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Umer Tariq (S2017270008)

NML is expected to grow steadily YoY. In FY 2013 they make the


policy to construct the new spinning unit to increase the production.
So in FY 2014 the company gives the 32.41% dividend to its
shareholders as compared to previous year to increase their capital
gain. But their sales are shrinking in FY2015-16 respectively due to
the instability in the market price in cotton, fuel and labor
respectively. But from FY2013-17 the equity grows to 250% to PKR
88,162 Million and non-current assets by 240% to PKR 88,532
Million which will help to boost in recent years. As the company is
more focus into their associated companies as well. The main reason
of downward trend in their profit is that their sales are decreasing due
to severe competition, higher rate of dollar and low demand of textile
products and their EPS becomes steady. The company receives the
good return on the investments over the years. As the company have
the 3% market share of textile. In term of debt the company is very
good as compared to FY2014 where the company took some loan to
invest. The company is position to take the loan and it can easily repay
it. But we compare ROA and ROE from FY 2013-17 it take to much
gap that the company is increasing its assets but the return on them is
slow due to the cost incurred on it as compared to the equity is
showing the response in a good manner. As per Z-Score analysis the
company total score moved from 8.49 to 10.90 from FY2013-17 this
shows that the company is in very good situation and it shows the
positive impact to its stakeholders as their market capitalization
reaches to Rs48 Billion as compared to their liability which is low as
compared to its assets. The company is given the dividend every year.
So according to it the company is in no state of bankruptcy. AS per
analysis of the stock valuation came out to be is Rs 80.16 but the
current price of this stock is Rs 167.65, we see our stock price is
undervalue. So in this case we should buy our stock so that we can
earn the profits. But if we see the growth rate from FY2013-17 is not
as good. As per horizontal and vertical analysis of the company
their net profit is not shows the continuous good trend as the company
is installing the new unit and not making the sales according to it and
the expenses are growing YoY basis. So the company should
definitely work on them to increase the profitability. On the other
hand the assets and shareholders’ equity shows good trend.
According to my opinion we should buy this share because the
statements of this company are better and they give their dividends on
time. And the company is not having so much huge debts that they
cannot pay it off.So it can be bought for the long term investments
purpose.