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    Project Analysis: FMCD Industry

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    muskan sharma
    The document analyzes companies in the consumer durables industry in India. It finds that the Indian appliance and electronics market is growing significantly and is expected to reach $48 billion by 2022. It then evaluates several companies in the industry based on their market valuation, growth rates, capital structure, and weighted average cost of capital. It determines that Sharp India Ltd has the highest growth rate at 44% and is the most undervalued company based on the WACC analysis, making it the most favorable investment opportunity.

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    Project Analysis: FMCD Industry

    Uploaded by

    muskan sharma
    36 views5 pages
    The document analyzes companies in the consumer durables industry in India. It finds that the Indian appliance and electronics market is growing significantly and is expected to reach $48 billion by 2022. It then evaluates several companies in the industry based on their market valuation, growth rates, capital structure, and weighted average cost of capital. It determines that Sharp India Ltd has the highest growth rate at 44% and is the most undervalued company based on the WACC analysis, making it the most favorable investment opportunity.

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    Corporate Finance.docx

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    The document analyzes companies in the consumer durables industry in India. It finds that the Indian appliance and electronics market is growing significantly and is expected to reach $48 billion by 2022. It then evaluates several companies in the industry based on their market valuation, growth rates, capital structure, and weighted average cost of capital. It determines that Sharp India Ltd has the highest growth rate at 44% and is the most undervalued company based on the WACC analysis, making it the most favorable investment opportunity.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    36 views5 pages

    Project Analysis: FMCD Industry

    Uploaded by

    muskan sharma
    The document analyzes companies in the consumer durables industry in India. It finds that the Indian appliance and electronics market is growing significantly and is expected to reach $48 billion by 2022. It then evaluates several companies in the industry based on their market valuation, growth rates, capital structure, and weighted average cost of capital. It determines that Sharp India Ltd has the highest growth rate at 44% and is the most undervalued company based on the WACC analysis, making it the most favorable investment opportunity.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    PROJECT ANALYSIS

    FMCD INDUSTRY
    Indian appliance and consumer electronics (ACE) market reached Rs 2.05 lakh crore (US$ 31.48 billion)
    in 2017. It is expected to increase at a 9 percent CAGR to reach Rs 3.15 lakh crore (US$ 48.37 billion) in
    2022. Electronics hardware production in the country reached Rs 38,800 crore (US$ 5.55 billion) in
    FY18, growing at a CAGR of 26.7 percent between FY14-18. Demand for electronics hardware in India
    is expected to reach US$ 400 billion by FY24 also the Draft National Policy (DNP) targets production of
    one billion mobile handsets by 2025. Production of consumer durables under the Index of Industrial
    Production has grown 6.4 percent year-on-year during April 2018-February 2019.

    MARKET VALUE PRICE COMPARISON

    Company Market value of the share Overvalued/ undervalued

    Whirlpool MP-RS. 2195.40 MP-RS.673.97

    (OVERVALUED)

    EXPECTED MP -RS.3,335.27

    (OVERVALUED)

    Voltas Ltd. MP-RS. 709.85 MP-RS.986.77

    (UNDERVALUED)

    EXPECTED MP-RS.605.05

    (UNDERVALUED)

    Hawkins MP-RS. 3603 MP-RS.1470.44

    (OVERVALUED)

    EXPECTED MP-RS.4564.99

    (OVERVALUED)

    Symphony MP-RS. 1127.25 MP-RS.1032.06

    (OVERVALUED)
    EXPECTED MP-RS 1222.22

    (OVERVALUED)

    TTK Prestige MP-RS. 5757 MP-RS.1003.19

    (OVERVALUED)

    EXPECTED MP-RS.7699.07

    (OVERVALUED)

    IFB MP-RS. 871.62 MP-RS.2330.85

    (UNDERVALUED)

    EXPECTED MP-RS.670.40

    (UNDERVALUED)

    Sharp India MP-RS. 16.7 MP-RS. -19.69

    (UNDERVALUED)

    EXPECTED MP-RS. 13.29

    (UNDERVALUED)

    Now, if the price calculated is more than Market Value as given on the internet, then the share is
    UNDERVALUED and if the Market Value is more than the calculated price then the share is
    OVERVALUED.

    GROWTH RATE ANALYSIS

    Company Growth Rate

    Whirlpool 31%

    Voltas 28%
    Hawkins 23%

    TTK Prestige 20%

    Symphony 33%

    IFB 16%

    Sharp India Ltd 44%

    In comparison to all the companies, the growth rate of the low cap company Sharp India Ltd is the highest
    i.e., 44%.

    CAPITAL STRUCTURE AND BETA ANALYSIS

    Company Beta Analysis (Aggressive/ Weightage of equity


    Defensive) and debt

    Whirlpool 0.2765715282 DEFENSIVE 100% EQUITY

    NO DEBT

    Voltas 0.2648678274 DEFENSIVE 99.46% EQUITY

    0.54% DEBT

    Hawkins 0.7901578777 DEFENSIVE 84.74% EQUITY

    15.26% DEBT

    TTK Prestige 0.7657531908 DEFENSIVE 100% EQUITY

    NO DEBT

    Symphony 1.236464146 AGGRESSIVE 84.35% EQUITY

    15.65% DEBT
    IFB 1.065266652 AGGRESSIVE 97.69% EQUITY

    2.31% DEBT

    Sharp India Ltd 1.17 AGGRESSIVE 48% EQUITY

    52% DEBT

    ● A beta that is greater than 1.0 indicates that the security's price is theoretically more volatile than
    the market.
    ● As in the case of Sharp India, IFB and Symphony the stock's beta is more than 1, hence they are
    considered to be more volatile than the market. We can classify the securities as aggressive as
    compared to the market.
    ● We can see that firms like Voltas, Prestige, and Hawkins are all defensive in nature as there
    average beta is less than 1.
    ● Whirpool is a debt-free company and hence utilizes only equity capital. Therefore, they have a
    leveraging power in the market. But there is also a disadvantage that they are not taking the tax
    benefit on the interest paid and other benefits of raising debt.

    WACC ANALYSIS

    Company WACC K(e) Decision

    Voltas 9.96% 10% FAVORABLE

    Hawkins 14.98% 15.27% FAVORABLE

    Symphony 16.80% 19.73% FAVORABLE

    IFB 18.46% 18.50% FAVORABLE

    Sharp India Ltd 6% 10.57% FAVORABLE

    ● WACC if less than K(e) means that the firm is not favorable to invest in. The WACC represents
    the minimum rate of return at which a company produces value for its investors. If the company's
    return is less than its WACC, the company is shedding value, indicating that it's an unfavorable
    investment.
    ● Whirlpool and TTK Prestige are both debt-free companies, so their K(e) is equal to WACC.
    ● According to our study and calculation, Sharp India ltd and Symphony are more favorable for
    investors in comparison to others since the rest have approximately equal WACC and K(e).

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