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FINANCIAL ANALYSIS REPORT
2009-2010
TEAMAbhishek Kumar- BLP038Abhishek Saxena- BLP012Kushal Prakash- BLP061Nihar Routray- BLP022Shankar Narayan- BLP039
An enterprise that started as a toy balloon maker in 1946 in South India quickly grew to become one of India's biggest and respected companies. Renowned for product superiority and innovation, MRF continues to be the leading tyre-maker in India
Tyre Industry Structure in INDIA Valued at approximately Rs.25,000 crore per annum. With Rs.3000 crore estimated to be the value of exports.• 39 tyre companies.• 60 factories located all over India.• 10 major tyre companies account for 88% of the tyre business in the country.
55%
30%
15%
30% OEM
15% Export
Market Distribution of Tyre Manufactured
55% Replacement Market
About Indian Tyre Industry Facts• Second largest two wheeler manufacturer in the world.• Largest tractor and three wheeler manufacturer in the world.• Fourth largest commercial vehicle market in the world.• Eleven largest passenger car market in the world.
Trends> Growth of exports of 22.30% FY 2009-10
> Commercial vehicles segment grew at 4.07% > Light commercial vehicles grew at 12.29%
Growth Potential• Can become world's third largest automobile market in 2030.• By 2016, Automotive sector can double its percentage contribution to GDP from current level of 5% (US $50billion) to 10% (US $180billion)
SWOT analysis of Tyre Industry in India
Opportunities• Growing Economy.• Govt emphasis on
infrastructure development.• Steady increase in radial
tyres for MHCV, LCV.
Weaknesses• Cost Pressure• Pricing pressure• High capital investment
Threats• Continuous increase in price
of natural rubber.• Cheap Import of tyres.• Cynical nature of automobile
industry.• Ban on overloading (short
term negative).
Strengths• Established Brand names• Exclusive distribution
network• Good R&D
DIRECTOR’S REPORT• Landmark achievement of sales turnover of Rs 8000 crores• 31% sales growth > Leveraged by growth in automobile sector
> Low interest rates• Twice interim dividend of Rs 3/share in the month of Sept. and Dec . were
declared by board of director.• Further board recommended final dividend of Rs 19/share and a special
dividend of Rs 25/share on Paid-up-Equity share capital .• An amount of Rs 329.26 crores was recommended to be transferred to
General Reserve after tax provision and proposed dividend. Concern for uncertain rise of material price and price sensitive
market. Imbalance in duty structure of import.
20% duty charges on Raw material 8 – 10 % duty charges on finished tyres from other countries
especially China.
Financial Results
High Sales Growth of 31 %Growth due to:
• Turnaround in Automobile market• Low Interest rates• General recovery of business
COMPARATIVE ANALYSIS
LIQUIDITY AND
TURNOVER RATIOS
CURRENT RATIO
2010 2009 20080
0.2
0.4
0.6
0.8
1
1.21.08
1.16
0.9
0.98
1.15
0.99
0.79
0.600000000000001
0.670000000000001
MRF Apollo JK
QUICK RATIO
2010 2009 20080
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0.720000000000001 0.730000000000001
0.780.740000000000001
0.91
0.830000000000001
0.710000000000001
0.620000000000001
0.720000000000001
MRF Apollo JK
DEBTORS TURNOVER RATIO
2010 2009 20080
5
10
15
20
25
30
35
40
45
10.739.54
8.71
44.89
33.75
20.69
7.91
11.24
6.12
MRFApolloJK
AVERAGE COLLECTION PERIOD
2010 2009 20080.00
10.00
20.00
30.00
40.00
50.00
60.00
33.55
37.74
41.33
8.0210.67
17.04
45.51
32.03
58.82
MRFApolloJK
INVENTORY TURNOVER RATIO
2010 2009 20080
2
4
6
8
10
12
14
16
7.68
10.17
6.09
10.47
11.77
8.729.11
14.03
5.58
MRFApolloJK
INVENTORY HOLDING PERIOD
2010 2009 20080.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
46.88
35.40
59.11
34.38
30.59
41.2839.52
25.66
64.52
MRFApolloJK
CAPITAL STRUCTURE RATIOS
DEBT EQUITY RATIO
2010 2009 20080
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
0.860000000000001
0.22
0.56
0.38
0.51
0.660000000000001
1.71
1.91
1.24
MRF Apollo JK
DEBT ASSETS RATIO
2010 2009 20080
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.36
0.17
0.46
0.39
0.330000000000001
0.27
0.55
0.650000000000001
0
MRF Apollo JK
INTEREST COVERAGE RATIO
2010 2009 20080
1
2
3
4
5
6
7
8
9
10
4.12
6.69
9.22
7.51
3.67
8.8
2.11
1.55
4.17
MRFApolloJK
FIXED CHARGES COVERAGE RATIO
2010 2009 20080
2
4
6
8
10
12
14
6.68
10.31
13.35
6.28
3.51
7.37
2.99
1.65
3.05
MRFApolloJK
Profit Margin Ratios
2010 2009 20080
2
4
6
8
10
12
14
16
11
12
8
14.5
8.4
12.612.5
2.3
10.1
MRFApolloJK Tyres
Gross Profit Margin Ratio (%)
2010 2009 20080
2
4
6
8
10
12
14
7.57.9
4.9
13.1
5.6
10.2
7.8
2
5.4
MRFApolloJK Tyres
Operating Profit Margin Ratio (%)
Profit Margin Ratios
2010 2009 20080
1
2
3
4
5
6
7
8
4.8
4.4
2.8
8
2.8
5.7
4.9
0.38
2.5
MRFApolloJK Tyres
Net Profit Margin Ratio (%)
Return on Investment Ratios
Profit Margin Ratios
2010 2009 20080
5
10
15
20
25
18.2
21.9
10.4
21.6
10.3
20.5
9.7
2
6.7
MRFApolloJK Tyres
Return On Assets (%)
Profit Margin Ratios
2010 2009 20080
5
10
15
20
25
30
20.9
19.1
12.4
24
8
17.8
26.4
3.33
13
MRFApolloJK Tyres
Return On equity /Net worth (%)
Profit Margin Ratios
2010 2009 20080
5
10
15
20
25
30
22.6
27
13.9
28.9
12.9
23.7
25.4
6.8
15.8MRFApolloJK Tyres
Return on Capital Employed (%)
Valuation Ratios
Profit Margin Ratios
2010 2009 20080
100
200
300
400
500
600
700
800
900834.63
604.37
334.74
8.23 2.15 4.49
39.81
4.6421.67
MRFApolloJK Tyres
Earnings Per Share - EPS (Rs)
Profit Margin Ratios
J K Tyres Apollo MRF0
1
2
3
4
5
6
7
8
9
2.5
3.8
8.7
2010
Price to Earnings (P/E) Ratio
Valuation Ratios
2010 2009 20080
5
10
15
20
25
30
35
40
45
50
50
25
20
0.75 0.45 0.5
3.5 2.7 2.7
MRFApolloJK Tyres
Dividend Per share (Rs)
Valuation Ratios
JK Tyres Apollo MRF0
0.5
1
1.5
2
2.5
3
2.6
1.5
0.7
2010
Dividend yield(%)
Way Ahead…• The automobile industry has picked up really fast this year
hence boosting tyre sales.• Chinese tyres have lower import duty(8-10%) thus are more in
demand whereas raw material import duties(20%) are high thus having higher cost.
• High reserve surplus to cover fluctuation in raw material cost(70 % of total cost). Natural Rubber prices increased from Rs.132 /kg to Rs 180 /kg.
• MRF has invested heavily in R&D which in turn is providing higher returns .
• MRF has also come up with a new factory in Andhra Pradesh which is highly automated and technologically advanced.
Market price of share very high. Rs 9439 per share in Sept 2010 with 544616 shares traded on NSE.
Recommendations
1. Stock split up as per share market price is very high.2. This will increase the equity base also.
Cont…
Q n A
Thank you