Financial Management CIA

Adani Ports and Special Economic Zone

Limited
Introduction

Adani Ports and Special Economic Zone Limited (APSEZ) is the largest commercial ports operator in India
accounting for nearly one-fourth of the cargo movement in the country.

Its presence across 13 domestic ports in seven maritime states of Gujarat, Maharashtra, Goa, Kerala, Andhra
Pradesh, Tamil Nadu and Odisha presents the most widespread national footprint with deepened hinterland
connectivity.

The port facilities are equipped with the latest cargo-handling infrastructure which is not only best-in-class,
but also capable of handling the largest vessels calling at Indian shores. Our ports are equipped to handle
diverse cargos, from dry cargo, liquid cargo, crude to containers.

Market Capitalisation

Year 2022 (In Trillion Rupees)

₹ 1.92

Financial Ratios

Particulars Mar-22 Mar-21 Mar-20

Basic EPS 1.41 9.49 9.43

Diluted EPS 1.41 9.49 9.43

Divident/Share 5 5 3.20

Asset Turnover Ratio 0.31 0.33 0.38

 Return on
7.10% 9.89% 11.47%
capital
employed

Brief on Ratios :-

1. Basic EPS - Basic earnings per share should be calculated by dividing the net profit or loss for
the period attributable to equity shareholders by the weighted average number of equity shares
outstanding during the period.

We can analyse that the EPS has significantly come down to 1.41 in the year of 2022 from 9.49
and 9.43 in year 2021 and 2020.This indicates a significant decline in the net profit and earnings
given to individual shareholders .This may be due to expansionary enterprise policy opted by
the organisation .

2. Diluted EPS - Diluted EPS is a calculation used to gauge the quality of a company's earnings
per share (EPS) if all convertible securities were exercised.

We can analyse that the Diluted EPS has significantly come down to 1.41 in the year of 2022
from 9.49 and 9.43 in year 2021 and 2020.This indicates a significant decline in the net profit
and earnings given to individual shareholders and that no convertible securities rights were
exercised.

3. Dividend / Share - The term dividends per share (DPS) refers to the total dividend a company pays
out over a 12-month period, divided by the total number of outstanding shares.

It can be analysed that the dividend has increased from 2020 where it was Rs 3.20 / share to Rs 5.00 /
share in 2021 and has remained constant since.Adani Ports opted for a liberal dividend policy in the year
2021.

4. Asset Turnover Ratio - Asset turnover ratio is the ratio between the value of a company’s sales
or revenues and the value of its assets. It is an indicator of the efficiency with which a company is
deploying its assets to produce the revenue.

The Asset Turnover Ration can be gradually decreasing from 0.38 in the year 2020 to 0.31 in the year
2022.This indicated that the company is not using its company assets properly.

5. Return on Capital Employed - The term return on capital employed (ROCE) refers to a financial
ratio that can be used to assess a company's profitability and capital efficiency. In other words, this ratio
can help to understand how well a company is generating profits from its capital as it is put to use.

The company is seeing a declining ROCE from 11.47% in the year 2020 to 7.10% in the year 2022.

Dividend Policy

Adani Ports & Special Economic Zone Ltd. has declared 19 dividends since Sept. 12, 2008.
In the past 12 months, Adani Ports & Special Economic Zone Ltd. has declared an equity dividend
amounting to Rs 5.00 per share.
At the current share price of Rs 894.0, this results in a dividend yield of 0.56%.

Cost of Capital

Cost of Equity - Cost of Equity is the rate of return a company pays out to equity investors. A firm uses
cost of equity to assess the relative attractiveness of investments, including both internal projects and
external acquisition opportunities.

Here ,
DPS - Dividend per share
MPS - Market Price per share
r - Growth rate of dividend

Dividend per share (DPS) = Rs 5.00

Market Price per share (MPS) = Rs 894

r = 0%( Dividend constant for the last three years)

Cost of Equity = 0.005 or 0.55%

Applying the above formula we achieve cost of equity to be near to 0.55% which is significantly less.

Cost of Debt - The cost of debt is the effective rate that a company pays on its debt, such as bonds and
loans.

Total Interest Incurred = 2493.6 cr

Total Debt = 44762.18 cr

 Cost of debt = 5.56%

The cost of equity achieved is 5.56% and is not very incremental and thus the organisation has done a
good job in using leverage to achieve debt at such a low rate.

Overall Cost of Capital - Using the below formula we get overall cost of capital as 12.36%

Leverages

Operating Leverage - Operating leverage is a cost-accounting formula that measures the degree to which
a firm or project can increase operating income by increasing revenue. A business that generates sales with
a high gross margin and low variable costs has high operating leverage.

Therefore the operating leverage comes by applying the above formula to 2.2x times.

Financial Leverage - Financial leverage is the use of borrowed money (debt) to finance the purchase
of assets with the expectation that the income or capital gain from the new asset will exceed the cost of
borrowing.

Therefore by calculating Financial Leverage using the formula above we get Financial Leverage to
be 2.87x times

Combined Leverage - Financial Leverage * Combined Leverage

Therefore combined leverage = 2.2 * 2.87 = 6.3 times

Financial Position of Adani Ports & SEZ analysis

Adani Ports & SEZ Income statement analysis

• Operating income during the year rose 27.0% on a year-on-year (YoY) basis.
 • The company's operating profit increased by 6.1% YoY during the fiscal. Operating profit
margins witnessed a fall and stood at 53.2% in FY22 as against 63.6% in FY21.
• Depreciation charges increased by 30.0% and finance costs increased by 13.3% YoY, respectively.
• Other income declined by 19.2% YoY.
• Net profit for the year declined by 9.1% YoY.

ADANI PORTS & SEZ Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 111 billion as compared to Rs 72 billion
in FY21, thereby witnessing an increase of 53.9%.
• Long-term debt stood at Rs 397 billion as compared to Rs 329 billion during FY21, a growth of
20.5%.
• Current assets rose 38% and stood at Rs 178 billion, while fixed assets rose 23% and stood at Rs 761
billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 939 billion as against Rs 746 billion during
FY21, thereby witnessing a growth of 26%

(https://www.equitymaster.com/research-it/annual-results-analysis/MNDRA/ADANI-PORTS-amp-
SEZ-2021%2D22-Annual-Report-Analysis/3266)
Larsen & Toubro
Introduction
Larsen & Toubro Ltd, commonly known as L&T, is an Indian multinational conglomerate company, with
business interests in engineering, construction, manufacturing, technology, information technology and
financial services, headquartered in Mumbai. The company is counted among world's top five construction
companies.

Market Capitalisation

Year 2022(In Trillion )

INR 2.83

Financial Ratios

Particulars Mar-22 Mar-21 Mar-20

Basic EPS 56.09 80.74 47.59

Diluted EPS 56.03 80.65 47.53

Divident/Share 22 36 18

Asset Turnover Ratio 0.64 49.55 58.19

Return on
14.2 12.55 14.33
capital
employed
Brief on Ratios

1. Basic Eps- As Compared to 2021 the basic eps has decreased which shows that company has a poor
health and gives lower return to the shareholders.

2. Diluted EPS- As Compared to 2021 the diluted Eps has decreased which shows a sharp reduction in net
profit and earnings distributed to individual shareholders as well as the absence of any exercise of
convertible securities rights.

3. Dividend/share- The Dividend has decreased in 2022 as compared to last year which shows that the
company’s health is not good and this lower dividend may have affected their stock price and return to
the shareholders.

4. Asset Turnover Ratio - The ratio has dropped significantly in 2022 which concludes that the company
is not making the best use of its resources. This could be the result of inadequate inventory management,
inadequate collecting techniques, or excess production capacity.

5. Return on Capital Employed - The company’s ROCE decreased in 2021 but again increased in 2022
which shows that company is gaining some profit but still is not profitable because ROCE should be of 20%
at least to attain profitability.

Dividend Policy

For the year ending March 2022 Larsen & Toubro has declared an equity dividend of 1100.00% amounting
to Rs 22 per share. At the current share price of Rs 1977.65 this results in a dividend yield of 1.11%. The
company has a good dividend track report and has consistently declared dividends for the last 5 years.

1
Cost Of Capital

Cost of Equity - Cost of equity is the return that a company requires for an investment or project, or the
return that an individual requires for an equity investment.

Here ,
DPS - Dividend per share
MPS - Market Price per share
r - Growth rate of dividend

Dividend per share (DPS) = Rs. 22

Market Price per share (MPS) = Rs 1977.65

r = 11.11%(Because the dividend increased from 18 to

22)

Cost of Equity = 11.121

Applying the above formula the Cost of Equity is good and which shows that company has given good return
to shareholders than last year .

Cost of Debt - The cost of debt is the effective interest rate that a company pays on its debts, such as bonds
and loans.

Total Interest Incurred = 12,966.07

Total Debt = 1,23,252.58
Cost of debt = 10.51%

Overall cost of capital-

The weighted average cost of capital for Larsen & Toubro as of today (2022-11-10) is 10.29%.

Leverages

Operating Leverage -

The operating leverage of L&T is 1.42x times.

Financial leverage -

The Financial leverage of L&T is 4.70x times.

Combined Leverage - Financial Leverage * Combined Leverage

6.674 is the Combined leverage of L&T.

Financial position of Larsen & toubro

L&T Income Statement Analysis

• Operating income during the year rose 15.1% on a year-on-year (YoY) basis.
• The company's operating profit increased by 14.4% YoY during the fiscal. Operating profit
margins witnessed a fall and stood at 12.8% in FY22 as against 12.9% in FY21.
• Depreciation charges increased by 1.5% and finance costs decreased by 20.8% YoY, respectively.
• Other income grew by 13.8% YoY.
• Net profit for the year grew by 120.4% YoY.
• Net profit margins during the year grew from 3.4% in FY21 to 6.6% in FY22.
•
L&T Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 1,594 billion as compared to Rs 1,374
billion in FY21, thereby witnessing an increase of 16.0%.
• Long-term debt down at Rs 616 billion as compared to Rs 821 billion during FY21, a fall of 25.0%.
• Current assets rose 7% and stood at Rs 2,082 billion, while fixed assets fell 4% and stood at Rs 1,090
billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 3,172 billion as against Rs 3,086 billion
during FY21, thereby witnessing a growth of 3%.
References
https://www.moneycontrol.com/financials/larsentoubro/balance-sheetVI/LT

GMR Infra
Introduction

GMR Group is an Indian multinational conglomerate headquartered in New Delhi. The group was founded in
1978 by Grandhi Mallikarjuna Rao (G M Rao) and comprises several companies including GMR
Infrastructure, GMR Energy, GMR Airports, GMR Enterprises. Employing the public-private
partnership model, the

Group has implemented several infrastructure projects in India. The Group also has a global presence with
infrastructure operating assets and projects in several countries
including Nepal, Indonesia, Singapore, Philippines and Greece.
GMR Group entered the airports development space in 2003.
GMR Group’s airport portfolio comprises India's busiest Delhi International Airport and Hyderabad
International Airport in India and Mactan Cebu International Airport in The Philippines. The portfolio has
further expanded by bagging the rights for developing the new Greenfield Airport in Goa, India in 2016 and
New Heraklion International Airport in Greece in 2017.

Market Capitalization

Year 2022 (In billion Rupees)

₹ 230.87

Financial Ratios

Particulars Mar-22 Mar-21 Mar-20

Basic EPS -0.51 -2.12 -2.45

Diluted EPS -0.51 -2.12 -2.45

Divident/Share 0.00 0.00 0.00

 Asset Turnover Ratio 0.00 0.00 4.75

Return on
-0.03% -0.17% 2.21%
capital
employed

Brief on Ratios: -

1. Basic EPS - Basic earnings per share should be calculated by dividing the net profit or loss for
the period attributable to equity shareholders by the weighted average number of equity shares
outstanding during the period.

We can analyze that the EPS has come down to -0.51 in the year of 2022 from -2.12 and -2.45
in year 2021 and 2020.This indicates a significant decline in the net profit and earnings given to
individual shareholders.

2. Diluted EPS - Diluted EPS is a calculation used to gauge the quality of a company's earnings
per share (EPS) if all convertible securities were exercised.

We can analyze that the Diluted EPS has come down to -0.51 in the year of 2022 from -2.12 and
-2.45 in year 2021 and 2020.This indicates a significant decline in the net profit and earnings
given to individual shareholders and that no convertible securities rights were exercised.

3. Dividend / Share - The term dividends per share (DPS) refers to the total dividend a company pays
out over a 12-month period, divided by the total number of outstanding shares.

It can be analyzed that the dividend has been constant from 2020 where it was Rs 0.00 / share and has
remained constant since.

4. Asset Turnover Ratio - Asset turnover ratio is the ratio between the value of a company’s sales
or revenues and the value of its assets. It is an indicator of the efficiency with which a company is
deploying its assets to produce the revenue.

The Asset Turnover Ratio has abruptly decreased from 4.75 in the year 2020 to 0.00 in the year 2021.
And has remained constant in 2022 This indicates that the company is not using its company assets
properly.

5. Return on Capital Employed - The term return on capital employed (ROCE) refers to a financial
ratio that can be used to assess a company's profitability and capital efficiency. In other words, this ratio
can help to understand how well a company is generating profits from its capital as it is used.

The company is seeing a declining ROCE from 2.21.% in the year 2020 to -0.17% in the year 2021 and
then an increase at -0.03% in 2022.

Dividend Policy
The last dividend given by GMR was in 2014 of 0.10, ever since 2015 up until 2022 GMR has not
announced another dividend for its shareholder as they are not profitable since.
At the current share price of Rs 894.0, this results in a dividend yield of 0.56%.Cost of Capital

Cost of Equity - Cost of Equity is the rate of return a company pays out to equity investors. A firm uses
cost of equity to assess the relative attractiveness of investments, including both internal projects and
external acquisition opportunities.

Here ,
DPS - Dividend per share
MPS - Market Price per share
r - Growth rate of dividend

Dividend per share (DPS) = Rs 0.00%

Market Price per share (MPS) = Rs 38.20

r = 0%( Dividend constant for the last three years)

Cost of Equity = 0

Applying the above formula, we achieve cost of equity to be 0% which is significantly less.

Cost of Debt - The cost of debt is the effective rate that a company pays on its debt, such as bonds and loans.

Total Interest Incurred = 78.98 cr.

Total Debt = 1015.62 cr.

Cost of debt = 7.78%

The cost of debt achieved is 7.78% and is not very incremental and thus the organization has done a good job
in using leverage to achieve debt at such a low rate.

Overall Cost of Capital - Using the below formula we get overall cost of capital as 5.48%
Leverages

Operating Leverage - Operating leverage is a cost-accounting formula that measures the degree to which a
firm or project can increase operating income by increasing revenue. A business that generates sales with a
high gross margin and low variable costs has high operating leverage.

Therefore the operating leverage comes by applying the above formula to 0.23x times.

Financial Leverage - Financial leverage is the use of borrowed money (debt) to finance the purchase
of assets with the expectation that the income or capital gain from the new asset will exceed the cost of
borrowing.

Therefore by calculating Financial Leverage using the formula above we get Financial Leverage to
be -12.7x times

Combined Leverage - Financial Leverage * Combined Leverage

Therefore combined leverage = 0.23* -12.7* = -12.47 times

Financial Position of GMR INFRA analysis

GMR INFRA Income statement analysis


Operating income during the year rose 29.0% on a year-on-year (YoY) basis.

The company's operating profit increased by 144.9% YoY during the fiscal. Operating profit
margins witnessed a fall and down at 38.8% in FY22 as against 20.4% in FY21.

Depreciation charges increased by 0.4% and finance costs increased by 12.0% YoY, respectively.

Other income declined by 16.8% YoY.

Net profit for the year declined by NA YoY.

Net profit margins during the year grew from 34.9% in FY21 to 16.4% in FY22.
GMR Infra Balance Sheet Analysis

The company's current liabilities during FY22 down at Rs 64 billion as compared to Rs 141 billion
in FY21, thereby witnessing an decrease of -54.4%.

Long-term debt down at Rs 244 billion as compared to Rs 310 billion during FY21, a fall of 21.3%.

Current assets fell 53% and stood at Rs 66 billion, while fixed assets fell 14% and stood at Rs 297
billion in FY22.

Overall, the total assets and liabilities for FY22 stood at Rs 363 billion as against Rs 491 billion
during FY21, thereby witnessing a fall of 26%.

(https://www.equitymaster.com/research-it/annual-results-analysis/GMRI/GMR-INFRA-2021-22-Annual-
Report-Analysis/39