Hid finalfinal project

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Hid finalfinal project

  1. 1. Focus Sector : Power Generation/Distribution Submitted By: Dhiraj Gaur(15) Ritesh Gupta(37) Saral(44) Prabhujeet Singh( Adarsh Srivastava(03) Umesh Raheja(59)
  2. 2. 0.00 50,000.00 100,000.00 150,000.00 200,000.00 market captialisation (rs cr.) market captialisation (rs cr.) 0 0.5 1 1.5 2 2.5 Debt/Equity Debt/Equity Same market capitalization Same D/E ratio From above we choose 4 firms having similar D/E ratio and market capitalization
  3. 3. Section 1 The firms we have selected are:-  National Hydroelectric Power Corporation  Reliance Infrastructure Ltd.  TATA Power Company Ltd.  Neyveli Lignite Corporation Ltd.( firm for valuation)
  4. 4. NHPC Ltd  Incorporated on November 7, 1975  Converted to a public limited company w.e.f. April 2, 1986  Name changed to “NHPC Ltd” on March 13, 2008  2008 - 09 Conferred Mini Ratna Category I status by the GoI  Return on Total Assets (ROTA) 3.36%  Return on capital employed (ROCE) 3.64%  Net profit margin 33.83%
  5. 5. Reliance Infrastructure Ltd  The Company was incorporated on 1st October 1929, at Mumbai as "Bombay Suburban Electric Supply Limited”  In 1992 the name of the Company was changed from Bombay Suburban Electric Supply, Ltd. to its abbreviated version "BSES Ltd."  In 2003, the name of BSES Ltd changed to Reliance Energy Ltd.  On 10 March 2008, the name of Reliance Energy changed to Reliance Infrastructure Ltd  Return on Total Assets (ROTA) 9.10%  Return on capital employed (ROCE) 6.37%  Net profit margin 10.73%
  6. 6. TATA Power Ltd  Incorporated on 18th September 1919  Set up 'Tala Transmission Line‘ with a JV with PGCIL for power transfer from Bhutan  Tata Power Trading Company Ltd (TPTCL), a wholly owned subsidiary of the Tata Power Company (TPC), awarded the first power trading licence by the Central Electricity Regulatory Commission (CERC)  Return on Total Assets (ROTA) 8.34%  Return on capital employed (ROCE) 6.63%  Net profit margin 12.32%
  7. 7. Neyveli Lignite Corporation  Incorporated as a private limited company on 14th November 1956  Return on Total Assets (ROTA) 4.68%  Return on capital employed (ROCE) 6.07%  Net profit margin 20.47%
  8. 8. Board of Directors NLC Name Designation Mr. Shashi Kumar Director Mr. Y N Apparao Director Dr. Krishna Kumar Director Mr. K Sekar Director (Finance) Mr. P K Choudhury Director Mr. V Sethuraman Director Prof. S Sadagopan Director Mr. B Surender Mohan Director Mr. A R Ansari Chairman and Managing director Mr. Ravindra Sharma Director
  9. 9. Company Snapshot Fundamentals Market Capitalization ( Rs cr ) 23,991.25 Book Value 56.44 Debt / Equity 0.42 P/E 29.22 Dividend Yield % 1.4 EPS 4.89 Return on Net Worth 7.8 Current Ratio 1.9 Quick Ratio 1.77 Interest Cover 7.35
  10. 10. Share Prices NSE BSE Date 18/12/2009 18/12/2009 Open Price 146 145 High Price 146.25 146.25 Low Price 142.8 142.65 Close Price 143.35 143 Number of Trades 4,709.00 1,338.00 Traded Quantity 349,635.00 94,859.00 Traded Value 50,552,281.90 13,699,353.00 52 Week High 162.7 162.7 52 Week Low 60.4 60.4
  11. 11. Price Chart
  12. 12. No of Shares 1677709600 Face Value 10 Domestic ( in %age ) Promoters 93.56 Directors 0 Subsidiary Companies 0 Other Companies 0.37 State Govt 0 Central Govt 0 Govt Companies 0 Govt Others 0 NBanks Mutual Funds 0.21 Holding Companies 0 General Public 1.56 Employees 0 Person Acting in Concert 0 Total 95.71 Institutions ( in %age ) 3.85 Foreign ( in %age ) 0.38 Others ( in %age ) 0.07 Shareholding Pattern
  13. 13. NHPC NTPC NLC TATA Reliance ROTA 3.36% 8.86% 4.68% 8.34% 9.10% ROCE 3.64% 8.76% 6.07% 6.63% 6.37% Net Profit Margin 33.83% 18.11% 20.47% 12.32% 10.73%
  14. 14. EBITDA Multiple Methodology  Step 1: Calculate Debt-Equity Ratio for all comparable companies  Step 2: Find the 5 competitors which have comparable D/E Ratios  Step 3: Find the 3 competitors which have comparable Growth Rates We choose National Hydroelectric Power Corporation, Reliance Infrastructure Ltd. ,TATA Power Company Ltd.  Step 4: Find out interest bearing debt  Step 5: Find common equity of each firm  Step 6: Find EBITDA & EBITDA multiple of each firm  Step 7: Take the average of the 3 EBITDA multiples  Step 8: Do backward calculation to find the share price of the concerned company.
  15. 15. EBITDA multiple method Reliance Infrastructure Interest Bearing debt 7332.18 Common Equity 23,185.94 Firm Value 30,518.12 Cash & Equivalents 249.97 Enterprise value 30,268.15 EBITDA 1,715.59 EBITDA Multiple 17.64299745 NHPC Ltd. Interest Bearing debt 12234.03 Common Equity 39,423.88 Firm Value 51,657.91 Cash & Equivalents 1,899.95 Enterprise value 49,757.96 EBITDA 2,268.21 EBITDA Multiple 21.93710459 Tata Power Company Ltd. Interest Bearing debt 5247.06 Common Equity 31,256.00 Firm Value 36,503.06 Cash & Equivalents 45.5 Enterprise value 36,457.56 EBITDA 1,780.62 EBITDA Multiple 20.47464366
  16. 16. Neyveli Lignite Corporation Ltd. Interest Bearing debt 4057.7 Common Equity 30,126.27 Firm Value 34,183.97 Cash & Equivalents 38.64 Enterprise value 34,145.33 EBITDA 1,705.71 Price Per Share= 179.5678273 EBITDA MULTIPLIER AVERAGE 20.01824857 Neyveli Lignite Corporation Ltd.( Actual) Interest Bearing debt 4057.7 Common Equity 23,991.25 Firm Value 28,048.95 Cash & Equivalents 38.64 Enterprise value 28,010.31 EBITDA 1,715.59 EBITDA Multiple 16.32692543 Share Price= 143.0000162 Thus we see that Price per share of Neyveli Lignite is undervalued and it will be profitable to purchase the company at the current price.

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