CORPORATE FINANCE II

PROJECT
TVS MOTORS
TEAM 5
K S H I T I J JA I N
N A M R ATA G U P TA
K S H I T I J AG G A RWA L
 TVS MOTORS
YEARS ASSET BETA WACC COST OF EQUITY

2019-2018
0.8469308469 17.462 17.940
2018-2017
1.25399361 20.502 20.740
2017-2016
1.353612167 21.553 21.990
2016-2015
1.217596229 20.042 20.620
2015-2014
0.9841954023 18.858 19.540
 INTEPRETATION
WACC IS INCREASING TILL 2017. AS THE BETA AND THE COST OF EQUITY IS INCREASING.
INCREASE IN WACC DENOTES A DECREASE IN VALUATION AND AN INCREASE IN RISK
COMPANY HAD INCREASE THEIR LOAN IN 2019 LEADING TO DECREASE IN WACC AND
INCREASE IN VALUATION
THE BETA OF THE COMPANY IS ALSO INCREASING. WHICH MEANS THE STOCK ARE MORE
VOLATILE AND HAVE HIGH RISK .BUT HIGHER THE RISK HIGHER THE RETURNS.
CURRENTLY COMPANY IS TRYING TO PLAY SAFE. IT IS HAVING THE LOWEST WACC.
BREAK EVEN POINT
Financial Breakeven point
YEARS Ve(in cr.) Vd(in cr.) Value of the firm (in cr) (in cr) No.of shares (in cr)
2019-2018 22462.728 1377.94 23840.668 16.00555672 47.51
2018-2017 29007.2305 1036.97 30044.2005 13.63209851 47.51
2017-2016 20666.85 1085.14 21751.99 9.586802778 47.51
2016-2015 15343.3545 758.46 16101.8145 23.75683014 47.51
2015-2014 12708.925 918.74 13627.665 6.544138076 47.51
FORMULA FOR CALCULATING INDIFFERENCE POINT
 INDIFFERENT POINTS
YEARS
PLAN 1 & 2 PLAN 1 & 3 PLAN 1& 4 PLAN 2 & 3 PLAN 2&4 PLAN 3&4
2019-2018
2860.88016 2860.88016 2860.88016 2860.88016 2860.88016 2860.88016
2018-2017
3605.30406 3605.30406 3605.30406 3605.30406 3605.30406 3605.30406
2017-2016
2610.2388 2610.2388 2610.2388 2610.2388 2610.2388 2610.2388
2016-2015
1932.21774 1932.21774 1932.21774 1932.21774 1932.21774 1932.21774
2015-2014
1635.3198 1635.3198 1635.3198 1635.3198 1635.3198 1635.3198
 INTEPRETATION
According to the above calculations we see that the value of the firm has been initially increasing from 2015 to 2018
but in the last year the value has fallen down due to following reasons :-
1) increase in the price of crude oil. i.e increase in price of petroleum
2) slowing down of economy

3) there is a ressession in automobile industry. Because of it the demand of automobiles have decreased. And there
is a decrease in share price.

There was a increase from 2015-2018 beacause :-

1) rise of middle class income and young population.

2) increase in forgein investment for the automobile industry and government support.
3) introduction of GST leading to growth.
 MARKET PRICE MARKET PRICE
Announcement
Ex Dividend Date Dividend (%) Dividend Type Dividend amt Dividend form @ANNOUNCEMEN @DIVIDEND
Date
T DATE DATE
11-Mar-19 18-Mar-19 140 Regular cash
Interim
1.4 dividend 505.85 490.4
23-Oct-18 30-Oct-18 210 Regular cash
Interim
2.1 dividend 535.2 539.65
26-Feb-18 6-Mar-18 130 Regular cash
Interim
1.3 dividend 680.15 644.4
1-Nov-17 8-Nov-17 200 Regular cash
Interim
2 dividend 709.15 708.15
6-Mar-17 14-Mar-17 125 Regular cash
Interim
1.25 dividend 425.95 436.9
27-Oct-16 3-Nov-16 125 Regular cash
Interim
1.25 dividend 412.1 392.7
12-Mar-16 17-Mar-16 150 Regular cash
Interim
1.5 dividend 287.35 283.5
29-Jan-16 4-Feb-16 100 Regular cash
Interim
1 dividend 292.5 289.35
29-Apr-15 5-May-15 115 Regular cash
Interim
1.15 dividend 236.95 249.65
3-Feb-15 6-Feb-15 75 Regular cash
Interim
0.75 dividend 285.25 293.6
29-Apr-14 2-May-14 75 Regular cash
Interim
0.75 dividend 92.35 101.3
DIVIDEND
YEAR EPS DPS DP RATIO
2019 24.53 3.5 14.27%
2018 21.84 3.3 15.11%
2017 17.38 2.5 14.38%
2016 14.44 2.5 17.31%
2015 10.5 1.9 18.10%
 INTEPRETATION
The company is paying dividends from profit. Neither the company is paying in
fixed dividend nor in same DP ratio.
It depends upon the company’s earnings and hence dividend is paid
accordingly.
Since the profit is increasing , the dividend per share of the company is also
increasing.
The policy states that the dividend is paid through its reserves.
It is observed that the prices have changed when dividend is announced and
paid.
 CONCLUSION
There was a increase in MPS from 2015-2018
◦ rise of middle class income and young population.
◦ increase in forgein investment for the automobile industry and government support.
◦ introduction of GST leading to growth.
There is a ressession in automobile industry. Because of it the demand of automobiles have
decreased. And there is a decrease in share price.
Currently there is a decrease in the automobile market