COMPANY ANALYSIS

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SUBMITTED TO : SUBMTTED BY:

DR. MILIND PATIL Group no.

Assistant Professor-Accounting & Finance Group Member Name:-

 Table of Content

1. Background pg.no
2. Products and Services
3. Operational Performance
3.1 Sales and Sales growth
3.2 Operating profit and operating profit margin
3.3 Fixed Assets Turnover
3.4 Inventory & Receivable Days
4. Financial Performance
4.1 Net profit & NPM
4.2 Debt to equity ratio
4.3 Return on Capital Employed (ROCE)
4.4 Return of Equity

5. Capital Market Performance

Background
In back ground the students shall give information with regard to year of incorporation of the
company followed by name of the promoters, major plants and capacity (for manufacturing
companies), Location of headquarters (only city) (for all companies), and lines of the
business.
Sentence Limit - Sentence limit will be approx five to six lines in a single paragraph. Please
don’t use bullet points and don’t give the address of company.
Sources – All business news papers, Business magazines Company website, Annual report,
Investors presentation and Red herring prospectus etc.
Font size – Garamond 11 Format – Paragraph

Products and Services

The students needs to mention about the products and services the company offers in the
market (all companies). If company has lots of products (FMCG or Chemicals), in this case
find out the highest weightage products (% of revenue) and mention the major products.
Format – Table format
Sources – All business news papers, Business magazines and company press releases etc.
Font size – Garamond 11
3.Operational Performance
In operational performance, students needs to have a full understanding about the operations
of company’s business. You needs to measure company’s operational aspects and analyse the
performance. The students shall find out the reasons for fluctuations in operational
performance. In operational performance, you needs to analyse –
1) Sales and sales growth
2) Operating profit and operating profit margin
3) Fixed assets turnover ratio
4) Inventory & Receivable Days

3.1 Sales and Sales growth

In order to analyse operations of company, students should take last 6 quarter sales and sales
growth. The focus of analysis must be on latest quarter and reasons thereon. For analysing
IT/Biotech/Telecom, students must do sequential QoQ (JFM21 VS OND20) analysis as
industry is more dependent upon Innovation and creativity. The rest of all other sectors will
have YoY (AMJ21 Vs AMJ20) growth analysis. In case of IPO for last two years, we will
consider performance on yearly basis (past three years). In the report, the students must
mention the reasons for cause in increase in sales. The reasons can be capacity addition, rise
in realisation in case commodities and power industry, new clients in case of ITSS, New
products launches in case of Automobiles and pharma, New subscribers additions and launch
of new services in Telecom, and Launch of drugs in case of Pharma cos.
Style and Font Size of Sub head – Garamond 11 bold
Style and Font Size of content – Garamond 11
Format-Table format
Data source - For data of companies plz refer to BSE India, NSE, SEBI or company website.
PLz take only standalone results and all units to be in Rs. million.
Starting sentences - During the quarter ended June/Sept/ March/December 2020, company’s
sales witnessed Dip/growth of …% to Rs …….. million compared to CPLY/previous quarter.
The strong growth / dip was due to ……….(plz give reasons).
3.2 Operating profit and operating profit margin
In case of operating profit and OPM, students shall analyse last 6 quarters and find out the
margin. In analyzing, students has to define which factor plays the major role for the changes
in the OPM on either side. Is it because of increase in sales or fall in the operational
expenditures or vice versa? The reasons for fluctuation in OPM can be due to – High capacity
utilisation, Captive power plants, VRS, high training cost, high raw material cost, high
transportation / logistics cost, rise in salary levels, high advt cost, shut down plants due to
floods, strike etc.
Style and Font Size of Sub head – Garamond 11 bold
Style and Font Size of content – Garamond 11
Format- Table format
Data source - For data of companies plz refer to BSE India, NSE, SEBI or company website.
Please take only stand alone results and all units to be in Rs. million.
Starting sentences - The company for the quarter ended June/September/December/March
2020/21 has witnessed dip/rise in the margins compared to CPLY / QoQ. This is due to the
fact that ………………..
While calculating OPM please remove other income from total income and calculate the
OPM

3.3 Fixed assets turnover ratio

The analysis of fixed assets turnover ratio measure the efficiency with which the firm uses its
fixed assets
Period- last 5 years Y0Y
Format- Table format
Front size-Garamond 11

4. Financial Performance

4.1 Net profit & NPM

In case of Net profit and NPM, students shall analyse last 6 quarters and find out the margin.
In analyzing, students has to define which factor plays the major role for the changes in the
NPM on either side. Is it because of increase in sales or fall in the net profit or vice versa?
The reasons for fluctuation in NPM can be due to – Better tax planning, High growth in other
income,Interest cost etc.
Period – last 6 quarters QoQ
Font Size – Garamond 11
Format- Table format
4.2 Debt to equity ratio
The analysis of long-term debt to equity ratio will give the inference of leverage of company.
The share holders will be always be happier, presence of debt holder because of tax shield.
Indian companies have a D/E ratio of 2:1.
Period – last 5 years
Chart –Line chart
Style and Font Size – Garamond 11
4.3 Return on Capital Employed (ROCE)
ROCE is calculated as Earning Before Interest and Tax (EBIT) to Capital Employed (Total
Shareholders fund plus Long Term Debt). The ratio measures the efficiency and profitability
of the capital investment. ROCE should always be higher than the company’s borrowing rate
otherwise it reduces the shareholder’s earnings.
Period – last 5 years
Chart –Line chart Style
Font Size – Garamond 11

4.4 Return on Equity(ROE)

It is the amount of net income returned as a percentage of shareholders equity. Return on
equity measures the profitability, a company generates with the money invested by the
shareholders. A higher ROE indicates the efficiency of a company in using its equity
Period – last 5 years
Chart –Line chart Style
Font Size – Garamond 11
5 Capital market Performance
In capital market performance, students has to compare share price of company in BSE/NSE
with BSE Sensex/Nifty/Industry index. You need to construct relative market performance
for share price and Sensex/Nifty/Industry index. While constructing relative market
performance, students should consider both share prices and Sensex/Nifty/Industry index as
100. In second step, they should find out the return from first day share price
Sensex/Nifty/Industry index and add 100. Then the students shall make the first observation
as constant and finds out the return of each day compared to the first day. They need to take
share price and Sensex/Nifty/Industry index together and plot a line chart. The students has to
analyse the reasons for deviations between the movement of share price and
Sensex/Nifty/Industry index. In case, movement of share price and Sensex/Nifty/Industry
index move in same direction then both are positively correlated. The reasons for difference
between share price and Sensex/Nifty/Industry index could be: • Corporate results •
Increasing capacity • Launching new product • New markets • Regulations • Technology •
Capacity utilisation • Reduction in cost
Period – monthly share prices and Sensex/Nifty/Industry index (two years)
Chart – line chart
Style and Font Size – Garamond 11

Total marks:-10
Marks break-up:-(Excel working:-3 marks and analysis/interpretation:- 7 marks)
Submission date:- 10.10.2024