SWOT

CHAPTER 3

SWOT ANALYSIS

SWOT Analysis is a basic strategic planning technique used to help a person or organization
identify strengths, weaknesses, opportunities, and threats that your company faces. It enables you
to build on your strengths, fix your weaknesses, reduces risks, and maximize your chance of
success.

3.1 STRENGTHS

Debt-free company
This firm is debt-free, which implies its responsibilities are kept to a minimal. Without having to worry
about debt repayment, the profit from the assessment year can be put to good use
Zero promoter pledge company

There are several factors to consider when analysing a stock based on its fundamentals. Looking
at the pledge amount on promoter's shares, in addition to assessing financial statistics and
managerial efficiency, is critical in recognising symptoms of financial crisis in the organisation.
Having a zero-promoter pledge indicates that the company has a lot of potential EBT.
2.WEAKNESS
Decline in Net Profit with falling Profit Margin (QoQ)
A shrinking profit margin indicates that the company is losing money per dollar of sales. This
could be due to a lower selling price, increased costs, or both. Total gross earnings in the
income statement will decrease if total sales do not grow to compensate for the fall. The
decrease in margin, on the other hand, could be the outcome of a strategic decision. A
manufacturer may reduce the retail price of a product in order to compensate for the lower
unit profit by increasing volume.

Degrowth in Revenue and Profit

The revenue and profitability of EIH Limited have been severely impacted due to the

pandemic, which hit the tourism and hospitality sector the hardest. Travel restrictions
imposed by the Indian government and fears associated with COVID-19 compelled
travelers to cancel their business trips, conferences and leisure travels both domestic and
international. Summer holiday bookings to destinations within India were cancelled. Most
international and domestic flights remained suspended during the two-month lockdown
from April to May 2020. the Indian hotel industry was staring at a loss of Rs. 90,000 Crore
in revenue by December 2020 due to the continued curb on travel. The occupancy rate fell
to 18%-20% while Revenue Per Available Room (RevPAR) was down by 80%.

Companies with weak financials

If a company has a piotroski score of 8 or 9, it is considered a good value. If the score adds up
to between 0-2 points, the stock is considered weak. Stock with low piotroski score the
company against the benchmark of good value. The company has not had any spectacular
performance, which might be seen as a danger because it is not in the company's best
interests.

Mutual fund decreased holdings

In the last few months, the assets management company's mutual funds have decreased
dramatically, which can be viewed as a negative sign for the company. This has shut many doors
for increased investment.
3. OPPORTUNITIES
Rising Delivery Percentage Compared to Previous Day

Bigger delivery quantity indicates that substantial trading is taking place, and balance is an
intraday game. It denotes a state of equilibrium. If 60 shares are designated for delivery,
despite the fact that 40 shares were traded intraday. In this case, the 60 percent delivery rate is
really important. This is a fantastic chance for the company's growth, and the company should
seize it and turn it into a higher-revenue-generating enterprise

Decrease in Provision in recent results

The company provision for doubtful debts decreases in recent result. So, debit balance of profit
and loss A/c would decrease and ultimately net profit would increase, so the more profitable for
company business.

FII / FPI increasing their shareholding

FII (Foreign Institutional Investors) or FPI (Foreign Portfolio Investors) are companies
established outside India which invest in Indian financial markets. EIH Ltd. FII holdings rise by
0.46% helps in the process of economic development by providing riskier, long-term capital to
companies for growth. Their presence improves efficiency of stock market and maintains the
balance between stock price and its value. They help in financial innovation and improve
corporate governance practices of companies.

Stocks having a low price-to-earnings ratio

A low PE stock whose business fundamentals are strong has good chances of seeing future price
appreciation. Good fundamentals lead to faster growth of sales, EPS, net worth etc. This growth
eventually reflects in stock’s market price.

4.THREATS

Degrowth in Revenue, Profits in recent results  

The revenue and profitability of EIH Limited have been severely impacted due to the
pandemic, which hit the tourism and hospitality sector the hardest. The Company recorded a
revenue of Rs. 4,736 million in FY 21, a decrease of 67% year-on-year from Rs. 14,343
million in FY 20. EBITDA was at Rs. (2,337) million, down 176% year-on-year from Rs.
3,094 million. The Company incurred a loss of Rs. 4,431 million compared to a Profit Before
Tax (PBT) Rs. 1,091 million in the previous year. Overall, the net loss for the year was Rs.
3,431 million compared to the net profit Rs.1,245 million in the previous year. The
comprehensive income was Rs. (3,400) Million as against Rs. 1,221 million in FY 20.

CHAPTER 4
FINANCIAL STATEMENTS WITH RATIO ANALYSIS
PROFIT & LOSS STATEMENT FOR LAST 5 YEARS

Standalone Profit & Loss account ------------------- in Rs. Cr. -------------------

PARTICULARS 2021 2020 2019 2018 2017

INCOME
Revenue From Operations [Gross] 432.70 1,350.30 1,543.24 1,350.28 1,277.55
Less: Excise/Service Tax/Other 0.00 0.00 0.00 0.39 1.81
Levies
Revenue From Operations [Net] 432.70 1,350.30 1,543.24 1,349.89 1,275.74
Total Operating Revenues 432.70 1,350.30 1,543.24 1,349.89 1,275.74
Other Income 40.94 84.01 84.02 83.76 99.23
Total Revenue 473.64 1,434.31 1,627.26 1,433.66 1,374.96
EXPENSES
Operating And Direct Expenses 69.98 168.83 212.09 193.94 191.75
Employee Benefit Expenses 315.41 410.89 421.58 404.36 379.29
Finance Costs 40.43 49.52 46.36 19.57 14.50
Depreciation And Amortisation 119.96 134.20 123.01 108.97 110.49
Expenses
Other Expenses 321.93 545.17 587.45 532.95 512.85
Total Expenses 867.71 1,308.61 1,390.49 1,259.79 1,208.89
Profit/Loss Before Exceptional, -394.07 125.70 236.77 173.87 166.07
Extraordinary Items and Tax
Exceptional Items -48.99 -16.61 -73.07 0.00 -38.22
Profit/Loss Before Tax -443.05 109.10 163.70 173.87 127.85
Tax Expenses-Continued
Operations
Current Tax 1.21 20.99 61.03 58.97 47.95
Deferred Tax -101.13 -36.36 -10.66 2.62 -16.63
Total Tax Expenses -99.93 -15.37 50.37 61.59 31.31

Profit/Loss After Tax -343.12 124.47 113.34 112.28 96.54

Profit/Loss from Continuing -343.12 124.47 113.34 112.28 96.54
Operations
EARNINGS PER SHARE -5.72 2.18 1.98 1.96 1.69
DIVIDEND AND DIVIDEND
PERCENTAGE
Equity Share Dividend 0.00 0.00 51.44 51.44 0.00
Tax On Dividend 0.00 0.00 10.57 5.96 0.00
Equity Dividend Rate (%) 0.00 0.00 45.00 45.00 45.00

CHART SHOWING NET SALES, PROFIT BEFORE TAX AND PROFIT AFTER TAX OF
THE COMPANY FOR LAST 5 YEARS

Chart Title
2000
1543.24
1500 1349.89 1350.3
1275.74

1000

432.7
500
166.7 173.87 163.7 109.1
0 96.54 112.28 113.34 124.47
2017 2018 2019 2020 2021
-443.05
-500 -343.12

-1000

Net Revenue(Cr) Profit Before Tax(Cr) Profit After Tax(Cr)

INTERPRETATION

The net revenues of the company have continuously increased from 2017 to 2019. After 2019 we can
see company revenues have decreased because of the Pandemic which is affected the growth of the
company.

CASH FLOW STATEMENT OF LAST 5 YEARS

PARTICULARS 2021 2020 2019 2018 2017
No of months 12 mths 12 mths 12 mths 12mths 12 mths
Net Profit Before tax -443.05 109.1 163.70 173.87 127.85
Net cash from operating activities -123.31 251.83 221.20 214.97 198.38
Net Cash from investing activities -44.31 -86.73 -152.34 -267.16 -211.40
Net cash from financing activities 166.49 -165.73 -67.61 49.97 14.13
Net Cash Inflow /Outflow -1.13 -0.63 1.25 -2.21 1.00
Opening cash & cash equivalent 5.20 5.83 4.58 6.79 5.59
Closing cash & cash equivalent 4.06 5.20 5.83 4.58 6.79

CASH FLOW STATEMENT OF LAST 5 YEARS

CASHFLOWS OF THE COMPANY

300
173.87 163.7
200
127.85 109.1 166.49
100
49.97
0 14.13 1 -2.21 1.25 -0.63 -1.13
2017 2018 2019 2020 2021-44.31
-67.61 -86.73
-100
-152.34 -165.73
-200
-267.16
-300
-322.4
-400 -443.05

-500

Net cash from operating activities Net Cash from investing activities
Net cash from financing activities Net Cash Inflow /Outflow

INTERPRETATION

BALANCE SHEET OF LAST 5 YEARS

Standalone Balance Sheet ------------------- in Rs. Cr. -------------------

Mar 21 Mar 20 Mar 19 Mar 18 Mar 17
PARTICULARS 2020 2019 2018 2017 2016
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 125.07 114.31 114.31 114.31 114.31
Total Share Capital 125.07 114.31 114.31 114.31 114.31
Revaluation Reserves 0.00 0.00 0.00 0.00 208.66
Reserves and Surplus 2,800.59 2,804.92 2,740.78 2,701.55 2,445.19
Total Reserves and Surplus 2,800.59 2,804.92 2,740.78 2,701.55 2,653.84
Total Shareholders Funds 2,925.66 2,919.23 2,855.09 2,815.87 2,768.16
NON-CURRENT LIABILITIES
Long Term Borrowings 214.59 183.21 209.86 253.72 151.94
Deferred Tax Liabilities [Net] 23.55 123.64 159.92 176.15 174.12
Other Long Term Liabilities 126.49 123.86 10.69 3.31 2.80
Long Term Provisions 21.75 24.41 24.40 23.80 21.00
Total Non-Current Liabilities 386.38 455.13 404.87 456.98 349.85
CURRENT LIABILITIES
Short Term Borrowings 17.03 186.53 224.66 139.97 115.97
Trade Payables 152.20 170.44 195.81 160.78 129.51
Other Current Liabilities 158.10 163.37 155.37 187.67 100.60
Short Term Provisions 17.96 19.12 16.16 21.08 15.07
Total Current Liabilities 345.30 539.46 592.00 509.50 361.15
Total Capital And Liabilities 3,657.34 3,913.82 3,851.96 3,782.35 3,479.16
ASSETS
NON-CURRENT ASSETS
Tangible Assets 2,104.45 2,211.29 1,931.42 2,012.07 1,559.11
Intangible Assets 6.76 7.85 7.34 8.73 8.85
Capital Work-In-Progress 152.45 112.93 63.90 134.08 313.44
Other Assets 105.88 108.48 110.69 0.00 0.00
Fixed Assets 2,369.53 2,440.56 2,113.35 2,154.89 1,881.40
Non-Current Investments 765.74 812.17 828.52 763.01 763.68
Other Non-Current Assets 333.11 329.77 564.18 540.62 498.03
Total Non-Current Assets 3,468.39 3,582.50 3,506.06 3,458.51 3,143.11
CURRENT ASSETS
Current Investments 9.93 0.00 0.00 0.00 0.00
Inventories 43.45 52.27 50.36 42.80 41.33
Trade Receivables 72.42 190.66 224.92 203.69 169.21
Cash And Cash Equivalents 6.98 8.51 9.10 7.86 9.80
Other Current Assets 56.16 79.88 61.52 69.48 115.71
Total Current Assets 188.95 331.32 345.90 323.84 336.05
Total Assets 3,657.34 3,913.82 3,851.96 3,782.35 3,479.16
OTHER ADDITIONAL
INFORMATION
CONTINGENT LIABILITIES,
COMMITMENTS
Contingent Liabilities 196.26 202.20 252.49 218.87 388.95
CIF VALUE OF IMPORTS
EXPENDITURE IN FOREIGN
EXCHANGE
Expenditure In Foreign
16.77 69.70 59.83 84.10 116.00
Currency
EARNINGS IN FOREIGN
EXCHANGE
Other Earnings 37.84 468.51 514.47 435.50 425.50
BONUS DETAILS
Bonus Equity Share Capital 59.82 54.67 54.67 54.67 54.67
NON-CURRENT
INVESTMENTS
Non-Current Investments 263.20 235.60 431.52 533.15 392.74
Quoted Market Value
Non-Current Investments
771.18 771.18 771.19 705.59 704.26
Unquoted Book Value

CHART SHOWING CURRENT,NON-CURRENT, FIXED AND TOTAL ASSETS OF THE

COMPANY FOR LAST 5 YEARS

CURRENT,NON-CURRENT, FIXED AND TOTAL ASSETS OF

THE COMPANY
4500
3782.35 3851.96 3913.82
4000 3657.34
3479.16
3500
3458.51 3506.06 3582.5 3468.39
3000
3143.11
2500
2440.56 2369.53
2000
2154.89 2113.355
1500 1881.4

1000
336 323.84 345.9 331.32
500 188.95
0
2017 2018 2019 2020 2021

TOTAL CURRENT ASSETS TOTAL NON-CURRENT ASSETS

FIXED ASSETS TOTAL ASSETS

INTERPRETATION

CHART SHOWING SHAREHOLDERS FUND, CURRENT, NON-CURRENT AND TOTAL

LIABILITY OF THE COMPANY FOR LAST 5 YEARS
 Chart Title
4500
3851.96 3913.82
4000 3782.35 3657.34
3479.16
3500
3000
2815.87 2855.09 2919.23 2925.66
2500 2768.16
2000

1500

1000
509.5 592 539.46
361.15 345.3
500
349.85 456.98 404.87 455.13 386.38
0
2017 2018 2019 2020 2021

SHAREHOLDERS FUND CURRENT LIABIITY

NON-CURRENT LIABILITY TOTAL LIABILITY

INTERPRETATION

FINANCIAL RATIOS

PARTICULARS 2021 2020 2019 2018 2017

Operational & Financial Ratios
Earnings Per Share (Rs) -5.49 2.18 1.98 1.96 1.69
DPS 0 0 .90 .90 .90
BVPS (Rs) 46.78 51.07 49.95 49.27 44.78
Tax Rate (%) 22.55 -14.10 30.76 35.42 24.48
Dividend Pay Out Ratio (%) 0 0 45.45 45.91 53.25
Profitability Ratios
EBIT Margin (%) -83.30 6.35 12.23 7.65 5.91
PAT Margin (%) -79.29 9.2 7.34 8.31 7.56
Cash Profit Margin (%) -36.77 19.19 19.01 15.43 17.83
ROA (%) -9.38 3.18 2.94 2.96 2.77
ROE (%) -11.72 4.26 3.96 3.98 3.77
ROCE (%) -10.67 5.19 8.68 5.91 5.79
Asset Turnover(x) 0.13 0.41 0.43 0.43 0.43
Liquidity And Solvency Ratios
Current Ratio(x) 0.96 0.66 0.90 1.19 1.35
Quick Ratio(x) 0.94 0.97 1.53 1.43 1.79

4.10ANALYSIS OF FINANCIAL RATIOS

  EARNING PER SHARE
The earnings per share (EPS) formula is used to calculate the value of each outstanding share of a
corporation. Analysts can also use it to compare firms and see which has higher earnings.

Earnings per Share = Common Shares Outstanding/ Net Income - Preferred

Dividends
Earnings per share of the company was at 1.69 in FY 2017 increased to 1.96 in FY 2018
and it constantly increased. For FY 2019 it increased by 1.98, for FY 2020 2.18. But it
declined to -5.49 in FY 2021.
 DIVIDENT PER SHARE
The total of a company's declared dividends issued for each ordinary share outstanding is
known as dividend per share (DPS).
Dividend per share = Sum of dividend over a period / ordinary shares outstanding
for the period
In FY 2017 it is showing .90 dividend per share, in FY 2018 and 2019 dividend declared
as almost same as last year but in FY 2020 and 2021 dividend declared nil.
 BVPS
The ratio of a company's common equity divided by the number of shares outstanding is
called book value per share (BVPS). Stock investors primarily utilise BVPS to assess a
company's stock price.
Book value= Total shareholders fund / No of outstanding shares
Book value of the company was at 44.78 in FY 2017, and it constantly increased. 49.27
in FY 2018, 49.95 in FY 2019, 51.07 in FY 2020. But it declined to 46.78 in FY 2021.
 TAX RATE
Tax rate is the rate at which the company paid tax for a particular period. In FY 2017,
2018, 2019, 2020, 2021 the company paid tax respectively at rate of 24.48%, 35.42%,
30.76%, -14.10%, 22.55% of their FY earnings. The tax rates differ from year to year on
the basis of its earnings from different sources and because of changes in tax system.
 DIVIDEND PAYOUT RATIO
The dividend pay-out ratio is the percentage of earnings paid out to shareholders as
dividends, usually stated as a percentage. The dividend pay-out ratio is calculated using
several factors, the most important of which is the company's maturity level
Dividend pay-out ratio= Dividend paid / net income
In FY 2017 it was 53.25 and it declined to 45.91 in FY 2018. Then it slightly declined to
45.45 in FY 2019. But in FY 2020 and 2021 it is showing nil.
 ANALYSIS OF PROFITABILITY RATIOS
 EBIT MARGIN
The EBIT margin is a financial ratio that measures the profitability of a company
calculated without taking into account the effect of interest and taxes. It
is calculated by dividing EBIT (earnings before interest and taxes) by sales
or net income. EBIT margin is also known as operating margin.
The companies EBIT margin was at 5.19 in FY 2017, which increased to 7.65 in
FY2018, again it reaches to 12.23 in FY 2019. Then it declined to 6.35 in FY 2020 and -
84.30 in FY2021 with a huge downfall.
 PAT MARGIN
The net profit margin, which is calculated by dividing net income by net sales, is the
same as the after-tax profit margin.
Pat margin= net income / net sales
The PAT margin was at 7.56% in FY2017 gone up to 8.31% in the FY 2018 and it
slightly declined to 7.34% in the FY 2019. it was increased to 14.96% in the FY 2020.
But it again declined to -79.29 % in the FY2021.
 CASH PROFIT MARGIN

The cash operating margin of EIH Ltd was at 17.83% in FY 2017, and it declined to
15.43% in FY 2018 and it reached to 19.01% in FY2019 and again it slightly increased to
19.19% in FY 2020. But in FY2021 it declined to -36.77%
 RETURN ON ASSET (ROA)
Return on assets (ROA) is a metric that measures how profitable a company's assets are
used. ROA is the most useful metric for comparing similar companies performance.
Return on asset = Net income/assets
The return of asset of the company was at 2.77% in FY2017 and slightly increased to
2.96% in FY2018 then it slightly decreased to 2.94% in FY 2019 and again it increased
by 3.18% in FY2020. BUT again, its decreased to -9.38% in FY 2020.
 RETURN ON EQUITY (ROE)
Return on equity (ROE) is a metric that compares a company's profitability to its
stockholders! equity. If net income and equity are both positive numbers, the return on
equity (ROE) may be calculated for any corporation.
Return on equity = Net income / shareholder’s fund
 In FY2017 it was at 3.77% and it increased in FY2018 was at 3.98%, then it slightly
decreased in FY2019 was at 3.96%, in FY2019 it was increase to 4.26% and it again
decreased FY2020 was at -11.72% So, it was in upward trend.
 RETURN ON CAPITAL EMPLOYED (ROCE)
The Return on capital employed is a financial ratio that assesses a company's profitability
in terms of all its capital.
ROCE=EBIT / capital employed
The ROCE of the company in FY 2017 which was at 5.97%, it slightly decreased to
5.91% in FY 2018 and it gone up in FY 2019 to 8.68% and in FY 2020 at 5.19% and
again it decreased by -10.67% in FY 2021.
 ASSET TURNOVER RATIO
The ratio of total sales or revenue to average assets is known as asset turnover. The asset
turnover ratio is used by investors to compare companies in the same sector or group.
Asset turnover ratio = Total sales/ Average assets
The asset turnover ratio was same in FY 2017, 2018 and 2019 which was at 0.43 but it
slightly declined in FY2020 to 0.41 and it again decrease by 0.13 in FY 2021
LIQUIDITY AND SOLVENCY RATIOS
 CURRENT RATIO
Current ratio= current assets/ current liabilities
The current ratio is a calculation that analyses a company's current assets and liabilities.
The current ratio allows investors to learn more about a company's ability to cover short-
term debt with current assets and compare it to its competitors and. The current ratio has
several flaws, including difficulty comparing it across industrial groupings,
overgeneralization of specific asset and liability balances.
Current ratio= current assets/ current liabilities
The Current ratio of the company has also gone decreased over the year except in FY
2021. In FY 2017 the current ratio was at 1.35 times. It slightly decreased to 1.19 times in
FY 2018 and again it declined to 0.90 times in FY 2019. In FY 2020 again it decreased to
2.27 times but in FY 2021 it increased to 0.96 times.
 QUICK RATIO
Quick ratio assesses a company's ability to meet current obligations without selling
goods. The Quick ratio is a more conservative measure than the current ratio, which
considers all current assets as current liability coverage.
Quick ratio = current assets- inventory-prepaid expenses / current liabilities
The quick ratio of the company was at 1.79 times in FY 2017. It slightly decreased in FY
2018 amounting to 1.43 times and it increased to1.53 times in FY 2019. In FY 2020 it
was at 0.97 times, in FY 2021 again it decreased to 0.94 times.