Ratio Analysis of

Base Company- Pincon Spirit

Peer Company- United Spirit
-Presented By
Gaurav Bhutada
Nakul Sharma
Mahendra Kumar Rathore
Sumant Tapale
Madhu Hotwani
Trupti Mondhe
 Pincon Spirit
Pincon spirit was incorporated in the
year 1978, and specialised in blending,
bottling, and distribution of different
kinds of alcoholic beverages and
products such as Indian made foreign
liquor, Rum, whiskey, vodka, brandy etc.
Current price of stock is Rs.65.35 and
have market cap of Rs.285.9Cr.
It contribute 57.32% of sales from total
India made foreign liquor.
 United Spirit
United spirit ltd is an Indian alcoholic
beverage company and worlds largest spirit
company by volume. It is subsidiary of Diageo.
Main products are scotch, whiskey, wines with
brands like Black dog, Antiquity, Signature,
Royal Challenge etc.
Current price of stock is Rs.1906 and have
market cap of Rs.27,704 Cr.
Diageo has a 55% stake in United spirit which
has a market value of about $4.5 billion.
 Current ratio
3.5

3 2.92 2.86 2.95

2.5

2 2016
1.47 2015
1.5 1.36 1.26
2014
1

0.5

0
Scooters India Hero Motocorp
 Interpretation
A low current ratio indicates that a firm
may have a hard time paying their current
liabilities in the short run.
A high ratio indicates a high level of
liquidity and less chance of a cash crunch.
However, a too high current ratio indicates
that the company has stocked up a lot or
not collecting payments from debtors or
has high cash reserves. In all the three
cases, it hurts the company.
 Quick ratio
2.5

2 1.93

1.5 1.46 1.44

1.3 2016
1.15 1.1 2015
1 2014

0.5

0
Hero Motocorp Scooters India
 Interpretation
Quick ratio is more stringent than Current
Ratio. Typically, because we remove the
highest contributing factor to Current
Ratio i.e. Stock.
It gives us the true scenario.
Like, Current Ratio, Quick ratio should
also not be too high. It should fairly
contribute to meet up Current Liabilities.
 Inventory turnover ratio
50
45.85
45
40.56
40
35.93
35
30
2016
25 2015
20 2014
15
10
5 3.79
1.89 2.05
0
Hero Motocorp Scooters India
 Interpretation
A higher turnover than the industry average means
that inventory is sold at a faster rate, signaling
inventory management effectiveness.(Other side of
the story can be that the inventory is too lean and
the firm may be unable to keep up with any
increased demand.
A lot of companies try to window dress their
Balance sheet by selling the same amount of goods
while holding less inventory or selling more amount
of goods by holding the same amount of inventory.
This also is indicative of effective Inventory
Turnover ratio but is not the true picture.
Account receivable Turnover
120
107.91
100 95.25

80.38
80
2016
60 2015
2014
40 31.88
21.4 23.88
20

0
Hero Motocorp Scooters India
Interpretation of Account receivable
Turnover
This ratio is a measure of how quickly
and efficiently a company collects on
its outstanding bills.
Once again we should check the
competitors here, a high receivables
turnover ratio means that the
companys credit policy is too
stringent, causing the firm to miss
out on sales opportunities.
 Net Profit Margin Ratio
12
10.95

10
8.64 8.34
8 7.74
7.29
2016
6 2015
3.94 2014
4

0
Hero Motocorp Scooters India
Interpretation of Profit Margin Ratio

Profit margin is calculated by dividing

net income by net sales, i.e. firms
ability to make earnings out of sales.
This purely suggests that a company
with consistent and strong net profit
margin should be looked for.
 Return on Asset ratio
450
397.85
400
350 327.58
300 280.43
250 2016
200 2015
2014
150
100
50
11.56 10.92 9.73
0
Hero Motocorp Scooters India
 Interpretation of Return on Asset
ratio
A high Return on assets means that
the company is able to efficiently
generate earnings using its assets.
Although, we should look PAT and not
EBIT.
 Earning Per Share
180
160 156.86

140
119.47
120
105.62
100 2016
80 2015
2014
60
40
20
0.64 1.3 1.59
0
Hero Motocorp Scooters India
 Interpretation
Earning per share is the portion of a
companys profit allocated to each
outstanding share.
A high EPS simply means high
profitability and happy investors.
 Price Earning Ratio
2016
40
18.4
20
0
Hero Motocorp Scooters India
-20
-40 2016
-60
-80
-100
-120
-140
-138.87
-160
 Interpretation
A high Price earning ratio indicates
that the investors are expecting
growth in future and vice-versa.
It can be calculated by the formula
MPS/ EPS.
 Dividend yield
2016
2.5
2.25

1.5
2016

0.5

0
Hero Motocorp 0 India
Scooters
 Interpretation
The Dividend Yield of a share is the
Dividend per share, divided by the
Price per share.
It means that here only dividend is
taken into picture while calculating
return for shareholders.
 Dividend Payout ratio
70
61.59
60
50.22
50 45.89

40 2016
2015
30
2014
20

10

0
Hero Motocorp 0 0 India
Scooters 0
 Interpretation
The dividend pay-out ratio is the
amount of dividends paid to
stockholders relative to the amount
of total net income of a company.
Here, good profit margin ratio for
United spirits is suggestive of the
fact that company is holding on to
dividends, which is clearly visible.
 Debt Equity Ratio
0.4
0.35
0.35

0.3 0.28
0.27
0.25
2016
0.2 2015
0.15 2014

0.1

0.05

0
0
Hero 0 0
Motocorp Scooters India
 Interpretation of Debt
Equity ratio
It is the ratio of debt that a company
uses compared to the amount of
equity capital it uses.
High debt capital is indicative of the
fact that in a hypothetical liquidation
situation, very low resources will be
left for equity shareholders.
 Coverage ratio
2,500.00

2044.99
2,000.00

1,500.00
2016
2015
1,000.00 2014

500.00 315.14
243.58
5.27 38.3423.63
0.00
Hero Motocorp Scooters India
 Interpretation of Coverage ratio

This ratios is calculated by dividing

EBIT by interest payments.
A high ratio is indicative to the fact
that company is able to service its
interest payments through EBIT.
Conclusion