Saturday, 5 December 2015

Case Study: Panoramic Universal

Various dimensions of following a stock.

1. Stock and sector News.

2. Earnings news.

3. Management interviews.

4. Corporate announcements.

5. Quarterly results, yearly results, cash flow, ratios, balance sheet, PL statement.

6. Capital Structure. (extremely important)

7. Shareholding pattern and Promoter holding.

8. Peer comparison.

9. Momentum analysis.


A quick look at Panoramic Universal:

Corporate Info: Panoramic Universal

Sectors: Information Technology, Hospitality.

The following is its partial list of financial ratios

All descriptions in the table below are © Investopedia.

Profitability Ratios
March 2015 March 2014 March 2013 March 2012March 2011

Operating Profit Margin(%)
Operating Income divided by Net Sales. Operating margin gives analysts an idea of how much a company makes (before interest and taxes) on each dollar of sales. When looking at operating margin to determine the quality of a company, it is best to look at the change in operating margin over time and to compare the company's yearly or quarterly figures to those of its competitors.
58.33 52.10 62.03 60.60 31.76

Profit Before Interest And Tax Margin(%)
This indicator gives information on a company's earnings ability. Increase in EBIT is mainly due to growth of net revenue, good cost control and strong productivity. Decrease in EBIT margin largely results from reduction in revenue and higher operating costs. EBIT margin is most useful when compared against other companies in the same industry.

This margin can be used as relative indicator for international, cross-industry comparisons. EBIT margin, however, varies greatly between industries.
45.95 40.53 55.20 52.49 27.22

Gross Profit Margin(%)
Gross Profit Margin tells us the profit a company makes in relation to the Cost of Goods Sold. It shows how efficiently labor and supplies are used in the production process.
47.75 45.62 57.27 56.20 29.45

Cash Profit Margin(%)
The Cash Flow Margin is a measure of how efficiently a company converts its sales dollars to cash. Since expenses and purchases of assets are paid from cash, this is an extremely useful and important profitability ratio, and = Cash Flows from Operating Activities/Net Sales. The higher the percentage, the more cash available from sales.
42.78 39.41 43.66 43.22 28.43

Adjusted Cash Margin(%)
Used to determine the profitability of a product, product line or company. The adjusted gross margin includes the cost of carrying inventory, whereas the gross margin calculation does not take this into consideration... includes these inventory carrying costs, which greatly affect the bottom line of a product's profitability. For example, two products could have identical, 25% gross margins. Each, however, could have different associated inventory carrying costs.
42.78 39.41 43.66 43.22 28.43

Net Profit Margin(%)
The ratio of net profits to revenues that shows how much of each dollar earned by the company is translated into profits. Net margins will vary from company to company, and certain ranges can be expected from industry to industry, as similar business constraints exist in each distinct industry. A company like Wal-Mart has made fortunes for its shareholders while operating on net margins less than 5% annually, while at the other end of the spectrum some technology companies can run on net margins of 15-20% or greater. Companies that are able to expand their net margins over time will generally be rewarded with share price growth.
33.87 37.87 40.54 41.88 27.42

Adjusted Net Profit Margin(%)
= Profit Margin / Price-to-Sales.

Adjusted net profit margin takes the price paid for a stock into account to determine the true profit earned from holding or selling it.
32.60 33.65 39.07 39.11 25.35

Return On Capital Employed(%)
measures a company's profitability and the efficiency with which its capital is employed. ROCE is calculated as:
ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed.
“Capital Employed”  is the sum of shareholders' equity and debt liabilities;
9.43 8.94 11.71 10.89 11.43

Return On Net Worth(%) or ROE
The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.
10.63 10.62 14.27 12.72 13.52
Adjusted Return on Net Worth(%) 10.63 10.62 14.27 12.72 13.83
Return on Assets Excluding Revaluations 19.29 18.17 16.96 15.50 14.09
Return on Assets Including Revaluations 19.29 18.17 16.96 15.50 14.09
Return on Long Term Funds(%) 13.82 14.86 18.47 16.62 11.70

Liquidity And Solvency Ratios
March 2015 March 2014 March 2013 March 2012March 2011

Current Ratio
measures a company's ability to pay short-term obligations. Also known as "liquidity ratio", "cash asset ratio" and "cash ratio".
0.95 0.86 0.84 0.80 1.95

Quick Ratio
The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. It is generally lesser than the Current Ratio.
4.20 7.44 6.34 5.44 3.02

Debt Equity Ratio
A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. So this ratio must be seen along with ratios that point to the debt health of the company, for example the Interest Cover Ratio.

Capital-intensive industries such as auto manufacturing tend to have a high debt/equity
1.10 1.25 1.18 1.17 0.96

Long Term Debt Equity Ratio
In risk analysis, a way to determine a company's leverage. The ratio is calculated by taking the company's long-term debt and dividing it by the total value of its preferred and common stock.

Put graphically: Ratio = Long-term debt / (Preferred stock + Common stock)

The greater a company's leverage, the higher the ratio. Generally, companies with higher ratios are thought to be more risky because they have more liabilities and less equity.
0.43 0.35 0.38 0.42 0.92

Debt Coverage Ratios March 2015 March 2014 March 2013 March 2012March 2011

Interest Cover
It determine how easily a company can pay interest on outstanding debt, and is calculated by dividing earnings before interest and taxes (EBIT)  by its interest expenses for the same period. When the interest coverage ratio is 1.5 or lower, the company's ability to meet interest expenses may be questionable.
69.09 525.62 268.73 143.88 52.86

Total Debt to Owners Fund
see in conjunction with interest cover and FCCR
1.10 1.25 1.18 1.17 0.96

Financial Charges Coverage Ratio
is the ratio that indicates a firm’s ability to satisfy fixed financing expenses such as interest and leases. This means that the fixed charges that a firm is obligated to meet are met by the firm. This ratio is calculated by summing up EBIT and Fixed charge which is divided by fixed charge before tax and interest.
83.24 584.24 289.71 153.88 56.89

Financial Charges Coverage Ratio Post Tax
See previous
60.46 401.88 200.51 106.24 44.09

Management Efficiency Ratios March 2015 March 2014 March 2013 March 2012March 2011
Inventory Turnover Ratio 1,238.01 633.21 653.72 428.76 772.31
Debtors Turnover Ratio

Higher is better because it means that credit sales are being converted to money efficiently.

 = Net Credit Sales / Average Debtors ( sundry debtors + bill receivables)
Average Debtors = (Opening balance of debtors + closing balance of debtors) / 2
Net Credit Sales = Total sales - sales return - cash sales
4.16 8.05 3.65 2.48 4.08
Investments Turnover Ratio 1,238.01 633.21 653.72 428.76 772.31
Fixed Assets Turnover Ratio 0.48 0.43 0.51 0.46 0.72
Total Assets Turnover Ratio 0.18 0.16 0.19 0.18 0.31

Asset Turnover Ratio
Is the ratio of revenue to sales. Indicates how efficiently a company is deploying its assets to generate sales. This would vary greatly from industry to industry so it is good only for comparing different companies in the same line of work. It does not measure the profitability from assets since the numerator is revenue from sales. The other ratio, ROA, looks at profitability from assets.
0.18 0.16 0.20 0.19 0.32
Average Raw Material Holding -- -- -- -- --
Average Finished Goods Held -- -- -- -- --
Number of Days In Working Capital 609.66 795.08 596.92 593.64 205.13

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