A Fundamental Analysis Of Mrf Tyres Finance Essay - Free Essay Example

Sample details Pages: 4 Words: 1287 Downloads: 7 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? The fundamental analysis of any stock generally begins from a macro-economic perspective and then moves down to the specific sector and finally narrowing down to the company analysis. The stock for fundamental analysis is MRF Tyres. The analysis will follow given below steps: Economic Analysis During the current global crisis, all the countries had suffered large amount of losses. As a result of which, all had registered a fall in GDP growth rate. However, India and China are the only two countries to register a positive rate even in this global meltdown scenario. At present, the economies are on the verge of a recovery and the recession seems to be a thing of near past. Now, India has a better chance to recover better than other countries due to its isolation from the global crisis for a relatively long period of time as well as the relatively less losses suffered unlike that of the European nation or for that matter even the USA. The following table describes the key factors indicating Indian economic growth: Head 2009-10 2008-09 GDP Growth Rate 8.6% 5.8% IIP 17.6% 1.1% Inflation 9.6% 1.3% Fiscal Deficit Rs 53993 Cr Rs. 54158 Cr FIIs $ 66.5 Bn $21.3 Bn Forex Reserves $ 279.6 Bn $ 251.7 Bn Sensex on Ju ly End 17868 14645 Nifty on July End 5367 4340 Clearly from above data, we can observe that the economy is on the verge of recovery and it is showing promising signs. An important factor to consider here is that, where all nations are fighting to remove deflation and accelerate growth, India on the other hand is trying to curb inflation. Don’t waste time! Our writers will create an original "A Fundamental Analysis Of Mrf Tyres Finance Essay" essay for you Create order Sector Analysis The automotive sector had witnessed a large fall in demand due to the global meltdown. Apart from this, the fall of auto giants like the General Motors, Chrysler and Ford also acted as a damper for the growth of this sector. As a result of this, many companies which were directly or indirectly related faced huge amount of losses. Typically, Indian automotive sector which was on its way to be an automotive hub hit badly since it was in its nascent stages wherein huge investments were done and the recession during the payback period made companies go haywire. Following table will describe Indias position in this sector: India Indias Competitiveness Availability of Qualified Engineers USA Germany China The fact that India has large pool of talent available at a relatively low cost is as an added advantage for this sector. Apart from this, this sector is composed of big Indian players like the TATA, Maruti, Mahindra and many such more. Presently, the launch of Tata Nano has received worldwide attention and marked the importance of India in this sector. Some of the major auto players in India are: Name Last Price Market Cap. (Rs. cr.) Sales Turnover Net Profit Total Assets Tata Motors 846.35 48,292.73 35,593.05 2,240.08 25,559.83 Ashok Leyland 70.95 9,438.75 7,244.71 423.68 5,936.76 Tata Motors (D) 604.75 3,881.02 Eicher Motors 984.10 2,634.20 378.01 37.53 413.30 Swaraj Mazda 298.25 431.62 716.76 21.46 316.81 Maruti Suzuki 1198.6 34628.76 29623.01 2497.62 10043.80 Mahindra Mahindra 661.50 38263.44 13093.68 836.78 10710.38 Due to all these reasons, The Government of India (GoI) has identified the automotive sector as a key focus area for improving Indias global competitiveness and achieving high economic growth. The Government formulated the Auto Policy for India with a vision to establish a globally competitive industry in India and to double its contribution to the economy by 2010. It intends to promote Research Development in automotive industry by strengthening the efforts of industry in this direction by providing suitable fiscal and financial incentives. Company Analysis Introduction MRF is India`s largest tyre manufacturer, having a 22% market share. The company derives over 95% of its revenues from its core business i.e. tyres, the rest comes from its presence in toys and paints. This focus on tyres has enabled it to constantly increase capacities, and maintain market leadership and profitability in most segments. MRF exports its products to over 75 countries. Credit rating agency, CARE has assigned a AA+ rating to the Long-term Bank Facilities of MRF (MRF). This rating is applicable for facilities having tenure of over one year. The company signed the memorandum of understanding (MoU) with government of Tamil Nadu for the new MRF plant to be located at Perambulur, Trichy and also for expansion of its existing plants in Tamil Nadu. This will be MRF`s third plant to be established in Tamil Nadu. MRF will invest Rs 1.25 billion in production facility of the tyres the product is produced after three years of in house research. The production will start at its Me dak facility in Andhra Pradesh. The companys Net sales and PAT are expected to grow at a CAGR of 11% and 32% over FY08 to FY11E. Key Ratios Particulars FY08(12 m) FY09E(12 m) FY10E(12 m) OPM (%) 13 13 13 NPM (%) 4 5 5 ROE (%) 19 18 17 ROCE (%) 19 19 18 P/BV(x) 1.88 1.54 1.28 P/E(x) 10.12 8.49 7.72 EV/EBDITA(x) 1.03 3.42 3.38 Debt-Equity ratio 0.78 0.70 0.64 Key Data Sector Auto Tyres Face Value 10.00 52 wk. High 8040.00 52 wk Low 4126 BSE Code 500290 Moving Average Values Moving Days BSE NSE 30 7699.81 7712.13 50 7550.59 7561.96 150 6819.38 6843.95 200 6587.57 6617.71 Peer Group Comparison The sector comprises of foreign as well as domestic players and hence represents a typical competitive market. The following table describes the typical values of these competitors: Name Last Price Market Cap. (Rs. cr.) Sales Turnover Net Profit Total Assets MRF 7,329.55 3,108.57 5,672.84 253.03 1,654.21 Apollo Tyres 63.90 3,220.72 5,036.80 414.99 2,859.55 Balkrishna Ind 669.00 1,293.29 1,394.30 208.73 940.64 JK Tyre Ind 164.60 675.84 3,691.64 163.47 1,553.60 Ceat 134.00 458.86 2,830.61 161.03 1,058.11 PTL Enterprise 34.00 225.04 25.00 2.97 90.02 TVS Srichakra 279.05 213.67 706.39 29.82 222.18 Elgi Rubber 8.40 89.88 62.01 4.25 84.63 Financials Following tables show the performance of MRF for the past 5 years, this can be used to estimate future earnings of the stock so as to perform fundamental analysis. The Balance Sheet for MRF is as follows: Balance Sheet of MRF Sep 05 Sep 06 Sep 07 Sep 08 Sep 09 Sources Of Funds      Total Share Capital 4.24 4.24 4.24 4.24 4.24 Reserves 749.81 820.05 981.91 1,116.55 1,357.18 Total Debt 542.9 539.98 607.86 962.19 292.79 Total Liabilities 1,296.95 1,364.27 1,594.01 2,082.98 1,654.21 Application Of Funds      Net Block 536.81 649.67 656.75 866.55 933.56 Capital Work in Progress 151.99 66.26 243.03 443.68 286.24 Investments 13.75 70.23 72.02 68.56 148.57 Inventories 553.56 565.63 693.34 984.28 650.47 Total Current Assets 1,061.63 1,158.02 1,318.14 1,696.39 1,290.10 Total CA, Loans Advances 1,190.10 1,296.82 1,562.93 2,003.71 1,695.98 Total CL Provisions 595.7 718.71 940.72 1,299.52 1,410.14 Net Current Assets 594.4 578.11 622.21 704.19 285.84 Total Assets 1,296.95 1,364.27 1,594.01 2,082.98 1,654.21 The Profit and Loss Statement for MRF is as follows:   PnL for MRF Sep 05 Sep 06 Sep 07 Sep 08 Sep 09 Income      Net Sales 2,975.74 3,746.69 4,410.22 5,060.81 5,679.57 Total Income 3,040.00 3,772.55 4,499.37 5,147.82 5,476.62 Expenditure      Raw Materials 2,179.21 2,685.70 3,124.83 3,645.42 3,613.20 Total Expenses 2,840.98 3,477.81 4,035.76 4,711.96 4,759.90  Operating Profit 175.29 257.83 451.67 438.08 705.43 Interest 32.66 49.27 49.24 66.25 68.92 PBDT 166.36 245.47 414.37 369.61 647.8 Profit Before Tax 56.04 99.81 260.96 200.09 398.48 Reported Net Profit 40.31 79.91 171.78 141.97 256.32 Total Value Addition 661.77 792.11 910.93 1,066.54 1,146.70 Equity Dividend 8.48 8.48 8.48 8.48 10.6 Corporate Dividend Tax 1.19 1.19 1.44 1.44 1.8 Per share data (annualized)      Shares in issue (lakhs) 42.41 42.41 42.41 42.41 42.41 Earnings Per Share (Rs) 95.05 188.42 405.03 334.74 604.37 Equity Dividend (%) 200 200 200 200 250 Book Value (Rs) 1,777.94 1,943.56 2,325.20 2,642.66 3,210.03 The Cash Flow Statement for MRF is as follows:   Cash Flow Sep 05 Sep 06 Sep 07 Sep 08 Sep 09       Net Profit Before Tax 59.52 63.4 260.96 211.39 398.48 Net Cash From Operating Activities 62.05 274.86 306.2 269 862.93 Net Cash (used in)/from -231.55 -227.09 -335.44 -566.29 -233.46 Investing Activities      Net Cash (used in)/from Financing Activities 116.39 -40.5 49.17 326.47 -671.93 Net (decrease)/increase In Cash and Cash Equivalents -53.11 7.27 19.93 29.18 -42.46 Opening Cash Cash Equivalents 111.94 46.03 53.3 73.17 102.35 Closing Cash Cash Equivalents 58.83 53.3 73.23 102.35 59.89 MRF has also been given dividends at the rate of about 250% over the face value of Rs 10 of the stock price. From above financial tables, we have following important data: Head Value D/E ratio 0.71 ROE 17% Cost of Debt 7.14% k 12.9% CAGR 9.5% Now, we can apply dividend discount model to get the present share price P0=D1/ (k-g) As the growth rate is 9.5%, dividend will also grow by same rate, thus share price will be P0 = 250*1.095/ (.129-.095) P0 = 8051.47 Calculated Price Current Market Price Difference 8051.47 7329.55 -8.96% Recommendation From above outlook and conclusion, we can infer that the stock is bound in northern direction. Also the calculated price as per the Dividend Discount Model comes to Rs. 8051.47 while it must be noted that the market price is Rs. 7329.55. This indicates an under pricing of the stock by 8.96%. Therefore, the recommendation for MRF Tyres is BUY We have arrived at this recommendation after indepth analysis of the macro and micro economic factors. The Dividend Discount Model used for arriving at price has mathematical validity and hence is a correct tool for deriving prices. Apart from these, the future situations of the economy, sector and the Company have also been taken into consideration.

Non Fiscal Barriers And The Free Movement Of The European...

This question concerns non-fiscal barriers to the free movement of goods in the European Union. Issues concerning Articles 34,35 or 36 of the Treaty on the Functioning of the European Union (TFEU) are raised and Brian’s potential claim is against France as the Member State who has enacted measures which may restrict imports and exports, thereby violating the Treaty. Firstly, considering the licence required by French legislation to import PS’s, this could amount to a selling arrangement which is defined in the case of Keck as rules that concern who sells the product and when, where and how they go about it. Those selling arrangements which apply equally in law and fact will not invoke Article 34 TFEU. As the product, the PS, in not directly affected, the requirement of a licence may be a selling arrangement . However the selling arrangement does not apply equally in law and fact because there is no licence requirement mentioned for domestic producers of PSs . As the li cence discriminates against imports, this may invoke Article 34 and it is likely to be a measure equivalent to a quantitative restriction (MEQR). MEQRs were defined in Dessonville as â€Å"All trading rules capable of hindering, directly or indirectly, actually or potentially, intra-Community trade† . In other words, an MEQR applies only to imports and not to everyone. As the licence is an additional requirement for imported PSs, and applications are only considered once a year in August, it makes imports moreShow MoreRelatedThe Benefits Of United Kingdom1408 Words   |  6 PagesThis essay will answer the essay topic on Economic Integration and discuss the extent to which the benefits of United Kingdom (UK) being a member of the European Union (EU) outweigh the costs. In short, giving the advantages and disadvantages of UK being part of the EU. This essay will start with a brief definition of Economic Integration. 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Is war ever justified Free Essays

Wars can be justified through the utilitarian theory and cost benefit analysis. These are dependent on whether the intention of the war is right and the cause for the war is just. Further, wars are only justified when other forms of conflict management have been tried and have failed. We will write a custom essay sample on Is war ever justified or any similar topic only for you Order Now There are many types of war, however this essay will focus on military war in particular. Utility Theory and Just War The theory of utility is one way to justify war. The utilitarian approach is defined as the pursuit of the greatest good of society for the greatest number f people in society. There are two branches of utility theory – act and rule. Act utilitarianism looks closely at the Consequences of the act Of war in order to justify engaging in war. Rule utilitarianism will only condone war when the reason for entering a war is just in itself, is based on good intentions and not for selfish reasons. In essence, act utilitarianism can be summarized as the ends justifying the means, while rule utilitarianism can be summarized as genuine intentions justifying the means. For instance, the Allied Forces declaring war on Germany’s invasion of their gibbous as well as on their anti-Semitic activities is an example of utilitarianism in action. The declaration of war was to prevent further harm to the world even if it did mean a significant loss to the Allied Forces by engaging in such actions. The end of the German terror as well as the protection Of the persecuted justified the means through which this was achieved. The distinction between act and rule utilitarianism while easily distinguishable in theory, is much harder to apply in real life. The example given above can be categorized under both types of utility theory. The protection of a large persecuted number of people justified entering into war against the anti- Semitic administration in Germany. Viewing it in this manner allows rule utilitarianism to come into play. At the same time, looking at the consequences of war -? which would be the saving of not only Jews, but also the prevention of invasion of other countries in Europe allows act utilitarianism to justify the Allied Forces declaration on war on Nazi Germany. Utility theory does run the risk of being manipulated and abused and has been used by terrorists and Islamic fundamentalists to justify the use of rower and force for â€Å"jihad† or what they call, â€Å"holy war†. However, it must be noted that utility theory condones war only if it causes the greatest good for the greatest number of society. Even if â€Å"jihad† is considered to be the greatest good, it is only from the perspective of a select few people with biased opinions. Hence, a terrorist’s justification of war via utility theory cannot be said to be a true justification at all. Be it act or rule utilitarianism, so long as the ends result in the greatest good for the largest number of people in society and are made with the best intentions in mind, war is justified. Cost-benefit Analysis and Just War The benefits should outweigh the costs in order to justify engaging in war. Cost-benefit analysis is a way of weighing the strengths and weaknesses of alternatives. It helps us determine whether an approach was worth the adoption and practice in terms of benefits in labor, time, Cost savings and so on. It is largely considered an economic analysis and is an approach that can be taken when determining whether a war is justified because of the high socio-economic costs involved in war. A good way to go about analyzing this would be to look at a case study of the Iraq war. The Gulf war resulted in 220,000 Iraqi casualties and a few hundred thousand wounded Iraqis. The costs of war amounted to 6 trillion US dollars. These numbers are neither small nor insignificant. The benefits, however, are the exact opposite. As far as tangible benefits go, the Iraqi economy saw a slight growth in its GAP since the end of the war. Part of this, is a windfall due to high oil prices but if the war had not taken place, oil sanctions imposed on Iraq would have severely curtailed Iraqi oil sale. This would have further crushed the already dying economy pre-war. Of course, since Cost-Benefit analysis is primarily economic in nature, on paper, the growth in Iraq’s GAP is touted by pro-war candidates as being worth the effort. However it would be ridiculous to imagine that Iraq’s economy would have grown enough to cover the costs of war even, much less to actually grow enough to recover and sustain the country post-war. Further, as cost-benefit analysis also should include some elements of intangibility, one must take note Of the accessory costs that came along with the war. Besides the devastation and disease that struck Iraq, neighbors Iran also saw acceleration in its nuclear programmed because it saw that as the only way to prevent an imminent US invasion. This is not good for the global economy because it makes the Middle East a very dangerous place. Further, there is a high continuing rate of violence in Iraq because society sees it as the only form of protection for them. Of course, regime change and the demise of Sadism Hussein must be considered in the benefit analysis but despite that, Iraq is still in shambles -? both economically as well as socially. Overall, a cost-benefit analysis allows us another opportunity to evaluate a war and to decide if it can be justified. In the example of Iraq, we can see how it can be used to prove that it cannot be justified. Counter argument However, despite these two analytical methods of justifying war, they come with a caveat. The caveat being that they are only used to justify war when negotiations have failed between parties; all peaceful methods have been already exhausted and war is the final and only option available to them. Unfortunately, this is not always the case. Many a time, countries prepare for war while negotiations are ongoing. Worse still, they may not even engage in any peaceful forms of collaboration or settlement at all. The notions of war always remain at the back of countries’ minds. The Cold War may seem like a successful instance where there were no missiles or bombs unloaded on either the USSR or the US. However, there was a war nonetheless and a war which lasted 30 years. Despite supposed ‘peaceful’ negotiations between the two superpowers, the thought of missile warfare was always at the back of their minds. It would not be far-fetched to imagine that this severely impacted the success Of their discussions. One cannot fully and calmly negotiate with a finger on the trigger. It was merely a combination of luck, timing and the right set of leaders that prevented the outbreak of a disastrous third world war. Conclusion War can be justified through two methods – utility theory and cost-benefit analysis. These allow an intangible and tangible account of the ways in which a war can be explained as being necessary. How to cite Is war ever justified, Essays

Mise En Scene free essay sample

An analysis on how Mise-en-scene and sound create meaning and generate response in the film Marnie, by Alfred Hitchcock. The scene is of Mark trying to rekindle Marnie’s memories from the night of her mother’s ‘accident’: Marnie, having seeing Mark trying to hold back her mother’s punches, begins to remember parts from that night. The first shot, of Marnie, her mother and Mark, uses Mise-en-scene to show the higher achy within the three characters. Whereas towards the beginning Hitchcock had always had Marnie positioned higher than other characters to show her importance and power, he now has her positioned lower than the other two characters; she is constantly being looked down on by both Mark and her mother. It introduces the aspect of her being childlike because she is now having to look up to other people and being talked down to rather than on an equal level. We will write a custom essay sample on Mise En Scene or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page This idea is reinforced when she begins speaking as though she were back to the time of the ‘accident’ – her words are spoken erratic and panicked. Another example Hitchcock shows to imply the idea of Marnie being childlike is that all of the movements and gestures that are directed towards Marnie, are those that would be expected to occur between a parent and child. Although the speech within the first shot is Diegetic Sound; there are two sub-types within the shot. All speech up until when Marnie speaks to tell Mark to let her mother go is simple diegetic sound. However when Marnie begins speaking the sound briefly becomes both simple diegetic; as she is speaking in the present to both Mark and her mother, and displaced diegetic sound; as she is saying these words also from her past. As the scene moves forward slightly external non diegetic sound is introduced with the diegetic sound. The background music is the same sound sequence repeated multiple times, but increasing the volume as it is repeated. This background music creates a tense atmosphere as they are waiting to see whether or not Marnie will remember. The tense atmosphere is reinforced with having the simple diegetic sound of the rain going on outside of the house. Hitchcock has Marnie’s costume as expensive clothing that would communicate to the audience that the person wearing them is rich and powerful. However he contrasts this by her appearance in the clothes and the makeup that she is wearing; Marnie’s appearance appears to be dishevelled, hair all over the place and untidy unlike earlier in the film where it was tied back without a hair out of place. The use of use blocking that Hitchcock uses in this shot o show the identification of Marnie as detached from the other characters. She is always, in this scene, further away from others to create difference and the show that Mark and her mother cant break into her world of thought. The external diegetic sound used whilst she is trying to remember her also creates the feeling that she is lost; going in repetitive circles trying to build to the point where she can r emember her childhood memory. Hitchcock has the character Mark wear a large amount of white clothing in this scene, the white clothing is also apparent in the flashback in the next shot. The white clothing was used as a way to break in to Marnie’s memories so that she could begin to remember; it brought her back to that night by portraying Mark as the man in her flash back. The simple diegetic sound of Mark knocking on the wall also succeeds in portraying Mark as the ‘man in the white suit’. During the flashback, there is very little colour apparent in the shot; the only colour shown that isn’t dark browns or greys, is the colour of each of the three characters present in the flashback. This symbolises the significance of them in the flashback; the place in which they are in is not the main focus, Hitchcock has chosen the costumes so that the stand out from the surrounding that they are in. This allows the audience to interpret that this flashback is purposely to show the incident that took place that night, and that it is the action and not the scenery that is going to be important. Between the shots of Marnie’s flashback and her back in the present, Hitchcock has used a sound bridge over both shots. In both shots there is lightning going on which is significant in the reasoning behind Marnie’s fear, as well as pointing out that she is coming closer to figuring out what happened that night to make her the way she is now. Hitchcock intended the lightning to be a significant trigger to Marnie’s memories and using that, as well as the similarities in clothing between Mark and the ‘man in the white suit, help to break through the emotional block that Marnie has on her memories of the night. The lightning symbolises a warning in her flashback, as it highlight over the man holding Marnie, that something bad is going to take place. As the fight takes place within the scene all of the simple diegetic sound becomes echoed in the shot, slipping in and out of displaced diegetic sound as Hitchcock switches between the past and present. This is used to show the confusion that Marnie’s in; how she is mentally between both the past and present, believing that she is experience her past while she is with Mark and her mother. When Marnie’s mother reaches for the fire instrument Hitchcock uses a complete contrast in colours; the weapon is a dark colour, as if foreshadowing the death that the weapon is going to be used for, it symbolises something bad and dangerous. And when the weapon is lifted all that you can see it the white clothing of the man. These two contrasts allow the audience to experience that something is going to happen with that weapon, and that the white clothing that the man is wearing is going to be tainted and changed when they are connected. Throughout the shots of the present and Marnie’s past, other than the simple diegetic sound of the speech between characters and the sound effects of the weapon impacts; Hitchcock has the two shots in complete silence. The silence ensures that all focus is clearly on the action taking place and symbolises the silence that Marnie has been in all those years with not being able to explain to both herself and anyone else why she is afraid of a man’s touch, or the lightning, or the colour red. The sound of Marnie crying in both the present and the past also shows her vulnerability to the event and refers back to her being presented as childlike in the first paragraph. The weapon in the next shot is foregrounded to show that, as Marnie got up from her chair, she is going to take it. This gives the audience the chance to wonder whether or not Marnie will actually pick up the weapon. When she does pick it up, Hitchcock uses the contrast between the size of the weapon and Marnie’s hands to symbolise the fact that it does not belong in her hands; she is too small and powerless compare to the weapon that is in her hands. When Marnie lifts the weapon above her head there is a brief moment in which Hitchcock allows the camera to linger longer on the shot of her holding it over her head. This could have been intended as a way for the audience to believe that Marnie is hesitating on actually going through with attacking the man with it. However as she begins to bring down the weapon there is the thunder and lightning that flashes in the window besides Marnie as she finally makes the impact. This lightning symbolises the final decision as she brings it down towards the man and the break though into Marnie’s memories: as well as symbolising the breaking of her innocence that night when she killed the man. The next shot breaks the silence of not having any non diegetic sound. As Marnie screams Hitchcock gives the audience a point of view shot in which we see exactly what Marnie is seeing. The diegetic sound is loud and creates tension as it repeats one sound sequence. It allows the audience to soak up the true nature of what Marnie’s done as we see the blood soaked in to the man’s contrasting white shirt. The amount of blood stained onto the shirt almost covers the whole shot as we only see small amounts of white left visible. The white symbolises the innocence that Marnie thought she had, but now the memories of that night have destroyed and tainted what she thought. When Hitchcock zooms the camera forward into the blood, he brings the red colour forward and makes it appear more vibrant. This symbolises all of Marnie’s memories becoming clear and the fact that she can’t hide from the truth anymore because it’s clear and in front of her.