Financial Decision

A study on Capital Structure

Presented By:
Badesaab Ankalgi
Iranna Patil
Ruben Stanley
Bhagyashree Kulkarni
Iravva Harijan

Industry Overview- IT

The sector has increased its contribution to

India's GDP from 1.2% in 1998 to 7.5% in 2012
Revenues $100 billion in 2012
Export and domestic revenue stood at $69.1 and
$31.7 billion respectively
Growing annually by 9%
Generates 2.5 million direct employment annually
Share in total exports increased from 4% to 25%
from 1998 to 2012
Globalization has given a positive result for all the
IT industries

Rolta India
Share Capital

161.33 161.33 161.33 161.33 161.19

Reserves & Surplus

2868.9

Net Worth

Equity Dividend (%)

22.5

30

30

35

32.5

2383.5 2304.45 2142.23 1743.13

3030.23 2544.83 2465.78 2303.56 1904.33

Book Value (Rs)

187.83 157.74 152.84 142.79 118.14

250

7000

6000

200

5000
150
4000

Net Worth

Book Value (Rs)

Reserves & Surplus

3000

Share Capital

Equity Dividend (%)

100

2000

50
1000

0
1

0
1

Debt Equity
Ratio

Close Price

0.81

0.86

0.87

0.35

0.63

3453.55 3287.35 3297.9 1854.75 2331.25

Interpretation:
As we can see here that in spite of there is increase in the Debt equity
ratio there is a steady growth in the Market price of Rolta that is because
IT sector Doesnt need any much investment and work on low
investments also so, there is no much impact of Debt on the price in the
market. Debt taken is signaled as good for the investors. And we can see
there is variable dividend policy which also is not effecting the market
price of rolta.

Polaris
Share Capital

49.78

Reserves & Surplus

Net Worth

49.75

49.76

49.6

49.48

1125.83 1037.89

979.2

867.51

730.6

1175.6 1087.64 1028.95

917.11

780.08

2500

Equity Dividend
(%)

125

Book Value (Rs)

100

100

90

70

118.09 109.3 103.47 92.45 78.83

300

250

2000

200
1500
Net Worth
Reserves & Surplus

Book Value (Rs)

150

Equity Dividend (%)

Share Capital

1000

100

500

50

0
1

Debt Equity Ratio

Close Price

--

0.1

0.1

--

--

210.35

135.7

114.1

123.8

174.35

Interpretation:
As we can see here that in spite of they took debt only in two years
there is a steady growth in the Market price of Polaris that is because IT
sector Do not need any much investment and work on low investments
also so, there is no much impact of Debt on the price in the market. They
also have variable dividend policy but that is no where effecting the
market price.

Mindtree
Share Capital

41.7

41.5

40.5

40

39.51

Reserves & Surplus

1599.2

1272.2

917.1

736.4

606.48

Net Worth

1640.9

1313.7

957.6

776.4

646

Earning Per Share (Rs)

Equity Dividend (%)
700

3000

600

2500

500

Net Worth

250

Book Value (Rs)

3500

2000

108.23 81.59 53.94 30.75 52.66

120

Share Capital

1000

Book Value (Rs)

Equity Dividend (%)

300

100

0
1

30

400

200

500

25

393.6 316.29 236.19 193.93 163.48

Reserves & Surplus

1500

40

0
1

Debt Equity Ratio

Close Price

--

0.02

0.05

0.01

--

1215.75 1530.65

682.4

397.3

558.8

Interpretation:
As we can see here that in spite of there is decrease and increase in the
Debt equity ratio there is a steady growth in the Market price of the
Mind tree that is because IT sector Do not need any much investment
and work on low investments also so, there is no much impact of Debt
on the price in the market. They also have steady rise in the EPS and have
variable dividend policy.

Oracle
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Networth

42.07
42.03
41.99
41.95 41.93
Earning Per Share (Rs)
0.36
0
0.12
0.08
0.81
0
0
0
0
0 Equity Dividend (%)
8,412.83 7,250.31 6,204.93 5,108.31 4,135.33
0
0
0
0
0
8,455.26 7,292.34 6,247.04 5,150.34 4,178.07 Book Value (Rs)

9000

136.48 122.44 129.71 115.38

0

1,200.00

7000

1,000.00

6000
Reserves

5000

Share Application
Money

4000

800.00

600.00

Book Value (Rs)

Equity Share Capital

400.00

3000
2000

200.00

1000
0.00
1

0
1

1,004.81 867.46 743.91 613.89 498.15

Book Value (Rs)

8000

78.81

Debt Equity
Ratio
Close Price

--

--

--

--

--

3453.55 3287.35 3297.9 1854.75 2331.25

Interpretation:
As we can see here that in spite of there is no debt taken by the firm
then also there is a steady growth in the Market price of Oracle that is
because IT sector Do not need much investment and work on low
investments also so, there is no much impact of Debt on the price in the
market. There is also nil dividend policy as never released any dividends

Wipro
Equity Share Capital

493.2

492.6

491.7

490.8

293.6

Share Application Money

1.8

Preference Share Capital

Reserves

28,862.70 23,736.90 23,860.80 20,829.40 17,396.80

35000

Earning Per Share (Rs)

Equity Dividend (%)

29.95 22.94 19.05 19.73 33.36

400

Book Value (Rs)

350

300

300

300

119.03 98.38 99.04 86.86 120.49

600

30000

500

25000
400
20000

Reserves
Equity Share Capital

15000

Book Value (Rs)

300

Equity Dividend (%)

Earning Per Share (Rs)

10000

200

5000

100

0
1

0
1

Debt Equity Ratio

Close Price

0.15

0.17

0.22

0.22

0.31

578.2

559.05

394.35

398.8

490.25

Interpretation:
As we can see here that in spite of there is decrease in the Debt equity
ratio there is a steady growth in the Market price of Wipro that is
because IT sector Do not need much investment and work on low
investments also so, there is no much impact of Debt on the price in the
market.

Infosys
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Networth

286
287
287
287
287
Earning Per Share (Rs)
0
0
0
0
0
0
0
0
0
0
41,806.00 35,772.00 29,470.00 24,214.00 21,749.00
Equity Dividend (%)
0
0
0
0
0
42,092.00 36,059.00 29,757.00 24,501.00 22,036.00 Book Value (Rs)

45000

178.4 158.75
1,260.00

840

147.5

112.22 101.13

940 1,200.00

736.64 627.95 518.21

500

426.73 384.02

2500

40000
2000

35000
30000

1500
25000

Book Value (Rs)

Reserves
20000

Equity Dividend (%)

Equity Share Capital

Earning Per Share (Rs)

1000
15000
10000

500

5000
0

0
1

--

--

--

--

--

2069.7 3485.5 2318.5 2765.05

3445

Interpretation:
As we can see here that in spite of there is no Debt in taken there is a
steady growth in the Market price of infosys that is because IT sector Do
not need any much investment and work on low investments also so,
there is no much impact of Debt on the price in the market.

HCL
Equity Share Capital

139.37 138.66 137.74 135.76 134.05

Share Application Money

5.01

2.77

2.01

0.47

Preference Share Capital

Reserves

10,093.36 6,465.15 5,720.41 4,798.09 3,353.72

12000

Earning Per Share (Rs)

85.5 53.16 28.13

17.4 15.57

Equity Dividend (%)

500

375

Book Value (Rs)

600

600

200

224.94 146.84 95.25 85.06 72.69

900
800

10000
700
600

8000

500

Book Value (Rs)

Reserves

6000

Equity Share Capital

Equity Dividend (%)

400

Earning Per Share (Rs)

300

4000

200
2000

100
0

0
1

--

0.06

0.11

0.14

0.28

1595.2

1263.1

619.25

388.25

456.05

Interpretation:
As we can see here that in spite of there is decrease in the Debt equity
ratio there is a steady growth in the Market price of HCL that is because
IT sector Do not need much investment and work on low investments
also so, there is no much impact of Debt on the price in the market.

MphasiS
Share Capital

210.14

210.13

210.11

210.04

Earning Per Share (Rs)

209.93

Reserves & Surplus

3644.63 3506.62 3422.01 3197.91 2698.63

Equity Dividend (%)

Net Worth

3854.77 3716.76 3632.12 3407.96 2908.56

Book Value (Rs)

4500

400

4000

350

3500

10.62 25.68 29.08 37.23 47.48

70

170

170

65

40

183.44 176.88 172.87 162.26 138.54

300

3000

250

2500
Reserves & Surplus

2000

Book Value (Rs)

200

Equity Dividend (%)

Share Capital

Earning Per Share (Rs)

150
1500
100
1000
50

500

0
1

Debt Equity
Ratio

--

Close Price

402

0.07

0.07

--

0.06

437.6 383.25

300.1

672.5

Interpretation:
As we can see here that in spite of there is decrease and increase in the
Debt equity ratio there is a steady growth in the Market price of Mphasis
that is because IT sector Do not need any much investment and work on
low investments also so, there is no much impact of Debt on the price in
the market.

Tech Mahindra
Equity Share Capital

233.5

128.1

127.5

126

122.3

Share Application Money

1,231.90

0.3

0.2

Preference Share Capital

Reserves

8,355.10 4,054.40 3,315.70 3,258.00 2,744.20

Earning Per Share (Rs)

115.02 50.93 36.13 55.31 60.73

Equity Dividend (%)

200

Book Value (Rs)

12000

50

40

40

35

367.86 326.45 270.08 268.67 234.34

800
700

10000
600
8000
Reserves
6000

500

Share Application
Money

400

Equity Share Capital

300

Book Value (Rs)

Equity Dividend (%)
Earning Per Share (Rs)

4000
200
2000

100
0

0
1

Debt Equity Ratio

Close Price

--

0.07

0.07

--

0.06

2617.6 1838.05

931.4

572.8

702.4

Interpretation:
As we can see here that in spite of there is decrease and increase in the
Debt equity ratio there is a steady growth in the Market price of Tech
Mahindra that is because IT sector Do not need much investment and
work on low investments also so, there is no much impact of Debt on the
price in the market.

TCS
Equity Share Capital

195.87

195.72

195.72

195.72

195.72

Share Application Money

Preference Share Capital

100

100

100

100

Reserves

43,856.0132,266.53 24,560.9119,283.7714,820.90

50000

Earning Per Share (Rs)

94.17

Equity Dividend (%)

65.23

55.97

38.62

28.62

3,200.00 2,200.00 2,500.00 1,400.00 2,000.00

Book Value (Rs)

224.9 165.86 126.49

99.53

76.72

4000

45000
3500
40000
3000

35000

2500

30000

Reserves

25000

Preference Share
Capital

2000

20000

Equity Share Capital

1500

15000

Book Value (Rs)

Equity Dividend (%)
Earning Per Share (Rs)

1000

10000
500
5000
0

0
1

Debt Equity
Ratio

Close Price

5.04

4.77

5.59

7.19

6.54

2578.45 2170.95 1258.55 1161.25 1165.05

Interpretation:

As we can see here that in spite of there is decrease and increase in the
Debt equity ratio there is a steady growth in the Market price of TCS
that is because IT sector Do not need much investment and work on low
investments also so, there is no much impact of Debt on the price in the
market.