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fundamental analysis and valuation of public sector power companies

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Nitin Jaggi
Nitin Jaggi

This document provides an overview and valuation of two major Indian public sector power companies: NTPC and NHPC. It first discusses Trustline Securities Ltd, the company conducting the analysis. It then provides background on India's power sector and an overview of NTPC, including its financials and valuation using DCF. For NHPC, it discusses the company overview and indicators but does not provide a valuation. The document aims to analyze and value these two major power companies in India.

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“Financial Analysis & Valuation of Public Sector Power Companies (NTPC and NHPC)” Nitin Jaggi PGDM-191
Flow Of Presentation  About Trustline Sec Ltd  Power Sector Overview  Overview Of NTPC  Valuation Of NTPC  Overview Of NHPC  Valuation Of NHPC  Conclusion  Recommendations  Learnings
• Trustline made a humble beginning in 1989 • Trustline has been operating for over 20 years in the Indian Financial Arena, offering equity, currency and commodities broking services to over 100,000 clients at over 600 locations, through own branches and business partners. • Trustlines’ vision is to be the most preferred Broking House of India • TRUSTLINE GROUPS’ foray into the commodity, currency, and depository • MEMBER : NSE,BSE,MCX-SX,NSDL,CDSL : MCX, NCDEX & NMCEIL • Group Companies • TRUSTLINE SECURITIES LIMITED • TRUSTLINE COMMODITIES (P) LTD • TRUSTLINE INSURANCE BROKERS (P) LTD • TRUSTLINE REAL ESTATES (P) LTD • TRUSTLINE ACADEMY Trustline Securities Ltd
Vision • To provide world class investment solution in simplified form to the investing population. • To provide the most modern technology platform so as to enable investors perform hassle free transactions at minimum impact cost. • To empower investors with opportunities to invest across various asset classes to benefit from the dynamism of the market. Mission • To empower individual investors by providing simple investments ideas through investment research and thus lead them to a path of wealth creation by investing in the securities market Vision & Mission
1. Equity 2. Commodity 3. Mutual fund 4. Currency SERVICES OFFERED BY THE COMPANY Edge over competitors 1. A vast network of offices giving it pan India presence with more than 400+ branches. 2. Vast offering of Services. 3. Real-time risk monitoring through RMS(Risk Management System) with latest technology. 4. Experienced and highly qualified Research Analysts and Relationship Managers. 5. Latest MF News & Fund Manager views & tools to help select the right scheme. 6. Indivitual portfolio analysis and suggestions. 7. Last but not the least ,most competitive prices in every segment across the industry. 5. Insurance 6. Portfolio Management Services 7. Education(Education First, Investment Second)
Competitors and Pricing.. S.No NAME OF BROKING HOUSES INTRADAY DELIVERY BASED TRADING 1 Indiabulls 0.03 0.3 2 Religare 0.03 0.3 3 India Infoline 0.02 0.2 4 Motilal Oswal 0.025 0.25 5 Share Khan 0.02 0.2 6 HDFC securities 0.08 0.75 7 ICICI securities 0.08 0.75 8 Kotak Securities 0.05 0.5 9 Trustline 0.01 0.1
Power Sector Overview 43% 30% 27% Central State Private 1. Demand for electrical energy is increasing at a rate of 8 to10 per cent annually 2. All India Capacity reached 207876 MW 3. Gross annual generation of the country was 876.89 Billion Units (BUs) (including Bhutan import) showing a growth rate of 8.11% over last year. 4. The energy requirement during the year 2012-13 was 937.20 BUs. 5. Energy deficit on a year-on-year basis in 2012-13 at 8.5%. 6. Peak load demand, increased by 6.31% thereby increasing peak load defi cit to 10.6% in 2012-13 from 9.8% in the previous year. (Source: CEA) 7. During 2013-14 India’s GDP is expected to grow at 6.1% to 7%. 8. In order to sustain the growth in GDP and bring it around 9%, India needs to add power generation capacity commensurate with this pace since growth of power sector is strongly co-related with the growth in GDP and going forward it is expected that supply will create further demand. 9. By FY17 demand will Cross 1403 Billion Units(CEA). Consumption Industrial>Residential>Agriculture>Commercial
Year 2007-08 2008-09 2009-10 2010-11 2011-12 Demand(mu) 737,052 777,039 830,594 861,591 937,199 Supply(mu) 664,660 691,038 746,644 788,355 857,886 Deficit(%) -9.80% -11.10% -10.10% -8.50% -8.50% 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 2007-08 2008-09 2009-10 2010-11 2011-12 Demand Supply Power Demand/Supply Overview
Challenges Of Power Sector: 1. New Project Management and Execution. 2. Ensuring availability of fuel quantities and qualities 3. Lack of initiative to develop large coal and natural gas resources present in India, 4. Land acquisition 5. Environmental clearances at state and central government level 6. Training of skilled manpower to prevent talent shortages for operating latest technology plants. 7. Huge losses during Transmission and Distribution. 8. Poor Financial health of state electricities boards. 9. Tariff decision highly regulated by State Gov.’s. 57.10% 9.09%0.58% 18.90% 2.30% 12.03% Fuel Based Allocation Coal Gas Diesel Hydro Nuclear Renewable
VALUATION
• Maharatna Company ,Incorporated as a Government company in 1975; amongst 7 Maharatna GoI companies, • Vision To be the world’s largest and best power producer, powering India’s growth. • As of December 31, 2012 total installed power generation capacity of 39,674MW whereas 17,909MW of capacity, under construction • Accounts for 18.5% of India’s total installed capacity • NTPC generated 220 billion units of electricity which is 27.4% of India’s total generation in FY12. • 11th Five Year Power Plan of addition of 9220 MW of Capacity was achieved. • 12 th Five Year Power Plan Target of Addition of 11148 MW. • At the 337th position in the Forbes Global 2000 list of the world’s largest Companies for the year 2012, and 3rd in Asia among electricity utilities. • Ranked 3rd in The Economic Times Best Employers in India 2012 Study of Best Employers in the Country NTPC
Financial Ratios 0.54 0.56 0.58 0.6 0.62 0.64 0.66 0.68 0.7 0.72 0.74 0.76 2008 2009 2010 2011 2012 Debt Equity ratio 0.52 0.53 0.54 0.55 0.56 0.57 0.58 0.59 0.6 0.61 0.62 2007 2008 2009 2010 2011 2012 Fixed Assets Turnover ratio 0.4 0.42 0.44 0.46 0.48 0.5 0.52 2007 2008 2009 2010 2011 2012 Capital Turnover ratio
92% 91% 91% 88% 85% 79% 77% 78% 75% 73% 2008 2009 2010 2011 2012 Plant Load Factor NTPC All India Plant Load Factor Share Holding Pattern in (%) MAR' 13 FEB' 13 DEC' 12 SEP' 12 Promoter 75 84.5 75 84.5 FII 9.37 4.39 8.99 3.95 DII 10.47 7.51 10.86 7.73 Others 5.16 3.6 5.15 3.82 Total 100 100 100 100 Share Holding Pattern
Concern Biggest Concern for NTPC is collection period and debtors turnover ratio b’coz of a) Poor Financial Condition of SEB’s. b) Irregularities in payment by SEB’s. 0 10 20 30 40 50 60 2007 2008 2009 2010 2011 2012 Average Collection Period
0 2 4 6 8 10 12 14 16 18 2007 2008 2009 2010 2011 2012 Return on capital employed 0.115 0.12 0.125 0.13 0.135 0.14 0.145 2007 2008 2009 2010 2011 2012 0 5 10 15 20 25 30 35 40 45 2007 2008 2009 2010 2011 2012 Gross profit ratio
0 2 4 6 8 10 12 2007 2008 2009 2010 2011 2012 EPS (earning per share) 0 2 4 6 8 10 12 14 16 18 20 2007 2008 2009 2010 2011 2012 PE ratio
Energy sale/Gross Gen. Ratio 93.51 Increase In Price 10.34% NTPC Capacity Commercialis ed Capacity CAPACITY ADDITION PLF Gross Generation (bu) Energy Sent Out (bu) price/unit Revenue Projection Total Capital Expenditure Requirement Internal Capital Expendit ure fy 10 27640 218.84 205.09 2.27 46639.74 FY 11 29830 0.91 220.34 206.04 2.63 54187.28 FY 12 30990 0.85 222.11 207.70 2.96 61478.90 13000 3900 FY 13 34810 3170 0.82 222.61 208.16 3.27 67984.82 7541.2 2262.36 FY 14 37118 2218 0.83 253.10 236.67 3.60 85286.69 7956 2386.8 FY 15 39458 2340 0.85 276.38 258.44 3.98 102760.27 8908 2672.4 FY 16 42078 2620 0.85 293.80 274.74 4.39 120530.89 2720 816 FY 17 42878 800 0.85 313.31 292.98 4.84 141821.16 2977.58 893.27 FY 18 0.85 319.27 298.55 5.34 159456.81 Projected Increase in Capacity/Revenue
Rupee Loans incl. Bonds & PDS Foreign Currency Loans Total Within 1 3,135.40 1,235.70 4,371.10 2–3 years 7,723.32 1,758.39 9,481.71 4– 5 years 7,376.79 3,717.76 11,094.55 6–10 years 13,595.28 5,662.66 19,257.94 Beyond 10 4,184.24 1,889.83 6,074.07 Total 36,015.03 14,264.34 50,279.37 Loan Repayment Schedule
FY 2013E FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E Projected Revenue 71533.51121 89053.71 106747.79 124742.46 146295.78 164154.6 Fuel 46976.13866 58481.67 70101.399 81918.51 96072.605 107800.5 Employee Expenses 3505.142049 4363.632 5230.642 6112.38 7168.4931 8043.574 Financial Expenses 1748.782588 2342.702 2808.1732 3281.551 3848.5467 4318.351 Depreciation 3740.647592 4656.818 5582.0814 6523.062 7650.1341 8584.01 Generation administration and expenses 3862.809606 4808.9 5764.3809 6736.093 7899.972 8864.347 Total Expense 59833.52049 74653.73 89486.676 104571.60 122639.75 137610.8 PBT 11699.99072 14399.99 17261.118 20170.856 23656.027 26543.79 Taxes 2822.856762 3474.284 4164.59 4866.62 5707.4897 6404.221 PAT 8877.133961 10925.7 13096.528 15304.233 17948.538 20139.57 EPS 10.76608124 13.25056 15.883312 18.560 21.76777 24.42503 Fuel Employee Expenses Financial Expenses Dep. Gen,ex p Total Expense WC Taxes 65.67% 4.90% 2.63% 5.23% 5.40% 83.64% 32.84% 24.13%
FY 2013E FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E Post 2018 Net Income 8877.133961 10925.7 13096.528 15304.23 17948.538 20139.57 Working Capital Req. 2361.626569 5886.848 5945.2733 6046.27 7241.987 6000.617 Capex 2262.36 2386.8 2672.4 816 893.275 911.1407 Depreciation 3740.647592 4656.818 5582.0814 6523.062 7650.134 8584.01 interest(1-tax rate) 1748.782588 2342.702 2808.1732 3,281.552 3848.546 4318.351 FCFF 9742.577572 9651.573 12869.11 18246.57 21311.955 26130.18 243871.7 Debt 50376 TV 243871.7 NPV 188040.1316 Less:NET Debt 34229.89 Equity Value 153810.24 Per Share Value(Rs.) 181.2 DCF Valuation
Growth 1% 2% 3% 4% 5% 6% Per Share Value 150.92 160.98 172.71 186.54 203.10 223.27 Retention Ratio 0.29 ROC 11.674 g=RR*ROC 3.42% Growth (%) 3.42 % WACC (%) 11.77 % Cost Of Equity (%) 15.413 % Cost of Debt (%) 5.96 % B 0.6538
DuPont Analysis Net income/sales Total asset/total Equity Sales/Total assets ROE FY 18 12.27% 1.88 0.93 21.36% FY 17 12.27% 1.99 0.88 21.48% FY 16 12.27% 2.02 0.78 19.24% FY 15 12.27% 2.04 0.68 17.02% FY 14 12.27% 1.99 0.60 14.62% FY 13 12.41% 1.93 0.50 12.05% FY 12 14.86% 1.92 0.46 0.131486 FY 11 16.53% 1.85 0.46 0.139783 FY 10 18.84% 1.81 0.44 0.148615 FY 9 19.56% 1.83 0.43 0.154283 FY 8 20.01% 1.70 0.45 0.152145 FY 7 21.06% 1.66 0.44 0.15333
Relative Valuation S.No Company PE (x) EPS (Rs.) Div Yield (%) P/BV (x) EV/Sales (x) EV/EBIT DA 1 Reliance Power Ltd 18.4 3.6 0 1 7.3 21 2 Tata power 61.6 1.3 1.6 2.4 1.6 9.1 3 Adani Power Ltd 0 0 0 3.6 7.4 50.8 4 JSW Energy Ltd 7.7 6.7 1 1.3 2 7 5 Jaiprakash Power Ventures Ltd 19.8 1.1 0 1 11.1 14.4 6 Torrent Power Ltd 15.4 8.2 5.2 1 1.3 8 7 Neyveli Lignite Corporation Ltd 7.2 8.1 4.8 0.7 2.3 6.5 AVERAGE 18.59 4.14 1.80 1.57 4.71 16.69 PRICE ON THE BASIS OF P/E RATIO Peer Group P/E Ratio - 18.59 Peer Group EBIDTA Multiple - 16.69 Per Share Price(INR) - 200.10 Per Share Price(INR) - 247.93
Net Asset Valuation Book Value 73079.24 Market capitalization(in crore) 122031.9 Shares outstanding(in crore) 824.5 Book Value per share 88.63 Market price per share 148 Premium/ (Discount) 66.99% P/BV 1.669 0.8 1 1.2 1.4 1.6 1.8 2 2013 2014 2015 2016 2017 2018 P/BV P/BV
0 2 4 6 8 10 12 14 16 2013 2014 2015 2016 2017 2018 Projected P/E 0 5 10 15 20 25 30 2013 2014 2015 2016 2017 2018 Projected EPS 0.000% 5.000% 10.000% 15.000% 20.000% 25.000% 2013 2014 2015 2016 2017 2018 Projected Return On Equity
0.000% 1.000% 2.000% 3.000% 4.000% 5.000% 6.000% 7.000% 0 5 10 15 20 25 30 2013 2014 2015 2016 2017 2018 Projected EPS dividend Dividend Yield 2013E 2014E 2015E 2016E 2017E 2018E P/E 13.38 10.88 9.07 7.76 6.62 5.90 Dividend Yield 0.03 0.04 0.04 0.05 0.06 0.07 BV/Share 89.22 90.97 93.90 97.32 102.50 115.86 P/BV 1.66 1.63 1.58 1.52 1.44 1.28 EV/EBITDA 10.85 8.41 6.85 5.76 4.84 4.28 ROE 12.36% 14.96% 17.37% 19.59% 21.81% 21.65% ROC 6.64% 8.61% 10.02% 11.27% 12.92% 11.67%
NHPC • Mini Ratna Enterprise of Govt. of India • Incorporated in 1975 with authorised capital of Rs.200 crore, the present authorised capital is Rs.15000 crore • Projects Completed 15 with Total Installed Capacity of 4095 MW • 16.65% of Total Hydro Power Generation Is Done by NHPC • 4095MW Of Projects Under construction 30% Capacity addition In next 5 years. • Largest Hydro Company with expertise in execution of Hydro Projects from concept to commissioning, with 16.65% share of installed hydro-electric capacity in India and presence across 8 states with installed capacity of 5526 MW. • Assured income business model due to long term power purchase agreement. • Problems Faced By NHPC are : a) Land Acquisition b) International and State Disputes. c) National Calamities d) Unexpected Complexitoes • PLF-49% • PAF-83%
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 2007 2008 2009 2010 2011 2012 Debt Equity ratio 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 2007 2008 2009 2010 2011 2012 Capital Turnover ratio Financial Ratios
Concern 0 5 10 15 20 25 30 2007 2008 2009 2010 2011 2012 Debtors Turnover ratio 0 50 100 150 2007 2008 2009 2010 2011 2012 Average Collection Period Biggest Concern for NTPC is collection period and debtors turnover ratio b’coz of a) Poor Financial Condition of SEB’s. b) Irregularities in payment by SEB’s.
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 2007 2008 2009 2010 2011 2012 Gross profit ratio 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5 2007 2008 2009 2010 2011 2012 Net Profit ratio 0 1 2 3 4 5 6 7 8 9 2007 2008 2009 2010 2011 2012 ROCE 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 2007 2008 2009 2010 2011 2012 Return on Equity
0 0.5 1 1.5 2 2.5 2007 2008 2009 2010 2011 2012 EPS (earning per share) 0 5 10 15 20 25 2007 2008 2009 2010 2011 2012 PE ratio 0.00 5.00 10.00 15.00 20.00 25.00 2007 2008 2009 2010 2011 2012 Book Value of Share
Year Selling Price Installed Capacity Increase in Capacity Generation Revenue Capital Expendit ure Internall y Raised 2017 3.626 5275.2 330 21659.976 7853.10 4335 1300.5 2016 3.486 4945.2 0 21659.976 7551.05 4771 1431.3 2015 3.352 4945.2 680 18681.576 6262.24 4094 1228.2 2014 3.223 4265.2 285 17433.276 5619.04 3450 1035 2013 3.099 3980.2 231 16421.496 5089.35 3350 1005 2012 2.980 3749.2 16357.09 4874.41 2011 2.810 3749.2 16293.32 4578.42 2010 2.910 3619.2 14841.67 4318.93 2009 1.850 3614.2 14587.88 2698.76 2008 1.801 3274.2 14662.69 2640.05 2007 1.746 2714.2 13048.76 2278.30 Increase in Selling Price 4%(CAGR) Year 2013 2014 2015 2016 2017 Debt Repayment Schedule 1033.87 1218.642 1272.222 1197.222 1090.082
FY 2013E FY 2014E FY 2015E FY 2016E FY 2017E Projected Revenue 6135.199 6889.835 7806.369 9427.303 10132.9 Employee Expenses 750.3349 842.6268 954.719 1152.959 1239.254 Financial Expenses 688.3693 773.0395 875.8746 1057.743 1136.911 Depreciation 984.6995 1105.818 1252.922 1513.082 1626.331 Generation administration and expenses 604.992 679.4066 769.7861 929.6264 999.2054 Provisions 112.4582 126.2907 143.0907 172.8025 185.7361 Expenditure on contract, project management and consultancy 122.3359 137.3833 155.659 187.9804 202.05 Total Expense 3263.19 3664.565 4152.052 5014.194 5389.487 PBT 2872.009 3225.269 3654.318 4413.109 4743.414 Taxes 561.4778 630.5402 714.4191 862.7628 927.3374 PAT 2310.532 2594.729 2939.899 3550.346 3816.076 EPS 1.878368 2.109409 2.390017 2.886286 3.102314 Other Income Gen exp Emp. Exp Financial Exp. Dep Provisions Exp contract, pm ,consulta ncy Total Exp Taxes WC 21.5 9.861 12.23 11.22 16.05 1.833 1.944 53.188 19.55 83.70% Income Statement
FY 2013E FY 2014E FY 2015E FY 2016E FY 2017E Post 2017 Net Income 2310.531587 2594.729 2939.899 3550.346 3816.076 WC Requirement 1124.31 631.63 767.14 1356.72 590.59 Capex 1005 1035 1228.2 1431.3 1300.5 Depreciation 984.699465 1105.818 1252.922 1513.082 1626.331 interest(1-tax rate) 758.8647843 950.1433 1189.78 1490.04 1866.311 FCFF 9742.577572 9651.573 12869.11 18246.58 21311.96 96573.12 Debt 19986.14 TV 96573.12 NPV 84856.92923 Less:NET Debt 22602.67 Equity Value 62254.26 Per Share Value(Rs.) 50.610 DCF Valuation
Growth (%) WACC (%) Cost Of Equity(%) Cost of Debt (%) B 3.99% 7.28% 8.34% 5.02% 0.5762 Growth Retention Ratio ROC g=RR*ROC 0.4955 7.60% 3.99% Growth 1 2 3 4 5 6 7 Value Per Share 41.36 50.61 64.17 85.98 126.87 231.31 463.51
DuPont Analysis FISCAL YEAR NET PROFIT MARGIN ASSET TURNOVER EQUITY MULTIPLIER R.O.E. FY 17 0.521 0.0912 1.885 8.959% FY 16 0.518 0.0977 1.937 9.807% FY 15 0.516 0.0903 1.964 9.146% FY 14 0.513 0.0895 1.985 9.114% FY 13 0.511 0.0886 2.002 9.055% FY 12 0.507 0.1035 2.002 10.518% FY 11 0.542 0.0841 1.936 8.815% FY 10 0.507 0.1003 1.853 9.434% FY 9 0.507 0.0763 1.966 7.614% FY 8 0.507 0.0720 1.849 6.758% FY 7 0.507 0.0717 1.657 6.031%
NET ASSET VALUE Book Value 28,696.64 Market capitalization(in crore) 22141.33 Shares outstanding(in crore) 1230.07 Book Value per share 22.75 Market price per share 18 Premium/ (Discount) (26.38%)
0 2 4 6 8 10 12 2013 2014 2015 2016 2017 Projected EV/EBIT 0 0.5 1 1.5 2 2.5 3 3.5 2013 2014 2015 2016 2017 Projected EPS 0 2 4 6 8 10 12 2013 2014 2015 2016 2017 Projected P/E 0% 5% 10% 15% 20% 25% 2013 2014 2015 2016 2017 2018 Projected Return On Equity
0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 0 0.5 1 1.5 2 2.5 3 3.5 2013 2014 2015 2016 2017 eps dividend Dividend Yield 2013 2014 2015 2016 2017 Dividend 0.564 0.633 0.717 0.866 0.931 Dividend Yield 3.13% 3.52% 3.98% 4.81% 5.17% BV/Share 22.749 25.714 28.701 32.441 37.126 P/BV 0.791 0.700 0.627 0.555 0.485 ROE 8.05% 8.20% 8.33% 8.90% 8.36% ROC 7.31% 7.40% 7.48% 7.99% 7.61%
Relative Valuation S.No Company PE (x) EPS (Rs.) Div Yield (%) P/BV (x) EV/Sales (x) EV/EBIT DA 1 Reliance Power Ltd 18.4 3.6 0 1 7.3 21 2 Tata power 61.6 1.3 1.6 2.4 1.6 9.1 3 Adani Power Ltd 0 0 0 3.6 7.4 50.8 4 JSW Energy Ltd 7.7 6.7 1 1.3 2 7 5 Jaiprakash Power Ventures Ltd 19.8 1.1 0 1 11.1 14.4 6 Torrent Power Ltd 15.4 8.2 5.2 1 1.3 8 7 Neyveli Lignite Corporation Ltd 7.2 8.1 4.8 0.7 2.3 6.5 AVERAGE 18.59 4.14 1.80 1.57 4.71 16.69 PRICE ON THE BASIS OF P/E RATIOPeer Group P/E Ratio - 18.59 Peer Group EBIDTA Multiple - 16.69 Per Share Price(INR) - 34.91 Per Share Price(INR) - 50.15
VALUATION VALUE DCF Valuation Rs.181.2 NAV Valuation Rs.88.63 Peer Group EV/EBIDTA Valuation Rs. 247.93 Peer Group P/E Valuation Rs.200.10 VALUATION VALUE DCF Valuation Rs.50.61 NAV Valuation Rs.22.75 Peer Group EV/EBIDTA Valuation Rs. 50.154 Peer Group P/E Valuation Rs.34.91 a) NTPC b) NHPC Recommendation NTPC-BUY NHPC-BUY Conclusion
http://trustline.co.in/ http://www.trustline.in/ Recommendations • Company has most competitive prices but is nowhere mentioned neither on there website nor in advertiement. • Company needs a brand identity .a recognition therefore it is advised to have a brand ambassador. • Sending investment tips and reports through mails and messages and updating on website. • This has to be followed by target achieved messages and mails .This fills confidence in the investors about the quality of ressearch. • Camps in Colleges and companies as employees normally have ESOP. • Educating Sessions for old clients about stock market trading, stock market instruments and also about the new Technological developments adopted in the stock market • Instead of Charging AMC once a year , charge monthly amc charges which doesnot create heavy charges feeling. • Website was old and crowded with information ,so a fresh look and feel is adviced.
Learnings • Corporate culture ,environment.. • Basics of Stock Market, new and different products of trading. • Different Softwares of trading. • Psychology of Indian retail investors.
fundamental analysis and valuation of public sector power companies

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fundamental analysis and valuation of public sector power companies

  • 1. “Financial Analysis & Valuation of Public Sector Power Companies (NTPC and NHPC)” Nitin Jaggi PGDM-191
  • 2. Flow Of Presentation  About Trustline Sec Ltd  Power Sector Overview  Overview Of NTPC  Valuation Of NTPC  Overview Of NHPC  Valuation Of NHPC  Conclusion  Recommendations  Learnings
  • 3. • Trustline made a humble beginning in 1989 • Trustline has been operating for over 20 years in the Indian Financial Arena, offering equity, currency and commodities broking services to over 100,000 clients at over 600 locations, through own branches and business partners. • Trustlines’ vision is to be the most preferred Broking House of India • TRUSTLINE GROUPS’ foray into the commodity, currency, and depository • MEMBER : NSE,BSE,MCX-SX,NSDL,CDSL : MCX, NCDEX & NMCEIL • Group Companies • TRUSTLINE SECURITIES LIMITED • TRUSTLINE COMMODITIES (P) LTD • TRUSTLINE INSURANCE BROKERS (P) LTD • TRUSTLINE REAL ESTATES (P) LTD • TRUSTLINE ACADEMY Trustline Securities Ltd
  • 4. Vision • To provide world class investment solution in simplified form to the investing population. • To provide the most modern technology platform so as to enable investors perform hassle free transactions at minimum impact cost. • To empower investors with opportunities to invest across various asset classes to benefit from the dynamism of the market. Mission • To empower individual investors by providing simple investments ideas through investment research and thus lead them to a path of wealth creation by investing in the securities market Vision & Mission
  • 5. 1. Equity 2. Commodity 3. Mutual fund 4. Currency SERVICES OFFERED BY THE COMPANY Edge over competitors 1. A vast network of offices giving it pan India presence with more than 400+ branches. 2. Vast offering of Services. 3. Real-time risk monitoring through RMS(Risk Management System) with latest technology. 4. Experienced and highly qualified Research Analysts and Relationship Managers. 5. Latest MF News & Fund Manager views & tools to help select the right scheme. 6. Indivitual portfolio analysis and suggestions. 7. Last but not the least ,most competitive prices in every segment across the industry. 5. Insurance 6. Portfolio Management Services 7. Education(Education First, Investment Second)
  • 6. Competitors and Pricing.. S.No NAME OF BROKING HOUSES INTRADAY DELIVERY BASED TRADING 1 Indiabulls 0.03 0.3 2 Religare 0.03 0.3 3 India Infoline 0.02 0.2 4 Motilal Oswal 0.025 0.25 5 Share Khan 0.02 0.2 6 HDFC securities 0.08 0.75 7 ICICI securities 0.08 0.75 8 Kotak Securities 0.05 0.5 9 Trustline 0.01 0.1
  • 7. Power Sector Overview 43% 30% 27% Central State Private 1. Demand for electrical energy is increasing at a rate of 8 to10 per cent annually 2. All India Capacity reached 207876 MW 3. Gross annual generation of the country was 876.89 Billion Units (BUs) (including Bhutan import) showing a growth rate of 8.11% over last year. 4. The energy requirement during the year 2012-13 was 937.20 BUs. 5. Energy deficit on a year-on-year basis in 2012-13 at 8.5%. 6. Peak load demand, increased by 6.31% thereby increasing peak load defi cit to 10.6% in 2012-13 from 9.8% in the previous year. (Source: CEA) 7. During 2013-14 India’s GDP is expected to grow at 6.1% to 7%. 8. In order to sustain the growth in GDP and bring it around 9%, India needs to add power generation capacity commensurate with this pace since growth of power sector is strongly co-related with the growth in GDP and going forward it is expected that supply will create further demand. 9. By FY17 demand will Cross 1403 Billion Units(CEA). Consumption Industrial>Residential>Agriculture>Commercial
  • 8. Year 2007-08 2008-09 2009-10 2010-11 2011-12 Demand(mu) 737,052 777,039 830,594 861,591 937,199 Supply(mu) 664,660 691,038 746,644 788,355 857,886 Deficit(%) -9.80% -11.10% -10.10% -8.50% -8.50% 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 2007-08 2008-09 2009-10 2010-11 2011-12 Demand Supply Power Demand/Supply Overview
  • 9. Challenges Of Power Sector: 1. New Project Management and Execution. 2. Ensuring availability of fuel quantities and qualities 3. Lack of initiative to develop large coal and natural gas resources present in India, 4. Land acquisition 5. Environmental clearances at state and central government level 6. Training of skilled manpower to prevent talent shortages for operating latest technology plants. 7. Huge losses during Transmission and Distribution. 8. Poor Financial health of state electricities boards. 9. Tariff decision highly regulated by State Gov.’s. 57.10% 9.09%0.58% 18.90% 2.30% 12.03% Fuel Based Allocation Coal Gas Diesel Hydro Nuclear Renewable
  • 11. • Maharatna Company ,Incorporated as a Government company in 1975; amongst 7 Maharatna GoI companies, • Vision To be the world’s largest and best power producer, powering India’s growth. • As of December 31, 2012 total installed power generation capacity of 39,674MW whereas 17,909MW of capacity, under construction • Accounts for 18.5% of India’s total installed capacity • NTPC generated 220 billion units of electricity which is 27.4% of India’s total generation in FY12. • 11th Five Year Power Plan of addition of 9220 MW of Capacity was achieved. • 12 th Five Year Power Plan Target of Addition of 11148 MW. • At the 337th position in the Forbes Global 2000 list of the world’s largest Companies for the year 2012, and 3rd in Asia among electricity utilities. • Ranked 3rd in The Economic Times Best Employers in India 2012 Study of Best Employers in the Country NTPC
  • 12. Financial Ratios 0.54 0.56 0.58 0.6 0.62 0.64 0.66 0.68 0.7 0.72 0.74 0.76 2008 2009 2010 2011 2012 Debt Equity ratio 0.52 0.53 0.54 0.55 0.56 0.57 0.58 0.59 0.6 0.61 0.62 2007 2008 2009 2010 2011 2012 Fixed Assets Turnover ratio 0.4 0.42 0.44 0.46 0.48 0.5 0.52 2007 2008 2009 2010 2011 2012 Capital Turnover ratio
  • 13. 92% 91% 91% 88% 85% 79% 77% 78% 75% 73% 2008 2009 2010 2011 2012 Plant Load Factor NTPC All India Plant Load Factor Share Holding Pattern in (%) MAR' 13 FEB' 13 DEC' 12 SEP' 12 Promoter 75 84.5 75 84.5 FII 9.37 4.39 8.99 3.95 DII 10.47 7.51 10.86 7.73 Others 5.16 3.6 5.15 3.82 Total 100 100 100 100 Share Holding Pattern
  • 14. Concern Biggest Concern for NTPC is collection period and debtors turnover ratio b’coz of a) Poor Financial Condition of SEB’s. b) Irregularities in payment by SEB’s. 0 10 20 30 40 50 60 2007 2008 2009 2010 2011 2012 Average Collection Period
  • 15. 0 2 4 6 8 10 12 14 16 18 2007 2008 2009 2010 2011 2012 Return on capital employed 0.115 0.12 0.125 0.13 0.135 0.14 0.145 2007 2008 2009 2010 2011 2012 0 5 10 15 20 25 30 35 40 45 2007 2008 2009 2010 2011 2012 Gross profit ratio
  • 16. 0 2 4 6 8 10 12 2007 2008 2009 2010 2011 2012 EPS (earning per share) 0 2 4 6 8 10 12 14 16 18 20 2007 2008 2009 2010 2011 2012 PE ratio
  • 17. Energy sale/Gross Gen. Ratio 93.51 Increase In Price 10.34% NTPC Capacity Commercialis ed Capacity CAPACITY ADDITION PLF Gross Generation (bu) Energy Sent Out (bu) price/unit Revenue Projection Total Capital Expenditure Requirement Internal Capital Expendit ure fy 10 27640 218.84 205.09 2.27 46639.74 FY 11 29830 0.91 220.34 206.04 2.63 54187.28 FY 12 30990 0.85 222.11 207.70 2.96 61478.90 13000 3900 FY 13 34810 3170 0.82 222.61 208.16 3.27 67984.82 7541.2 2262.36 FY 14 37118 2218 0.83 253.10 236.67 3.60 85286.69 7956 2386.8 FY 15 39458 2340 0.85 276.38 258.44 3.98 102760.27 8908 2672.4 FY 16 42078 2620 0.85 293.80 274.74 4.39 120530.89 2720 816 FY 17 42878 800 0.85 313.31 292.98 4.84 141821.16 2977.58 893.27 FY 18 0.85 319.27 298.55 5.34 159456.81 Projected Increase in Capacity/Revenue
  • 18. Rupee Loans incl. Bonds & PDS Foreign Currency Loans Total Within 1 3,135.40 1,235.70 4,371.10 2–3 years 7,723.32 1,758.39 9,481.71 4– 5 years 7,376.79 3,717.76 11,094.55 6–10 years 13,595.28 5,662.66 19,257.94 Beyond 10 4,184.24 1,889.83 6,074.07 Total 36,015.03 14,264.34 50,279.37 Loan Repayment Schedule
  • 19. FY 2013E FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E Projected Revenue 71533.51121 89053.71 106747.79 124742.46 146295.78 164154.6 Fuel 46976.13866 58481.67 70101.399 81918.51 96072.605 107800.5 Employee Expenses 3505.142049 4363.632 5230.642 6112.38 7168.4931 8043.574 Financial Expenses 1748.782588 2342.702 2808.1732 3281.551 3848.5467 4318.351 Depreciation 3740.647592 4656.818 5582.0814 6523.062 7650.1341 8584.01 Generation administration and expenses 3862.809606 4808.9 5764.3809 6736.093 7899.972 8864.347 Total Expense 59833.52049 74653.73 89486.676 104571.60 122639.75 137610.8 PBT 11699.99072 14399.99 17261.118 20170.856 23656.027 26543.79 Taxes 2822.856762 3474.284 4164.59 4866.62 5707.4897 6404.221 PAT 8877.133961 10925.7 13096.528 15304.233 17948.538 20139.57 EPS 10.76608124 13.25056 15.883312 18.560 21.76777 24.42503 Fuel Employee Expenses Financial Expenses Dep. Gen,ex p Total Expense WC Taxes 65.67% 4.90% 2.63% 5.23% 5.40% 83.64% 32.84% 24.13%
  • 20. FY 2013E FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E Post 2018 Net Income 8877.133961 10925.7 13096.528 15304.23 17948.538 20139.57 Working Capital Req. 2361.626569 5886.848 5945.2733 6046.27 7241.987 6000.617 Capex 2262.36 2386.8 2672.4 816 893.275 911.1407 Depreciation 3740.647592 4656.818 5582.0814 6523.062 7650.134 8584.01 interest(1-tax rate) 1748.782588 2342.702 2808.1732 3,281.552 3848.546 4318.351 FCFF 9742.577572 9651.573 12869.11 18246.57 21311.955 26130.18 243871.7 Debt 50376 TV 243871.7 NPV 188040.1316 Less:NET Debt 34229.89 Equity Value 153810.24 Per Share Value(Rs.) 181.2 DCF Valuation
  • 21. Growth 1% 2% 3% 4% 5% 6% Per Share Value 150.92 160.98 172.71 186.54 203.10 223.27 Retention Ratio 0.29 ROC 11.674 g=RR*ROC 3.42% Growth (%) 3.42 % WACC (%) 11.77 % Cost Of Equity (%) 15.413 % Cost of Debt (%) 5.96 % B 0.6538
  • 22. DuPont Analysis Net income/sales Total asset/total Equity Sales/Total assets ROE FY 18 12.27% 1.88 0.93 21.36% FY 17 12.27% 1.99 0.88 21.48% FY 16 12.27% 2.02 0.78 19.24% FY 15 12.27% 2.04 0.68 17.02% FY 14 12.27% 1.99 0.60 14.62% FY 13 12.41% 1.93 0.50 12.05% FY 12 14.86% 1.92 0.46 0.131486 FY 11 16.53% 1.85 0.46 0.139783 FY 10 18.84% 1.81 0.44 0.148615 FY 9 19.56% 1.83 0.43 0.154283 FY 8 20.01% 1.70 0.45 0.152145 FY 7 21.06% 1.66 0.44 0.15333
  • 23. Relative Valuation S.No Company PE (x) EPS (Rs.) Div Yield (%) P/BV (x) EV/Sales (x) EV/EBIT DA 1 Reliance Power Ltd 18.4 3.6 0 1 7.3 21 2 Tata power 61.6 1.3 1.6 2.4 1.6 9.1 3 Adani Power Ltd 0 0 0 3.6 7.4 50.8 4 JSW Energy Ltd 7.7 6.7 1 1.3 2 7 5 Jaiprakash Power Ventures Ltd 19.8 1.1 0 1 11.1 14.4 6 Torrent Power Ltd 15.4 8.2 5.2 1 1.3 8 7 Neyveli Lignite Corporation Ltd 7.2 8.1 4.8 0.7 2.3 6.5 AVERAGE 18.59 4.14 1.80 1.57 4.71 16.69 PRICE ON THE BASIS OF P/E RATIO Peer Group P/E Ratio - 18.59 Peer Group EBIDTA Multiple - 16.69 Per Share Price(INR) - 200.10 Per Share Price(INR) - 247.93
  • 24. Net Asset Valuation Book Value 73079.24 Market capitalization(in crore) 122031.9 Shares outstanding(in crore) 824.5 Book Value per share 88.63 Market price per share 148 Premium/ (Discount) 66.99% P/BV 1.669 0.8 1 1.2 1.4 1.6 1.8 2 2013 2014 2015 2016 2017 2018 P/BV P/BV
  • 25. 0 2 4 6 8 10 12 14 16 2013 2014 2015 2016 2017 2018 Projected P/E 0 5 10 15 20 25 30 2013 2014 2015 2016 2017 2018 Projected EPS 0.000% 5.000% 10.000% 15.000% 20.000% 25.000% 2013 2014 2015 2016 2017 2018 Projected Return On Equity
  • 26. 0.000% 1.000% 2.000% 3.000% 4.000% 5.000% 6.000% 7.000% 0 5 10 15 20 25 30 2013 2014 2015 2016 2017 2018 Projected EPS dividend Dividend Yield 2013E 2014E 2015E 2016E 2017E 2018E P/E 13.38 10.88 9.07 7.76 6.62 5.90 Dividend Yield 0.03 0.04 0.04 0.05 0.06 0.07 BV/Share 89.22 90.97 93.90 97.32 102.50 115.86 P/BV 1.66 1.63 1.58 1.52 1.44 1.28 EV/EBITDA 10.85 8.41 6.85 5.76 4.84 4.28 ROE 12.36% 14.96% 17.37% 19.59% 21.81% 21.65% ROC 6.64% 8.61% 10.02% 11.27% 12.92% 11.67%
  • 27. NHPC • Mini Ratna Enterprise of Govt. of India • Incorporated in 1975 with authorised capital of Rs.200 crore, the present authorised capital is Rs.15000 crore • Projects Completed 15 with Total Installed Capacity of 4095 MW • 16.65% of Total Hydro Power Generation Is Done by NHPC • 4095MW Of Projects Under construction 30% Capacity addition In next 5 years. • Largest Hydro Company with expertise in execution of Hydro Projects from concept to commissioning, with 16.65% share of installed hydro-electric capacity in India and presence across 8 states with installed capacity of 5526 MW. • Assured income business model due to long term power purchase agreement. • Problems Faced By NHPC are : a) Land Acquisition b) International and State Disputes. c) National Calamities d) Unexpected Complexitoes • PLF-49% • PAF-83%
  • 28. 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 2007 2008 2009 2010 2011 2012 Debt Equity ratio 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 2007 2008 2009 2010 2011 2012 Capital Turnover ratio Financial Ratios
  • 29. Concern 0 5 10 15 20 25 30 2007 2008 2009 2010 2011 2012 Debtors Turnover ratio 0 50 100 150 2007 2008 2009 2010 2011 2012 Average Collection Period Biggest Concern for NTPC is collection period and debtors turnover ratio b’coz of a) Poor Financial Condition of SEB’s. b) Irregularities in payment by SEB’s.
  • 30. 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 2007 2008 2009 2010 2011 2012 Gross profit ratio 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5 2007 2008 2009 2010 2011 2012 Net Profit ratio 0 1 2 3 4 5 6 7 8 9 2007 2008 2009 2010 2011 2012 ROCE 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 2007 2008 2009 2010 2011 2012 Return on Equity
  • 31. 0 0.5 1 1.5 2 2.5 2007 2008 2009 2010 2011 2012 EPS (earning per share) 0 5 10 15 20 25 2007 2008 2009 2010 2011 2012 PE ratio 0.00 5.00 10.00 15.00 20.00 25.00 2007 2008 2009 2010 2011 2012 Book Value of Share
  • 32. Year Selling Price Installed Capacity Increase in Capacity Generation Revenue Capital Expendit ure Internall y Raised 2017 3.626 5275.2 330 21659.976 7853.10 4335 1300.5 2016 3.486 4945.2 0 21659.976 7551.05 4771 1431.3 2015 3.352 4945.2 680 18681.576 6262.24 4094 1228.2 2014 3.223 4265.2 285 17433.276 5619.04 3450 1035 2013 3.099 3980.2 231 16421.496 5089.35 3350 1005 2012 2.980 3749.2 16357.09 4874.41 2011 2.810 3749.2 16293.32 4578.42 2010 2.910 3619.2 14841.67 4318.93 2009 1.850 3614.2 14587.88 2698.76 2008 1.801 3274.2 14662.69 2640.05 2007 1.746 2714.2 13048.76 2278.30 Increase in Selling Price 4%(CAGR) Year 2013 2014 2015 2016 2017 Debt Repayment Schedule 1033.87 1218.642 1272.222 1197.222 1090.082
  • 33. FY 2013E FY 2014E FY 2015E FY 2016E FY 2017E Projected Revenue 6135.199 6889.835 7806.369 9427.303 10132.9 Employee Expenses 750.3349 842.6268 954.719 1152.959 1239.254 Financial Expenses 688.3693 773.0395 875.8746 1057.743 1136.911 Depreciation 984.6995 1105.818 1252.922 1513.082 1626.331 Generation administration and expenses 604.992 679.4066 769.7861 929.6264 999.2054 Provisions 112.4582 126.2907 143.0907 172.8025 185.7361 Expenditure on contract, project management and consultancy 122.3359 137.3833 155.659 187.9804 202.05 Total Expense 3263.19 3664.565 4152.052 5014.194 5389.487 PBT 2872.009 3225.269 3654.318 4413.109 4743.414 Taxes 561.4778 630.5402 714.4191 862.7628 927.3374 PAT 2310.532 2594.729 2939.899 3550.346 3816.076 EPS 1.878368 2.109409 2.390017 2.886286 3.102314 Other Income Gen exp Emp. Exp Financial Exp. Dep Provisions Exp contract, pm ,consulta ncy Total Exp Taxes WC 21.5 9.861 12.23 11.22 16.05 1.833 1.944 53.188 19.55 83.70% Income Statement
  • 34. FY 2013E FY 2014E FY 2015E FY 2016E FY 2017E Post 2017 Net Income 2310.531587 2594.729 2939.899 3550.346 3816.076 WC Requirement 1124.31 631.63 767.14 1356.72 590.59 Capex 1005 1035 1228.2 1431.3 1300.5 Depreciation 984.699465 1105.818 1252.922 1513.082 1626.331 interest(1-tax rate) 758.8647843 950.1433 1189.78 1490.04 1866.311 FCFF 9742.577572 9651.573 12869.11 18246.58 21311.96 96573.12 Debt 19986.14 TV 96573.12 NPV 84856.92923 Less:NET Debt 22602.67 Equity Value 62254.26 Per Share Value(Rs.) 50.610 DCF Valuation
  • 35. Growth (%) WACC (%) Cost Of Equity(%) Cost of Debt (%) B 3.99% 7.28% 8.34% 5.02% 0.5762 Growth Retention Ratio ROC g=RR*ROC 0.4955 7.60% 3.99% Growth 1 2 3 4 5 6 7 Value Per Share 41.36 50.61 64.17 85.98 126.87 231.31 463.51
  • 36. DuPont Analysis FISCAL YEAR NET PROFIT MARGIN ASSET TURNOVER EQUITY MULTIPLIER R.O.E. FY 17 0.521 0.0912 1.885 8.959% FY 16 0.518 0.0977 1.937 9.807% FY 15 0.516 0.0903 1.964 9.146% FY 14 0.513 0.0895 1.985 9.114% FY 13 0.511 0.0886 2.002 9.055% FY 12 0.507 0.1035 2.002 10.518% FY 11 0.542 0.0841 1.936 8.815% FY 10 0.507 0.1003 1.853 9.434% FY 9 0.507 0.0763 1.966 7.614% FY 8 0.507 0.0720 1.849 6.758% FY 7 0.507 0.0717 1.657 6.031%
  • 37. NET ASSET VALUE Book Value 28,696.64 Market capitalization(in crore) 22141.33 Shares outstanding(in crore) 1230.07 Book Value per share 22.75 Market price per share 18 Premium/ (Discount) (26.38%)
  • 38. 0 2 4 6 8 10 12 2013 2014 2015 2016 2017 Projected EV/EBIT 0 0.5 1 1.5 2 2.5 3 3.5 2013 2014 2015 2016 2017 Projected EPS 0 2 4 6 8 10 12 2013 2014 2015 2016 2017 Projected P/E 0% 5% 10% 15% 20% 25% 2013 2014 2015 2016 2017 2018 Projected Return On Equity
  • 39. 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 0 0.5 1 1.5 2 2.5 3 3.5 2013 2014 2015 2016 2017 eps dividend Dividend Yield 2013 2014 2015 2016 2017 Dividend 0.564 0.633 0.717 0.866 0.931 Dividend Yield 3.13% 3.52% 3.98% 4.81% 5.17% BV/Share 22.749 25.714 28.701 32.441 37.126 P/BV 0.791 0.700 0.627 0.555 0.485 ROE 8.05% 8.20% 8.33% 8.90% 8.36% ROC 7.31% 7.40% 7.48% 7.99% 7.61%
  • 40. Relative Valuation S.No Company PE (x) EPS (Rs.) Div Yield (%) P/BV (x) EV/Sales (x) EV/EBIT DA 1 Reliance Power Ltd 18.4 3.6 0 1 7.3 21 2 Tata power 61.6 1.3 1.6 2.4 1.6 9.1 3 Adani Power Ltd 0 0 0 3.6 7.4 50.8 4 JSW Energy Ltd 7.7 6.7 1 1.3 2 7 5 Jaiprakash Power Ventures Ltd 19.8 1.1 0 1 11.1 14.4 6 Torrent Power Ltd 15.4 8.2 5.2 1 1.3 8 7 Neyveli Lignite Corporation Ltd 7.2 8.1 4.8 0.7 2.3 6.5 AVERAGE 18.59 4.14 1.80 1.57 4.71 16.69 PRICE ON THE BASIS OF P/E RATIOPeer Group P/E Ratio - 18.59 Peer Group EBIDTA Multiple - 16.69 Per Share Price(INR) - 34.91 Per Share Price(INR) - 50.15
  • 41. VALUATION VALUE DCF Valuation Rs.181.2 NAV Valuation Rs.88.63 Peer Group EV/EBIDTA Valuation Rs. 247.93 Peer Group P/E Valuation Rs.200.10 VALUATION VALUE DCF Valuation Rs.50.61 NAV Valuation Rs.22.75 Peer Group EV/EBIDTA Valuation Rs. 50.154 Peer Group P/E Valuation Rs.34.91 a) NTPC b) NHPC Recommendation NTPC-BUY NHPC-BUY Conclusion
  • 42. http://trustline.co.in/ http://www.trustline.in/ Recommendations • Company has most competitive prices but is nowhere mentioned neither on there website nor in advertiement. • Company needs a brand identity .a recognition therefore it is advised to have a brand ambassador. • Sending investment tips and reports through mails and messages and updating on website. • This has to be followed by target achieved messages and mails .This fills confidence in the investors about the quality of ressearch. • Camps in Colleges and companies as employees normally have ESOP. • Educating Sessions for old clients about stock market trading, stock market instruments and also about the new Technological developments adopted in the stock market • Instead of Charging AMC once a year , charge monthly amc charges which doesnot create heavy charges feeling. • Website was old and crowded with information ,so a fresh look and feel is adviced.
  • 43. Learnings • Corporate culture ,environment.. • Basics of Stock Market, new and different products of trading. • Different Softwares of trading. • Psychology of Indian retail investors.