mahindra and mahindra ltd financial analysis
TRANSCRIPT
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FINANCIAL ANALYSIS OF
MAHINDRA AND MAHINDRA
LIMITEDTeam members:
Ayan Saha
Ankita Rai
Amrit Sidhu
T.V. Shankaran
Nikhil Thomas
Madhav Maheshwari
Anandamayee Agrawal
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Company Formation
Steel trading company in 1945 as Mahindra &
Mohammed Changed its name to Mahindra & Mahindra in
1948
Manufacturing and selling larger MUVs
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Road to Success
1991 :Commander range of vehicles
1996 :Mahindra Ford India Limited was established
2002 : Scorpio, world-class Sports Utility Vehicle
2007 :Logan and Scorpio the highest selling Sedan andSUV
2010 :Mahindra & Mahindra and MitsubishiAgricultural Machinery tie-up to deliver FarmTech
prosperity 2013 :Mahindra and Mahindra has inked partnership
with Snapdeal to sell its two-wheelers on the site
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Shareholding of Promoter and
Promoter GroupCATEGORY
OFSHAREHOLDER
NO. OF SHARE-
HOLDERS
TOTAL NO.OF
SHARES
TOTAL SHAREHOLDING AS A % OF TOTAL NO.OF SHARES(Total number of
shares=615,892,384)
1) Indian
Individuals / Hindu
Undivided Family
22 3,998,552 0.65
Bodies Corporate 8 71,128,386 11.55
Any Others (Specify) 8 79,737,027 12.95
M&M Benefit Trust 1 51,835,214 8.42
ESOP Trust 4 25,870,943 4.2
Employees Welfare
Fund3
2,030,870 0.33
Sub Total 38 154,863,965 25.14
(2) Foreign
Individuals (Non-
Residents Individuals /
Foreign Individuals)
1 651,772 0.11
Sub Total 1 651,772 0.11
Total shareholding of
Promoter andPromoter Group (A)
39 155,515,737 25.25
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Financial Statement Analysis
Horizontal Analysis
Vertical Analysis
Trend Analysis DuPont Analysis
Ratio Analysis
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Horizontal AnalysisBalance SheetParticulars Mar'14 (Rs in crores) Mar'13 (Rs in crores) Change (%)
Liabilities 12 Months 12 MonthsShare Capital 295.16 295.16 0.00
Reserves & Surplus 16496.03 14363.76 14.84
Net Worth 16791.19 14658.92 14.55
Secured Loan 294.1 266.67 10.29
Unsecured Loan 3451.06 2960.4 16.57
TOTAL LIABILITIES 20536.35 17885.99 14.82
Assets
Gross Block 10242.58 8602.96 19.06
(-) Acc. Depreciation 4365.63 3645.1 19.77
Net Block A 5876.95 4957.86 18.54
Capital Work in Progress B 1228.44 863.48 42.27
Investments C 11379.85 11833.46 -3.83
Inventories 2803.63 2419.77 15.86
Sundry Debtors 2509.84 2208.35 13.65
Cash and Bank 2950.39 1781.41 65.62Loans and Advances 4539.55 3389.26 33.94
Total Current Assets 12803.41 9798.79 30.66
Current Liabilities 8678.28 7662.13 13.26
Provisions 2074.02 1905.47 8.85
Total Current Liabilities 10752.3 9567.6 12.38
NET CURRENT ASSETS D 2051.11 231.19 787.20
Misc. Expenses 0 0 0.00TOTAL ASSETS(A+B+C+D+E) 20536.35 17885.99 14.82
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Horizontal AnalysisProfit & LossYear Mar '14 (Rs in crores) Mar '13 (Rs in crores) Change (%)
INCOME:
Gross Sales 43120.18 43412.65 -0.67
Excise Duty 2611.51 2971.49 -12.11Net Sales 40508.5 40411.16 0.24
Other Income 717.99 549.17 30.74
TOTAL INCOME 41226.49 40990.33 0.58
EXPENDITURE:
Manufacturing Expenses 221.35 206.39 7.25
Material Consumed 29614.77 30587.96 -3.18
Personal Expenses 2163.72 1866.45 15.93
Administrative Expenses 3787.45 3071.06 23.33
TOTAL EXPENDITURE 35787.29 35731.86 0.16
Operating Profit 4721.21 4709.3 0.25
EBITDA 5439.2 5258.47 3.44
Depreciation 863.34 710.81 21.46
EBIT 4575.86 4547.66 0.62
Interest 259.22 191.19 35.58
EBT 4316.64 4356.47 -0.91
Taxes 611.08 1094.27 -44.16
Profit and Loss for the Year 3705.56 3262.2 13.59
Non Recurring Items 52.79 90.62 -41.75
REPORTED PAT 3758.35 3352.82 12.10
KEY ITEMS
Equity Dividend 758.21 798.17 -5.01
Equity Dividend (%) 256.88 270.41 -5.00
Shares in Issue (Lakhs) 6158.92 6139.81 0.31EPS - Annualised (Rs) 61.02 54.61 11.74
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Vertical AnalysisBalance SheetParticulars Mar'14 Mar'13
Liabilities
Share Capital 1.437256377 1.650230152
Reserves & Surplus 80.3260073 80.30732434
Net Worth 81.76326368 81.95755449
Secured Loan 1.432094798 1.49094347
Unsecured Loan 16.80464153 16.55150204
TOTAL LIABILITIES 100 100
Assets
Gross Block 49.87536734 48.09887515
(-) Acc. Depreciation 21.25806192 20.37963792
Net Block 28.61730541 27.71923724
Capital Work in Progress 5.98178352 4.827689158
Investments 55.41320634 66.16049769
Inventories 13.65203651 13.52885694
Sundry Debtors 12.22145123 12.34681446
Cash and Bank 14.36667178 9.95980653Loans and Advances 22.10495049 18.94924463
Total Current Assets 62.34511001 54.78472257
Current Liabilities 42.25814227 42.83872461
Provisions 10.09926301 10.65342204
Total Current Liabilities 52.35740528 53.49214665
NET CURRENT ASSETS 9.987704728 1.292575921
Misc. Expenses 0 0TOTAL ASSETS(A+B+C+D+E) 100 100
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Vertical AnalysisProfit & LossYear Mar '14 Mar '13
INCOME:
Gross Sales 104.59 105.90
Excise Duty 6.33 7.24Net Sales 98.26 98.58
Other Income 1.74 1.33
TOTAL INCOME 100.00 100
EXPENDITURE:
Manufacturing Expenses -0.54 -0.47
Material Consumed -71.83 -69.58
Personal Expenses -5.25 -4.25
Selling Expenses 0.00 0Administrative Expenses -9.19 -6.99
Expenses Capitalised 0.00 0
Provisions Made 0.00 0
TOTAL EXPENDITURE -86.81 -81.28
Operating Profit 11.45 10.71
EBITDA 13.19 11.96
Depreciation -2.09 1.62
Other Write-offs 0.00 0.00EBIT 11.10 10.34
Interest 0.63 0.43
EBT 10.47 9.91
Taxes -1.48 2.49
Profit and Loss for the Year -8.99 7.42
Non Recurring Items 0.13 0.21
Other Non Cash Adjustments 0.00 0.00
Other Adjustments 0.00 0.00
REPORTED PAT 9.12 7.63
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Trend AnalysisBalance Sheet of Mahindra and Mahindra ------------------- in Rs. Cr. -------------------
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Sources Of Funds
Total Share Capital 104.3 104.3 104.08 103.77 100Equity Share Capital 104.3 104.3 104.08 103.77 100
Reserves 219.14 190.81 157.77 133.1 100
Networth 214.44 187.2 155.43 131.71 100
Secured Loans 48.81 44.26 66.42 67.59 100
Unsecured Loans 151.51 129.97 121.79 84.02 100
Total Debt 130.03 112.04 110.21 80.58 100
Total Liabilities 191.74 166.99 143.27 117.96 100
Application Of Funds
Gross Block 210.48 176.79 154.17 120.38 100
Less: Accum. Depreciation 172.02 143.63 126.73 107.39 100
Net Block 252.4 212.92 184.07 134.55 100
Capital Work in Progress 89.38 62.83 57.82 56.29 100
Investments 177.86 184.95 161.15 139.5 100
Inventories 235.84 203.55 198.38 142.51 100
Sundry Debtors 199.49 175.53 158.04 100.17 100
Cash and Bank Balance 620.91 374.89 250.1 129.35 100Total Current Assets 282.81 219.35 189.42 122.14 100
Loans and Advances 223.13 166.59 146.75 154.26 100
Fixed Deposits 0 0 0 0 1268.06
Total CA, Loans & Advances 205.69 157.42 136.88 107.75 100
Current Liabilities 227.03 200.44 175.83 136.65 100
Provisions 115.44 106.06 102.17 93.59 100
Total CL & Provisions 191.35 170.27 152.45 122.89 100
Net Current Assets 338.73 38.18 -7.5 -32.65 100
Miscellaneous Expenses 0 0 0 0 4.12Total Assets 191.74 166.99 143.27 117.96 100
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Du Pont Analysis
Particulars Mar'14 Mar'13
Net Profit 3705.56 3262.20
Net Sales 40508.50 40441.16Profit Margin (%) 9.15 8.07
Total Assets 19211.70 16615.65
Asset Turnover 2.11 2.43
Return on Assets (%) 19.29 19.63
Equity 295.16 294.84
Leverage 65.09 56.35
Return on Equity 12.55 11.06
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Ratio AnalysisParticulars Mar'14 Mar'13
Liquidity Measurement Ratios
Current Ratio 1.19 1.02Quick Ratio 0.93 0.77
Receivable Turnover 16.14 18.31
Avg Collection Period 22.31 19.66
Inventory Turnover 14.45 16.71
Profitability Indicator Ratios
Operating Profit Margin (%) 11.45 11.488
Profit Margin Analysis (%) 9.15 8.067Asset Turnover 2.11 2.43
Return On Assets (%) 19.29 19.63
Return On Equity 12.55 11.06
Debt Ratios
Debt-Equity Ratio 0.22 0.22
Liabilities-Equity Ratio 0.22 0.22
Interest Coverage Ratio 17.65 23.79Operating Performance Ratios
Fixed-Asset Turnover 4.03 4.76
Investment Valuation Ratios
Earnings per Share 61.02 54.61
Book value per Share 272.63 238.75
Price/Book Value Ratio 3.60 3.59
Price/Earnings Ratio 16.07 15.69
Dividend Yield (%) 1.26 1.52
Dividend per Share 12.31 13.00
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Ratio Analysis
The company has a current ratio
which is close to the industry
average ; whereas the quick ratio
is very high than the industryaverage.
This indicates that the company
is in a good position to pay its
current liabilities hence ensuring
that operations are notdisrupted.
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2010 2011 2012 2013 2014 Industry
Avg.
Current Ratio
0
0.1
0.2
0.3
0.4
0.5
0.6
0.70.8
0.9
1
2010 2011 2012 2013 2014 Industry
Avg.
Quick Ratio
Liquidity Analysis
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Ratio Analysis
The average inventory holding
period of the company is only
25.25 days as opposed to
industry average of 27.56 days.This signifies better inventory
management as it results in
lesser storage costs.
Liquidity Analysis Contd.
RTO of the company is very high
in comparison with the industry
indicating that receivables are
rapidly being converted in to
cash.
0
24
6
8
10
12
14
16
18
20
2010 2011 2012 2013 2014 Industry
Avg.
Inventory Turnover
0
5
10
15
20
25
2010 2011 2012 2013 2014 Industry
Avg.
Account Receivable Turnover
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Ratio Analysis
Total Asset Turnover is well above the
industry average due to Mahindras
effective management of inventories
and receivables among other factors
Profitability Analysis
Profit margin is not on par with the
industry margin. There is a
considerable difference( roughly 3%).
There has not been much difference in
the net sales of 2013 and 2014. This
indicates that Mahindra must take an
aggressive approach towards sales.
0
0.5
1
1.5
2
2.5
2010 2011 2012 2013 2014 Industry
Avg.
Total Assets Turnover
0
2
4
6
8
10
12
14
2010 2011 2012 2013 2014 Industry Avg.
Profit Margin
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Ratio Analysis
Debt ratio is well below the
industrial average, indicating
the company is not taking
too many risks and hence is
following a laid backapproach. This reflection can
be seen in the low profit
margin.
Interest cover is a little less
than industry average and
the reason can be attributed
to the unsecured loans taken
by the company.
Solvency Analysis
0
0.1
0.2
0.3
0.4
0.5
0.6
2010 2011 2012 2013 2014 Industry
Avg.
Debt to Equity ratio
0
10
20
30
40
50
60
2010 2011 2012 2013 2014 IndustryAvg.
Interest Coverage
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Ratio Analysis
The ratio is a little below the
industry average indicating
that the growth prospects are
weak. The decreasing profitmargin trend over last 5 years
supports this value.
Capital Market Standing
In spite of following a down
trend in profits, the company
has managed to give out
dividend yield that is greater
than industry value. This might
encourage the shareholders to
invest more money in the
companysstock.
14.5
1515.5
16
16.5
17
17.5
18
2013 2014 Industry Avg.
Price to Earnings ratio
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2013 2014 Industry Avg.
Dividend Yield
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Competitor Analysis Four wheeler automobile industry:
o M&M has witnessed a decline of 5.3 % in sales over the financial years 13 and 14
Small segment two wheeler automobile industry :
WAY TO GO ?
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Recommendations
1. Dividends given is well above the industry average. This can be compromised and
profits can be re-invested in to the business instead .
2. Bonds can be issued as they come at a much cheaper interest rate. Brand name
of Mahindra will convince buyers to settle for a low interest rate.
3. Mahindra must take an aggressive approach towards sales by increasing
advertising costs of its two-wheelers( which is very less currently) and promotionof upcoming launches .
4. New two wheeler models can be launched targeting the Mid-segment .
5. Exports can be increased by leveraging the fact that economic recovery is gaining
strength across the globe and the value of Indian rupee has picked up.
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Future Plans
Change from frugal engineering methods to quality initiative
Increasing competitionmarket shares for Utility Vehicles fell from 47% to41%
Launching soft-roaders to recoup market share to meet the emergingchallenge from rivals who base performance on quality andstandardization
Customer satisfaction and good service to customer is current salesstrategy
R&D is given prime importance with quality review each month
Tie-ups within Pininfarnia (Design and Engineering Firms) and setting upinternational technical centers that support Indian product development
by providing world class technology CRUSADE - First time right, Every time right and delightful customer
experience
Sales wars are not fought in show rooms, but in R&D.
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References
http://csimarket.com/Industry/industry_Mana
gementEffectiveness.php?ind=405
http://www.moneycontrol.com/financials/ma
hindramahindra/ratios/MM#MM
http://pages.stern.nyu.edu/~adamodar/New_
Home_Page/datafile/pedata.html
http://pages.stern.nyu.edu/~adamodar/New_
Home_Page/datafile/divfund.htm
http://csimarket.com/Industry/industry_ManagementEffectiveness.php?ind=405http://csimarket.com/Industry/industry_ManagementEffectiveness.php?ind=405http://www.moneycontrol.com/financials/mahindramahindra/ratios/MMhttp://www.moneycontrol.com/financials/mahindramahindra/ratios/MMhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.htmlhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.htmlhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/divfund.htmhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/divfund.htmhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/divfund.htmhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/divfund.htmhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.htmlhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.htmlhttp://www.moneycontrol.com/financials/mahindramahindra/ratios/MMhttp://www.moneycontrol.com/financials/mahindramahindra/ratios/MMhttp://csimarket.com/Industry/industry_ManagementEffectiveness.php?ind=405http://csimarket.com/Industry/industry_ManagementEffectiveness.php?ind=405