ASSIGNMENT 1.

FINANCIAL REPORT
Submitted By-

Rahul Gupta 2016A4PS0366H

1.1.1) Increase in Fixed Asset
Fixed Asset of the company grew from 473.7 million in 2012 to 931.5 million in
2018 with CAGR Of 15.4%.

Total Fixed Assets

1200

1000

800

600
Total Fixed Assets
400

200

0
FY FY FY FY FY FY FY
2012 2013 2014 2015 2016 2017 2018

Analysis of Fixed Asset

1. Increase in Fixed Asset are particularly important to capital intensive industries

such as the Auto Industry.
2. The numbers show a increase in Fixed Asset for the company and thus the
company can charge heavy depreciation which will affect its Profit but not its
operating Cash Flow.
3. Company’s investing in Fixed Asset shows the company’s confidence in its
growth opportunities.
4. Increase in Fixed Assset enabled the company to increase their capacity hence
exploit the economies of scale making it difficult for new entrants to compete
with existing company’s brand value.
1.1.2) Increase in Sales

Sales grew steadily from 3,628.60 million in 2013 to 5718.1 million in 2018 at a CAGR
of 9.24 %.

Sales
7,000.00
6,000.00
5,000.00
4,000.00
3,000.00
Total Revenue
2,000.00
1,000.00
0.00

Analysis of Sales

1. Sales numbers consolidated every year hence showing the increase in the Market
Preference for Atul Auto over the years .
2. Number of units sold also increased depicting that the sales grew In a more
sustainable manner not only due to Selling Price increase.
3. Atul Auto has increased its sales at a healthyrate. It has been able to maintain its
operating & net profit margins (OPM &NPM) at levels of 9-11% and 5-7%
respectively.
4. The sales growth achieved by Atul auto over last 5 years has been contributed
both by product-price increase (measured by price per vehicle sold) and
increased quantity of product sold. The growth has come mainly from increase in
quantity sold which shows that they are expanding its reach in markets by
selling higher quantities.
1.1.3) Increase in Profit

Income grew from 259.2million in 2013 to 486.7 million in 2018 at a CAGR of

12.24%.

Net Income
600

500

400

300

200 Net Income

100

Analysis of Net Income Increase

1. If we compare the cumulative PAT for last 8 years (2012-18), we realize that
company has collected cash more than its profits. It indicates that the company is
able to collect its profits in cash and it is not stuck in receivables & inventory. It
is a good sign for a healthy company.
2. Net Income increased over the years enabling the company to invest in Fixed
Assets , funding Research and Development Programs and increasing CSR
activities.
3. We can see that though the profit margin has been fluctuating over the years, it
has still been able to maintain it at respectable levels of 5-7%.
4. We can see that though the profit margin has been fluctuating over the years, it
has still beenable to maintain it at respectable levels of 5-7%.
1.1.4) WACC(Weighted Average Cost of Capital)

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Cost of 11.50% 11.80% 13.00% 12.00% 10.10%

Equity
Weight of 100.00 100.00% 100.00% 100.00% 100.00%
Equity %
Weight of 0.00% 0.00% 0.00% 0.00% 0.00%
Debt
WACC 11.50% 11.80% 13% 12% 10.10%

Analysis of WACC

1. Weighted Average Cost of Capital for Atul auto has been almost constant over the
years .The graph shows that company is debt-free and is only financed through
equity.
2. So the company can use their funds for distributing dividends rather than paying
interest expenses which makes it a strong pick for the equity investors.

1.1.5 ) Market Share

Market Share
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Analysis of the Market Share

1. Market Share rose from 5.8% in FYN 2013 to 7.7% in FY 2018

2. Market Share grew steadily for ATUL Auto because of the growth in the
Domestic Market which was greatly fuelled by the growth in rural market where
the company had strong presence .
1.1.5) STANDARD DEVIATION OF RETURNS AND VOLUME TRADED

Standard Deviation Daily -Daily - Weekly Weekly Weekly Monthly

One Three - One - Two - Two - Two
Month Month Year Year Year Year
Range Range Range Range Range Range
*
2.82% 1.93% 2.68% 3.69% 5.31% 6.42%

Average Volume Traded(per day)

16000

14000

12000

10000

8000

6000

4000

2000

0
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Analysis of Standard deviation of Returns and Average Daily Volume

1. The standard deviation of Daily Three Month range of Stock Returns depicts that
the stock is less Volatile as compared to the Index Returns of the same period.
2. Average Daily Volume traded rose significantly during 5 years which depicts the
liquidity of the share on the National Stock Exchange which was the highest in
the 2 wheeler segment on the National Stock Exchange.
1.1.6) Liquidity Ratios

Interest Coverage Ratio and Cash Coverage Ratio

200
180
160
140
120
100 Interest Coverage Ratio
80 Cash Coverage Ratio
60
40
20
0
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Analysis on Liquidity Ratios

1. Interest Coverage Ratio provides the protection earnings provide against

interest expenses while The cash coverage ratio is useful for determining the
amount of cash available to pay for a borrower's interest expense
2. Interest coverage ratio is recently at the exceptional level because the
company has paid off its debt and now it’s a debt free company. This is a sign
of a healthy company
1.1.7)Operating Efficiency Analysis

Fixed Asset Turnover

10

4 Fixed Asset Turnover

2

0
FY FY FY FY FY FY FY
2012 2013 2014 2015 2016 2017 2018

Analysis of Fixed Asset Turnover

1. Net fixed asset turnover (NFAT) has decrease from 7.4 in FY2012 to 6.2 in
FY2018 which means company is not able to convert its fixed asset
2. But After 2017 company has increase NFAT from 5.3 in FY2017 to 6.2 in FY2018
, which is a remarkable improvement.
3. It has a straight impact on the self-sustainable growth rate (SSGR) of the
company. Atul Auto Ltd currently has a Self-Sustainable Growth Rate (SSGR) of
32%, which has increased from negative levels in the past.

1.1.8) Dividend Yield

Dividend Yield
1.40%
1.20%
1.00%
0.80%
0.60%
Dividend Yield
0.40%
0.20%
0.00%
FY FY FY FY FY
2014 2015 2016 2017 2018

Analysis of Dividend Yield

1. The company rewarded its shareholders by increasing its dividends from
1.04 % to 1.33%
2. This is the sign of a shareholders friendly management
Conclusion

After analysis of financials of Atul Auto for last 6years (2012-18),

1. I realized that it is growing at a healthy growth rate while maintaining good
profitability margins.
2. Atul auto is able to increase its sale by capacity expansion without overly
leveraging its balance sheet, as it has been using cash generating from operations
to pay off its lenders and company has zero debt at this point.
3. Atul Auto Ltd could achieve its fast-paced growth without needing additional
capital.
4. An investor would notice that the debt of Atul Auto Ltd started reducing FY2011
onwards and soon it turned debt free.
5. Atul Auto Ltd has been paying regular dividends to its shareholders. It amounts
to sharing the fruits of growth with shareholders. These are signs of a
shareholders’ friendly management.
6. Atul Auto Ltd has been growing at a good pace when compared to its peers and
has a management that seems to be competent and shareholders friendly.

Stakeholder Analysis

 Supply: The Indian automobile market has some amount of excess capacity.
 Demand: Largely cyclical in nature and dependent upon economic growth and per
capita income. Seasonality is also a vital factor.
 Barriers to entry: High capital costs, technology, distribution network, and
availability of auto components.
 Bargaining power of suppliers: Low, due to stiff competition.
 Bargaining power of customers: Very high, due to availability of options.
 Competition: High. Expected to increase even further.
Sector Prospects

The current government has been trying to revive the economy and has been very
aggressive in terms of infrastructure spending. The spending on constructing roads,
airports and expected high GDP growth will benefit auto sector in general. In fact, the
lower interest regime also bodes well the for the sector as more than 80% of the
vehicles in India are financed