A Corporate Finance Perspective on Idea Cellular, a listed company in India (IDEA) by traditional methods like leverage analysis, EBIT-EPS Analysis, Dividend Policy Analysis and Alternate Funding Policy Analysis
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Corporate Finance – A Study On Idea Cellular
1. Corporate Finance – A Study on Idea Cellular Beta Analysis, Leverage Analysis, Dividend Policy Analysis and Alternate financing policy analysis for Idea Cellular ( 532822 | IDEA ) Sarang Bhutada, MBA Student at DoMS, IIT Madras Financial Management, under Dr. Thenmozhi [email_address]
2. Debt Structure Dept. of Management Studies, IIT Madras 2008 2007 2006 2005 Debt 65147.59 42505.04 29156.07 NA Shareholder’s Equity 49525.20 46300.09 28423.68 NA Total Capital 114672.79 88805.13 57579.75 NA EBITDA 22712.65 14859.63 7260.52 NA Interest Expense 4592.27 3293.10 2532.59 2600 EBIT 11168.61+4592.27 = 15760.88 5090.52+3293.10 = 8383.62 1285.05+2532.59 = 3817.64 260.5+2600 = 2860.5 PAT 10443.62 5020.61 1256.03 260.5 Number of shares 2635.36 2592.86 2259.53 2259.53 EPS 3.963 1.936 0.556 0.115
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4. Ratio Analysis Debt is being maintained at around 50% levels Earnings convincingly cover the interest charges DSCR = EBITDA / [ Int exp + Loan Repayment/(1-tax rate )] Dept. of Management Studies, IIT Madras 2008 2007 2006 Debt to total capital ratio 65147.59/114672.79 =0.5681 -> 56.81% debt 42505.04/88805.13 = 0.4786 -> 47.86% debt 29156.07/57579.75 = 0.5063 -> 50.63% debt Debt equity ratio 65147.59/49525.20 = 1.3154 42505.04/46300.09 = 0.9180 29156.07/28423.68 = 1.0258 Interest Coverage ratio 22712.65/4592.27 = 4.946 14859.63/3293.10 = 4.512 7260.52/2532.59 = 2.867 Debt Service Coverage ratio 22712.65/(4592.27 + 1.538*65147.59)= 0.2167 14859.63/(3293.10 + 1.538*42505.04) = 0.2164 7260.52/(2532.59 + 1.538*29156.07) = 0.1532