fundamental analysis of an engineering company

8/8/2019 Fundamental Analysis of An Engineering Company

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Fundamental analysis«..

Fundamental analysis is a stock valuation methodthat uses financial and economic analysis to predict

the movement of stock prices.

It can answer questions such as «.

What are the chances this

business is going to go

bankrupt ?

How certain can I be that

this stock will continue

paying dividends ?

Fundamental

information



3

Tools«.

Earnings Per Share

PE Ratio Liquidity Ratio

Profitability Ratio

Turnover Ratio

Fundamental analysis is an important part of learning to understand the

markets.

Fundamental analysis will help you to understand the reasons behind

trends and give you insight into currency movements.

Summary«

In the short run, the results are not always straight forward, they can

even seem backwards

In the long run, currencies will always move along with fundamentals.



Larsen & Toubro Limited (L&T) is a technology, engineering, construction

and manufacturing company. It is one of the largest and most respected

companies in India's private sector.

International

presence

Brand Image

Network

Customer focus

Quality

Leadership

Larsen & Toubro (L&T) is a technology-driven USD 9.8 billion company

that infuses engineering with imagination. We offer a wide range of

advanced solutions, services and products.



5

Engineering &

Construction

Projects (E&C)

Heavy Engineering

(HED)

Construction

Electrical & Electronics

(EBG)

Machinery & Industrial

Products (MIPD)

IT & Technology Services

L&T¶s signature of excellence is evidenton:

The world's largest coal gasifier made

in India and exported to China

The world¶s biggest EO reactor for a

petrochemical complex in the Gulf

The world¶s largest FCC regenerator

for a refinery

Asia¶s highest viaduct

The world¶s longest coal conveyor

L&T played a critical role in building

India¶s first nuclear powered submarine



6

Particulars 31-Mar-09 31-Mar-08

Total Share Capital 1171.40 584.70

Reserves and Surplus 121068.90 93822.20

Loan Funds 65560.30 35839.50

Current Liabilities 147761.50 117417.20

Provisions 19426.30 20354.20

Current Liabilities and Provisions 167187.80 137771.40

Total Liabilities and Stockholders Equity361696.60 271605.00

Tangible Assets Net 39663.30 28069.80Intangible Assets Net 1015.30 617.40

Net Block 41173.90 29192.40

Capital Work In Progress Net 10802.80 7292.70

Fixed Assets 51946.00 36454.40

Investments 82637.20 69222.60

Inventories 14705.10 43059.10

Accounts Receivable 99031.30 73650.10

Cash and Cash Equivalents 7752.90 9644.60

Other Current Assets 43561.00 143.20

Current Assets 165050.30 126497.00

Loans & Advances 58193.60 37570.80

Miscellaneous Expenditure Other Assets 2.60 30.60

Total Assets 361696.60 271605.00



Liquidity Ratio :

Current assets ± stock

=

current liabilities

Liquidity is the ability of the firm to meet its current

liabilities as they fall due.

Interpretation

Increase in current assets

and decrease in liabilities



Profitability Ratio :

Net profit

=

Net sales

It indicates the returns of the firm with regard to the

sales

Interpretation

result of increase in profit



Net income

=

No of shares

EPS :

50.2037.80

2008 2009

EPS

It shows the distribution

of earning for each of the

share.

Interpretation

because of issuing new

shares for raising share

capital.



P/E Ratio :

Price per share

=

EPS

It is a measure of the price

paid for a share, relative tothe profit earned by the firm

per share.

Interpretation

It is because of decrease in

EPS and increase in price of

the share.



11

Elecon Engineering Company Limited was established in the year 1951.Since then it has been cast in the mould of a pioneer. Setting trailblazing

standards of technical excellence scaling new heights in its determination

to deliver the best . From elevators, conveyors and gears to material

handling plants. For over 5 decades, Elecon has supplied hi-tech

equipment to major core sectors such as steel, fertilisers, cement , coal,

lignite and iron ore mines, Sugar, power stations and port mechanization in

India and abroad.

Quality policy

To be a customer focused organization

at all times by

Understanding customer needs andproviding optimum solution.

Fulfilling commitment made towards

supply,

reliability and trouble free usage.Upgrading technology of products and

services.

vision

Create global presence in power

transmission by innovating and

developing products to enhance value

and satisfaction of our Customers.

We adapt to the changes and meet the

challenges by creative

entrepreneurship, empowered

teamwork, continuous improvements,

environment friendly practices and

optimize profits to delight our stakeholders.



1.511.31

2008 2009

Liquidity Ratio

Liquidity Ratio :


=

current liabilities


profit

=

sales

7.96.0

2008 2009

Profitability Ratio



Net income

=

No of shares

EPS :

7.16.

2008 200

EPS Ratio

P/E Ratio :

Price per share

=

EPS

12.3

14

2 2

/E



14

Punj Lloyd Ltd. (Punj Lloyd) is an India-based company. The Company is

engaged in providing integrated design, engineering procurement,

construction and project management services for energy and infrastructuresector.

Punj Lloyd operates in four segments

Energy

Power

Civil &

Infrstructcture

Renewables

It has its operations spread across the Middle

East, Africa, the Caspian, Asia Pacific and South

Asia.

Punj Lloyd provides engineering procurement

construction (EPC) services in Oil & Gas, Process, CivilInfrastructure, and Thermal Power.

Its Power segment provides Thermal power

plants in India, upto 660 megawatt.

Its Energy segment comprises process plants,

pipeline and tankage.

To be among the top five EPC

companies in the segments

and markets we serve by

2012.



Liquidity Ratio :


=

current liabilities


profit

=

sales



EPS :

P/E Ratio :



L&T

JP Assoc.

Punj Loyd

IVRCL

Nagarjuna Const.

1691.3

152.65

207

354.15

166.7

EPS

65.38

9.14

8.19

15.67

6.10

25.68

16.07

25.03

22.37

27.15

Company CMP P/E 1Yr. return (%)

118.37

178.95

41.65

146.69

131.57

PEER COMPARISON AS ON 4TH JAN, 2010



Future projects

L&T is foraying into the power generation segment with an aim to have 7,000 mw

capacity over the next five years. This could mean superior profit margins.

Operating profit margins expanded by 1 percentage point to 10.2 per cent in the

September quarter over last year.

Recently L&T bagged contracts worth 3.92 billion rupee to set up a coal handling

plant for Adani Power in Western India, and a 1.89 billion rupee order to lay awater pipeline to Bangalore.

It has secured a Rs 9.87 billion (USD 212 million) contract to build a plant to make

feedstock for fertilizer in Gujarat state in western India.

It has reported a strong order inflow led by the orders from the hydrocarbon andpower sectors.



Looking µtop to down¶

Indian economy has been witnessing a phenomenal growth since 2003. Government data

showed that the economy grew at its fastest pace in 18 months expanding an annual 8.8%in the September 2010 quarter.

The Engineering sector is the largest sector in the overall industrial segments in India.

It is growing on the back of growth in the user industries and several new projects

being undertaken in various core industries such as railways, power, infrastructure, etc.

Capacity creation in sectors such as infrastructure, oil & gas, power mining,

automobiles, auto components, steel, refinery, consumer durables, etc, is drivinggrowth of the engineering industry.

Along with higher spending of govt. on infrastructure creates better prospects for India¶s

Engineering industry. Government of India reviews its Foreign Direct Investment (FDI) policy

regularly, in a bid to attract more investment. Recently, the government permitted 100 per

cent FDI in construction and development projects. Around 36 per cent of the total FDI is

directed towards engineering industry. Also it has initiated many policies to facilitate a better environment for this industry.

India being preferred by global companies as an outsourcing destination as it enjoys lower

labour cost and better designing capabilities.



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fundamental analysis of an engineering company

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