FIN-302

Assignment-3
Title: Basic Financial Management

Name: Amandeep Singh

Reg.no:12014541
Roll NO: RQ2018A04
Date of allotment: 7 APRIL, 2022
Date of submission: 21 APRIL, 2022
Faculty member: Dr. Anil Kumar
COMPANY NAME : ASHOK LEYLAND
 Introduction - ASHOK LEYLAND

Ashok Leyland, flagship of the Hinduja group, is the 2nd largest manufacturer of commercial
vehicles in India, the 4th largest manufacturer of buses in the world, and 19th largest
manufacturers of trucks. Headquartered in Chennai, 9 manufacturing plants gives an
international footprint – 7 in India, a bus manufacturing facility in Ras Al Khaimah (UAE), one
at Leeds, United Kingdom and a joint venture with the Alteams Group for the manufacture of
high-press die-casting extruded aluminum components for the automotive and
telecommunications sectors, Ashok Leyland has a well-diversified portfolio across the
automobile industry. Ashok Leyland has recently been ranked as 34th best brand in India.

Vision and Mission

Through authentic relationships, we are building better, stronger and more sustainable communities.
People, Planet and Profit for all stakeholders especially our customers is at the core of Ashok Leyland
which resonates with our Philosophy of ‘Aapki Jeet, Hamari Jeet’.

Director

Director Name Designation

GOPAL MAHADEVAN Wholetime Director

MANISHA GIROTRA Director

JOSE MARIA ALAPONT Director

SANJAY KHATAU ASHER Director

CANAKAPALLI BHAKTAVATASALA RAO Director

ANDREW CHARLES PALMER Additional Director

JEAN BRUNOL Director

SAUGATA GUPTA Director

DHEERAJ GOPICHAND HINDUJA Director

ANDREAS HUBERTUS BIAGOSCH Director

 PEER COMAPNAY - Eicher Motors

Introduction

Eicher Motors was incorporated in 1982, is engaged in manufacturing of commercial vehicles,

motorcycles and engineering components. In 1986, the company introduced its first product 'Canter'. It
is one of the leading manufacturers of commercial vehicle. t is one of the leading manufacturers of
commercial vehicle. It has manufacturing facilities located in Madhya Pradesh, Tamil Nadu,
Maharashtra, and Haryana.

Products-

Motors – It manufactures several kinds of commercial vehicles.Its 50–50 joint venture with the Volvo
group, VE Commercial Vehicles Limited, designs, manufactures and markets reliable, fuel–efficient
commercial vehicles of high quality and modern technology, engineering components and provides
engineering design solutions. Motorcycles– It manufactures bullet motorcycles Royal Enfield. It
manufactures six different models ranging from 300cc to 600cc. The manufacturing plant has installed
capacity of 39,000 motorcycles per annum.

Engineering Components– The company manufactures complete range of automotive gears. The range
of gears includes Spiral bevels (Crown wheel and pinions), Straight bevels and Transmission gears.

VISION AND MISION -

ECV aims to continuously improve transportation efficiency in India and developing markets, thereby
reducing logistics costs for goods and people – leading to higher enablement of specialization in
manufacturing, agriculture and services, thereby increasing the nation's economic activity and
productivity.

Director-

Name Designation

Inder Mohan Singh Independent Director

Kaleeswaran Arunachalam Chief Financial Officer

Manhar Kapoor Co. Secretary & Compl. Officer

Manvi Sinha Independent Director

S Sandilya Chairman

Siddhartha Lal Managing Director

Vinod Aggarwal Non Executive Director

Vinod K Dasari WholeTime Director & CEO

 The calculation of EPS, DPS and Market Price

ASHOK LEYLAND-

EPS DPS MARKET

PRICE
YEAR ( RS) ( RS) ( RS)

2021 -1.07 0.60 2.18

2020 0.82 0.50 0.72

2019 6.76 3.10 0.92

2018 5.87 2.43 1.61

2017 4.24 1.56 1.19

Eicher Motors-

EPS DPS MARKET

PRICE
YEAR ( RS) ( RS) ( RS)

2021 48.68 17.00 8.26

2020 697.50 125.00 3.94

2019 753.37 125.00 5.72

2018 629.07 110.00 8.62

2017 573.75 100.00 9.88

Analysis of Payout, Dividend yield and Earning yield

Payout Dividend yield Earning yield

YEAR ASHOK EICHER ASHOK EICHER ASHOK EICHER

2021 0.00 0.00 0.90 3.60 -0.01 0.02

2020 530.32 35.84 0.77 3.40 0.02 0.05

2019 43.35 14.59 0.93 2.22 0.07 0.04

2018 31.98 18.51 0.91 1.15 0.04 0.02

2017 26.60 0.00 0.93 0.92 0.05 0.02

 Ashok Leyland's dividend payout ratio for the months ended in Dec. 2021 was 0.00.
 The historical rank and industry rank for Ashok Leyland's Dividend Payout Ratio or its related
term are showing as below:
 During the past 13 years, the highest Dividend Payout Ratio of Ashok Leyland was 3.13.
The lowest was 0.00. And the median was 0.34.
 As of today (2022-04-21), the Dividend Yield % of Ashok Leyland is 0.47%.
 During the past 13 years, the highest Trailing Annual Dividend Yield of Ashok Leyland
was 13.33%. The lowest was 0.37%. And the median was 1.45%.
 Ashok Leyland's Dividends per Share for the months ended in Dec. 2021 was ₹0.00.
 During the past 12 months, Ashok Leyland's average Dividends Per Share Growth
Rate was 20.00% per year. During the past 3 years, the average Dividends Per
Share Growth Rate was -100.00% per year.
 During the past 13 years, the highest 3-Year average Dividends Per Share Growth Rate
of Ashok Leyland was 75.40% per year. The lowest was -100.00% per year. And
the median was 1.45% per year.
 The growth rate is calculated with least square regression.
 During the past 12 months, Ashok Leyland's average Dividends Per Share Growth Rate
was 20.00% per year. During the past 3 years, the average Dividends Per Share Growth
Rate was -100.00% per year. Please click Growth Rate Calculation Example
(GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue
growth rate. You can apply the same method to get the average dividends per share
growth rate.
 Ashok Leyland's Dividend Payout Ratio for the three months ended in Dec. 2021 was
0.00. As of today, Ashok Leyland's Dividend Yield % is 0.47%.

 Ashok Leyland's basic earnings per share (Basic EPS) for the three months ended
in Dec. 2021 was ₹-0.41. Its basic earnings per share (Basic EPS) for the trailing
twelve months (TTM) ended in Dec. 2021 was ₹-0.50.
  Ashok Leyland's EPS (Diluted) for the three months ended in Dec. 2021 was ₹-0.41.
Its EPS (Diluted) for the trailing twelve months (TTM) ended in Dec. 2021 was ₹-0.50.
 Ashok Leyland's EPS without NRI for the three months ended in Dec. 2021 was ₹-0.41.
Its EPS without NRIearnings per share without non-recurring items for the trailing
twelve months (TTM) ended in Dec. 2021 was -0.50.
 Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus
calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same
method to get the EPS without NRI Growth Rate using EPS without NRI data.
 During the past 13 years, Ashok Leyland's highest 3-Year average EPS without
NRI Growth Rate was 132.10% per year. The lowest was -40.70% per year. And
the median was 10.30% per year.

Ashok Leyland (NSE:ASHOKLEY) 3-Year Dividend Growth Rate Explanation

1. DividendPayout Ratio measures the percentage of the company's earnings paid out
as dividends.
Ashok Leyland's Dividend Payout Ratio for the quarter that ended in Dec. 2021 is
calculated as
Dividend Payout Ratio = Dividends per Share (Q: Dec. 2021 ) / EPS without NRI (Q: Dec. 2021 )

= 0 / -0.41

= N/A

During the past 13 years, the highest Dividend Payout Ratio of Ashok Leyland
was 3.13. The lowest was 0.00. And the median was 0.34.
2. Dividend Yield % measures how much a company pays out in dividends each year
relative to its share price.
Ashok Leyland Recent Full-Year Dividend History
Amount Ex-date Record Date Pay Date Type Frequency
INR 0.600 2021-08-31 2021-09-02 2021-09-27 Cash Dividend annually

* GuruFocus converts dividend currency to local traded share price currency in order to
calculate dividend yield. Please refer to the last column "Forex Rate" in the above table.
Ashok Leyland's Dividend Yield (%) for Today is calculated as
Dividend Yield % = Most Recent Full Year Dividend / Current Share Price
 = 0.6 / 127.85

= 0.47 %

Current Share Price is ₹127.85.

Ashok Leyland's Dividends per Share for the trailing twelve months (TTM) ended
in Today is ₹0.6.
During the past 13 years, the highest Dividend Yield of Ashok Leyland was 13.33%.
The lowest was 0.37%. And the median was 1.45%.
* For Operating Data section: All numbers are indicated by the unit behind each term
and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and
percentage. All currency related amount are indicated in the company's associated
stock exchange currency.
Ashok Leyland Dividend Payout Ratio Calculation
Dividend payout ratio measures the percentage of the company's earnings paid out as
dividends.
Ashok Leyland's Dividend Payout Ratio for the fiscal year that ended in Mar. 2021 is
calculated as
Dividend Payout Ratio = Dividends per Share (A: Mar. 2021 ) / EPS without NRI (A: Mar. 2021 )

= 0 / -0.56

= N/A

Ashok Leyland's Dividend Payout Ratio for the quarter that ended in Dec. 2021 is
calculated as
Dividend Payout Ratio = Dividends per Share (Q: Dec. 2021 ) / EPS without NRI (Q: Dec. 2021 )

= 0 / -0.41

= N/A

* ForOperating Data section: All numbers are indicated by the unit behind each term
and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and
percentage. All currency related amount are indicated in the company's associated
stock exchange currency.
Limitations
 The company has shown a poor profit growth of -156.73% for the Past 3 years.
 The company has shown a poor revenue growth of -16.58% for the Past 3 years.
 Company has low Interest coverage ratio of -0.34.
 The company is trading at a high EV/EBITDA of 47.91.
Eicher Motors's
Eicher Motors's Dividends per Share for the three months ended in Dec. 2021 was
₹0.00.

During the past 12 months, Eicher Motors's average Dividends Per Share Growth Rate
was 36.00% per year. During the past 3 years, the average Dividends Per Share
Growth Rate was -100.00% per year. Please click Growth Rate Calculation Example
(GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue
growth rate. You can apply the same method to get the average dividends per share
growth rate.

During the past 13 years, the highest 3-Year average Dividends Per Share Growth Rate
of Eicher Motors was 84.20% per year. The lowest was -100.00% per year. And the
median was 19.70% per year.

Eicher Motors's Dividend Payout Ratio for the three months ended in Dec. 2021 was
0.00. As of today, Eicher Motors's Dividend Yield % is 0.67%.

Competitive Comparison

For the Auto Manufacturers subindustry, Eicher Motors's 5-Year Dividend Growth Rate,
along with its competitors' market caps and 5-Year Dividend Growth Rate data, can be
viewed below:

* Competitive companies are chosen from companies within the same industry, with
headquarter located in same country, with closest market capitalization; x-axis shows
the market cap, and y-axis shows the term value; the bigger the dot, the larger the
market cap. Note that "N/A" values will not show up in the chart.

. Dividend Yield % measures how much a company pays out in dividends each year
relative to its share price.
Eicher Motors Recent Full-Year Dividend History
Amount Ex-date Record Date Pay Date Type Frequency
INR 17.000 2021-08-09 2021-08-11 2021-09-02 Cash Dividend annually
* GuruFocus converts dividend currency to local traded share price currency in order to
calculate dividend yield. Please refer to the last column "Forex Rate" in the above table.
Eicher Motors's Dividend Yield (%) for Today is calculated as
Dividend Yield % = Most Recent Full Year Dividend / Current Share Price

= 17 / 2536.80

= 0.67 %

Current Share Price is ₹2536.80.

Eicher Motors's Dividends per Share for the trailing twelve months (TTM) ended
in Today is ₹17.
During the past 13 years, the highest Dividend Yield of Eicher Motors was 6.05%.
The lowest was 0.18%. And the median was 0.52%.
* For Operating Data section: All numbers are indicated by the unit behind each term
and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and
percentage. All currency related amount are indicated in the company's associated
stock exchange currency.

Eicher Motors (NSE:EICHERMOT) Dividend Yield % Explanation

Over the long term, the return from dividends has been a significant contributor to the
total returns produced by equity securities. Studies by Elroy Dimson, Paul Marsh, and
Mike Staunton of Princeton University (2002) found that a market-oriented portfolio,
which included reinvested dividends, would have generated nearly 85 times the wealth
generated by the same portfolio relying solely on capital gains.

Dividends may also qualify a lower tax rate for investors.

In dividends investing, Payout Ratio and Dividend Growth Rate are the two most
important variables for consideration. A lower payout ratio may indicate that the
company has more room to increase its dividends.
Comparision of Ashok Leyland and Eichar motars-

Report card of ashok

Attribute Value Date

PE ratio 152.52 19/04/22

EPS (Rs) 0.82 Mar, 20

Sales (Rs crore) 5,535.16 Dec, 21

Face Value (Rs) 1

Net profit margin (%) -2.05 Mar, 20

Last bonus 1:1 15/06/11

Last dividend (%) 60 25/06/21

Return on average equity -4.49 Mar, 20

Report card of eichar

Attribute Value Date

PE ratio 50.44 19/04/22

EPS (Rs) 48.65 Mar, 21

Sales (Rs crore) 2,838.46 Dec, 21

Face Value (Rs) 1

Net profit margin (%) 15.42 Mar, 21

Last bonus

Last dividend (%) 1700 27/05/21

Return on average equity 13.7 Mar, 21

Q- what are the reasons for the differences in the market price of the two companies
share?

ANS - Returning to the examples from before, Microsoft had 7.57 billion shares
outstanding at the end of its fiscal year on June 30, 2020.1 On that day, the company's
stock closed at $203.51 per share.3

The resulting market cap was about $1,540.6 billion (7.57 billion * $203.51). This
market value is over 13 times the value of the company on the books.

Similarly, Walmart had 2.87 billion shares outstanding.4 Its closing price was $114.49
per share at the end of Walmart's fiscal year on January 31, 2020.5 Therefore, the firm's
market value was roughly $328.59 billion (2.87 billion * $114.49). That is more than four
times Walmart's book valuation of $74.67 billion that we calculated earlier.
It is quite common to see the book value and market value differ significantly. The
difference is due to several factors, including the company's operating model, its sector
of the market, and the company's specific attributes. The nature of a company's assets
and liabilities also factor into valuations.

Market Value Limitations

While market cap represents the market perception of a company's valuation, it may not
necessarily represent the real picture. It is common to see even large-cap stocks
moving 3 to 5 percent up or down during a day's session. Stocks often become
overbought or oversold on a short-term basis, according to technical analysis.

Long-term investors also need to be wary of the occasional manias and panics that
impact market values. Market values shot high above book valuations and common
sense during the 1920s and the dotcom bubble. Market values for many companies
actually fell below their book valuations following the stock market crash of 1929 and
during the inflation of the 1970s. Relying solely on market value may not be the best
method to assess a stock’s potential.

Key Differences

The examples given above should make it clear that book and market values are very
different. Many investors and traders use both book and market values to make
decisions. There are three different scenarios possible when comparing the book
valuation to the market value of a company.

Book Value Greater Than Market Value

It is unusual for a company to trade at a market value that is lower than its book
valuation. When that happens, it usually indicates that the market has momentarily lost
confidence in the company. It may be due to business problems, loss of critical lawsuits,
or other random events. In other words, the market doesn't believe that the company is
worth the value on its books. Mismanagement or economic conditions might put the
firm's future profits and cash flows in question.
Value investors actively seek out companies with their market values below their book
valuations. They see it as a sign of undervaluation and hope market perceptions turn
out to be incorrect. In this scenario, the market is giving investors an opportunity to buy
a company for less than its stated net worth. However, there is no guarantee that the
price will rise in the future.

Forces That Move Stock Prices

Stock prices are determined in the marketplace, where seller supply meets buyer
demand. But have you ever wondered about what drives the stock market—that is, what
factors affect a stock's price? Unfortunately, there is no clean equation that tells us
exactly how the price of a stock will behave. That said, we do know a few things about
the forces that move a stock up or down. These forces fall into three categories:
fundamental factors, technical factors, and market sentiment.

Fundamental Factors
In an efficient market, stock prices would be determined primarily by fundamentals, which, at
the basic level, refer to a combination of two things:

1. An earnings base, such as earnings per share (EPS)

2. A valuation multiple, such as a P/E ratio

An owner of common stock has a claim on earnings, and earnings per share (EPS) is the
owner's return on their investment. When you buy a stock, you are purchasing a proportional
share of an entire future stream of earnings. That's the reason for the valuation multiple: It is
the price you are willing to pay for the future stream of earnings.

What Moves Stock Prices?

Part of these earnings may be distributed as dividends, while the remainder will be
retained by the company (on your behalf) for reinvestment. We can think of the future
earnings stream as a function of both the current level of earnings and the expected
growth in this earnings base.

The valuation multiple (P/E), or the stock price as some multiple of EPS, is a way of
representing the discounted present value of the anticipated future earnings stream
 CONCLUSION

To conclude, study largely suggests rejection of random walk hypothesis in Indian stock
market. This implies that Indian equity market is not weak form efficient.The results
indicate no significant difference in the behaviour of index returns between the NSE and
BSE. Nevertheless, the stock indices having higher liquidity and market capitalization
prove to be less inefficient than small indices on both the exchanges. Furthermore, the
small indices with less liquidity appear to be more vulnerable to external shocks.
Sectorwise, there has not been much difference. In the light of the present evidence, it
is clear that policy reforms aimed at improving the efficiency have not brought the
desired results. In view of the above discussion, some policy implications are proposed
here. The evidence of existence of potential excess returns in short horizons of
investment calls for policy measures aiming at proper dissemination of information to
the participants. This has further support from the episodic nonlinear dependence,
which suggests that investor takes time to respond to the events. Further, to improve
the performance of small indices having lesser liquidity, it is important to improve the
liquidity of smaller stocks. Encouraging retail trading and promoting the mutual funds in
the Indian market may achieve this. RBI’s initiative for financial literacy and NSE’s
certificate courses for financial education are welcoming steps in this direction. External
events have always created panic in the Indian stock market. Whenever there were
some shocks , there was net outflow of FIIs. In the light of this, policy measures aiming
at an appropriate management of external sector and global events need to be initiated
in order to improve the immunity of stock market towards ill effects of global shocks.
There is also need of optimal regulation of FIIs and pressing for further disclosures from
the FIIs. In light of the current empirical evidences, before hastening for the third
generation reforms, a pause for a holistic review of financial sector reforms is important
at this crucial juncture. The limitations of the study highlight scope for further research.
The study indicated stronger rejection of market efficiency and vulnerability of Indian
stock market to external shocks. The interaction between market microstructure
variables and market efficiency indicators may throw further light. A further investigation
of sources of long memory and a causal analysis of inefficiencies would provide useful
information for policy measures. The empirical evidence presented in this book
resoundingly rejects the EMH. From the theoretical perspective, there are no convincing
explanations for nonrandom walk behaviour in stock returns. According to Andrews Lo,
perfect efficient market is difficult to find in real world and he advocates the engineering
notion of ‘‘relative efficiency’’ of market as a useful concept. Using the evolution of
human behavioural principles, Lo proposes adaptive market hypothesis, according to
which market efficiency evolves over a period. In this framework, rational EMH co-exists
with behavioural models in an intellectually consistent manner. Future research on
Indian stock market could focus on these aspects.