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This document analyzes the financial performance of several major power companies in India using ratio analysis. It discusses the objectives of assessing profitability, solvency, management efficiency, and making suggestions. The methodology used secondary data from company websites and annual reports to calculate ratios over 5 years for companies like NTPC, NHPC, Power Grid, Tata Power, and more. The analysis found that SJVN and Power Grid were fundamentally strongest with high margins, while Tata Power and Torrent Power needed improvements in areas like return on investment and profitability. Overall, the power industry needs better liquidity and some companies should focus on reducing costs to boost profits.

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Sushant
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93 views

Project

This document analyzes the financial performance of several major power companies in India using ratio analysis. It discusses the objectives of assessing profitability, solvency, management efficiency, and making suggestions. The methodology used secondary data from company websites and annual reports to calculate ratios over 5 years for companies like NTPC, NHPC, Power Grid, Tata Power, and more. The analysis found that SJVN and Power Grid were fundamentally strongest with high margins, while Tata Power and Torrent Power needed improvements in areas like return on investment and profitability. Overall, the power industry needs better liquidity and some companies should focus on reducing costs to boost profits.

Uploaded by

Sushant
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
You are on page 1/ 18

Financial analysis of selected

companies at CRISIL Ltd.


Sushant Tathwadkar
Roll no:437
Contents
• Introduction
• Objectives
• Company profile
• Research methodology
• Data analysis and interpretation
• Conclusions
• Suggestions
• Bibiliography
Introduction

• Power sector-driver of economy.


• Power generation and distribution sector
• Total installed capacity - 343.79 Gigawatt
(GW) as on April, 2018.
• Expected rise in demand
• The government initiatives
• The road ahead
What is financial analysis
• financial statement analysis is the selection,
evaluation, and interpretation of financial
data, along with other pertinent information,
to assist in investment and financial
decision-making-Drake
• Tools-Ratio analysis,Common size
statements,Trend analysis
Why ratio analysis
• Simplification of Accounting Data
• Helpful in comparative study
• Helpful in locating the weak spots of the
business
• Fixation of Ideal Standards
Objectives
• To Assess the profitability Position of selected
Power sector companies
• To analyze short term and long term solvency
position of companies
• To analyze management efficiency of the
selected companies
• To suggest the area to focus to a company
CRISIL ltd.
• Leading credit rating agency in India,
• pioneered credit rating in 1987
• Mrs. Ashu Suyash,MD
Vision
• To be a leading agile and innovative, global
analytics company.

Mission
• To make markets function better by providing
independent opinions, actionable insights and
efficient solutions.
Different products of CRISIL

•Ratings
•Corporate sector
•Finance sector

•SME offerings
•Real estate grading
•SME ratings

•Research
•Economy
•Industry
•Capital markets
Research Methodology
• Nature of data:-secondary
• Design:-descriptive
• Selection criteria:-Based on market cap, total
assets and availability of data
• Source:-company websites, annual reports,
research journals, financial websites
• Financial tools used:-Ratio analysis
• Statistical tools used:-Mean, standard deviation,
coefficient of variance
• Study period:-FY 2012-13 to 2016-17(5 years)
Companies selected for analysis
• NTPC ltd.
• NHPC ltd.
• Power grid corporation of India
• Reliance infra
• Tata Power ltd
• Torrent Power ltd
• SJVN Ltd
• CESC ltd
Ratios considered
Gross profit margin Net profit margin Return on net
worth

Return on capital Return on assets Current ratio


employed

Quick ratio Debt-equity ratio Debt to total assets


ratio

Inventory turnover Debtors turnover Fixed asset


turnover
Analysis(Based
NTPC NHPC PGC RI
on
TP
averages)
CESC SJVN TORP

GPM B A A B B B A B
NPM B A A B B B A B
RONW A B A B B B A B
ROA A B B B B B A B
ROCE A B A A A A A B
CR B A B B B B A A
QR B A B B B B A A
DE B B A B B B B A
DTAR A B A A B A B A
ITR B A B B B B A B
DTR A B A B A B B A
FATR A B B A A B B A
Analysis(based on CV)
NTPC NHPC PGC RI TP CESC SJVN TORP

GPM B B A B B B A B
NPM B B A B B A A B
RONW A B A A B B A B
ROA B B A B B A A B
ROCE B A A A B B A B
CR B A A A B B B A
QR B A A A B B B A
DE B A A B A B A B
DTA B A A A B A B B
ITR B A A B A B B B
DTR A A A A B A B A
FATR A B A B A A A A
conclusions
• Power industry-equity driven industry.need to
improve liquidity position for most companies in
industry
• SJVN and PGC fundamentally very strong with
very high net profit margins compared to peers.
• Tata Power and Torrent power have many areas
to focus upon as they are lagging behind the
competitord in ROI and Profitability.Also CV is
higher than peers.Tata power is unable to convert
most of it’s credit sales into cash.
continued…
suggestions
NTPC NHPC Power Grid corp.
•Focus on reduction in •Focus on improving ROE, •Increase equity financing
cost of goods sold to by either using debt to improve solvency
improve profitability financing(providing •Use long term financing
•To reduce generating leverage),or cutting to finance assets to
costs by using quality operating costs improve liquidity
raw material

Reliance Infra Tata Power CESC


•To focus on increasing •To assure better returns •The company should find
debtors turnover ratio by to stakeholders by a way to reduce
improving collection improving ROE,RONW COGS(stock in trade) to
efficiency •To improve inventory to improve its Gross profit
cash conversion by margin and ultimately
increased frequency and net profit margin
less quantity
SJVN Torrent power
•Company should use it’s •Torrent power should
assets or short term focus on building stable
financing more business model with
efficiently negotiable terms with
•Company can focus on suppliers and with
providing long term consistency and
credit from suppliers and efficiency in operations
comparatively shorter
bibiliography
• www.crisil.com
• www.ibef.org
• http://ieefa.org/wp-content/uploads/2017/11/India-Electricity-Sector-Tra
nsformation_Nov-2017-3.pd
• www.moneycontrol.com
• Kothari, C. and Garg, G. (2014). Research methodology Methods and
Techniques. 3rd ed. New Delhi:
• Bhunia, A. (2010). Financial Performance of Indian Pharmaceutical
Industry-A Case Study. Asian Journal of Management Research ,
427-451.New Age International (P) Ltd., p.63.
• Ranjit Kumar Paswan.(2013) “Analysis of Solvency of Selected FMCG
Companies in India”. Global Journal of Management & Business Studies,
ISSN 2248-9878, Vol. 3, No. 4, PP. 401-406
THANK YOU

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