Institute of Chartered Financial Analysts of India (ICFAI) University 2006 Certification Finance Security Analysis – II - Question Paper

1,105.23
948.79
720.18
874.23

Profit After Tax
1,439.88
982.86
844.52
609.51
801.73

Net worth
3,380.74
2,686.58
4,110.91
4,003.71
3,622.02

Total Assets
7217.08
5526.60
7365.64
7787.94
7158.35




Total assets turnover ratio (NS/TA)
1.7058
1.9659
1.5789
1.4214
1.5552

Leverage ratio (TA/NW)
2.1348
2.0571
1.7917
1.9452
1.9763

Pre–tax Profitability ratio (PBT/NS)
0.1308
0.1017
0.0816
0.0651
0.0785

(PAT /PBT)
0.8944
0.8893
0.8901
0.8463
0.9171

Return on equity (ROE)
0.4259
0.3658
0.2054
0.1522
0.2213




Return on Equity for the year 2001–02 has decreased, but then it has risen from the previous levels. Taxability effect on profitability is more or less constant other than in the year 2000–01. Asset turnover has reduce in the year 2001–02 and 04–05. Net worth indicates a volatile picture. This is due to the Demerger of Pharma business from Dabur India Ltd. In the year 2003–04 it has increased, and then it dropped in the year 2003–04 and again increased in the year 2004–05. Thus, Leverage ratio for the company after the demerger is on the higher side. Pre–tax profitability is increasing other than in the year 2001–02 and increase in this ratio is the main cause for increase in the Return on Equity ratio.

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3. (a)

Particulars
31.3.2005
31.3.2004
31.3.2003
31.3.2002
31.3.2001

Net Profit
1439.88
982.86
844.52
609.51
801.73

Growth
46.50%
16.38%
38.56%
–23.98%
–




Simple avg. growth rate: –

= 46.5 +16.38 + 38.56 – 23.98 / 4

=77.46 / four = 19.365 %.

EPS as on 31st March 2005= 1439.88 / 286.42 = 5.03.

EPS Projected = 5.03 (1.19365) = Rs. 6.00

Market price as on 31st March 2005 = Rs. 111.05

Therefore, P/E based on Simple growth rate = 111.05 / six = 18.5083 19.

b.

EPS as on 31st March 2005 = Rs. 5.03

Market price as on 31st March 2005= Rs.111.05

Free cash flow

Capital expenditure = 2009.37 – 1486.06 = Rs. 523.31Mn

Depreciation = Rs. 185.92 Mn

Investment in working capital = Rs. (574.16) Mn

Debt ratio= 1– 0.067 = 0.933.



(Capital expenditure – Depreciation) (1 – b)

Earning:   Approval pending.