Nocil Financial Analysis of Fy 2015-16 and 2016-17

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Net profit margin for NOCIL has increased from 10.82% to 15.98%. It means the company is incurring less expenses (More PAT, PBT) than those the previous year.

ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed

ROCE for NOCIL has slightly gone down from 26.4% to 25.55%. Hence, we can say the earnings have almost stayed constant with respect to the capital employed. As the capital employed remains almost same.

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RoE for NOCIL has increased by 22% from 16.61% to 20.22%. Hence, we can say that the profit has been increased due to increase in earnings or increase in capital or reduction in the COGS. There is not much change in Shareholder’s equity or the net worth.

- Valuation analysis:

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PE ratio for NOCIL is 19.6. It has increased in one year, as the EPS has increased by approximately 54 and the market price has approximately doubled from Rs. 70 to Rs. 145. The valuation of the share was more last year than this year and actually hence, the share has rallied a lot in the previous one year.

- Liquidity and Credit Analysis

Current Ratio = Current Assets / Current Liabilities

Current ratio for Torrent power has up from 3.44 to 2.32 Hence, we can say that either the company has paid loans or has increased some of its current assets. Also, a ratio more than 1 here means that company’s liabilities are less than its assets and suggests that the company in question would be easily able to pay off its obligations if they came due at that point.

Debt - Equity Ratio = Total Liabilities / Shareholders' Equity

The Debt to equity ratio for Torrent power has reduced up from 0.055 to 0.025 (Less than the optimum DE ratio of 1). This means that the company doesn’t require to carry out its its growth with the help of debts.

Quick ratio = (current assets – inventories) / current liabilities

The quick ratio is more conservative (Includes only Short Term Liquidity) than the current ratio, as it doesn’t inventories from current assets. Quick ratio for Torrent power has increased from 1.31 to 2.48. An increase in it means that a company has more liquid assets available to cover each $1 of current liabilities.

Inventory Turnover Ratio = Cost Of Goods Sold / Average Inventory

The inventory turnover ratio for Torrent power has increased marginally from 5.42 to 6.57. This means that less inventory is required to generate income and thus, that the operations have been improved.

Net Cash Flow

The net cash flow has increased by a ratio of 50.37, suggesting overall improvement in the cash flow. However, the operating cash flow has decreased by 15% this year.