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Analysis Of Mphasis

1386 words - 6 pages

FINANCIAL MANAGEMENT II
ASSIGNMENT 1
Submitted by : Raja Sugirtha.R (10AC23)
MPHASIS LIMITED:
Mphasis Limited was formed in June 2000 after the merger of the US-based IT consulting company MphasiS Corporation (founded in 1998) and the Indian IT services company BFL Software Limited (founded in 1993).
Jeya Kumar is CEO of MphasiS, which has a staff strength of 27,000 people. For the year ended the MphasiS Group recorded revenues of Rs 2,423 crore (Rs 24.23 billion), a growth of Rs 662 crore, which is 38 per cent over the previous year.
FINANCIAL POSITION:
|Year |2006 |2007 |2008 |2009 ...view middle of the document...

52 |228.50 |246.37 |814.83 |980.65 |

VARIABLES CONSIDERED:

|Year |2006 |2007 |2008 |2009 |2010 |
|DOL |5.11 |3.74 |2.98 |2.47 |2.52 |
|DFL |1.01 |1.002 |1.003 |1.007 |1.002 |
|DCL |5.16 |4.74 |2.99 |2.49 |2.52 |
|D/E RATIO |0.008:1 |0.023:1 |0.022:1 |0.6:1 |0.004:1 |
|EPS |8.02 |10.58 |12.66 |39.93 |47.48 |

ANALYSIS:

• The operating leverage of the company can be observed to decrease over the span of five years. It has reduced from 5.11 to 2.52. This shows that the business risk of the firm is low i.e the impact of the level of sales on the operating profit is relatively low. This can be attributed to the level of fixed asset of the company.

• The financial leverage of the firm is observed to be almost constant at an optimal value of 1. Therefore the financial risk of the firm is very low. The debt component determines the financial risk of the firm which is very low for Mphasis. The company relies more on equity capital and very low debt. During 2009, a steep increase in the raise of the capital can be observed. Both the equity capital and debt was increased.

• DCL gives the overall riskiness of the firm i.e the percentage change in EPS for every 1% change in Sales. When we observe we should say that the company has strived to bring down its risk. The risk value which has gradually reduced through the five years remains at 2.52 as of 2010.

• The capital structure of the company has always been in favour of equity capital. The capital structure is selected based on the profitability of the shareholders. Therefore the highest EPS value is for the year 2010 with the D/E ratio 0.004:1. The average D/E ratio of Software Industry is 0.26:1

• The company shows very high growth. The profit has increased 9 times since 2005. This is mainly due to its investment in 2009.

PUNJ LLOYD:

Crowned as 'all-terrain specialists', Punj Lloyd is one of the biggest Indian engineering construction firms. The company performs its operations in Asia Pacific, China, Middle East, Europe, Africa, South Asia and Caspian. It provides services ranging from engineering to project administration, innovative designs to construction, to eminent clients like Petroleum Development Oman, British Petroleum, Pertamina, Shell, ADNOC, Cairn Energy, etc.

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