A

Financial Analysis of
Sun Pharmaceutical Industries Ltd.
Course- MBA

Name of the Faculty- Prof. J Rajesh

Subject – Security Analysis and Portfolio Management

Presented by: Kumari Neha Mishra

 Financial Indicators of the organization (March’2021)

Some of the financial indicators of the organization

a. Companies share price on BSE & NSE: BSE (Rs 597.80) & NSE (Rs. 597.60) F.Y. 2020-21 (Apr’20-Mar’21)
b. Sales turnover: 12,8032.10 million Days Price

c. Net Profit: 21397.00 million 30 484.00

d. Earnings per share: 8.92
50 439.90

150 560.56

BSE - 52 WK LOW/HIGH 595.70 / 606.00 200 484.95

NSE - 52 WK LOW/HIGH 562.10 / 636.75 365 594.95

Current 840.10
Continue…….

Considering the share price in last one year, it is traded high at the end point of
the year. The table shows the share price is constantly trading between the range
of 439 to 500. So, investment can be made.
---------------------------------------------------------------------------------------------------------------------
-

CHANGES OVER LAST YEAR

Financial Indicators 2021 2020 2019
Sales turnover 128032.10 125319.3 103032.1
0 0
% Change over last 2.16% 21.63% -
year
Net profit 21397.00 32111.40 8166.00
% Change over last -33.37% 293.23% -
year
 OTHER IMPORTANT INDICATORS

Particulars Amount in
Rs The P/BV is more than 1 which
Market Value Per Share 598.00
signifies that the share price of the
(M/V)
Book Value Per Share (B/V) 193.60 company is traded higher than
Earnings Per Share 8.92
potential. For an investor it is a
P/E Ratio (MV/EPS) 67.04
situation where he can sell his shares
P/BV Ratio (MV/BV) 3.08

Market Cap 1434 billion and realize his investment.

Face Value 1 per share

Industry PE 31.60
Competitors
 SHARE PRICE MARKET CAPITAL
6000 250000

5000
200000

4000
150000

MARKET CAPITAL
SHARE PRICE

3000
5372.15
4958.7 201856.05
100000
2000 3780.5 3892.7
3130.4 142613.7
50000
1000 82512.18 73514.38
62114.32
55701.83
52973.48
841.3 911.35 46543.07
544.1
0 0
s bs
a ab ab pl
a nd lth a ab a
La
b
pl
a nd lth a ab
a rm s
L L Ci la ea a rm L
a rm s La Ci la e a r m L
Ph y’ is G H Ph em Ph y’ is G H ha m
d iv ila t lk d iv lia t P lke
n ed D d en A n ed D d n A
Su . R Ca rr Su . R Ca r re
r r
D To D To

COMPETITORS COMPETITORS
 16000 SALES TURNOVER Net Profi t
13349.1 13900.58
1400012803.21
12000
10000 1685.08; 12%
2139.7; 15%
7790.4 7219.68
8000 6798.61
Turnover
6451
6000
4000 3462.88
1138; 8%
2000
0

2186.4; 16%
competitors
1476.2; 11%

TOTAL ASSETS
31525.7
30000
18182.3 19927.56 997.01; 7%
16049.9
15000 9271.92 5907.22 9381.55
8964.91
Total asset

1954.72; 14%
0
s
m
a
La
b
ab ipl
a nd lth m
a
L ab
a r s L C la e a r
Ph y’ vi
s G H ha m 2468.28; 18%
d i ila t P lke
n ed D d n A
Su R Ca re
r. r
D To Sun Pharma Dr. Reddy’s Lab Divis Labs
Cipla Gland Cadila Health
competitors
Torrent Pharma Alkem Lab

Total Asset
Continue…..

Observations:
In overall scenario there are several players in competition to Sun
Pharmaceutical Industries Ltd but still the company is able to stand with its
position and it has a long way to go as the market capital is high in compare
to others and also the company holds more assets in compare to others.
 RATIO ANALYSIS AND OBSERVATIONS

SHORT-TERM SOLVENCY RATIO

•Current Ratio = Current Asset/Current liabilities

Particulars 2020-21 2019-20 2018-19

Current assets 120663.40 119411.20 111697.70

Current liabilities 139586.70 140141.10 132718.30

Ratio 0.86 0.85 0.84

•Quick Ratio= (Current assets-inventories)/ Current Liabilities

Particulars 2020-21 2019-20 2018-19

Current assets-inventories 89006.20 93074.50 83771.50

Current liabilities 139586.70 140141.10 132718.30

Ratio 0.64 0.66 0.63

Continue…

Observation: The ideal current ratio and quick ratio is between

1 to 2. Above calculation shows that company has not
achieved the ideal ratio in last three years. Company needs to
improve its current assets over its short term obligation.
 LONG -TERM SOLVENCY RATIO

•Total debt ratio= (Total assets – Total equity)/Total Asset

Particulars000 2021-20 2019-20 2018-19

Total assets- total equity 139586.70 140141.10 148705.20

Total asset 389988.30 384103.30 377141.30

Ratio 0.35 0.36 0.39

•Debt equity ratio= Total debt/Total equity

Particulars 2021-20 2019-20 2018-19

Total debt 64855.40 57449.60 58505.50

Total equity 250401.60 243962.20 228436.10

Ratio 0.26 0.24 0.26

Continue…

Observation: The ideal debt ratio is 0.50 and high

debt ratio shows that the company has more
financial risk. Above analysis shows that company
has maintained its debt ratio and it is below 0.50
that is a favorable situation.

Debt equity ratio below 1 would be seen as

relatively safe because it measure the relative
contribution of creditors and shareholders or
owners in the capital employed. Note that if debt
equity ratio is too low then it is a negative signal
that company is not taking advantage of debt
financing to expand and grow. Hence co. is in safe
 ASSET UTILIZATION RATIO

•Inventory Turnover Ratio=(Cost of goods sold/inventory)*100

Particulars 2020-21 2019-20 2018-19

Cost of goods sold` 2148.40 1386.00 5398.70

Inventory 28996.95 27131.00 27926.20

Ratio 7.41 5.11 19.33

•Total assets turnover= (Sales/ total assets)*100

Particulars 2020-21 2019-20 2018-19

Sales 128032.10 125319.30 103032.10

Total assets 389988.30 384103.30 377141.30

Ratio 32.83 32.63 27.32

Continue…

Observation: The ideal inventory turnover ratio for many

industry is between 5-10. above analysis shows that
company had highest ratio in the year 2018-19 i.e.
19.33. but last two financial year it has been reduced
and fall between 5-10 ratio which is consider as ideal
inventory ratio. The high inventory turnover ratio
indicates that there is insufficient inventory and
company misses out on sales opportunities.

Higher the asset turnover ratio ,the more efficient a

company is at generating revenue from its assets. Above
analysis indicates that the company performed good and
the ratio goes up in last two years.
 PROFITABILITY RATIO

•Return on assets= (Net income/Total assets)*100

Particulars5.49 2020-21 2019-20 2018-19

Net income 21397.00 32111.40 8166.00

Total assets 389988.30 384103.30 377141.30

Ratio 5.49 8.36 2.17

•Profit margin= (Net income/Sales turnover)*100

Particulars 2020-21 2019-20 2018-19

Net income 21397.00 32111.40 8166.00

Sales turnover 128032.10 125319.30 103032.10

Ratio 16.71 25.62 7.93

Continue…

Observation: Return on assets measures how much

profit generated by utilizing the existing assets of
the company. High return ratio on assets is a
favorable sign for the company. Considering 3
years analysis there is fluctuation in every year.
But 5% or above 5% is good ratio. But it need to
improve to reach the excellent ratio of 20% or
more.

Net profit margin is calculated to identify the

annual net profit percentage over the sales
turnover of the organization. 8% and above net
profit margin is eligible for tax audit and it is an
 MARKET VALUE RATIO

•Earnings per share= Net income/No. of shares outstanding

Particulars 2020-21 2019-20 2018-19

Net income 21397.00 32111.40 8166.00

No. of outstanding shares 239933497 2399334970 2399330257

Ratio 8.92 13.40 3.40

•Price earnings ratio= Market Price per share/ earnings per share

Particulars 2020-21 2019-20 2018-19

Market Price per share 598.00 352.30 478.85

Earnings per share 8.92 13.40 3.40

Ratio 67.04 26.29 140.84

Continue…

Observation: if company EPS ratio is 25% or above then it

would be consider that is has high growth in market. Above
analysis indicates that the EPS of the company is not
favorable and it needs improvement to generate high
income and say in competitive market. The highest EPS
was generated in the year 2019-20 i.e. 13. 43.

PE Ratio talks about the stock of the company. If the PE

ratio is below 15 then it would consider cheap while above
18 it would be consider as expensive. So, high PE ratio
suggests that investors are expecting higher return growth
in future. Hence co. with high PE would be consider as good
for investment and sun pharma has maintained a good PE
ratio in last three year.
 DU PONT ANALYSIS FOR THE YEAR ENDER 31ST MARCH, 2021
Return on Equity as per du Pont analysis
(Net profit margin=Net Income /Sales) * (Return on assets= Net Income/Total Assets) * (Financial
Leverage= Total Assets / Equity) RETURN ON EQUITY
= 143.11

NET PROFIT MARGIN* RETURN ON ASSETS* FINANCIAL LEVERAGE

16.71 * 5.49* 1.56

NET INCOME = 21397 NET INCOME= 21397 TOTAL ASSET =

SALES TOTAL ASSETS 389988.30 389988.30
128032.10 TOTAL EQUITY
250401.60