CF Presentation-Group-1 Ver 2

7/25/2019 CF Presentation-Group-1 Ver 2

http://slidepdf.com/reader/full/cf-presentation-group-1-ver-2 1/10

CORPORATE FINANCE - ANALYSIS

OF INDIAN IT COMPANIES

SECTION E

GROUP 1 Aakanksha Teotia

Abhinav Saha

Prateek Singh AtulyaSrivastava

Shruti Sharma

Vignesh

itesh !oel

ShashankSrivastava



IT INDUSTRY OVERVIEW• "n#ia$s "T in#ustry %an be #ivi#e# into &ve main %om'onents( vi)* So

Pro#u%ts( "T servi%es( -ngineering an# ./ servi%es( "T-SP an# 4

• ASS6 estimates the revenue o+ the "TP in#ustry at :119 billi

12 'er %ent in 201;15

• ASS6 has also envisage# the "n#ian "T"T-S in#ustry to a%hieve

target o+ <S 225 bn* by 2020

• "n#ian "T %om'anies are in%reasingly a#o'ting the global #elivery m

• "n#ian !overnment is taking many initiatives to 'romote "T in#ustry*

igital "n#ia 'rogram

• a>or 'layers in the in#ustry are T6S( "n+osys( ?i'ro( 6ogni)ant( an#

Te%hahin#ra



STANDARD & POOR’S CREDIT RATI

• A %re#it rating is an use+ul tool to 'ut a se%urity( %om'any or %ount

global ra#ar( attra%ting +oreign money an# boosting it@s e%onomy

S&P Rating Grade Risk

AAA "nvestment o,est .isk

AA "nvestment o, .isk

A "nvestment o, risk

BBB "nvestment e#ium .isk

BB, B unk 4igh .isk

CCC/CC/C unk 4ighest .isk



CALCULATING BETA, COST OF EQUI

COST OF DEBT, AND WACC

• eta B 6ovarian%e CSto%k #aily returns( market #aily returnsDVarian%e Cm

returnsD

• 6ost o+ eEuity CFeD B .isk +ree rate C.+D G etaH .isk Premium C.'D

?here .+ B .isk+ree rate C7*75I in the %al%ulationsJ =iKe# #e'osits rat

An# .' B -K'e%te# .isk Premium C#erive# +rom risk+ree rate an# S/P

s'rea#D• 6ost o+ #ebt CF#D B "nterestebt H C1tD

?here t B %or'orate taK rate

• ?A66 B Fe C,eight o+ eEuityD G F# C,eight o+ #ebtD



COMPANY ANALYSIS

Company Debt(in rores!"#$ity(inrores!

%nterest(inrores!

t' o debt t' o e#$ity

)CS 250*27 ;5;1L 30*3 0*005;803L 0*99;519L;

%nosys 0 ;80L8 0 0 1

)e*+a*indra 0 12;87 0 0 1

CompanyS&P

RatingRatingSpread

Risk reerate

Beta"-peted Risk

Premi$mCost oe#$ity

Cost odebt

AC

)CS A 1*20I 7*75I 0*353 8*95 10*91I 8*11I 10*89

%nosys A 1*20I 7*75I 0*389 8*95 11*23I 0I 11*23

)e*+a*indra

G 1*75I 7*75I 0*37L 9*50 11*32I 0I 11*32



CONTD..

• As 'er the %al%ulations

the ?eighte# Average

6ost o+ 6a'ital is highest

+or Te%hahin#ra at

11*32I ,hi%h makes it

the riskiest o'tion +or an

investor to invest in*

• As 'er our analysis( it is

a#visable to invest in

T6S out o+ the three

%om'anies* T6S "n+osys T10*L0I

10*70I

10*80I

10*90I

11*00I

11*10I

11*20I

11*30I

11*;0I

10'.

11'2

?A66

?A66



CONTD..

• Te%hahin#ra is aggressively a%Euiring

ne, %om'anies so their #ivi#en#

'ayout ratio is very less as %om'are# to

the other t,o %om'anies* Their

retention ratio is 73*L1I*

• T6S has 'rovi#e# a PS o+ .s* 79 on a

+a%e value o+ .s* 1 in the 'revious&nan%ial year ,ith an earning retention

ratio o+ 17*38I*

• "n+osys has 'rovi#e# a PS o+ .s* L0 on

a =V o+ .s* 5 in the 'revious =M ,ith an

earning retention ratio %lose to L0I*ar $11 ar $12 ar $13 ar $1; ar

0

10

20

30

;0

50

L0

70

80

90

ivi#en# Per Share

"n+osys T6S Te%hahin#ra



CONTD..

• Te%hahin#ra has in%rease# its

outstan#ing shares +rom 233;*73

la% to 9L07*89 la% in the last =M

an# hen%e a huge #e%line in the

-PS is ,itnesse# by the

sharehol#ers

• "n+osys has in%rease# itsoutstan#ing shares +rom 571;*03

la% to 11;8;*72 la% in last =M

• T6S has been maintaining a

%onsistent outstan#ing shares@

&gure sin%e 2011

ar $11 ar $12 ar $13 ar $1; ar0

20

;0

L0

80

100

120

1;0

1L0

180

200

-arning 'er Share

"n+osys T6S Te%hahin#ra



RECOMMENDATIONS

• ut o+ the three %om'anies( T6S an# "n+osys are %ash %o,s an# the

,ho are eK'e%ting a stea#y #ivi#en# 'ayout shoul# invest in them

Te%hahin#ra has been a%tive in /A o+ many &rms an# hen%e les

o+ #ivi#en#s is eK'e%te# in near +uture too*

• 6ost o+ %a'ital is lo,est +or T6S an# hen%e it is re%ommen#e# to in

T6S* The riskier o'tion o+ Te%hahin#ra is also very lu%rative +or th,ho are risktakers an# ,ant to take %han%es ,ith the eK'ansion s

Te%h*



Thank MouN

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CF Presentation-Group-1 Ver 2