Student/s Name: Shankhadeep Nath Batch: B Roll No/s:11122 Module Name: Capital Markets Marks Allocation: 25 Assignment No:

MBAFM/CF/001 Assignment Scope: Individual Assignment Duration (in hrs): 8 Assignment Description & prospect: Analysing Capital Structure of 3 real estate firms and 3 IT firms and recommend suitable measures.

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Report & Analysis: Overview and Capital Structure of Three Real Estate Companies. Rajeshwari Graphics 19.75 1.73 20.61 10.64 11.54 9.65/38.50 35.7 127.39% 0.96 0.54 Sunteck Realty 1890.25 1.44 213.13 56.46 355.54 242/503.9 300.2 -39.22% 0 0.54 HDIL 3339.46 17.08 4.67 223.91 13832.48 52.1/198.9 79.7 -48.75% 0.45 0.54

Market Cap EPS P/E Book value Total Assets 52 wk low/high Current Price Return in last 1yr Debt Equity Ratio Industry Debt Equity Ratio Capital Structure Equity Share Application money Reserves Debt Secured Loan Unsecured Loan Total Debt Holding Promoter Holding Public Holding Institutions (MF,UTI) FII Non-Institutions

5.53 0.00 0.35 5.4 0.26 5.66 54.81% 0.03% 0% 45.16%

12.59 0.00 355.54 0.00 0.00 0.00 70.08% 0.07% 4.44% 25.40%

415 259.20 8962.88 4195.39 0.00 4195.39 39.17% 0.32% 40.13% 20.39%

Company selection: 1. When most of the real estate companies were in red, giving negative return as low as -60% . Rajeshwari Graphics gave 127.39% return in 1 year. 2. Real Estate sector is considered a where debt equity ratio in generally high. In contrast to this Sunteck Reality is a zero debt company with 2nd highest P/E ratio after Indiabulls which have 2360 P/E ratio. 3. According to me HDIL is a good buy. It is 4th in market capitalisation, 2nd in terms of profit in the sector. Also has high EPS and low P/E ratio. Calculation of Average Industry Debt Equity Ratio: -2-

Inference:

Real Estate: Industry average of debt-equity ratio of this sector generally than other sectors due to huge working capital requirement and gestation period high. This sector is very unregulated and opaque sector. Valuations dont have any basis or benchmark. Absence of regulator, high volatility, easy manipulation and various other problems like land acquisition, labour laws, black money repels retail investors and other investors who are not directly related to the sector. So real estate finds it tough to raise money through markets and opt for debt. Most of the time companies need quick money for projects which they cant raise from markets so opt for debt. A real estate project can have gestation period as long as 20 years or more. So profitability is not seen in balance sheet and investors shy away. Surprisingly Oberoi Realty and Sunteck Realty which have zero debt.
IT: This sector has very low debt-equity ratio, their working capital requirement is not high and they have very low gestation period. FIIs mostly have good amount of holding in almost all IT companies. They have high EPS. Even though IT sector have high profitability 3i Infotech have been running in losses in last quarter. It also have very high debt equity in contrast to its Industry average. Rolta is another company which has high debt-equity ratio. Recommendation: Rajeshwari Graphics has 0.94 debt-equity. It doesnt have high EPS means it doesnt have high growth too for which it may use the debt amount for generating better returns. It doesnt have enough reserves to pay back the debt. It doesnt have enough asset base to go for another IPO. Only option it has is generate profits and build reserves. Sunteck Realty has no debt and has low EPS that means its not growing. Company has good reserves, it can take debt and fuel growth and expantion. HDIL is going good and doesnt need to make any changes in debt-equity ratio. Rolta needs to increase profitability and build reserves.

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List of Reference: http://moneycontrol.com http://investopedia.com

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