Description
PROJECT ON MRF FINANCIAL REPORT
FINANCIAL ANALYSIS REPORT 2009-2010
TEAM Abhishek KumarAbhishek SaxenaKushal PrakashNihar RoutrayShankar Narayan-
BLP038 BLP012 BLP061 BLP022 BLP039
An enterprise that started as a toy balloon maker in 1946 in South India quickly grew to become one of India's biggest and respected companies. Renowned for product superiority and innovation, MRF continues to be the leading tyre-maker in India
Tyre Industry Structure in INDIA
? Valued at approximately Rs.25,000 crore per annum. ? With Rs.3000 crore estimated to be the value of exports. • 39 tyre companies. • 60 factories located all over India. • 10 major tyre companies account for 88% of the tyre business in the country.
Market Distribution of Tyre Manufactured
30% OEM
30% 55% 15%
55% Replacement Market
15% Export
About Indian Tyre Industry
Facts
• • • • Second largest two wheeler manufacturer in the world. Largest tractor and three wheeler manufacturer in the world. Fourth largest commercial vehicle market in the world. Eleven largest passenger car market in the world.
Trends
> Growth of exports of 22.30% FY 2009-10 > Commercial vehicles segment grew at 4.07% > Light commercial vehicles grew at 12.29%
Growth Potential
• Can become world's third largest automobile market in 2030. • By 2016, Automotive sector can double its percentage contribution to GDP from current level of 5% (US $50billion) to 10% (US $180billion)
SWOT analysis of Tyre Industry in India
Strengths
• Established Brand names • Exclusive distribution network • Good R&D
Weaknesses
• Cost Pressure • Pricing pressure • High capital investment
Opportunities
• Growing Economy. • Govt emphasis on infrastructure development. • Steady increase in radial tyres for MHCV, LCV.
Threats
• Continuous increase in price of natural rubber.
• Cheap Import of tyres. • Cynical nature of automobile industry. • Ban on overloading (short term negative).
DIRECTOR’S REPORT
• Landmark achievement of sales turnover of Rs 8000 crores • 31% sales growth > Leveraged by growth in automobile sector > Low interest rates • Twice interim dividend of Rs 3/share in the month of Sept. and Dec . were declared by board of director. • Further board recommended final dividend of Rs 19/share and a special dividend of Rs 25/share on Paid-up-Equity share capital . • An amount of Rs 329.26 crores was recommended to be transferred to General Reserve after tax provision and proposed dividend. ? Concern for uncertain rise of material price and price sensitive market. ? Imbalance in duty structure of import. ? 20% duty charges on Raw material ? 8 – 10 % duty charges on finished tyres from other countries especially China.
Financial Results
High Sales Growth of 31 % Growth due to: • Turnaround in Automobile market • Low Interest rates • General recovery of business
COMPARATIVE ANALYSIS
LIQUIDITY AND TURNOVER RATIOS
CURRENT RATIO
1.16 1.2 1.08 0.98 1 0.79 0.8 0.6 0.6 0.67 0.9 0.99 1.15
0.4
0.2
0 2010 2009 MRF Apollo JK 2008
QUICK RATIO
1 0.9 0.78 0.8 0.7 0.6 0.5 0.4 0.91
0.83 0.72
0.74 0.73 0.62
0.71
0.72
0.3
0.2 0.1 0 2010 2009 MRF Apollo JK 2008
DEBTORS TURNOVER RATIO
44.89 45 40 33.75 35
30 MRF 25 20.69 20 Apollo JK
15
10.73 7.91
11.24
9.54 8.71
10
6.12
5
0 2010 2009 2008
AVERAGE COLLECTION PERIOD
58.82
60.00 50.00 45.51 41.33
40.00
33.55
37.74 32.03 MRF Apollo
30.00
JK
20.00 10.67 10.00 8.02
17.04
0.00 2010 2009 2008
INVENTORY TURNOVER RATIO
16 14.03
14
11.77 12 10.47 10 7.68 8 6.09 5.58 6 9.11 10.17 8.72
MRF Apollo JK
4
2
0 2010 2009 2008
INVENTORY HOLDING PERIOD
70.00 59.11 64.52
60.00
50.00
46.88 39.52 41.28 35.40 30.59 MRF Apollo JK 25.66
40.00
34.38
30.00
20.00
10.00
0.00 2010 2009 2008
CAPITAL STRUCTURE RATIOS
DEBT EQUITY RATIO
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2010 2009 MRF Apollo JK 2008 0.51 0.38 0.22 0.56 0.86 0.66 1.24 1.71 1.91
DEBT ASSETS RATIO
0.7 0.65 0.6 0.55
0.5 0.39 0.4 0.36 0.33
0.46
0.27 0.3 0.17 0.2
0.1
0 0 2010 2009 MRF Apollo JK 2008
INTEREST COVERAGE RATIO
10 9 8 7 6 5 4 3 2 1 0 2010 2009 2008 9.22 8.8
7.51
6.69
MRF Apollo 4.12 3.67 4.17 JK
2.11 1.55
FIXED CHARGES COVERAGE RATIO
14 13.35
12 10.31 10
8
7.37
MRF Apollo JK
6.68
6.28
6
4
3.51 2.99 1.65 3.05
2
0 2010 2009 2008
Profit Margin Ratios
Gross Profit Margin Ratio (%)
16 14.5 14 12.5 12 12 11 10.1 10 8.4 8 8 MRF Apollo JK Tyres 6 12.6
4 2.3 2
0 2010 2009 2008
Operating Profit Margin Ratio (%)
14 13.1
12 10.2 10
8
7.5
7.8
7.9 MRF Apollo
6
5.6 4.9
JK Tyres 5.4
4 2 2
0
2010 2009 2008
Net Profit Margin Ratio (%)
8 8
7
6 4.9
5.7
5
4.8
4
Profit Margin Ratios
4.4 2.8 2.8 2.5
MRF Apollo JK Tyres
3
2
1
0.38
0 2010 2009 2008
Return on Investment Ratios
Return On Assets (%)
25
21.6 21.9 20.5 20 18.2
15
Profit Margin Ratios
9.7 10.3 10.4 6.7
MRF Apollo JK Tyres
10
5 2
0 2010 2009 2008
Return On equity /Net worth (%)
30 26.4 25 20.9 20 19.1 17.8 24
15
Profit Margin Ratios
12.4 13 8
MRF Apollo JK Tyres
10
5
3.33
0
2010
2009
2008
Return on Capital Employed (%)
30 28.9 27 25.4 25 22.6 23.7
20
15
Profit Margin Ratios
13.9 12.9 6.8
15.8
MRF Apollo JK Tyres
10
5
0 2010 2009 2008
Valuation Ratios
Earnings Per Share - EPS (Rs)
900
834.63
800
700 604.37 600
500
Profit Margin Ratios
334.74
MRF Apollo JK Tyres
400
300
200
100 8.23 0 2010
39.81
2.15 2009 4.64 4.49 2008
21.67
Price to Earnings (P/E) Ratio
8.7 9
8
7
6
5
Profit Margin Ratios
3.8
2.5
2010
4
3
2
1
0 J K Tyres Apollo MRF
Dividend Per share (Rs)
50 50
45
40
35
30
Valuation Ratios
25 20
MRF Apollo JK Tyres
25
20
15
10 3.5 0.75 0 2010 2009 2008 0.45 2.7 0.5 2.7
5
Dividend yield(%)
3 2.6
2.5
2
Valuation Ratios
1.5 1.5 1 0.7
2010
0.5
0 JK Tyres Apollo MRF
Way Ahead…
• The automobile industry has picked up really fast this year hence boosting tyre sales. • Chinese tyres have lower import duty(8-10%) thus are more in demand whereas raw material import duties(20%) are high thus having higher cost. • High reserve surplus to cover fluctuation in raw material cost(70 % of total cost). Natural Rubber prices increased from Rs.132 /kg to Rs 180 /kg. • MRF has invested heavily in R&D which in turn is providing higher returns . • MRF has also come up with a new factory in Andhra Pradesh which is highly automated and technologically advanced.
Cont…
Market price of share very high. Rs 9439 per share in Sept 2010 with 544616 shares traded on NSE.
Recommendations 1. Stock split up as per share market price is very high. 2. This will increase the equity base also.
QnA ?
Thank you
doc_729410284.pptx
PROJECT ON MRF FINANCIAL REPORT
FINANCIAL ANALYSIS REPORT 2009-2010
TEAM Abhishek KumarAbhishek SaxenaKushal PrakashNihar RoutrayShankar Narayan-
BLP038 BLP012 BLP061 BLP022 BLP039
An enterprise that started as a toy balloon maker in 1946 in South India quickly grew to become one of India's biggest and respected companies. Renowned for product superiority and innovation, MRF continues to be the leading tyre-maker in India
Tyre Industry Structure in INDIA
? Valued at approximately Rs.25,000 crore per annum. ? With Rs.3000 crore estimated to be the value of exports. • 39 tyre companies. • 60 factories located all over India. • 10 major tyre companies account for 88% of the tyre business in the country.
Market Distribution of Tyre Manufactured
30% OEM
30% 55% 15%
55% Replacement Market
15% Export
About Indian Tyre Industry
Facts
• • • • Second largest two wheeler manufacturer in the world. Largest tractor and three wheeler manufacturer in the world. Fourth largest commercial vehicle market in the world. Eleven largest passenger car market in the world.
Trends
> Growth of exports of 22.30% FY 2009-10 > Commercial vehicles segment grew at 4.07% > Light commercial vehicles grew at 12.29%
Growth Potential
• Can become world's third largest automobile market in 2030. • By 2016, Automotive sector can double its percentage contribution to GDP from current level of 5% (US $50billion) to 10% (US $180billion)
SWOT analysis of Tyre Industry in India
Strengths
• Established Brand names • Exclusive distribution network • Good R&D
Weaknesses
• Cost Pressure • Pricing pressure • High capital investment
Opportunities
• Growing Economy. • Govt emphasis on infrastructure development. • Steady increase in radial tyres for MHCV, LCV.
Threats
• Continuous increase in price of natural rubber.
• Cheap Import of tyres. • Cynical nature of automobile industry. • Ban on overloading (short term negative).
DIRECTOR’S REPORT
• Landmark achievement of sales turnover of Rs 8000 crores • 31% sales growth > Leveraged by growth in automobile sector > Low interest rates • Twice interim dividend of Rs 3/share in the month of Sept. and Dec . were declared by board of director. • Further board recommended final dividend of Rs 19/share and a special dividend of Rs 25/share on Paid-up-Equity share capital . • An amount of Rs 329.26 crores was recommended to be transferred to General Reserve after tax provision and proposed dividend. ? Concern for uncertain rise of material price and price sensitive market. ? Imbalance in duty structure of import. ? 20% duty charges on Raw material ? 8 – 10 % duty charges on finished tyres from other countries especially China.
Financial Results
High Sales Growth of 31 % Growth due to: • Turnaround in Automobile market • Low Interest rates • General recovery of business
COMPARATIVE ANALYSIS
LIQUIDITY AND TURNOVER RATIOS
CURRENT RATIO
1.16 1.2 1.08 0.98 1 0.79 0.8 0.6 0.6 0.67 0.9 0.99 1.15
0.4
0.2
0 2010 2009 MRF Apollo JK 2008
QUICK RATIO
1 0.9 0.78 0.8 0.7 0.6 0.5 0.4 0.91
0.83 0.72
0.74 0.73 0.62
0.71
0.72
0.3
0.2 0.1 0 2010 2009 MRF Apollo JK 2008
DEBTORS TURNOVER RATIO
44.89 45 40 33.75 35
30 MRF 25 20.69 20 Apollo JK
15
10.73 7.91
11.24
9.54 8.71
10
6.12
5
0 2010 2009 2008
AVERAGE COLLECTION PERIOD
58.82
60.00 50.00 45.51 41.33
40.00
33.55
37.74 32.03 MRF Apollo
30.00
JK
20.00 10.67 10.00 8.02
17.04
0.00 2010 2009 2008
INVENTORY TURNOVER RATIO
16 14.03
14
11.77 12 10.47 10 7.68 8 6.09 5.58 6 9.11 10.17 8.72
MRF Apollo JK
4
2
0 2010 2009 2008
INVENTORY HOLDING PERIOD
70.00 59.11 64.52
60.00
50.00
46.88 39.52 41.28 35.40 30.59 MRF Apollo JK 25.66
40.00
34.38
30.00
20.00
10.00
0.00 2010 2009 2008
CAPITAL STRUCTURE RATIOS
DEBT EQUITY RATIO
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2010 2009 MRF Apollo JK 2008 0.51 0.38 0.22 0.56 0.86 0.66 1.24 1.71 1.91
DEBT ASSETS RATIO
0.7 0.65 0.6 0.55
0.5 0.39 0.4 0.36 0.33
0.46
0.27 0.3 0.17 0.2
0.1
0 0 2010 2009 MRF Apollo JK 2008
INTEREST COVERAGE RATIO
10 9 8 7 6 5 4 3 2 1 0 2010 2009 2008 9.22 8.8
7.51
6.69
MRF Apollo 4.12 3.67 4.17 JK
2.11 1.55
FIXED CHARGES COVERAGE RATIO
14 13.35
12 10.31 10
8
7.37
MRF Apollo JK
6.68
6.28
6
4
3.51 2.99 1.65 3.05
2
0 2010 2009 2008
Profit Margin Ratios
Gross Profit Margin Ratio (%)
16 14.5 14 12.5 12 12 11 10.1 10 8.4 8 8 MRF Apollo JK Tyres 6 12.6
4 2.3 2
0 2010 2009 2008
Operating Profit Margin Ratio (%)
14 13.1
12 10.2 10
8
7.5
7.8
7.9 MRF Apollo
6
5.6 4.9
JK Tyres 5.4
4 2 2
0
2010 2009 2008
Net Profit Margin Ratio (%)
8 8
7
6 4.9
5.7
5
4.8
4
Profit Margin Ratios
4.4 2.8 2.8 2.5
MRF Apollo JK Tyres
3
2
1
0.38
0 2010 2009 2008
Return on Investment Ratios
Return On Assets (%)
25
21.6 21.9 20.5 20 18.2
15
Profit Margin Ratios
9.7 10.3 10.4 6.7
MRF Apollo JK Tyres
10
5 2
0 2010 2009 2008
Return On equity /Net worth (%)
30 26.4 25 20.9 20 19.1 17.8 24
15
Profit Margin Ratios
12.4 13 8
MRF Apollo JK Tyres
10
5
3.33
0
2010
2009
2008
Return on Capital Employed (%)
30 28.9 27 25.4 25 22.6 23.7
20
15
Profit Margin Ratios
13.9 12.9 6.8
15.8
MRF Apollo JK Tyres
10
5
0 2010 2009 2008
Valuation Ratios
Earnings Per Share - EPS (Rs)
900
834.63
800
700 604.37 600
500
Profit Margin Ratios
334.74
MRF Apollo JK Tyres
400
300
200
100 8.23 0 2010
39.81
2.15 2009 4.64 4.49 2008
21.67
Price to Earnings (P/E) Ratio
8.7 9
8
7
6
5
Profit Margin Ratios
3.8
2.5
2010
4
3
2
1
0 J K Tyres Apollo MRF
Dividend Per share (Rs)
50 50
45
40
35
30
Valuation Ratios
25 20
MRF Apollo JK Tyres
25
20
15
10 3.5 0.75 0 2010 2009 2008 0.45 2.7 0.5 2.7
5
Dividend yield(%)
3 2.6
2.5
2
Valuation Ratios
1.5 1.5 1 0.7
2010
0.5
0 JK Tyres Apollo MRF
Way Ahead…
• The automobile industry has picked up really fast this year hence boosting tyre sales. • Chinese tyres have lower import duty(8-10%) thus are more in demand whereas raw material import duties(20%) are high thus having higher cost. • High reserve surplus to cover fluctuation in raw material cost(70 % of total cost). Natural Rubber prices increased from Rs.132 /kg to Rs 180 /kg. • MRF has invested heavily in R&D which in turn is providing higher returns . • MRF has also come up with a new factory in Andhra Pradesh which is highly automated and technologically advanced.
Cont…
Market price of share very high. Rs 9439 per share in Sept 2010 with 544616 shares traded on NSE.
Recommendations 1. Stock split up as per share market price is very high. 2. This will increase the equity base also.
QnA ?
Thank you
doc_729410284.pptx