ANALYSIS OF

CAPITAL
STRUCTURE
ALISHA GILHOTRA : 18BSP1472
ADITI AGRAWAL : 18BSP1448
ABHISHEK KHURANA : 18BSP1438
AKASH GOYAL : 18BSP1466
ADITYA AGGRAWAL : 18BSP1450
COMPANIES

 HERO MOTOR CORP  TVS MOTORS

HERO MOTOR CORP.

Shareholder’s Funds Borrowed Funds

Equity Capital = 39.94 Debt = 225

Preference Shares = nil Secured Loan = 10.21

Retained Earnings = 11931.52 Unsecured loan = 214.79

ANALYSIS

 EPS of company = Rs 186.4 ( last year=177.6)

 Price Equity ration = 17.7 times
 Cost of Equity (ke) = 1/ P/E ratio
=1/17.7*100
=5.64%
 Value of firm(V) = NIATEH/Ke
= 3697.36/5.64
= 655.56cr
 WACC = 0.162
RATIOS

 Current Ratio : 0.68

 Quick Ratio : 0.68
 Debt to Equity Ratio : 0.02
 Asset Turnover Ratio : 2.89
 Return on net worth : 36.04%
 Gross Profit margin : 16.29%
 Net profit margin : 11.23%
 Operating Profit margin : 18.02%
TVS MOTOR COMPANY

Shareholder’s Funds Borrowed Funds

Equity Capital = 47.51 Debt = 1037

Preference Shares = nil Secured loan= 183.40

Retained Earnings = 2629.69 Unsecured loan = 853.57

ANALYSIS

 EPS of company = Rs 14.0 ( last year=10.7)

 Price Equity ratio = 36.1 times
 Cost of Equity (ke) = 1/ P/E ratio
=1/36.1*100
=2.77%
 Cost of Debt (kd) = 23.83%
 Value of firm(V) = NIATEH/Ke
=662.59/2.77
= 239.20cr
 WACC = 0.2017
RATIOS

 Current Ratio : 0.66

 Quick Ratio : 0.5
 Debt to Equity Ratio : 0.36
 Long Term Debt Equity Ratio: 0.11
 Return on net worth : 23.87%
 Gross Profit margin : 5.22%
 Net profit margin : 4.37%
 Operating Profit margin : 7.46%
FINDINGS/OBSERVATIONS

 Hero Motor Corp is better than Tvs.

 Hero Motor Corp has low debt, hence low interest.
 High profit margin
 Higher EPS and EBIT
 High market share of about 38% as compared to 9% of TVS Motors
 Low risk hence more secured.
 Also, TVS motor Corp. has high growth prospects but less operating
margin so it should work towards increasing its profit margin.