PRESENTED BY:SAURABH JAIN FMS, GOVT.

ENGINEERING COLLEGE, AJMER

analysis

To analyse the financial performance of Shree Cement Ltd. through ratio and its comparison with the other key cement players

Ticker Country Major Industry Sub Industry: Employees: BSE code NSE Symbol Market Cap:

: : : : : : : :

SHR INDIA Construction Cement Producers 1,982 500287 SHREECEM 41,405,783,774

Golden Peacock Award

National Energy Conservation Award

Greentech Award , 2009

Excellence in water management

Multiple Brand Strategy Efficient team Exceptional execution

Excessive dependance Marketing mix not proper

Location Advantage Initiatives

Government Policy Threats of new entrants

Earning per share
180 160 140 120 100 Rs. 80 60 40 20 0 165.91

Mar '09, 6.02 Mar '08, 12.52 Mar '07, 13.46

Dividend Pay- out ratio

Mar '05, 54.66

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

74.74 54.81 8.34 5.28 Mar '06, 107.92

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09 ye a rs

Current ratio
3 2.5 ratio 2 1.5 1 0.5 0 1 2 years 3 0.88 years 2.71 2.28

Inventory turnover raio
1.135443159 1.2 1 0.8 ratio 0.6 0.4 0.2 0 0.794174001 0.518410616

1 years

O perating Profit R atio 40 35 30 25 20 15 10 5 0 26.87 28.69 34.14

OPR ( In % )

O perating Profit R atio

2005-2006

2006-2007 Y ears

2007-2008

R e t u r n o n N e t W o r t h ( in % ) 40 35 30 25 RONW ( In % ) 20 15 10 5 0 3 6 .5 2 2 4 .0 8 R e t u rn o n N e t W o rt h ( in % ) 9 .6 5

N e t P ro fit R a t io ( In % ) 1 3 .4 3 14 12 10 8 R a ti o i n % 6 4 2 0 9

2 0 0 5 - 2 0 02 60 0 5 - 2 0 0 7 0 5 - 2 0 0 8 20 Year

2007 Ye a r

2008

An increase in EPS is pointing towards favourable conditions to invest in this company.

A decrease in the dividend pay out ratio suggests that the company is distributing a lower portion of its earnings in the form of dividends and so will be financially stronger and is likely to expand and grow at a faster rate. A high current ratio in 2008 (2.28) is good from the creditor’s point of view but extremely high current ratio is not good from the management point of view. In such a case (1) more funds of the firm would be employed in unproductive uses which don not fetch any return (2) it is an indicator of a firm’s poor investment policy A high inventory turnover/stock velocity indicates efficient management of inventory because more frequently the stocks are sold, the lesser amount of money is required to finance the inventory.

The higher value of debtors turnover shows that the Shree is becoming more efficient in the management of debtors The operating profit ratio of the Shree Cement Ltd. is continuously increasing in the successive years and thus we can say that this company has been able not only to increase its sales but also been able to cut down its operating expenses

• .

A high return on equity indicates that the Shree is spending wisely and is likely profitable.High returns on equity lead to higher stock prices. The Net Profit ratio has increased in magnitude by 4.43 from 2007 to 2008. This ratio not only reveals the recovery of the cost and expenses from the revenue of the period but also leave a margin of reasonable compensation to the owners for providing capital at their risk.

Book value per share has increased from 130.48 in 2007 to 193.13 in 2008 which is indicative of higher resources of the company. This company is a potential bonus candidate in the long run

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