Course Title: Financial Accounting

Course Instructor: Dr. Veerma puri

Continuous Evaluation No. 2

Continuous Evaluation Title: Assignment

(Eg. Assignment/Case Analysis/Project/Poster Presentation/Case Study, etc)

Date of Allotment: 24 September 2022 Date of Submission: 7 September 2022

Type of Assignment: Individual

(Individual/Group)
Student PRN Number: 22021241111
(Describe student role in the assignment)
Declaration:
I declare that this continuous evaluation component is my/our original work. I/we
have not copied from any source or any other students work. We have acknowledged
the source, if any content is used in completion of this continuous evaluation
component. I/we are responsible for any discrepancies/unfair means content/copied
material presented in the assignment/case analysis.

Note: Students are not allowed to disclose their identity in the assignment/case
analysis/project. Failing which lead to the unfair means practice and necessary action
will be initiated.


 ANALYSIS
 Company has been maintaining healthy ROCE of 24.06% over the past 3
years.
 Company is virtually debt free.
 Company has a healthy Interest coverage ratio of 207.06.
 The Company has been maintaining an effective average operating margins
of 25.33% in the last 5 years.
 The company has an efficient Cash Conversion Cycle of -56.43 days.
 The company has a good cash flow management; CFO/PAT stands at 

Limitations

 The company has shown a poor profit growth of -8.26% for the Past 3 years.
 The company has shown a poor revenue growth of 1.11% for the Past 3
years.
 The company is trading at a high PE of 50.37.
 The company is trading at a high EV/EBITDA of 31.20.
EICHER MOTORS
The Indian Auto Industry comes in the top 5 largest auto industries of the world. India
is also a prominent auto exporter and has strong export growth expectations for the
near future. The support from the government is providing the auto companies with a
boost needed in their development. But will it sustain?
We can look into more details and dig a little deeper into the analysis of the stock of
this sector. Let’s look at how Eicher Motors is performing and if it is the right time to
buy the stock of Eicher Motors with detailed analysis.

 The mainstream of revenue for Auto Sector is their sales, Eicher Motors has
reported decent sales growth of 17.45 % and in the latest quarter sales was
Rs 3,247.94 Cr. To judge whether the company’s inventory is being sold or
not and the sales picture is true, inventory turnover ratio plays a major role,
which is 12.21 times for Eicher Motors . It is managing its inventory poorly .
 
 The company reported Profit growth of 19.29 % over the year, where the
latest year profit is Rs 1,586.22 Cr compared to the previous year of
Rs 1,329.70 Cr. The new permits by governments and increasing demand will
lead to an increase in profits in the coming year.
 
 The operating profit of the company in the latest quarter is Rs 788.21 Cr. It
helps in measuring the company’s operating performance which is used to
make financing decisions.
 
 Eicher Motors has a average ROE of 15.57 %. The ROE is an important
financial parameter because Auto companies work with high equity
investments. Also, they have to take huge debt to incur the research and
manufacturing work so their Debt to Equity ratio should be evaluated. Eicher
Motors has a low Debt to Equity ratio of 0.00.
 
 Eicher Motors pays a dividend of 21 Rs per share. It tells us that a
company likes to share profits with its shareholders. The dividend yield
is low at 0.60 %.
 
 The share of promoter in the company is low at 49.21 %, where the pledging
is 0 %.
 
 What the market is willing to pay for the company for its earnings can be
determined by PE multiple. Current PE of Eicher Motors is 50.37 compared to
the 5 year average PE of 37.41 
LAST 3 YEARS
 POSITIVE Annual Revenue rose 17.06% in the last year. Its sector's
average revenue growth for the last fiscal year was 18.38%.
 POSITIVE Quarterly Revenue rose 72.08% YoY. Its sector's average
revenue growth YoY for the quarter was 29.46%.
 POSITIVE Annual Net Profit rose 24.48% in the last year. Its sector's
average net profit growth for the last fiscal year was 107.57%.
 POSITIVE Quarterly Net profit rose 157.52% YoY. Its sector's average net
profit growth YoY for the quarter was 1,061.54%.
 POSITIVE Stock Price outperformed its sector by 0.3% in the past year.
 NEGATIVE Price to Earning Ratio is 46.66, higher than its sector PE
ratio of 46.46.
 POSITIVE Debt to Equity Ratio is less than one and healthy. This implies
that its assets are financed mainly through equity.
 NEUTRAL Return on Equity(ROE) for the last financial year was in the
normal range of 10% to 20%.
 POSITIVE Mutual Fund Holding increased by 0.37% in the last quarter.
 NEUTRAL Promoter Share Holding stayed the same in the most recent
quarter at 49.21%.
 POSITIVE Interest Coverage Ratio is higher than 1.5. This means that it
is able to meet its interest payments comfortably with its earnings (EBIT).
 POSITIVE Promoter Pledges are zero.