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Indian Institute of Management Rohtak
Inter Company AnalysisExxonMobil, Dabur, & Bajaj Automobiles
Submitted By
Laxmikant Borase PGP02.075
Mithilesh Pathak PGP02.092
Avinash Agarwal PGP02.074Dishari Halder PGP02.
Abhishke Ra ut PGP02.64
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Table of ContentsIntroduction ...................................................................................................................................................................................... 3
Methodology .................................................................................................................................................................................... 3
Company overview ........................................................................................................................................................................... 3
ExxonMobil .................................................................................................................................................................................. 3Bajaj Automobiles ........................................................................................................................................................................ 3
Dabur ........................................................................................................................................................................................... 4
Revenue & Cost Composition ........................................................................................................................................................... 5
ExxonMobil .................................................................................................................................................................................. 5
Bajaj ............................................................................................................................................................................................. 5
Dabur ........................................................................................................................................................................................... 6
Relationship ...................................................................................................................................................................................... 6
ExxonMobil .................................................................................................................................................................................. 6
Relationship among stakeholders ........................................................................................................................................... 6
Company and Society/Environment ....................................................................................................................................... 7
Dabur ........................................................................................................................................................................................... 7
Shareholding Pattern ........................................................................................................................................................................ 7
ExxonMobil .................................................................................................................................................................................. 7
Bajaj Automobiles ........................................................................................................................................................................ 8
Dabur ........................................................................................................................................................................................... 8
Capital Structure ............................................................................................................................................................................... 9
Dabur ........................................................................................................................................................................................... 9
Bajaj ............................................................................................................................................................................................. 9
Dabur ........................................................................................................................................................................................... 9
Cost of Capital ................................................................................................................................................................................. 10
Bajaj ........................................................................................................................................................................................... 10
ExxonMobil Corporation ............................................................................................................................................................ 10
Dabur ......................................................................................................................................................................................... 10
Dividend policy ............................................................................................................................................................................... 10
Dabur ......................................................................................................................................................................................... 10
Bajaj ........................................................................................................................................................................................... 11Risk and Return ............................................................................................................................................................................... 11
Bajaj ........................................................................................................................................................................................... 11
Dabur India Ltd. ......................................................................................................................................................................... 12
Exxon Mobil ............................................................................................................................................................................... 12
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IntroductionThe objective of the report is to employ the knowledge and tools studied in the course Business
Analysis and Valuation and analyze & valuate companies from different industries and do a comparative
analysis and find out the similarities and differences in these industries. The report also tries to find out
relationships between management and shareholder, firm and financial market, firm and society, and
shareholders and debt holders.
MethodologyFor financial analysis, business analysis and valuation a lot of data is required. These data include income
statements, balance sheet, interest rates of the country, return on govt. bonds among many other
things. These data was collected for all the 3 companies through various sources. These sources include
companys annual report, companys financial supplements, stock exchanges, RBI website, and
Capitaline database among many other sources. These sources of data were chosen because of their
reliability and easy availability, ease of access and also these are the primary sources of data which
could be trusted.
Company overview
ExxonMobil
Exxon Mobil Corporation or ExxonMobil is an American multinational oil and gas corporation. It is a
direct descendant ofJohn D. Rockefeller's Standard Oil company, and was formed on November 30,
1999, by the merger ofExxon and Mobil. Its headquarters are in Irving, Texas. It is affiliated with
Imperial Oil which operates in Canada.
ExxonMobil is one of the largest publicly traded companies by market capitalization in the world and is
the largest company in the world by revenue. The company is ranked #1 globally in Forbes Global
2000 list in 2012.
ExxonMobil markets products around the world under the brands ofExxon, Mobil, and Esso. It also
owns hundreds of smaller subsidiaries such as Imperial Oil Limited (69.6% ownership) in Canada,
and SeaRiver Maritime, a petroleum shipping company.
Bajaj Automobiles
Bajaj Auto Limited is an Indian motorized vehicle-producing company. Bajaj Auto is a part ofBajaj
Group. Its founded by Jamnalal Bajaj at Rajasthan in the 1930s. It is based in Pune, Maharashtra, with
plants in Chakan (Pune), Waluj (near Aurangabad) and Pantnagar in Uttaranchal. The oldest plant at
Akurdi (Pune) now houses the R&D centre Ahead. Bajaj Auto makes and
exports automobiles, scooters, motorcycles and the auto rickshaw.
Bajaj Auto is the world's third-largest manufacturer of motorcycles and second-largest in India.
The Forbes Global 2000 list for the year 2005 ranked Bajaj Auto at 1,946. It features at 1639 in forbes
2011 list.
http://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/List_of_petroleum_companieshttp://en.wikipedia.org/wiki/John_D._Rockefellerhttp://en.wikipedia.org/wiki/Standard_Oilhttp://en.wikipedia.org/wiki/Exxonhttp://en.wikipedia.org/wiki/Mobilhttp://en.wikipedia.org/wiki/Irving,_Texashttp://en.wikipedia.org/wiki/Imperial_Oilhttp://en.wikipedia.org/wiki/List_of_corporations_by_market_capitalizationhttp://en.wikipedia.org/wiki/List_of_companies_by_revenuehttp://en.wikipedia.org/wiki/List_of_companies_by_revenuehttp://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Exxonhttp://en.wikipedia.org/wiki/Mobilhttp://en.wikipedia.org/wiki/Essohttp://en.wikipedia.org/wiki/Imperial_Oilhttp://en.wikipedia.org/wiki/SeaRiver_Maritimehttp://en.wikipedia.org/wiki/Bajaj_Grouphttp://en.wikipedia.org/wiki/Bajaj_Grouphttp://en.wikipedia.org/wiki/Jamnalal_Bajajhttp://en.wikipedia.org/wiki/Rajasthanhttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Chakanhttp://en.wikipedia.org/wiki/Aurangabad,_Maharashtrahttp://en.wikipedia.org/wiki/Pantnagarhttp://en.wikipedia.org/wiki/Uttaranchalhttp://en.wikipedia.org/wiki/Automobilehttp://en.wikipedia.org/wiki/Scooter_(motorcycle)http://en.wikipedia.org/wiki/Motorcyclehttp://en.wikipedia.org/wiki/Auto_rickshawhttp://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Auto_rickshawhttp://en.wikipedia.org/wiki/Motorcyclehttp://en.wikipedia.org/wiki/Scooter_(motorcycle)http://en.wikipedia.org/wiki/Automobilehttp://en.wikipedia.org/wiki/Uttaranchalhttp://en.wikipedia.org/wiki/Pantnagarhttp://en.wikipedia.org/wiki/Aurangabad,_Maharashtrahttp://en.wikipedia.org/wiki/Chakanhttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Rajasthanhttp://en.wikipedia.org/wiki/Jamnalal_Bajajhttp://en.wikipedia.org/wiki/Bajaj_Grouphttp://en.wikipedia.org/wiki/Bajaj_Grouphttp://en.wikipedia.org/wiki/SeaRiver_Maritimehttp://en.wikipedia.org/wiki/Imperial_Oilhttp://en.wikipedia.org/wiki/Essohttp://en.wikipedia.org/wiki/Mobilhttp://en.wikipedia.org/wiki/Exxonhttp://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/List_of_companies_by_revenuehttp://en.wikipedia.org/wiki/List_of_companies_by_revenuehttp://en.wikipedia.org/wiki/List_of_corporations_by_market_capitalizationhttp://en.wikipedia.org/wiki/Imperial_Oilhttp://en.wikipedia.org/wiki/Irving,_Texashttp://en.wikipedia.org/wiki/Mobilhttp://en.wikipedia.org/wiki/Exxonhttp://en.wikipedia.org/wiki/Standard_Oilhttp://en.wikipedia.org/wiki/John_D._Rockefellerhttp://en.wikipedia.org/wiki/List_of_petroleum_companieshttp://en.wikipedia.org/wiki/Multinational_corporation -
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Dabur
Dabur is India's largest Ayurvedic medicine manufacturer. Dabur's Ayurvedic Specialities Division has
over 260 medicines for treating a range of ailments and body conditions-from common cold to chronic
paralysis. Dabur India Limited is the fourth largest FMCG Company in India with Revenues of US$1 Billion
(over Rs 5,300 Cr) & Market Capitalization of US$4 Billion (Rs 20,000 Cr). Building on a legacy of quality
and experience of over 125 years, Dabur operates in key consumer products categories like Hair Care,
Oral Care, Health Care, Skin Care, and Home Care & Foods
Company Bajaj Automobiles Dabur India ExxonMobil Corporation
Industry Automobiles Ayurvedic Medicine-FMCG Oil and Gas Integrated
Geography India, Export all over
world.
India, Export all over world. Global operations with
Manufacturing across the world
Business Selling 2 & 3 wheelers Selling Ayurvedic Medicines
and FMCG products
Exploration, refining and
distribution & selling of oil and ga
productsProducts & brand 1. Commercial
Vehicles (3
wheelers): Bajaj
GC Max 1000
2. Bikes: Pulsar,Platina, Boxer
1. Dabur - Ayurvedichealthcare products
2. Vatika - Premium haircare
3. Hajmola - Tastydigestives
4. Ral - Fruit juices &beverages
5. Fem - Fairnessbleaches & skin care
products
1. Oil, LPG, Natural Gas2. Diesel (ESSO, Exxon, Mob3. Gasoline4. Aviation Fuel, Jet Fuel,
heating oil
5. Plastics, high-endpolymers and Lubricant
(Mobil1)
Market Share 3-wheelers:58.8% (India)
2-Wheelers:32.1%(India)
Hair Care: 12%
Oral Care:13%
Skin Care:7%
Chywanprash:63%
Digestive:55%
Fruit Juice:45%
#1 Global 2000
#3 in Sales
#1 in Profit
#82 in Assets
#2 in Market value (Forbes)
Revenue INR 20201.25 Cr INR 5,283 Cr US $ 498.36bn
Divisions
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Ayurvedahttp://en.wikipedia.org/wiki/Ayurvedahttp://en.wikipedia.org/wiki/India -
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Revenue & Cost Composition
ExxonMobil
The prices of crude oil are very volatile. Since the major expenditure for the company is to purchase the
crude oil, with the increase in the prices of crude oil, either the profitability of the company would
decrease or the price of its finished products would increase.
Bajaj
The major cost of the company is buying the raw materials. Raw materials for the company include steel
as a major contributor. Also there is high inflation in India which also increases the cost of the
commodities. If in the near future inflation is not controlled, cost of procuring raw materials would
increase thereby eating into the profits of the company.
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Dabur
The major cost contributor for Dabur is the raw material cost which is more or less affected by inflation
alone. Therefore, the profits of the company would vary with inflation which can be controlled bypassing on the burden to the consumers.
Relationship
ExxonMobil
ExxonMobil is investing billions of dollars in exploration, R&D and building plants for new resources.
Company has been engaging in developing high impact technology to reduce the cost of production and
create the new products. However, there have been several issues between shareholders and
management on using latest technologies in generating fuel, the technology which can hamper the
environment.
Relationship among stakeholders
ExxonMobil is highly valued company in the corporate history. Founded by J.D. Rockefeller, The
Company was the part of huge company which was broken into 34 companies. Since then, the company
is accused of various issues in operating as well as in management.
Recently, ExxonMobil is accused of paying huge amount to politicians and lobbyists. Last year
shareholders had heated argument with management over following issues:
A. Executive pay and its frequencyB. Lobbying and political spendingC. Non discrimination policy (particularly in 2008 annual meeting)D. Split the chairman and chief executive officer roles amid increasing investor scrutiny of board
accountability in the energy industry.
E. Controversial deal in Iraq.
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Just eight weeks before ExxonMobils annual shareholder meeting this year 2012, the Securities and
Exchange Commission (SEC) sided with investors in their battle to address concerns about the energy
giantshydraulic fracturing (fracking) operations.
This shows that relationship between shareholders and management is not in good terms, particularly
the issue of fracking operation got much attention in outside world.
Company and Society/Environment
ExxonMobil has been accused of setting high prices since its inception. With huge amount reserve, they
can explore oil at very low cost. However, with its commitment to increase the value of shareholders,
company does not engage in such activity.
The company is also accused of spoiling the natural resources as well as disrupting environment through
activities like fracking; oil spills (Valdez Oil Spill). Valdez Oil Spill killed thousands of sea animals and birds
and took away the fishing profession of hundreds of fishermen.
American citizens want ExxonMobil to pursue alternative energy sources such as Wind Energy. However,
ExxonMobil contends that alternative energy sources are not enough to fulfill the demand from world,
which we think is not fully justifiable statement from company.
Dabur
The management of Dabur India is very active when it comes to taking care of the interests of its
shareholders. The management maintains a positive relation with its shareholders and do not hesitate
to share its profits with its shareholders. The company had announced bonus shares in the ratio of 1:1 in
the year 2010 for the employee stock option scheme. Also the company had announced a 75% final
dividend to its shareholders. This shows that the management also keeps in mind the interests of the
shareholders and do not neglect them in the course of running the company.
Shareholding Pattern
ExxonMobil
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Bajaj Automobiles
Dabur
69%
19%
1%5% 0% 1% 5%
Shareholding
Directors, Promoters and family members FIIs
Mutual Funds Financial Institutions/Banks/Insurance Companies
NRIs Corporates
Individuals
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Capital Structure
Dabur
Dabur has reduced its debt significantly. In the recent year, D/E ratio for Dabur is negligible. Therefore,
expense for interest would be reduced and so the benefit of tax .
Bajaj
Bajaj Auto Capital structure has been changed lot since last few years. Company mainly working on
equity and debt portion has been reduced from 45% to 1.98 %. Benefit of tax deduction has been
reduced.
Dabur
Dabur till now has not borrowed any debt. So, equity has been major source of capital for Dabur
0
0.05
0.1
0.15
0.2
0.25
0.3
2004 2005 2006 2007 2008 2009 2010 2011 2012
Industry D/E
Dabur D/E
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
2008 2009 2010 2011 2012
Equity
Debt
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Cost of Capital
Bajaj
Annual Avg Market Return 15.72%
Risk Free Rate 8%
Beta 0.966Cost of Equity 15.46%
Cost of Debt 23%
Tax 30%
Post Tax Cost of Debt 16%
D:E
WACC 15.47%
ExxonMobil Corporation
Risk Free Rate 4.5
Cost of Debt 2.38
Alpha 2
Country Risk
Premium
0
Market Risk Premium 4.1
Beta Unlevered 0.91
Beta Levered 0.97
Debt to Capital 9.6
Debt to Equity 0.106
Equity to Capital 90.4
Kd 2.3%
Ke 10.39%
WACC 9.63%
Dabur
As Dabur does not have any debt, cost of equity is WACC only which is 14.13%
Dividend policy
DaburThe company has a dividend policy of paying dividends out of its profits to its shareholders. The
company has a history of paying average dividends of 75-100% to its shareholders. According to the
dividend policy of the company, the company would pay the dividends only out of its current year of
previous year profits after setting off any losses which it might have incurred in previous years and also
keeping any reserves required for the expansion of the company. The company avoids paying out
dividends out of its reserves.
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Bajaj
Face Value Rs. 10
Announcement
Date
Effective
Date
Dividend
Type
Dividend
(%)
17/05/2012 5/7/2012 Final 450%18/05/2011 29/06/2011 Final 400%
12/5/2010 8/7/2010 Final 400%
21/05/2009 2/7/2009 Final 220%
26/05/2008 27/06/2008 Final 200%
1. The Board of Directors ofBajaj Auto constituted its shareholders and investors grievancecommittee in 2008
2. Dividend will be paid by account payee/non-negotiable instruments or through the NationalElectronic Clearing Service (NECS), as notified by the SEBI through the stock exchanges
3. In view of the significant advantages and the convenience, the Company will pay dividendthrough NECS in all major cities to cover maximum number of shareholders, as per applicable
guidelines.
4. Dividend is accrued in the year in which it is declared whereby a right to receive is established.
Risk and Return
Bajaj
Autoindex Bajaj Auto BSE Sensex
Autoindex 0.010379049
Bajaj Auto 0.0102872 0.024208836
BSE Sensex 0.007738154 0.00700567 0.007109118
Cov(Bajaj Auto,
Bse sensex) 0.00700567
Variance of Bse 0.0072513
Beta of Bajaj
auto 0.966
Beta of Auto
Industry 0.730936452
Cov(Auto index,
BSE) 0.007738154
Variance of
Auto index 0.01058663
Autoindex Bajaj Auto BSE Sensex
Autoindex 1
Bajaj Auto 0.648980198 1
BSE Sensex 0.900846342 0.534016749 1
Variance of Bajaj
Auto Stock Return 0.025
Coffecient of
Variation of Bajaj
Auto Stock
4.58
Covariance Matrix
Correlation Matrix
Risk Measurement
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As we can see that coefficient of variation that indicates risk per unit return is not very high. Beta
of stock is .966 that is not good as stock will vary with market. Auto industry beta is .73 that is
lower than Bajaj Auto, it means compans stock is more volatile than industry.
Dabur India Ltd.
Risk and Return
Covariance
Dabur India BSE
Dabur India 0.009968025
BSE 0.0014988 0.006474754
Beta of Dabur .2314
Avg Return 0.0022 0.0085
Std Dev 0.1005 0.0810
Coffecient of Variation 44.8927 9.4918
Variance 0.0101 0.0066
Variance of Dabur is lesser than the Variance of Bajaj. However, Coefficient of variation is high that
means risk per unit retun is very high.
Exxon Mobil
Risk and Return
Covariance MatrixExxon Mobil NYSE
Exxon Mobil 0.002909538
NYSE 0.001503053 0.002512789
Avg Return 0.0014 0.0056
std dev 0.054284801 0.050448033
coefficient of
variation 36.42639191 8.995151228
variance 0.00294684 0.002545004
Exxon mobil variance is very low that shows, risk is very high very low. However, coefficient of variation
is very high that means risk per unit is very high.