...SUMMER PROJECT REPORT ON “EQUITY REASER CH OF INDIAN COMMERCIAL VEHICLES INDUSTRY” In the partial fulfilment of the Degree of Master of Management Studies under the University of Mumbai By Mr. Mihir Bhatia (Roll No: A- 05) Under the guidance of: Mr. Pranjal Wagh Prof. Nilay Savla (External Guide, Organization) (Internal Guide) Aruna Manharlal Shah Institute of Management and Research Ghatkopar [W], Mumbai-86 2010-11 Acknowledgement In the course of researching and completing this project, I have been fortunate in receiving help from many individuals, without them it would never have come to fruition. I therefore wish to express my gratitude to the following that have helped me throughout my project. I acknowledge and thank the Mumbai University and My Institute “ARUNA MANHARLAL SHAH INSTITUTE OF MANAGEMENT AND RESEARCH” who gave me the opportunity to undertake this very summer project in MMS Course. And the first person that comes to mind for this is Our Prof. NILAY SAVLA, who is not only my Mentor but also the person who made me incline towards my goal of pursuing Finance as a career. Her support and inputs are valued and respected. I wish to express my gratitude to Samarth EduFin Pvt. Ltd. to give me the opportunity to work in the Company as a Management Trainee. I am deeply indebted to Mr. Pranjal Wagh for his efforts in terms of time, energy and knowledge sharing. He has been most gracious and accommodating. Without any...
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...Microsoft’s Bid for Yahoo! Timeline As early as in late 2007, Microsoft proposed a number of cooperation alternatives with Yahoo! ranging from commercial partnerships to a merger, which were rejected by Yahoo!. Regarding to Microsoft’s proposal of acquisition in 2008, here are some key issues: Late 2007 Yahoo! rejected partnerships or merger proposal from Microsoft 31/1/2008 Microsoft announced its bid for Yahoo! at US$31/share 11/2/2008 Yahoo! rejected the offer, saying that it undervalued the company 28/2/2008 Google released news that with willingness to acquire 20% Yahoo share 6/4/2008 Final call from Microsoft – threatened Yahoo! Board with a proxy battle 2/5/2008 Yahoo! asked for US$37, Microsoft rose to US$33 4/5/2008 Microsoft withdrew US$47.5 buyout offer 5/5/2008 Yahoo!’s value dropped to $34 billion 17/5/2008 Yahoo! accepted the price $33-34, but Microsoft only interested in search business, Yahoo decided instead to sign a search advertising deal with Google. Microsoft’s Motivation of Acquisition After the failure of the deal, Steven Ballmer was made fun by the public that his greatest contribution during his tenure was: not able to close the deal. Why would Microsoft pay such high cost to acquire Yahoo! at the first place? As we know, Google was the dominant player in this industry and it kept consolidating its dominance through acquisition. Microsoft was eager to content against its biggest rival. The combination...
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...Hindustan Petroleum Corporation Limited * Stock Analysis Contents About Hindustan Petroleum Corporation Limited 4 The Indian Oil and Gas Industry Overview – Why the industry is Superior 4 About the industry 4 Yearly Consumption 5 Yearly Domestic Production 6 Imports 7 Industry Prospects 8 HPCL – Superior Business from Superior Industry 9 Industry Growth vs Overall Economy Growth 10 HPCL’s Profitability vs other Players in the Industry 10 Net Profit Margin 11 Return on Capital Employed 11 Return on Net Worth 12 Earnings per Share 13 Net Cash from Operating Activities 14 Barriers to entry in the Oil and Gas Industry 15 Growth Prospects of HPCL 15 Valuation Measures of HPCL 16 Intangible Assets of HPCL 17 Risk Parameters of HPCL 17 Use of Leverage by HPCL 18 Debt Equity Ratio 18 Return on Equity & Earnings per Share 19 Barriers to Entry enjoyed by HPCL 20 Shareholders’ Objectives and Returns 21 Quality Management – ROE and Stock Price 22 Shareholding Pattern 23 Valuation of HPCL 24 Free Cash Flow to Firm Approach 24 Dividend Discount Model 27 Ratios – ROE/PE & PEG 28 ROE/PE 28 PEG 28 Scenario Analysis 29 Optimistic Scenario 29 Most Likely Scenario 29 Pessimistic Scenario 30 Conclusion 30 References 31 About Hindustan Petroleum Corporation Limited Hindustan Petroleum Corporation Limited is a major player operating in the Indian Oil and Gas Industry with around 20% market share. HPCL is...
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...Discounted Cash Flow Valuation: Basics Aswath Damodaran Aswath Damodaran 1 Discounted Cashflow Valuation: Basis for Approach t = n CF t Value = ∑ t t = 1( 1 +r) where CFt is the cash flow in period t, r is the discount rate appropriate given the riskiness of the cash flow and t is the life of the asset. Proposition 1: For an asset to have value, the expected cash flows have to be positive some time over the life of the asset. Proposition 2: Assets that generate cash flows early in their life will be worth more than assets that generate cash flows later; the latter may however have greater growth and higher cash flows to compensate. Aswath Damodaran 2 Equity Valuation versus Firm Valuation n n Value just the equity stake in the business Value the entire business, which includes, besides equity, the other claimholders in the firm Aswath Damodaran 3 I.Equity Valuation n The value of equity is obtained by discounting expected cashflows to equity, i.e., the residual cashflows after meeting all expenses, tax obligations and interest and principal payments, at the cost of equity, i.e., the rate of return required by equity investors in the firm. t=n Value of Equity = CF to Equity t ∑ (1+ k )t t=1 e where, CF to Equityt = Expected Cashflow to Equity in period t ke = Cost of Equity n The dividend discount model is a specialized case of equity valuation, and the value of a stock is the present value of expected future dividends...
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...Dart Group Plc Dart Group Plc A Financial Analysis Student ID – A4042738 Student Name – Chitra Naraindas Relwani Module Code - FRA Intake - 10 Programme - MSc Finance Assignment Type - Individual Assignment Page 1 of 27 Chitra Naraindas Relwani – A4042738 Dart Group Plc Table of Content Title Company Overview – Descriptive overview Strategies DuPont Analysis Comparison Ratio Analysis 6 Page number 2 Company Valuation and 8 LBO Resisting Takeovers Encouraging Sale Forecasting Negative Equity Reference Appendix 1-4 11 15 18 20 22 25 Page 2 of 27 Chitra Naraindas Relwani – A4042738 Dart Group Plc Company Overview Dart Group Plc is a publically traded company listed on AIM rather than the main stock exchange list due to its small size and potential to grow. It is categorised into the Travel and Leisure sector and Airline subsector. As described in the company’s website, Dart Group started in 1971 as Carpenter’s Air Services Ltd. and Carpenter’s Transport Ltd. supplying flowers to the United Kingdom mainland from Guernsey. Through organic growth as well as acquisitions, the company grew, changing its name to Dart Group in 1991. In 1988 the company listed on the Unlisted Securities Market (USM), which was an easier route to the capital market for small or new companies as explained in the London Stock Exchange website. In 2002 the company announced the launch of its low-cost airline division – Jet2.com and in 2007 Jet2 Holidays was launched...
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...* Our idea: Our business idea is not a newfound product or a yet to be explored market, it is an existing business with 100% competition. In a nutshell, our business idea is to open a flower shop catering to deliveries, formalities and small-scale events. Our objective is to be accessible and convenient whilst offering above par products. We came up with this idea through our love for flowers and the slight experience and skill we have in this field. It is a beautiful market with ability to create and innovate. We would like to expand our expertise and skills in this field and its popularity and relative higher demand for it recently makes it all the more appealing. Accessibility to this market could not be easier, the laws and regulations are reasonable and we have already established contacts within this field. At this point, it would be illogical for us to not come up with this idea. Our vision is to provide beautifully arranged flowers catering to small-scale events, formalities in accessible area and slowly yet surely be a dominant player in the market. Our mission is to provide all that is beautiful and add beauty with flowers to everyday life at affordable prices and superb customer service. * Resources: For our business recruiting research we utilized numerous resources. The Internet was of great help to us providing everything from the risk free rate to quotations for our delivery vehicle and fridges. Moreover, the Internet was of great assistance...
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...Dow 30 Case Table of Contents 1.1 Bordered Covariance Matrix 3 1.2 Determination of Target Return 3 1.3 Solver Parameter 4 1.4 Efficient Frontier Creation 4 1.5 Asset Weights 5 1.6 Weekly Rebalancing 6 1.7 Portfolio Calculations 6 2.0 Firm Analysis: Home Depot 7 2.1 Trends 7 2.2 Analysis of current Macro-economic conditions 8 3.0 Analysis of Return & Benchmark 8 4.0 Analysis of Porter’s Five Forces 10 4.1 Intensity of Competitive Rivalry 10 4.2 Threat of entry for new competition 10 4.3 Threat of Substitutes for Product & Services 11 4.4 Supplier Power 11 4.5 Buyer Power 11 4.6 Closing Remarks 11 5.0 P/E 12 6.0 Individual Company Analysis 12 6.1 Growth ratios: 13 6.2 Gross profit margin: 13 6.3 Financial Strength: 14 6.4 Efficiency ratios: 14 6.5 Management Effectiveness: 14 7.0 Dividend Discount Model Analysis 16 7.1 Calculations 17 7.2 Methodology & Result 17 8.0 Modeling: Free Cash Flow to Firm & Free Cash Flow to Equity 18 Appendix A 22 Appendix B 25 1.0 Asset Allocation Model 1.1 Bordered Covariance Matrix The chapter 7 in class spreadsheet model was a strong foundation that helped teach the group how to find an optimum portfolio. To create our portfolio model, a bordered covariance matrix and an efficient frontier was developed to find our minimum variance portfolio in the DOW 30 trading case. A screen shot of our model developed on October the 8th, 2010 is in the...
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...other lines of business. In the 1980s, corporate giants like Time, Beatrice and RJR Nabisco were acquired by other firms, their own management or wealthy raiders, who saw potential value in restructuring or breaking up these firms. In the 1990s, we saw a wave of consolidation in the media business as telecommunications firms acquired entertainment firms, and entertainment firms acquired cable businesses. Through time, firms have also acquired or merged with other firms to gain the benefits of synergy, in the form of either higher growth, as in the Disney acquisition of Capital Cities, or lower costs. Acquisitions seem to offer firms a short cut to their strategic objectives, but the process has its costs. In this chapter, we examine the four basic steps in an acquisition, starting with establishing an acquisition motive, continuing with the identification and valuation of a target firm, and following up with structuring and paying for the deal. The final, and often the most difficult, step is making the acquisition work after the deal is consummated. Background on Acquisitions When we talk about acquisitions or...
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...Debt and Value: Beyond MillerModigliani Aswath Damodaran Stern School of Business Aswath Damodaran 1 The fundamental question: Does the mix of debt and equity affect the value of a business? Assets Existing Investments Generate cashflows today Includes long lived (fixed) and short-lived(working capital) assets Expected Value that will be created by future investments Assets in Place Debt Liabilities Fixed Claim on cash flows Little or No role in management Fixed Maturity Tax Deductible Growth Assets Equity Residual Claim on cash flows Significant Role in management Perpetual Lives Different Value? Different Financing Mix? Aswath Damodaran 2 Approaches to Valuation Discounted cashflow valuation, relates the value of an asset to the present value of expected future cashflows on that asset. Relative valuation, estimates the value of an asset by looking at the pricing of 'comparable' assets relative to a common variable like earnings, cashflows, book value or sales. Contingent claim valuation, uses option pricing models to measure the value of assets that share option characteristics. Aswath Damodaran 3 Valuation Models Asset Based Valuation Discounted Cashflow Models Relative Valuation Contingent Claim Models Liquidation Value Stable Replacement Cost Two-stage Three-stage or n-stage Current Equity Firm Sector Option to delay Option to expand Young firms Option to liquidate Equity in...
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...Blue Sky University Student Research FedEx Corporation Tanan Jargalsaikhan Table of Contents Key Information 3 Business Description 4 Industry Overview and Competitive Positioning 5 Porter’s Five Forces model 5 SWOT analysis 7 Financial Analysis 8 Cash Flows 8 Common size statements 9 Evaluating Internal Liquidity 11 Evaluating Operating Performance 12 Valuation 14 Dividend Discount Model 14 Present Value of Free Cash Flow to Equity 15 Present Value of Operating Free Cash Flow 17 Relative Valuation 19 Investment Risks 20 Investment Summary 21 Conclusion 22 * Key Information Company name: FEDEX CORPORATION Exchange: New York Stock Exchange (NYSE) Ticker symbol: FDX Sector: Services Industry: Air Delivery and Freight Services Price: $166.11 (as of 30 January, 2015) Price Target: $189.13 Recommendation: HOLD / BUY * * Business Description FedEx Corporations (“FedEx”) is one of the largest operating delivery service companies within the United States as well as globally. The company was first founded in 1971 and today operates in over 220 countries with its headquarters based in Memphis, Tennessee. The company has over 300,000 employees worldwide. The revenue for 2014 was $45,6 billion and the net income was $2,1 billion. The firm is the prevailing leader within the delivery and freight service industry. This is substantiated through sales, profit, and growth. FedEx’s revenue is one...
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...1 The Value of Synergy Aswath Damodaran Stern School of Business October 2005 2 The Value of Synergy Many acquisitions and some large strategic investments are often justified with the argument that they will create synergy. In this paper, we consider the various sources of synergy and categorize them into operating and financial synergies. We then examine how best to value synergy in any investment and how sensitive this value is to different assumptions. We also look at how this synergy value should be divided between the parties (or companies) involved in the investment. We conclude with an empirical examination of how much synergy is actually created in corporate mergers, and how much is paid. Synergy, we conclude, is so seldom delivered in acquisitions because it is incorrectly valued, inadequately planned for and much more difficult to create in practice than it is to compute on paper. 3 When Carly Fiorina argued for Hewlett-Packard’s acquisition of Compaq, she offered a number of of reasons the deal made sense. She noted that the combined company would be able to meet the demands of customers for “solutions capability on a truly global basis.” She also claimed that the firm would be able to lead with its products “from top to bottom, from low end to high end.” As her crowning argument, she claimed that the merger made sense because it would create “synergies that are compelling.” Synergy, the increase in value that is generated by combining two entities...
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...© Path Finance, www. path2finance.com CFA® Level 1 2011 (Also applicable for June 2012) Financial Reporting Analysis (R 22 to R 29) Includes material presented in the video lectures1 © Path Finance, www. path2finance.com Table of Contents 1.1 Financial Statements Analysis (R 22) ..........................................................................................................2 1.1.1 Introduction ....................................................................................................................................................................2 1.1.2 Financial Statements and Other Sources ......................................................................................................................2 1.1.3 Steps in financial Statement Analysis Framework .........................................................................................................3 1.2 Financial Reporting Mechanics (R 23) .........................................................................................................4 1.2.1 Classifying Financial Statements Elements ...................................................................................................................4 1.2.2 Accounting Equations ....................................................................................................................................................5 1.2.3 Statement of Owners Equity ...................................................................
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...Art and Science Management is both art and science. It is the art of making people more effective than they would have been without you. The science is in how you do that. There are four basic pillars: plan, organize, direct, and monitor. Make Them More Effective Four workers can make 6 units in an eight-hour shift without a manager. If I hire you to manage them and they still make 6 units a day, what is the benefit to my business of having hired you? On the other hand, if they now make 8 units per day, you, the manager, have value. The same analogy applies to service, or retail, or teaching, or any other kind of work. Can your group handle more customer calls with you than without? Sell higher value merchandise? Impart knowledge more effectively? etc. That is the value of management - making a group of individual more effective. Basic Management Skill #1: Plan Management starts with planning. Good management starts with good planning. And proper prior planning prevents… well, you know the rest of that one. Without a plan you will never succeed. If you happen to make it to the goal, it will have been by luck or chance and is not repeatable. You may make it as a flash-in-the-pan, an overnight sensation, but you will never have the track record of accomplishments of which success is made. Figure out what your goal is (or listen when your boss tells you). Then figure out the best way to get there. What resources do you have? What can you get? Compare strengths and...
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...Boeing Working Capital – FI515 Managerial Finance 1 Hector Rueda TABLE OF CONTENTS Introduction, Company Overview ………….. ……………………………………… Risk factors …………………………………………………………………………... Boeing Balance Sheet ……………………………….……………………….………. 2 3 4 Boeing income Statement . …………………………………………………….……. 18 Boeing Working Capital………………………………………………………….…… 24 Boeing Valuation.…………………………………………………………….……… 29 Conclusion …………………………………………………………………….…….. 37 References …. ……………………………………………………………………….. 38 Appendix Financial Statements & Ratios..…………………………………………………….. Discounted Free Cash Flow projection …………………………………………….. CAGR ………………………………………………………………………………. Terminal Value …………………………………………………………………….. 40 46 47 47 1 Introduction William Boeing founded the Boeing in 1916, in the midst of World War I (U.S. Centennial of Flight Commission, 2011). Since then the company just took off to become “world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems. A top U.S. exporter, the company supports airlines and U.S. and allied government customers in 150 countries. Boeing products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems, and performance-based logistics and training” (Boeing 10K). Methodology We used various sources to gather our information, primary sources as well as secondary, Boeing...
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...The Walt Disney Co. FINA 4200.002 Nick Camp Nick Meyer Muddasir Sultan Theme: The Walt Disney Co. is an enigma in these rough economic times for the sole purpose that they show minimal signs of slowing down. Mickey Mouse has his hands dipped into everything and from an investor’s standpoint that’s a good thing because that equals diversification, and in turn, diversification lowers risk. The Disney Company operates in several areas of the media and entertainment industry. They have recently acquired Pixar, which consistently provides box office record sales with their animated films. Along media entertainment lines, Disney also operates dominant media channels ABC and ESPN. These are two channels that carry with them a strong loyal following. Sports have always been America’s past time and it’s unlikely to see them ever declining or the viewership that goes along with it. People have always poured capital into sports and will continue to for many centuries to come. Aside from Disney’s ventures, investors focus and confidence should be in the trademark of Disney. Characters such as Mickey Mouse and Buzz Light-year are icons that will never be lost in the pages of time. Kids and adults alike will always want to participate in the next big thing the company has to offer and these kinds of expectations will always lead to Disney having a stable stock price and even unstable in the positive manner because the growth potential is limitless for...
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