Valuation of Shares

Introduction
Introduction of Study : -
Valuation of Shares:
Valuation is the processes that links & assist to determine the worth of an asset. It
can be applied to expected benefits from real as well as financial assets & securities to
determine their worth at a given point of time. This key input the valuation process are;
1. The value of an asset depends on the returns it is expected to provide over the
holding /ownership period. In addition to the total cash flow estimates their
timing his also required to identify the return expected from the shares.
2. The required return is used in the valuation process the incorporate risk into
the analysis risk denotes the chance that expected outcome would not be
realized. The live of risk associated with a given cash flow has a significant
bearing on its.Value that is the greater the risk the lower the value & vice
years higher risk can be incorporated in to the valuation analysis by using a
higher required rate to determine the present value.
3. Expected return in term of cash flow together with their time & risk in terms
of the required return
Objectives of Study:-
1. To Study theoretical aspects of valuation.
2. To explain the different methods or valuation of equity shares.
3. To ascertain the value of share of companies.
4. To study the valuation of assets & liabilities of the company.
5. To make some suggestions on the baits of data analysis.
Hypothesis of Study: -
1. The intrinsic value of shares is fair.
2. The performance relating to shares of all five companies is good.
Limitations
We cannot give proper comment on competitor’s services till we use it. But I try to collect as
accurate information as possible. As we all know services are intangible and we cannot predict
its quality, it is a thing to feel not to see.
INDUSTRY PROFILE
Meaning & Definition of Company:-
In common Parlance Company means an association of person formed for the economics
gain of its members. However, in law any association of person for any common object can
be registered as company. The object need not be economy gain of its members.
Example:-
A Company can be formed for purpose such as charity, research advancement of
knowledge etc.
Definition
In the Word of Justice Lindley:
“ A Company it an association of main person who contribute money or money’s worth
to a common stock & employ it for a company purpose. The common stock so contributed is
denoted in money & is the capital of the company. The person who contributes it or to whom it
belonging are members”.
The companies Act defines a company as “A company formed & registered under this
Act or an existing company”.
Profile of Companies
1] BAJAL AUTO LIMITED
i) Name of Company BAJAL AUTO LIMITED
ii) Registered Office Mumbai- Pune Road Akurdi Pune -411035

iii) Telephone (020)-27472851
27406063
iv) Fax (020)-27407380
v) E-Mail ID Investo@bajaauto.co.in
vi) Board of Directors Rahul Bajaj (Chairman)
Madhur Bajaj (Vice Chairman)
Rajiv Bajaj (MD)
J.N.Godrej (Director)
SumanKirloskar (Director)
Shekhar Bajaj (Director)
D.S. Metha (Director)
vii) Equity Share Capital 289367020 equity shares of Rs.10 each
viii) Rate of Dividend Rs 40 Per Share
2] SUDARSHAN CHEMICAL INDUSTRIES LIMITED
i) Name of Company SUDARSHAN CHEMICAL INDUSTRIES

LIMITED
ii) Registered Office 162,Wellesley Road Pune – 411001

iv) Fax (020)-26058222

v) E-Mail ID contact@sudarshan.com.
vi) Board of Directors Mr. K.L.Rathi (Chairman)
Mr. B.S.Metha (Director)
Mr. P.R. Rathi(Director)
Mr. P.P.Chhabria (Director)
Mr.S.N.Indamdar (Director)
Mr. N.J.Rathi (Director)
vii) Equity Share Capital 6922775 equity shares of Rs.10 each fully paid
up
viii) Rate of Dividend Rs 12.50 Per Share
3] MELSTAR INFORMATION TECHNOLOGIES LIMITED
i) Name of Company MELSTAR INFORMATION

TECHNOLOGIES LIMITED
ii) Registered Office Melstar House, G4, MIDC Cross Road “A”
Anderi (East Mumbai -400093
iv) Fax (022)-28310520

v) E-Mail ID info@melstar.com.
vi) Board of Directors Mr. Yeshvardhan Birla (Chairman)
Mr. M.S.Adige (Director)
Mr. P.V.R. Murthy (Director)
Mr. Rajesh Shah (Director)
Mr.AnojMenon (Director)
vii) Equity Share Capital 14283139 equity shares of Rs.10 each fully
paid up
viii) Rate of Dividend Nil
4] ACC LIMITED
i) Name of Company ACC LIMITED

ii) Registered Office Cement House 121, MaharahiKarve Road Mumbai
- 400020
iv) Fax (022)-33617440

v) E-Mail ID info@melstar.com.
vi) Board of Directors Mr. N.S.Sekhsrai (Chairman)
Mr. PapulHugeentobler (Deputy Chairman)
Mr. KuldipK.Kaura (Director)
Mr. Naresh Chandra (Director)
Mr.M.L.Narula (Director)
Mr. R.A.Shah (Director)
Miss. AshwiniDani (Director)
vii) Equity Share 18795000 equity shares of Rs.10 each fully paid up
Capital
5] RELIANCE COMPNY LIMITED
i) Name of Company RELIANCE COMPNY LIMITED
ii) Registered Office 3rd Floor Maker Chambers, 222, Nariman Point
Mumbai - 4000020
iv) Fax (022)-22785111

v) E-Mail ID invester relation@rill.com.
vi) Board of Directors Mr. Mukesh D. Ambani (Chairman)
Mr. Hital R. Meswani (Director)
Mr. Pawan K. Kupil (Director)
Mr. Ashok Misra (Director)
Mr. Ashok Misra (Director)
Miss. Ramnilaila H. Ambani (Director)
Mr. Yogendra P. Trivedi (Director)
Mr. Dipak C. Jain (Director)
vii) Equity Share 1140000 equity shares of Rs.10 each fully paid up
Capital
COMPANY PROFILE
ABOUT THE COMPANY
SHAREKHAN RETAIL BROKING
• Among the top 3 branded retail service providers (Rs 650 crs avg. daily volume- Apr
Dec’17
• No. 1 player in online business
• Largest network of branded broking outlets in the country servicing 7,00,000 clients.
MANAGEMENT TEAM
The company has an eighty years experience in brokering business it was earlier known as SSKI
Group. The owner of the company is Mr. Dinesh Murikya.
Sharekhan is one of the leading retail brokerage firms in the country. It is the retail broking arm
of the Mumbai-based SSKI Group, which has over eight decades of experience in the stock
broking business. Sharekhan offers its customers a wide range of equity related services
including trade execution on BSE, NSE, Derivatives, depository services, online trading,
investment advice etc. The firm’s online trading and investment site-www.Sharekhan.com-was
launched on Feb 8, 2000. The site gives access to superior content and transaction facility to
retail customers across the country. Known for its jargon-free, investor friendly language and
high quality research, the site has a registered base of over 4 lakh customers. The number of
trading members currently stands at over 3 Lacs. While online trading currently accounts for just
over 1 per cent of the daily trading in stocks in India, Sharekhan alone accounts for 22 per cent
of the volumes traded online.
The content-rich and research oriented portal has stood out among its contemporaries because of
its steadfast dedication to offering customers best-of-breed technology and superior market
information.
The firm’s online trading and investment site-www.Sharekhan.com-was launched on Feb 8,
2000. The site gives access to superior content and transaction facility to retail customers across
the country. Known for its jargon-free, investor friendly language and high quality research, the
site has a registered base of over 4 lakh customers. The number of trading members currently
stands at over 3 Lacs. While online trading currently accounts for just over 1 per cent of the daily
trading in stocks in India, Sharekhan alone accounts for 22 per cent of the volumes traded online.
The content-rich and research oriented portal has stood out among its contemporaries because of
its steadfast dedication to offering customers best-of-breed technology and superior market
information. The objective has been to let customers make informed decisions and to simplify
the process of investing in stocks.
On April 17, 2002 Sharekhan launched SpeedTrade, a net-based executable application that
emulates the broker terminals along with host of other information relevant to the Day Traders.
This was for the first time that a net-based trading station of this caliber was offered to the
traders. In the last six months SpeedTrade has become a de facto standard for the Day Trading
community over the net.
Sharekhan’s ground network includes over 250 centres in 123 cities in India, of which 20 are
fully-owned branches.
Sharekhan has always believed in investing in technology to build its business. The company has
used some of the best-known names in the IT industry, like Sun Microsystems, Oracle,
Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign Financial Technologies India
Ltd, Spider Software Pvt Ltd. to build its trading engine and content. The Morakhia family holds
a majority stake in the company. HSBC, Intel & Carlyle are the other investors.
With a legacy of more than 80 years in the stock markets, the SSKI group ventured into
institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading
players in institutional broking and corporate finance activities. SSKI holds a sizeable portion of
the market in each of these segments. SSKI’s institutional broking arm accounts for 7% of the
market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional
portfolio investment in the country. It has 60 institutional clients spread over India, Far East, UK
and US. Foreign Institutional Investors generate about 65% of the organization’s revenue, with a
daily turnover of over US$ 2 million. The Corporate Finance section has a list of very prestigious
clients and has many ‘firsts’ to its credit, in terms of the size of deal, sector tapped etc. The group
has placed over US$ 1 billion in private equity deals. Some of the clients include BPL Cellular
Holding, Gujarat Pipavav, Essar, Hutchison, Planetasia, and Shopper’s Stop.\
250 branded
share shops
across 110
cities in
India From sharekhan.com to
India’s largest chain of branded
retail share
Sharekhan Business Shops

1 Brokering business
2 White feathering house production

Vision
To be the best retail brokering Brand in the retail business of stock market.
Mission
To educate and empower the individual investor to make better investment decisions
through quality advice and superior service.
Stock Exchange Mumbai

Sharekhan is the retail broking arm of SSKI, an organization with more than eight decades of
trust & credibility in the stock market.
• Amongst pioneers of investment research in the Indian market
• In 1984 ventured into Institutional Broking & Corporate Finance.
• Leading domestic player in Indian institutional business
• Over US$ 5 billion of private equity deals
SSKI Group Companies
• SSKI Investor Services Ltd (Sharekhan)
• S.S. Kantilal Ishwarlal Securities
• SSKI Corporate Finance
• Idream Productions
SSKI – Corporate Structure
SSKI Securities Pvt.

Owns 56% Ltd. Owns
of 50.5% of
Morakhia Family &

Associates
SSKI CORPORATE FINANCE
100%
PVT. LTD.
SSKI INVESTOR SERVICES PVT.
Investment Banking arm of the
LTD.
group
Shareholding pattern:
Retail broking arm of the
50.5% SSKI Securities Pvt. Ltd.
group
49.5 % Morakhia family
Shareholding pattern:
55.5% Morakhia family

(promoters)
18.5% HSBC Private Equity

India Fund Ltd
18.5% First Carlyle Ventures,

Mauritius
7.5% Intel Pacific Inc.

THEORETICAL FRAME WORK
Meaning & Definition of Equity Shares:-
All shares are those which do not enjoy any special rights in respect of payment of
dividend & repayment of capital. Equity shares are risk bearing shares. All shares holder control
the affairs of the company because they have right to vote.
Features of Equity Shares:
1. An equity share/ ordinary share which is not preference share.
2. The rate of dividend on equity shares is not fixed.
3. The board of directors recommends the rate of dividend which is declared in the
annual general meeting.
4. The holders of equity share have voting right in proportion to the paid up equity capital
of the company.
5. The equity share capital is sometimes referred to us the “Risk Bearing Capital”.
6. It is also referred to us permanent capital because equity are not redeemed in the life
time of the company.
Types of Shares:-
There are two types of shares.
1. Preference shares
2. Equity shares
Equity Share:
Shares which are not preference shares are termed as “Equity Share”. These shares do not
carry any preferential right.
Share Capital:-
The Sum total of the nominal value of shares of a company is called its shares capital.
The share capital is the two types.
1. Equity share capital
2. Preference share capital
1. Equity share capital:
“It is the sum total of the nominal value of equity share of a company”.
2. Preference share capital:
“It is the sum total of the nominal value of preference share of company”.
Classification of Shares Capital:
“Accordingto Schedule -6 of the companies Act, 1956 share capital of the
company should be classified in the capital of the company is divided as under”.
a. Authorized share Capital-
The amount of capital which the company is authorizes to rise by
memorandum of association and with which the company is registered
with the registrar of companies. This capital is also named as “Registered
Capital or Nominal Capital”.
b. Issued Capital-
“It is the nominal value of that part of the authorized capital which is
allotted for cash as well as for consideration other than cash. But it cannot
exceed the authorized capital. If issued capital is less than the authorized
capital, then it means that there is more amount of issued capital”.
C. Subscribed Capital-
“It means that part of the issued capital which is allotted for cash. No
distinction can be drawn between issued capital and subscribed capital and
unless then shares are subscribed and paid for there cannot be issued
capital”.
D. Called up Capital-
“It means that part of the allotted share capital which has been called up
by the company”.
E. Paid up Capital-
“Paid up capital has been defined V/s 2(32) as paid up capital or capital
paid up includes capital credited as paid up”.
Valuation of Shares:-
Valuation of share is one of the most perplexing problems that confront students
of accountancy. The basic principles are by a no means difficult but their applications call
for a considerable degree of knowledgeof the various technicalities involved.
Need of Valuation:-
The necessity for valuation of a share arises in the following circumstances.
1. For estate duty and wealth tax purpose.
2. For amalgamation and absorption schemes.
3. For gift Tax purpose.
4. For discharge of debts & liabilities in exceptional nature.
5. Conversion of preference share in to equity shares.
6. Advancing loans on the security of shares.
7. Purchase share for control.
Methods of Valuation:-
a. Net Assets Method
This method is also called balance sheet method or asset, backing method or
intrinsic or break-up value method. Under this method, an attempt is made to determine as to
how much amount per share, for this purpose it is necessary to determine the net assets of the
business as on that date net assets mean the total of third party liabilities as only realizable assets
are to be taken the item such as preliminary expenses discount on debenture/ shares underwriting
commission profit & loss Account (Debit Balance) etc. appearing under the heading
miscellaneous expenditure & loss are not to be taken in to consideration similarly realizable
value & not the book value are to be considered.
The intrinsic value per share is arrived at by dividing value of net assets by the number of
share issued & subscribed.
Important:
1. While taking third party liabilities, even contingent liabilities are to be considered.
2. Depreciation Fund
If there is a depreciation fund in respect of any fixed assed and no change in the
value of that assets is given, the depreciation fund is to be deducted from the
value of that asset to get its realizable value.
3. Realizable Value
If realizable value of any assets are not mentioned, their book – value are to be
taken as realizable value.
𝑁𝑒𝑡 𝐴𝑠𝑠𝑒𝑡
Intrinsic Value of Each share = 𝑁𝑜.𝑜𝑓 𝐸𝑞𝑢𝑖𝑡𝑦 𝑠ℎ𝑎𝑟𝑒𝑠
B. Market Value Method of Yield Basis Method

Under this method, prospective earning of the company are considered. There are
different ways of calculating the market value as follows.
1. On the basis of dividend declared by the company
𝑅𝑎𝑡𝑒 𝑜𝑓 𝐷𝑖𝑣𝑖𝑑𝑒𝑑
Market Value = 𝑁𝑜𝑟𝑚𝑎𝑙 𝑟𝑎𝑡𝑒𝑜𝑓 𝑟𝑒𝑡𝑢𝑟𝑛 X Paid up value of share
Example:-
12
Market Value = X 100
15
= 80%
2. On the basis of earning
It is suitable method for valuation of share when the investors are interested in
knowing companies earning & the rate of profit.
𝑅𝑎𝑡𝑒 𝑜𝑓 𝑝𝑟𝑜𝑓𝑖𝑡
Market Value = 𝑁𝑜𝑟𝑚𝑎𝑙 𝑟𝑎𝑡𝑒𝑜𝑓 𝑟𝑒𝑡𝑢𝑟𝑛 × Paid up value of share
𝑃𝑟𝑜𝑓𝑖𝑦 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒
Rate of Profit = 𝑃𝑎𝑖𝑑 𝑢𝑝 𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑆ℎ𝑎𝑟𝑒 ×100
Example:-
Equity share capital is 10000 equity share of Rs.10each, Rs.8 paid up & the profit
available is Rs.20000. The normal rate of return 20% Calculate the market value per
share
𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒
Rate of Profit = × 100
𝑃𝑎𝑖𝑑 𝑢𝑝 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒
20000
= ×100
80000
= 25%
25
Market Value = 20 ×8
=10each per share

1. Capitalization Method
There is another method of calculating the market value which may be termed as
capitalization method.
𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑒𝑞𝑢𝑖𝑡𝑦 𝑠ℎ𝑎𝑟𝑒 ℎ𝑜𝑙𝑑𝑒𝑟
Market Value = × 100
𝑁𝑜𝑟𝑚𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑟𝑒𝑡𝑢𝑟𝑛
Example:-
If the company has subscribed capital of Rs.10000 equity share of Rs.100 each
(Rs. 1000000) & the profit earned by the company Rs.150000 & the normal rate
of return is 10% than they market value as per capitalization method will be as
follows
𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑒𝑞𝑢𝑖𝑡𝑦 𝑠ℎ𝑎𝑟𝑒 ℎ𝑜𝑙𝑑𝑒𝑟
Market Value = × 100
𝑁𝑜𝑟𝑚𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑟𝑒𝑡𝑢𝑟𝑛
150000
= ×100
10
= 1500000
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑉𝑎𝑙𝑢𝑒
Market Value Per share = 𝑁𝑜 𝑜𝑓 𝐸𝑞𝑢𝑖𝑡𝑦 𝑆ℎ𝑎𝑟𝑒𝑠
150000
=
10000
= 150 each share

C. Fair value Method
There are some accountants who do not prefer to use intrinsic value & the yield
value method for ascertaining the correct value of share. They however,
prescribed the fair value method is the main of intrinsic value & yield value
method & the some provided a better indication about the value of share than the
earlier two method.
𝐼𝑛𝑡𝑟𝑖𝑛𝑠𝑖𝑐 𝑣𝑎𝑙𝑢𝑒+𝑀𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒
Fair value per share = 2
DATA ANALYSIS
Data Presentation:-
1. Bajaj Auto Limited
Balance Sheet
as on 31st March 2016 (Rs. In lacks)
Liabilities Amt. Amt. Assets Amt. Amt.
Share capital 289.37 Fixed Assets Gross
Block 3390.88
Less Depreciation 1912.45
Reserve & Surplus Add Capital Work 1478.43 1548.29
General Reserve 2084.6 in Progress
Hedge Reserve 20.77 Expenditure to date
Profit & Loss A/c 2515.48 Technical Know 69.86 4.28
Secured Loans 23.53 How Investment
Unsecured Loans 301.62 4946 4775.20
Deferred Tax Current Assets &
Liabilities Less Loans & Advance
Deferred Tax Assets 197.7 29.71 Inventories Sundry
Debtors
Current Liabilities & 167.99 Cash & Bank
Provision Liabilities Balance Other
Provision 3955.28 Current Assets 547.28
Loans & Advance 362.76
2426.65 556.49
1528.63 216.42 2872.59
1189.64
9220.36 9220.36
SUDARSHAN CHEMICAL INDUSTRIES LIMITED
Balance Sheet as on 31st March 2016 (Rs. In lacks)
Share capital 69227250 Fixed Assets Gross 3322103747
Block
Less Depreciation 1992628779
Reserve & Surplus 1329474968
Deferred Tax 23710457036 Add Capital Work in
Liabilities 120974039 Progress
Expenditure to date 38553227 1715028495
Secured Loans 1451997582 Investment 218574915

Unsecured Loans 511859180
Current Assets &

Loans & Advance
Inventories Sundry 1374554262
Debtors
Current Liabilities 1004824094 Cash & Bank 1746882158
& Provision 176644931 1181469025 Balance
Liabilities 123498124
Provision Other Current
Assets Loans &
Advance 65221227
463224931 3773380702
57069884112 57069884112
MELSTAR INFORMATION TECHOLOGIE LIMITED

Share capital 142831390 Fixed Assets
(289367020 Gross Block 194083826
equity shares of Less
Rs.10 each) Accumulated 77402807 116681019
Depreciation
Reserve & 2136361
Surplus Deferred
Tax
Liabilities
Unsecured Loans
Current Assets
& Loans &
Advance
Sundry
Debtors
Current Cash & Bank
Liabilities & Balance 43351828
Provision 42974070
Liabilities 5449257 Other Current 2567246
Provisions Assets Loans
48423327 & Advance
Profit & Loss 32534292 78453366
A/c
22731659
219866044 219866044
ACC LIMITED
Balance Sheet
Share capital 187.95 Fixed Assets
Gross Block 8076.95
Less
Accumulated 2994.51
Depreciation
Reserve & Surplus 6281.54 5082.44
Secured Loans 518.05 Add Capital

Unsecured Loans 5.77 Work in 1562.80 6645.24
Progress
Investment 1702.67
Current Liabilities & Current Assets &
Provision Loans &
Provisions 4280.30 Advance 2925.70
11273.61 11273.61
RELIANCE COMPNY LIMITED
Balance Sheet
Share capital equity Fixed Assets
shares Preference 1140 Gross Block 21705.44
Share 0.86 Less
Accumulated 10870.50
Depreciation
1140.86 10834.94
Reserve & Surplus
General Reserve 4.91
Profit & Loss A/C 330.40
Securities Premium 4260.16
A/c 80.00 4657.47
Capital Subsidy
Unsecured Loans 22.75 Work in 155.15
Progress
Assets Held for 18.42 11008.51
Diseorsal
Deferred Tax 1093.13 Investment 1736.43
Liabilities Deferred 467.98
Tax (Net)
Current Liabilities Current Assets &
& Provision 6046.37 Loans &
Provisions 219.94 Advance
Inventories 2707.01
Sundry Debtors
Cash and Bank 5935.21

Balance
Loans and 202.41
Advance
874.66 9719.29
22464.23 22464.23
Bajaj Auto Limited
Balance Sheet
Share capital 289.37 Fixed Assets Gross
Block 3395.16
Less Depreciation 1912.45 1482.71
Reserve & Surplus 4620.85 Capital Work in 69.86
Progress
Deferred Tax 29.71 Investment 4721.91
Liabilities
Secured Loans 133.84 321.43 Current Assets &
Unsecured Loan 157.84 Loans & Advance
Inventories 574.28
Sundry Debtors 359.89
Current Liabilities & Cash & Bank 228.78
Provision Liabilities Balance
Provision Trade 670.82
Payable 1555.8
1789.26 4015.88
Other Current 618.05
Assets Loans &
Advance
1219.05 2973.05
9247.53 9274.53
SUDARSHAN CHEMICAL INDUSTRIES LIMITED
Balance Sheet
Share capital 69227250 Fixed Assets 4264104198
Gross Block
Less Depreciation 2092628779 2171475379
Reserve & Surplus
Deferred Tax 263295626 Capital Work in
Liabilities 212310169 Progress 167466556
Unsecured Loans 27770460
Current Assets &

Loans & Advance
Inventories 1569123196
Sundry Debtors
Current Liabilities 823157861 Cash & Bank 1842772784
& Provision 192896199 1964566494 Balance
Liabilities 948512434 338335313
Provision Other Current
Assets Loans &
Advance 71642266
778460194 4600333753
7191045639 7191045639
MELSTAR INFORMATION TECHOLOGIE LIMITED
Balance Sheet
Share capital 142831390 Fixed Assets
Gross Block 174924902
Less Accumulated
Depreciation 66402807 108522095
Reserve & Surplus 160231693

Unsecured Loans
Current Assets &
Loans & Advance
Sundry Debtors
Current Liabilities Cash & Bank
& Provision Balance 185476162
Liabilities 10900102
Provisions 2966648 Other Current 2127955
Trade payable 10216510 Assets Loans &
24083260 Advance
7564744
2599214 197768075
330784003 330784003
ACC LIMITED

Share capital 187.95 Fixed Assets
Gross Block 9645.37
Less
Accumulated 3437.84
Depreciation
Reserve & Surplus 7004.32 6207.53

Unsecured Loans 4.23 Work in 435.32 6642.85
Progress
Investment 1624.95
Provision Loans &
Provisions 4357.25 Advance 3792.45
12060.25 12060.25
RELIANCE COMPNY LIMITED
Share capital equity Fixed Assets Gross
shares Preference Share 1140 Block 23495.79
0.86 Less Accumulated
Depreciation 12884.14
1140.86 10611.65
Reserve & Surplus
General Reserve 4.91
Profit & Loss A/C 1537.18
Securities Premium A/c 4260.16
Capital Subsidy 80.00 5882.25
Secured Loans 6450.01 Add Capital Work in
Unsecured Loans ---- Progress 315.28
Assets Held for
Diseorsal 18.42 10945.35
Deferred Tax Liabilities 992.19 Investment 1736.43
Deferred Tax (Net) 313.25

Provision 9016.39 Loans &
Provisions 339.98 Advance Inventories
Cash and Bank 7133.48

Balance
Loans and Advance 403.81
802.77 11453.15
24134.93 24134.93
Thus in this chapter 20 Balance sheets of five companies of study for two years have been
collected & presented.
Analysis of Data:-
Valuation of Shares:
1. BAJAJ AUTO LIMITED
𝑵𝒆𝒕 𝑨𝒔𝒔𝒆𝒕𝒔
A. Intrinsic Value Method =𝑵𝒐 𝒐𝒇 𝑬𝒒𝒖𝒊𝒕𝒚 𝑺𝒉𝒂𝒓𝒆𝒔
a. Net Assets Rs. Rs.

Fixed Assets 1478.43
Capital Work in Progress 69.86
Technical Know How 4.28
Investment 4795.28
Cash & Bank Balance 556.49
Other Current Assets 216.42
Loan & Advances 1189.64
Inventories 547.28 9920.36
Less- Liabilities
Deferred Tax Liabilities 29.71
Current Liabilities 2526.65
Provision 1528.63 4084.99
Net Assets 5235.37
b. No of Equity Shares = 289367020

𝟓𝟐𝟑𝟓𝟑𝟕𝟎𝟎𝟎
Intrinsic Value =𝟐𝟖𝟗𝟑𝟔𝟕𝟎𝟐𝟎
= 1.80
𝑹𝒂𝒕𝒆 𝒐𝒇 𝑷𝒓𝒐𝒇𝒊𝒕
B. Market Value Method = × Paid up value of share
𝑹𝒂𝒕𝒆 𝒐𝒇 𝒓𝒆𝒕𝒖𝒓𝒏
Profit available = Profit during the year 333670000

𝑷𝒓𝒐𝒇𝒊𝒕 𝒂𝒗𝒂𝒊𝒍𝒂𝒃𝒍𝒆
a:Rate of Profit =𝑷𝒂𝒊𝒅 𝒖𝒑 𝒗𝒂𝒍𝒖𝒆 𝒐𝒇 𝒔𝒉𝒂𝒓𝒆 ×100
𝟑𝟑𝟑𝟔𝟕𝟎𝟎𝟎𝟎
=𝟐𝟖𝟗𝟑𝟔𝟕𝟎𝟐𝟎𝟎 ×100
= 11.54%
𝑷𝒓𝒐𝒇𝒊𝒕 𝒂𝒗𝒂𝒊𝒍𝒂𝒃𝒍𝒆
b:Rate of Return = ×100
𝟑𝟑𝟑𝟔𝟕𝟎𝟎𝟎𝟎
= ×100
𝟐𝟖𝟗𝟑𝟔𝟕𝟎𝟐𝟎𝟎
= 63.73%
𝟏𝟏.𝟓𝟒
Market Value =𝟐𝟔𝟑.𝟓𝟒 ×10
=1.80
𝑰𝒏𝒕𝒓𝒊𝒏𝒔𝒊𝒄 𝒗𝒂𝒍𝒖𝒆+𝑴𝒂𝒓𝒌𝒆𝒕 𝒗𝒂𝒍𝒖𝒆

C:Fair Value = 𝟐
𝟏.𝟖𝟎+𝟏.𝟖𝟏
= 𝟐
=1.80
2. SUDRSHAN CHEMICAL INDUSTRIES LIMITED
A.Intrinsic Value Method =𝑵𝒐 𝒐𝒇 𝑬𝒒𝒖𝒊𝒕𝒚 𝑺𝒉𝒂𝒓𝒆𝒔

Fixed Assets 1329474968
Capital Work in Progress 385553527
Technical Know How 218574915
Investment 1374554262
Sundry Debtors 1746882158
Cash & Bank Balance 123498124
Other Current Assets 65221227
Loan & Advances 46322491
5706984112
Less- Liabilities
Deferred Tax Liabilities 120974039
Current Liabilities 1004824094
Provision 176644931 1302443064
Net Assets 4404541048

𝟒𝟒𝟒𝟒𝟒𝟒𝟒𝟒𝟒𝟒
Intrinsic Value = 𝟒𝟒𝟒𝟒𝟒𝟒𝟒
= 636.23
𝐑𝐚𝐭𝐞 𝐨𝐟 𝐏𝐫𝐨𝐟𝐢𝐭
𝐑𝐚𝐭𝐞 𝐨𝐟 𝐫𝐞𝐭𝐮𝐫𝐧

𝐏𝐫𝐨𝐟𝐢𝐭 𝐚𝐯𝐚𝐢𝐥𝐚𝐛𝐥𝐞
a:Rate of Profit =𝐏𝐚𝐢𝐝 𝐮𝐩 𝐯𝐚𝐥𝐮𝐞 𝐨𝐟 𝐬𝐡𝐚𝐫𝐞 ×100
𝟑𝟐𝟒𝟐𝟗𝟗𝟓𝟕𝟕
= 𝟔𝟗𝟐𝟐𝟕𝟕𝟓𝟎 ×100
= 468.45%
𝐍𝐞𝐭 𝐀𝐬𝐬𝐞𝐭𝐬
𝟑𝟐𝟒𝟐𝟗𝟗𝟓𝟕𝟕
= ×100
𝟒𝟒𝟎𝟒𝟓𝟒𝟏𝟎𝟒𝟖
= 7.36%
𝟒𝟔𝟖.𝟒𝟓
Market Value = ×10
𝟕.𝟑𝟔
=636.48
𝐈𝐧𝐭𝐫𝐢𝐧𝐬𝐢𝐜 𝐯𝐚𝐥𝐮𝐞+𝐌𝐚𝐫𝐤𝐞𝐭 𝐯𝐚𝐥𝐮𝐞

C:Fair Value = 𝟐
𝟔𝟑𝟔𝟔.𝟐𝟑+𝟔𝟑𝟔.𝟒𝟖
= 𝟐
=636.35
3. MELSTAR INFORNMATION TECHNOLOGIES LIMITED
A. Intrinsic Value Method =𝐍𝐨 𝐨𝐟 𝐄𝐪𝐮𝐢𝐭𝐲 𝐒𝐡𝐚𝐫𝐞𝐬

Investment 2000000
Loan & Advances 32534292 197134385
Less- Liabilities
Provision 549257 48423327
Net Assets 48423337

𝟏𝟒𝟖𝟕𝟏𝟏𝟎𝟓𝟖
Intrinsic Value = 𝟏𝟒𝟐𝟖𝟐𝟏𝟑𝟗
= 10.39

𝟏𝟒𝟔𝟐𝟔𝟐𝟒𝟗
=𝟏𝟒𝟐𝟖𝟑𝟏𝟑𝟗𝟎 ×100
= 10.24%
𝟏𝟒𝟔𝟐𝟔𝟐𝟒𝟗
=𝟏𝟒𝟖𝟕𝟏𝟏𝟎𝟓𝟖 ×100
= 9.83%
𝟏𝟎.𝟐𝟒
Market Value = 𝟗.𝟖𝟑 ×10
=10.41
C:Fair Value = 𝟐
𝟏𝟎𝟒𝟏+𝟏𝟎𝟒𝟏
= 𝟐
=10.41
4.ACC LIMITED

Investment 1702.67
Loan & Advances 2925.70 11273.61
Less- Liabilities
Current Liabilities
Provision 4280.30
Net Assets 6993.31
𝟔𝟗𝟗𝟑𝟑𝟏𝟎𝟎𝟎
Intrinsic Value = 𝟏𝟖𝟕𝟓𝟎𝟎𝟎
= 37.20

𝟏𝟏𝟐𝟎𝟗𝟒𝟎𝟎𝟎
=𝟏𝟖𝟕𝟗𝟓𝟎𝟎𝟎𝟎 ×100
= 59.64%
𝟏𝟏𝟐𝟎𝟗𝟒𝟎𝟎𝟎
=𝟔𝟗𝟗𝟑𝟑𝟏𝟎𝟎𝟎 ×100
= 16.02%
𝟓𝟗.𝟔𝟒
Market Value =𝟏𝟔.𝟎𝟐 ×10
=37.22
C:Fair Value = 𝟐
𝟑𝟕.𝟐𝟎+𝟑𝟕.𝟐𝟐
= 𝟐
=37.21
5.RELIANCE COMPANY LIMITED

Assets Held for Disposal 18.42
Investment 1736.43
Inventories 2707.01
Loan & Advances 874.66 22464.23
Less- Liabilities
Deferred Sales Tax 1093.13
Provision 219.94 7827.42
Net Assets 14636.81

𝟏𝟒𝟔𝟑𝟔𝟖𝟏𝟎𝟎𝟎
Intrinsic Value = 𝟏𝟏𝟒𝟎𝟎𝟎𝟎
= 128.39

𝟑𝟑𝟎𝟒𝟎𝟎𝟎𝟎
=𝟏𝟏𝟒𝟎𝟎𝟎𝟎𝟎 ×100
= 2.89%
𝟑𝟑𝟎𝟒𝟎𝟎𝟎𝟎
=𝟏𝟒𝟔𝟑𝟔𝟖𝟏𝟎𝟎𝟎 ×100
= 2.25%
𝟐.𝟖𝟗
Market Value =𝟐.𝟐𝟓 ×10
=128.44

C:Fair Value = 𝟐
𝟏𝟐𝟖.𝟑𝟗+𝟏𝟐𝟖.𝟒𝟒
= 𝟐
=128.41
1. BAJAJ AUTO LIMITED

Investment 4721.91
Other Current Assets 618.05
Loan & Advances 1219.05
Inventories 547.28 9247.53
Less- Liabilities
Provision 1555.8
Trade Payable 1789.26
Net Assets 5201.94
c. No of Equity Shares = 289367020

𝟓𝟐𝟏𝟗𝟒𝟎𝟎𝟎
Intrinsic Value =𝟐𝟖𝟗𝟑𝟔𝟕𝟎𝟐𝟎
= 1.79

𝟑𝟑𝟑𝟗𝟕𝟑𝟎𝟎𝟎
=𝟐𝟖𝟗𝟑𝟔𝟕𝟎𝟐𝟎𝟎 ×100
= 11.54%
𝟑𝟑𝟑𝟗𝟕𝟑𝟎𝟎𝟎
= ×100
𝟓𝟐𝟎𝟏𝟗𝟒𝟎𝟎𝟎
= 64.20%
𝟏𝟏.𝟓𝟒
Market Value =𝟔𝟒.𝟐𝟎 ×10
=1.79

C:Fair Value = 𝟐
𝟏.𝟕𝟗+𝟏.𝟕𝟗
= 𝟐
=1.79
2. SUDRSHAN CHEMICAL INDUSTRIES LIMITED
c. Net Assets Rs. Rs.

Capital Work in Progress 167466556
Investment 251769915
Inventories 1569123196
Other Current Assets 71642266
Loan & Advances 778460194 7191045639
Less- Liabilities
Provision 192896199
Trade Payable 948512434 1964566494
Net Assets 5226479145
d. No of Equity Shares = 6922775

𝟓𝟏𝟐𝟔𝟒𝟕𝟗𝟏𝟒𝟓
Intrinsic Value = 𝟔𝟗𝟐𝟐𝟕𝟕𝟓
= 754.97

𝟑𝟔𝟏𝟓𝟏𝟎𝟔𝟒𝟑
=𝟓𝟐𝟐𝟔𝟒𝟕𝟗𝟏𝟒𝟓 ×100
= 522.20%
𝟑𝟔𝟏𝟓𝟏𝟎𝟔𝟒𝟑
=𝟓𝟐𝟐𝟔𝟒𝟕𝟗𝟏𝟒𝟓 ×100
= 6.91%
𝟓𝟐𝟐.𝟐𝟎
Market Value = ×10
𝟔.𝟗𝟏
=755.71

C:Fair Value = 𝟐
𝟕𝟓𝟒.𝟗𝟏+𝟕𝟓𝟓.𝟕𝟏
= 𝟐
=755.34
3. MELSTAR INFORNMATION TECHNOLOGIES LIMITED

Investment 24493833
Loan & Advances 2599214
Other Current Assets 7564744 330784003
Less- Liabilities
Provision 2966648
Trade Payable 10216510 24832060
Net Assets 89951943

𝟖𝟗𝟗𝟓𝟏𝟗𝟒𝟑
Intrinsic Value =𝟏𝟒𝟐𝟖𝟐𝟏𝟑𝟗
= 6.29

𝟏𝟒𝟔𝟏𝟕𝟎𝟑𝟎
=𝟏𝟒𝟐𝟖𝟑𝟏𝟑𝟗𝟎 ×100
= 10.23%
𝟏𝟒𝟔𝟏𝟕𝟎𝟑𝟎
=𝟖𝟗𝟗𝟓𝟏𝟗𝟒𝟑 ×100
= 16.24%
𝟏𝟎.𝟐𝟑
Market Value =𝟏𝟔.𝟐𝟒 ×10
=6.29
C:Fair Value = 𝟐
𝟔.𝟐𝟗+𝟔.𝟐𝟗
= 𝟐
=6.29
4.ACC LIMITED

Investment 1624.95
Loan & Advances 3792.55 12060.25
Less- Liabilities
Current Liabilities
Provision 4337.25
Net Assets 7703.00

𝟕𝟕𝟎𝟑𝟎𝟎𝟎𝟎𝟎
Intrinsic Value = 𝟏𝟖𝟕𝟗𝟓𝟎𝟎𝟎
= 40.98

𝟏𝟑𝟐𝟔𝟕𝟓𝟎𝟎𝟎
=𝟏𝟖𝟕𝟗𝟓𝟎𝟎𝟎𝟎 ×100
= 70.59%
𝟏𝟑𝟐𝟔𝟕𝟓𝟎𝟎𝟎
=𝟕𝟕𝟎𝟑𝟎𝟎𝟎𝟎𝟎 ×100
= 17.22%
𝟕𝟎.𝟓𝟗
Market Value = ×10
𝟏𝟕.𝟐𝟐
=40.99
C:Fair Value = 𝟐
𝟒𝟎.𝟗𝟖+𝟒𝟎.𝟗𝟗
= 𝟐
=40.98
5.RELIANCE COMPANY LIMITED

Assets Held for Disposal 18.42
Investment 1736.43
Inventories 3133.09
Loan & Advances 802.77 24134.93
Less- Liabilities
Deferred Sales Tax 992.19
Provision 339.98 10661.81
Net Assets 13473.12

𝟏𝟑𝟒𝟕𝟑𝟏𝟐𝟎𝟎𝟎
Intrinsic Value = 𝟏𝟏𝟒𝟎𝟎𝟎𝟎
= 118.85

𝟏𝟓𝟑𝟖𝟐𝟐𝟎𝟎𝟎
= 𝟏𝟏𝟒𝟎𝟎𝟎𝟎𝟎 ×100
= 13.49%
𝟏𝟓𝟑𝟖𝟐𝟐𝟎𝟎𝟎
=𝟏𝟑𝟒𝟕𝟑𝟏𝟐𝟎𝟎𝟎 ×100
= 11.41%
𝟏𝟑.𝟑𝟗
Market Value =𝟏𝟏.𝟒𝟏 ×10
=118.22

C:Fair Value = 𝟐
𝟏𝟏𝟖.𝟖𝟓+𝟏𝟏𝟖.𝟐𝟐
= 𝟐
=118.53
Observations & Testing of Hypotheses:-
A. Observations
The ranking of companies is as follows
For the Financial year 2012-13
Sr.No. Name of Intrinsic Market Fair Value of Rank
Companies Value of Value of Share (Rs)
Shares (Rs) Shares (Rs)
2 Sudarshan 636.23 636.48 636.35 1
Chemical
Industiries Ltd.
5 Reliance Company 128.39 128.44 128.41 2
Ltd
4 ACC Ltd 37.20 37.22 37.21 3
3 Melstar 10.41 10.41 10.41 4
Information
Technologies Ltd.
1 Bajaj Auto Ltd. 1.80 1.81 1.80 5
For the Financial year 2016-17
Sr.No. Name of Intrinsic Market Fair Value of Rank
Companies Value of Value of Share (Rs)
Shares (Rs) Shares (Rs)
2 Sudarshan 754.97 755.71 755.34 1
Chemical
Industiries Ltd.
5 Reliance Company 118.85 118.22 118.53 2
Ltd
4 ACC Ltd 40.98 41.04 41.01 3
3 Melstar 6.29 6.29 6.29 4
Information
Technologies Ltd.
1 Bajaj Auto Ltd. 1.79 1.79 1.79 5
Comment:
1. First ranking company is the Sudarshan Chemical Industries Ltd.
2. Last ranking company is the Bajaj Auto Ltd.
B) Testing of Hypotheses
1. The performance relating to valuation of shares all companies is good.

The hypotheses are partly proved because as per the ranking of shares
value two companies is good. And remaining three companies performance is
not as per ranking shown on page no.57
2. Intrinsic value of all five companies is fair
The hypothesis is partly proved because three companies intrinsic value is
good as it is more than face value.
But remaining two companies intrinsic value is less than face value as
indicated in chapter –VI
SUGGESTIONS
The following suggestions can be made after study of valuation of shares of five companies.
Out of five companies under study first two companies are having good performance relating to
shares, because their fair value of shares is less than sufficient. So their improve their profit to
increase share value.
Intrinsic value of six companies is not sufficient, so they should improve value of shares.
BIBLOGRAPHY
BOOKS :-
1. Jain P.K. and Khan M.Y. Financial Management text, problems & Cases, Tata McGraw –
Hill Publishing Company Limited, 5th Edition, New Delhi
2. Dr. Maheshwari S.K. and Dr. Maheshwari S.N. Advanced Accountancy, 8th Revised
Edition 2001, Vikas Publication house Private Limited ,New Delhi.
3. Dr. Joshi C.M. and PatkarM.G. ,Advanced Accounting , 1st Edition as per new syllabus,
Feb-2003.
4. Agrawal T.S., Gupta S.C. and Shukla M.C. , Advanced Accounting.
5. S.K.R. Paul, Corporate Accounting , New Central Agency Public Ltd. Published May
2005

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Introduction

i) Name of Company BAJAL AUTO LIMITED

ii) Registered Office Mumbai- Pune Road Akurdi Pune -411035

i) Name of Company SUDARSHAN CHEMICAL INDUSTRIES

ii) Registered Office 162,Wellesley Road Pune – 411001

iv) Fax (020)-26058222

i) Name of Company MELSTAR INFORMATION

iv) Fax (022)-28310520

i) Name of Company ACC LIMITED

iv) Fax (022)-33617440

i) Name of Company RELIANCE COMPNY LIMITED

iv) Fax (022)-22785111

Sharekhan Business Shops

2 White feathering house production

Stock Exchange Mumbai

SSKI Securities Pvt.

Morakhia Family &

55.5% Morakhia family

18.5% HSBC Private Equity

18.5% First Carlyle Ventures,

7.5% Intel Pacific Inc.

B. Market Value Method of Yield Basis Method

=10each per share

= 150 each share

Secured Loans 1451997582 Investment 218574915

Current Assets &

Balance Sheet as on 31st March 2016 (Rs. In lacks)

Secured Loans 518.05 Add Capital

Cash and Bank 5935.21

Current Assets &

Secured Loans 3637660 Investment 24493833

Balance Sheet as on 31st March 2017 (Rs. In lacks)

Secured Loans 506.50 Add Capital

Current Liabilities & Current Assets &

Cash and Bank 7133.48

a. Net Assets Rs. Rs.

b. No of Equity Shares = 289367020

Profit available = Profit during the year 333670000

𝑰𝒏𝒕𝒓𝒊𝒏𝒔𝒊𝒄 𝒗𝒂𝒍𝒖𝒆+𝑴𝒂𝒓𝒌𝒆𝒕 𝒗𝒂𝒍𝒖𝒆

a. Net Assets Rs. Rs.

b. No of Equity Shares = 26922775

Profit available = Profit during the year 324299577

𝐈𝐧𝐭𝐫𝐢𝐧𝐬𝐢𝐜 𝐯𝐚𝐥𝐮𝐞+𝐌𝐚𝐫𝐤𝐞𝐭 𝐯𝐚𝐥𝐮𝐞

a. Net Assets Rs. Rs.

b. No of Equity Shares = 14283139

Profit available = Profit during the year 1426249

a. Net Assets Rs. Rs.

Profit available = Profit during the year 112094000

a. Net Assets Rs. Rs.

b. No of Equity Shares = 1140000

Profit available = Profit during the year 33040000

𝐈𝐧𝐭𝐫𝐢𝐧𝐬𝐢𝐜 𝐯𝐚𝐥𝐮𝐞+𝐌𝐚𝐫𝐤𝐞𝐭 𝐯𝐚𝐥𝐮𝐞

a. Net Assets Rs. Rs.

c. No of Equity Shares = 289367020

Profit available = Profit during the year 333973000

𝐈𝐧𝐭𝐫𝐢𝐧𝐬𝐢𝐜 𝐯𝐚𝐥𝐮𝐞+𝐌𝐚𝐫𝐤𝐞𝐭 𝐯𝐚𝐥𝐮𝐞

c. Net Assets Rs. Rs.

d. No of Equity Shares = 6922775

Profit available = Profit during the year 361510643

𝐈𝐧𝐭𝐫𝐢𝐧𝐬𝐢𝐜 𝐯𝐚𝐥𝐮𝐞+𝐌𝐚𝐫𝐤𝐞𝐭 𝐯𝐚𝐥𝐮𝐞

a. Net Assets Rs. Rs.

c. No of Equity Shares = 14283139

Profit available = Profit during the year 14617030