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Capital and money market

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  • 1. By Mithilesh CMM Assignment-2: Choose 20 manufacturing company which are traded on stock exchange on all working days and 5 years of working and should have average trading volume more than 50,000 with share price range should be 100 to 250.Evaluate only profitability ratios of these company and co-relate with return on capital employed and market capitalization. Executive Summary Following 20 manufacturing companies are considered for the assignment.Sr. Company Industry Trading ShareNo. Name Volume Price( Rs.) 1 Tata Motors Auto 2140263 170.3 2 Crompton Greaves Electric Equipment 265566 123.15 3 ITC Cigarettes 304792 202.15 4 Amar Remedies Personal Care 199938 123.25 5 Astral Polytechnik Plastic 1264291 169.7 6 Finotex Chemical Chemicals 157125 122.7 7 United Phosphorous Chemicals 61629 132.8 8 Godrej Industries Personal Care 61594 186.25 9 Ambuja Cements Cement 56284 153.210 Exide Industries Auto Ancillaries 99932 114.0511 Orchid Chemicals Pharmaceuticals 430730 160.3 Power Transmission &12 Areva T&D Equipment 60559 202.3513 Titan Industries Miscellaneous 645184 203.8 1
  • 2. 14 Amtek India Auto Ancillaries 590003 131.7 15 Hind Zinc Metals - Non Ferrous 111828 110.7 16 Hindalco Aluminium 1267589 123.7 Jubilant Life 17 Sciences Pharmaceuticals 126834 204.05 18 Radico Khaitan Breweries & Distilleries 79200 120.35 19 VIP Industries Plastics 2091569 134.6 20 Timken India Bearings 80047 235.4 Profitability ratios like Operating Profit Margin(%),Cash Profit Margin(%),Net Profit Margin(%),Assets turnover,Return on Assets Excluding Revaluations and Earning per share are analyzed for last five years ( 2007 -2011 ) for above 20 companies and co- related these ratios with with return on capital employed and market capitalization..Return on capital employed : A ratio that indicates the efficiency and profitability of a companyscapital investments.Calculated as:Return on capital employed should always be higher than the rate at which the company borrows,otherwise any increase in borrowing will reduce shareholders earnings.Market Capitalization:The total dollar market value of all of a companys outstandingshares. Marketcapitalization is calculated by multiplying a companys shares outstanding by the current market priceof one share. The investment community uses this figure to determining a companys size, as opposedto sales or total asset figures.Company size is a basic determinant of asset allocation and risk-returnparameters for stocks. 2
  • 3. For the following companies Return on capital employed was reduced significantly where as forthe remaining companies it has improved. • Tata Motors • Godrej Industries • Amar Remedies • Astral Polytechnik • Areva T&D • Amtek India • Hindalco • Jubilant Life Sciences • Timken India 3
  • 4. Company -1 : Tata Motors Profitability Ratios Mar 11 Mar10 Mar09 Mar08 Mar07 Operating Profit Margin(%) 9.81 11.4 6.71 10.53 9.7 Cash Profit Margin(%) 6.94 7.26 6.97 8.13 8.55 Net Profit Margin(%) 3.74 6.26 3.77 6.96 6.94 Return on Assets Excluding Revaluations 314.93 259.03 240.6 202.54 177.33 Asset Turnover Ratio 2.22 1.95 1.88 2.69 3.08 Earnings Per Share 28.55 39.26 19.48 52.63 49.65 Return On Capital Employed(%) 10.19 10.37 6.41 18.96 25.82 Market Capitalization ( in Cr. ) 45835Analysis :• Net profit margin has decreased to 3.74 where as return on asset has increased.• Both Asset Turnover Ratio and Earnings Per Share has decreased significantly.• Earning Per Share has decreased from 49.65 to 28.55 in the last 5 years. This is an important measure of profitability• Return On Capital Employed has reduced by more than half.It indicates the efficiency and profitability of a companys capital investments.Company -2 : Crompton Greaves Profitability Ratios Mar 11 Mar 10 Mar 09 Mar 08 Mar 07 Operating Profit Margin(%) 15.32 15.9 16.14 12.3 10.07 Cash Profit Margin(%) 11.69 11.02 11.76 7.9 6.77 Net Profit Margin(%) 11.33 11.32 8.4 7.92 5.62 Return on Assets Excluding Revaluations 35.7 27.28 33.48 24.99 17.99 Asset Turnover Ratio 3.93 4.66 4.25 3.74 3.72 Earnings Per Share 10.82 9.62 10.83 8.56 5.25 Return On Capital Employed(%) 38.58 48.53 59.04 47.43 34.79 Capital and Money Markets – Ex-MBA – 2010-13 4
  • 5. Market Capitalization ( in Cr. ) 7899Analysis :• Net profit margin and return on asset has increased significantly.• Earnings Per Share has inecreased significantly.• Return On Capital Employed has increased by 3.79 %Company -3: ITC Profitability Ratios Mar 11 Mar10 Mar09 Mar08 Mar 07 Operating Profit Margin(%) 34.08 33.02 32.84 31.57 32.51 Cash Profit Margin(%) 25.17 23.98 24.22 23.45 24.28 Net Profit Margin(%) 22.91 21.3 21.18 21.5 21.4 Return on Assets Excluding Revaluations 20.55 36.69 36.24 31.85 27.59 Asset Turnover Ratio 1.69 1.58 1.44 1.59 1.75 Earnings Per Share 6.45 10.64 8.65 8.28 7.18 Return On Capital Employed(%) 44.94 42.64 34.6 36.6 37.24 Market Capitalization ( in Cr. ) 157,227.51Analysis :• Both Operating Profit Margin and Net profit margin has increased where as return on asset has decreased.• Both Asset Turnover Ratio and Earnings Per Share has decreased significantly.• Earning Per Share has decreased from 49.65 to 28.55 in the last 5 years. This is an important measure of profitability• Return On Capital Employed has increased 7.7 %Company -4: Amar Remedies Profitability Ratios Mar 11 Mar 10 Mar 09 Mar 08 Mar 07 Operating Profit Margin(%) 14.32 14.57 12.87 12.03 13.29 Cash Profit Margin(%) 8.56 9.11 9.11 8.15 9.17 Net Profit Margin(%) 6.57 6.81 7.19 7.29 8.42 Return on Assets Excluding Revaluations 81.65 67.64 56.29 47.08 38.57 Asset Turnover Ratio 3.59 3.34 3.4 3.24 5.75 Earnings Per Share 14.54 12.33 10.2 8.32 6.51 Return On Capital 17.45 19.35 17.6 18.35 15.76 Capital and Money Markets – Ex-MBA – 2010-13 5
  • 6. Employed(%) Market Capitalization ( in Cr. ) 322.47Analysis :• Net profit margin has decreased where as return on asset has increased.• Earning Per Share has increased by more than doubled in the last 5 years.This is an important measure of profitability• Return On Capital Employed has increased to 17.45 .Company -5: Astral PolytechnikProfitability Ratios Mar 11 Mar 10 Mar 09 Mar 08 Mar 07Operating Profit Margin(%) 13 14.54 15.26 15.23 13.36Cash Profit Margin(%) 10.22 11.33 12.82 13.77 11.21Net Profit Margin(%) 8.16 9.66 7.26 12.25 9.03Return on Assets Excluding Revaluations 65.66 104.04 81.44 69.98 56Asset Turnover Ratio 2.97 2.6 2.06 2.71 2.75Earnings Per Share 14.95 24.94 12.63 15.2 8.11Return On Capital Employed(%) 23.32 22.03 16.79 18.92 12.97Market Capitalization ( in Cr. ) 381.42Analysis :• Net profit margin has decreased where as return on asset has increased.• Earning Per Share has increased by 1.5 times in the last 5 years.• Return On Capital Employed has increased significantly to 23.32Company -6: Finotex ChemicalProfitability Ratios Mar 11 Mar 10Operating Profit Margin(%) 21.57 23.12Cash Profit Margin(%) 15.3 16.15 Capital and Money Markets – Ex-MBA – 2010-13 6
  • 7. Net Profit Margin(%) 14.86 17.21Return on Assets Excluding Revaluations 41.2 21.51Asset Turnover Ratio 7.41 5.6Earnings Per Share 3.79 5.18Return On Capital Employed(%) 13.68 33.29Market Capitalization ( in Cr. ) 137.79Analysis : • Net profit margin has decreased where as return on asset has increased significantly. • Earning Per Share has decreased to 3.79. • Return On Capital Employed has decreased signicantly by 19,61 %Company -7: United Phosphorous Profitability Ratios Mar 11 Mar10 Mar09 Mar08 Mar07 Operating Profit Margin(%) 14.3 12.74 13.7 6.85 15.84 Cash Profit Margin(%) 10.29 8.62 13.02 7.79 13.82 Net Profit Margin(%) 4.97 6.51 6 5.54 7.37 Return on Assets Excluding Revaluations 48.9 43.71 41.35 77.54 60.09 Asset Turnover Ratio 2.04 1.84 1.85 1.47 1.48 Earnings Per Share 3.41 4.12 3.55 4.21 5.8 Return On Capital Employed(%) 9.41 7.8 9.81 5.33 6.76 Market Capitalization ( in Cr. ) 6,132.76 Analysis : • Net profit margin and return on asset has decreased. • Return On Capital Employed has increased by 2.65 % Company -8 : Godrej Industries Profitability Ratios Mar 11 Mar10 Mar09 Mar08 Mar07 Operating Profit Margin(%) 4.13 1.64 -3.63 11.31 3.49 Cash Profit Margin(%) 2.52 1.85 -0.8 10.12 6.9 Net Profit Margin(%) 12.04 9.22 2.09 14 10.68 Return on Assets Excluding Revaluations 33.96 31.79 31.56 32.24 12.89 Capital and Money Markets – Ex-MBA – 2010-13 7
  • 8. Asset Turnover Ratio 1.6 1.36 1.44 1.33 1.24 Earnings Per Share 4.2 2.55 0.58 3.33 2.65 Return On Capital Employed(%) 4.05 3.05 1.36 6.22 7.78 Market Capitalization ( in Cr. ) 5,915.76Analysis :• Both Operating Profit Margin and Net profit margin has decreased• Earning Per Share has increased to 4.2• Return On Capital Employed has decreased signicantly by 3.73 %Company -9 : Ambuja Cements Profitability Ratios Dec10 Dec09 Dec08 Dec07 Dec06 Operating Profit Margin(%) 25.18 27.07 28.85 36.2 34.71 Cash Profit Margin(%) 20.01 20.46 21.17 34.61 29.04 Net Profit Margin(%) 16.84 16.78 22.11 30.53 23.86 Return on Assets Excluding Revaluations 47.9 42.45 37.23 30.58 27.56 Asset Turnover Ratio 0.85 1.15 1.1 1.09 1.37 Earnings Per Share 8.26 8 9.21 11.62 9.9 Return On Capital Employed(%) 21.6 27.04 28.19 38.84 43.76 Market Capitalization ( in Cr. ) 23,479.85Analysis :• Both Operating Profit Margin and Net profit margin has decreased .Asset turnover has also decreased.• Earning Per Share has decreased by 1.64.• Return On Capital Employed has decreased signicantly by 22.16 %Company -10 : Exide Industries Profitability Ratios Mar 11 Mar10 Mar09 Mar08 Mar07 Operating Profit Margin(%) 17.38 21.21 14.63 14.89 14.8 Cash Profit Margin(%) 13.57 14.7 9.7 9.77 10.03 Net Profit Margin(%) 12.86 12.7 7.55 7.92 7.43 Return on Assets Excluding Revaluations 31.94 25.76 15.22 12.37 8.37 Asset Turnover Ratio 3.25 3.16 3 2.88 2.2 Capital and Money Markets – Ex-MBA – 2010-13 8
  • 9. Earnings Per Share 7.84 6.32 3.55 3.13 2.07 Return On Capital Employed(%) 33.2 36.16 31.67 30.55 27.18 Market Capitalization ( in Cr. ) 9,694.25Analysis :• Both Operating Profit Margin and Net profit margin has increased significantly.• Earning Per Share has decreased by more than 3 times.• Return On Capital Employed has decreased signicantly by 6.02 %Company -11 : Orchid Chemicals Profitability Ratios Mar 11 Mar10 Mar09 Mar08 Mar07 Operating Profit Margin(%) 19.78 -8.85 16.3 30.02 27.97 Cash Profit Margin(%) 12.29 -36.76 2.36 19.2 19.58 Net Profit Margin(%) 9.55 26.48 -4.36 14.88 10.56 Return on Assets Excluding Revaluations 160.99 141.57 83.28 104.49 76.16 Asset Turnover Ratio 0.7 0.58 0.49 0.66 0.66 Earnings Per Share 22.64 47.04 -7.41 28.02 14.68 Return On Capital Employed(%) 6.94 -9.18 2.16 10.43 9.1 Market Capitalization ( in Cr. ) 1,129.19Analysis :• Both Operating Profit Margin and Net profit margin has decreased significantly.• Return On Capital Employed has decreased signicantly by 2.16 %Company -12 : Areva T&D Profitability Ratios Dec10 Dec09 Dec08 Dec07 Dec06 Operating Profit Margin(%) 12.05 16.88 18.55 13.83 8.72 Cash Profit Margin(%) 6.94 10.86 11.83 9.6 5.23 Net Profit Margin(%) 4.62 8.52 10.69 8.45 4.14 Return on Assets Excluding Revaluations 41.9 30.27 114.54 11.7 4.56 Asset Turnover Ratio 3.47 7.07 6.18 6.67 4.16 Earnings Per Share 7.81 8.03 9.47 45.23 34.35 Return On Capital Employed(%) 20.9 35.01 54.96 54.95 30.71 Capital and Money Markets – Ex-MBA – 2010-13 9
  • 10. Market Capitalization ( in Cr. ) 4,838.27Analysis :• Operating Profit Margin has increased significantly.• Earning Per Share has decreased by 26.54• Return On Capital Employed has decreased signicantly by 9.81 %Company -13 : Titan Industries Profitability Ratios Mar 11 Mar 10 Mar 09 Mar 08 Mar 07 Operating Profit Margin(%) 9.43 9.33 8.93 8.69 8.69 Cash Profit Margin(%) 6.99 6.75 5.73 6.01 5.59 Net Profit Margin(%) 6.4 5.34 4.08 4.92 4.4 Return on Assets Excluding Revaluations 231 163.19 124.18 98.26 72.82 Asset Turnover Ratio 10.94 8.33 7.33 6.17 4.72 Earnings Per Share 96.96 56.39 35.81 33.85 21.16 Return On Capital Employed(%) 59.46 48.67 42.68 34.19 29.2 Market Capitalization ( in Cr. ) 18,093.08Analysis :• Net profit margin has increased significantly.• Earning Per Share has increased by 75.8• Return On Capital Employed has decreased signicantly by 30.26 % Capital and Money Markets – Ex-MBA – 2010-13 10
  • 11. Company -14 : Amtek India Profitability Ratios Jun 10 Jun09 Jun08 Jun07 Jun06 Operating Profit Margin(%) 28 24.28 41.33 26.9 26.47 Cash Profit Margin(%) 16.77 15.76 32.58 19.8 19.28 Net Profit Margin(%) 7.41 6.76 28.24 15.16 13.57 Return on Assets Excluding Revaluations 128.12 131.4 126.81 87.77 6.81 Asset Turnover Ratio 0.4 0.57 1.05 0.99 1.18 Earnings Per Share 6.05 4.82 30.93 12.73 11.27 Return On Capital Employed(%) 5.29 5.66 21.82 14.21 12.67 Market Capitalization ( in Cr. ) 1,800.43 Analysis :• Earning Per Share has decreased to 6.05• Return On Capital Employed has decreased signicantly by 7.38 %Company -15 : Hind Zinc Profitability Ratios Mar 11 Mar10 Mar09 Mar08 Mar07 Operating Profit Margin(%) 55.36 58.21 48.06 68.36 75.16 Cash Profit Margin(%) 49.51 49.75 44.18 50.28 53.08 Net Profit Margin(%) 45.13 46.5 41.83 52.16 51.28 Return on Assets Excluding Revaluations 53.33 428.94 339.8 280.41 180.51 Asset Turnover Ratio 1.02 0.99 0.99 1.57 2.51 Earnings Per Share 11.6 95.65 64.55 104.04 105.12 Return On Capital Employed(%) 26.45 27.51 22.83 48.17 83.67 Market Capitalization ( in Cr. ) 46,753.15 Analysis :• Return On Capital Employed has decreased signicantly by 57.22 % Capital and Money Markets – Ex-MBA – 2010-13 11
  • 12. Company -16 : Hindalco Profitability Ratios Mar 11 Mar10 Mar09 Mar08 Mar07 Operating Profit Margin(%) 14.98 15.04 16.03 17.1 21.9 Cash Profit Margin(%) 12 10.89 13.76 14.31 16.72 Net Profit Margin(%) 8.83 9.69 11.87 14.56 13.76 Return on Assets Excluding Revaluations 155.07 145.85 139.71 140.95 107.09 Asset Turnover Ratio 1.67 1.42 1.37 1.53 1.64 Earnings Per Share 11.16 10.01 13.12 23.31 22.12 Return On Capital Employed(%) 8.9 7.46 9 12.44 19.07 Market Capitalization ( in Cr. ) 23,682.19Analysis :• Both Operating Profit Margin and Net profit margin has decreased significantly.• Return On Capital Employed has decreased signicantly by 10.17 %Company -17 : Jubilant Life Sciences Profitability Ratios Mar 11 Mar10 Mar09 Mar08 Mar07 Operating Profit Margin(%) 20.64 21.19 22.03 22.31 17.56 Cash Profit Margin(%) 17.58 13.5 19.38 18.44 17.26 Net Profit Margin(%) 12.54 14.62 10.6 19.69 14.11 Return on Assets Excluding Revaluations 134.39 136.85 90.76 94.19 66.76 Asset Turnover Ratio 1.04 1.21 1.27 1.44 1.31 Earnings Per Share 17.56 22.87 17.67 26.83 16.14 Return On Capital Employed(%) 7.6 11.44 12.7 12.91 10.24 Market Capitalization ( in Cr. ) 3,250.13Analysis :• Return On Capital Employed has decreased signicantly by 2.64 % Capital and Money Markets – Ex-MBA – 2010-13 12
  • 13. Company -18 : Radico Khaitan Profitability Ratios Mar 11 Mar10 Mar09 Mar08 Mar07 Operating Profit Margin(%) 15.64 16.53 13.12 10.24 13.67 Cash Profit Margin(%) 9.96 7.59 8.14 4.81 7.96 Net Profit Margin(%) 7.25 4.91 0.9 4.02 5.39 Return on Assets Excluding Revaluations 48.44 44.54 21.45 22.7 17.17 Asset Turnover Ratio 1.97 1.71 1.54 2.12 1.96 Earnings Per Share 5.49 3.15 0.64 2.89 3.13 Return On Capital Employed(%) 11.95 11.84 10.69 9.71 9.55 Market Capitalization ( in Cr. ) 1,596.42Analysis :• Both Operating Profit Margin and Net profit margin has increased significantly.• Earning Per Share has increased to 5.49• Return On Capital Employed has increased by 2.4%Company -19 : VIP Industries Profitability Ratios Mar 11 Mar10 Mar09 Mar08 Mar07 Operating Profit Margin(%) 13.05 15.63 6.23 10.53 9.9 Cash Profit Margin(%) 10.47 12.51 3.72 7.9 6.29 Net Profit Margin(%) 10.47 12.51 3.72 7.9 8.38 Return on Assets Excluding Revaluations 71.19 60.91 45.63 42.39 39.01 Asset Turnover Ratio 3 2.72 2.24 2.39 2.12 Earnings Per Share 21.94 17.71 3.29 7.11 5.63 Return On Capital Employed(%) 27.39 32.82 8.01 18.43 17.8 Market Capitalization ( in Cr. ) 1,902.13Analysis : Capital and Money Markets – Ex-MBA – 2010-13 13
  • 14. • Both Operating Profit Margin and Net profit margin has increased significantly.• Earning Per Share has inecreased by more than 3 times.• Return On Capital Employed has increased signicantly by 9.59 %Company -20 : Timken India Profitability Ratios Dec10 Dec09 Dec08 Dec07 Dec06 Operating Profit Margin(%) 15.24 13.24 17.23 17.61 19.13 Cash Profit Margin(%) 12.44 10.86 12.64 12.71 14.15 Net Profit Margin(%) 10.69 9.89 12.57 10.74 11.21 Return on Assets Excluding Revaluations 59.71 51.7 46.6 38.28 15.03 Asset Turnover Ratio 2.24 1.61 2.2 1.91 1.93 Earnings Per Share 8.01 5.1 8.32 5.87 5.98 Return On Capital Employed(%) 18.22 11.58 23.16 21.98 27.47 Market Capitalization ( in Cr. ) 1,500.32Analysis :• Both Operating Profit Margin and Net profit margin has decreased significantly.Asset turnover ration has increased.• Earning Per Share has increased to 8.01.• Return On Capital Employed has decreased signicantly by 9.25 %Bibliography• Financial Accounting by R.Narayanswamy Capital and Money Markets – Ex-MBA – 2010-13 14
  • 15. • http://www.bseindia.com/• http://www.moneycontrol.com/financials/• http://www.investopedia.com• Annual Reports of Company Capital and Money Markets – Ex-MBA – 2010-13 15
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