital 160.58 1.63% Equity Share Capital 160.58 1.63% Share Application Money 0 0.00% Preference Share Capital 0 0.00% 8,708.94 88.55% 0 0.00% 8,869.52 90.18% 9.49 0.10% Unsecured Loans 956.32 9.72% Total Debt 965.81 9.82% 9,835.33 100.00% Reserves Revaluation Reserves Networth Secured Loans Total Liabilities
  23. 23. Application Of Funds Rs crore Gross Block 4,983.81 50.67% Less: Accum. Depreciation 1,565.52 15.92% Net Block 3,418.29 34.76% 350.34 3.56% Investments 2,601.82 26.45% Inventories 2,343.37 23.83% Sundry Debtors 1,645.22 16.73% 105.07 1.07% Total Current Assets 4,093.66 41.62% Loans and Advances 1,029.10 10.46% 0 0.00% 5,122.76 52.09% 0 0.00% 1,380.91 14.04% 276.97 2.82% Total CL & Provisions 1,657.88 16.86% Net Current Assets 3,464.88 35.23% 0 0.00% 9,835.33 100.00% Capital Work in Progress Cash and Bank Balance Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Miscellaneous Expenses Total Assets

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