CHAPTER-4shodhganga.inflibnet.ac.in/bitstream/10603/9796/10/10...Tata Consultancy Services Ltd. 532540 6 June, 2005 Listed History, Liquidity (Trading Frequency, Number of Trades and

87

CHAPTER-4

REASONS OF REPLACEMENT OF THE SENSEX COMPANIES

AND PROFITABILITY ANALYSIS OF SENSEX

REPRESENTATIVE COMPANIES

As per the objective of our study the researcher examined and studied the causes of

replacement (Inclusion and Exclusion) of a company in the list of 30 constituents

that made the SENSEX of the Bombay Stock Exchange. The causes of Inclusion and

Exclusion were gleaned out after discussing the issue with brokers at Delhi, site of

Bombay Stock Exchange, and by studying the reports of the companies which were

included and excluded in the fabric of SENSEX. Table 4.1 and 4.3 portrays those

companies which were replaced (included and excluded) in the SENSEX 30 list by

the Bombay Stock Exchange (with reasons) during the study period:

Table 4.1 Reasons for the Inclusion of Companies in SENSEX-30

Sr.

No.

Name of the

Company

Scrip

Code

Inclusio

n Date

Reasons

1. National

Thermal Power

Corporation ltd.

532555

6 June,

2005

Listed History, Liquidity (Trading

Frequency, Number of Trades and

Value of Shares traded), Market

Capitalization, Track Record and

Industry Representation

2. Tata

Consultancy

Services Ltd.

532540

6 June,

2005






3. Reliance

Communication

Ltd.

532712

12 June,

2006






4. Mahindra & 500520 09 July, Listed History, Liquidity (Trading


88

Mahindra Ltd. 2007 Value of Shares traded), Market



5. DLF Ltd. 532868

19

Novemb

er, 2007






6. Jaiprakash

Associates Ltd.

532532

14

March,

2008






7. Sterlite

Industries ltd.

500900

28 July,

2008






8. Tata Power Co.

Ltd.

500400

28 July,

2008






9. Sun

Pharmaceutical

Industries Ltd.

524715

12

January,

2009






10. Hero Honda

Motors Ltd.

500182

29 June,

2009






11. Cipla ltd. 500087

03 May,

2010





89


12. Jindal Steel &

Power Ltd.

532286

26 May,

2010






13. Bajaj Auto Ltd. 532977

06

Decemb

er, 2010






14. Coal India Ltd. 533278

08

August,

2011






15. Sun

Pharmaceutical

Industries Ltd

524715

08

August,

2011






16. Gail India Ltd. 532155

09

January,

2012






17. Dr. Reddy’s

Laboratories

Ltd.

500124

11 June,

2012






Source: Brokers’ Interview and website of BSE

90

Table 4.2 Categorization of Reasons for the Inclusion of Companies in Sensex-30

Sr.

No.

Reasons for Inclusion of

Companies in Sensex-30

Effected Companies

No. of

Companies

% to Total

Companies

1. Listed History 17 100%

2. Liquidity 17 100%

3. Market Capitalization 17 100%

4. Industry Representation 17 100%

5. Track Record 17 100%

Source: Researcher Calculation

On the basis of the information in Table 4.2 all the seventeen companies (given in

the Table 4.1) were included in BSE -SENSEX on the basis of five reasons. All the

reasons were collectively significant (100% companies were included on the basis of

five reasons). Every company has completed three months listing history on BSE-

SENSEX. No company was listed on the basis of merger/ demerger/ amalgamation.

There was no newly listed company in BSE-SENSEX without completion of the

three months listed history on Bombay Stock Exchange. It is the result based on

information collected by the researcher from various sources. Further the context

analysis of reasons/factors of inclusion of the sampled companies in Sensex, it was

found that the Listed History, Liquidity (Trading Frequency, Number of Trades and

Value of Shares traded), Market Capitalization, Track Record and Industry

Representation were the main reasons that rendered these companies (under study)

into Sensex list. There is no need to give the supporting or contradictory results of

the previous researches in this regard because it is an objective fact and not

changeable at present. However, it is suggested that the other companies should

made the continuous efforts to make these variables sound so that they may stand in

the queue of Sensex- Companies.

91

Table 4.3 Reasons for the Exclusion of Companies from SENSEX-30

Sr.

No.

Name of the

Company

Scrip

Code

Inclusion

Date

Reasons

1. Hindustan

Petroleum Corp.

Ltd.

500104

6 June,

2005

Liquidity (Trading

Frequency, Number of Trades

and Value of Shares traded)

and Market Capitalization

2. Zee Telefilms

Ltd.

505537

6 June,

2005

Liquidity (Trading




3. Tata Power Ltd. 500400

12 June,

2006

Liquidity (Trading




4. Hero Honda

Motors Ltd.

500182

09 July,

2007

Liquidity (Trading




5. Dr. Reddy’s

Laboratories

Ltd.

500124

19

November,

2007

Liquidity (Trading




6. Bajaj Auto Ltd. 500490

14 March,

2008

Liquidity (Trading




7. Ambuja

Cements ltd.

500425

28 July,

2008

Liquidity (Trading




92

8. Cipla Ltd. 500087

.

28 July,

2008

Liquidity (Trading




9. Satyam

Computers Ltd.

500376

12

January,

2009

Liquidity (Trading




10. Ranbaxy

Laboratories

Ltd.

500359

29 June,

2009

Liquidity (Trading




11. Sun

Pharmaceutical

Industries Ltd

524715

03 May,

2010

Liquidity (Trading




12. Grasim

Industries Ltd.

500300

26 May,

2010

Liquidity (Trading




13. Acc Ltd. 500410

06

December,

2010

Liquidity (Trading




14. Reliance

Infrastructure

Ltd.

500390

08 August,

2011

Liquidity (Trading




15. Reliance

Communication

Ltd

532712

08 August,

2011

Liquidity (Trading




93

16. Jaiprakash

Associates Ltd.

532532

09

January,

2012

Liquidity (Trading




17. DLF Ltd. 532868

11 June,

2012

Liquidity (Trading




Source: Brokers’ Interview and website of BSE

Table 4.4 Categorization of Reasons for the Exclusion of Companies from the

Sensex-30

Sr.

No.

Reasons for Exclusion of

Companies from Sensex-30

Effected Companies

No. of

Companies

% to Total

Companies

1. Liquidity 17 100%

2. Market Capitalization 17 100%

Source: Researcher Calculation

On the basis of the information in the Table 4.4 all the seventeen companies (given

in Table 4.3) were excluded from the BSE-SENSEX on the basis of two reasons.

Both reasons were significant because 100% companies were excluded on the basis

of liquidity and market capitalization. There can be no other reasons on the basis of

which a company could be excluded from the BSE-SENSEX viz. merger/ demerger/

amalgamation, delisted by SEBI, delisted by BSE and a company voluntarily

delisted. But, in this study there were only two reasons on the basis of which all

companies were excluded from the SENSEX. Further the context analysis of

reasons/factors of exclusion of the sampled companies from Sensex, it was found

that the Liquidity (Trading Frequency, Number of Trades and Value of Shares

traded) and Market Capitalization were the main reasons that excluded these

companies (under study) from Sensex list.

94

PROFITABILITY ANALYSIS OF SENSEX REPRESENTATIVE

COMPANIES

Fundamental analysis involves looking at any numbers that can show something

about a company’s worth. That includes the financial statements and ratios derived

from those numbers that can give you more insight into whether the company is

performing well, indifferently or badly. Profitability and valuation ratios are the

most comprehensive means of a company as they reflect the corroborated influence

of risk and profitability financial ratios. These ratios are more important because

they reflect the general confidence and trust of the market in a company’s

management, but said confidence and trust depends upon many economic, social,

and political factors. When investors fundament their decisions, they take into

consideration a variety of indicators, such as internal performances achieved by a

company, and established by analyzing the information reflected in its financial

statements. The researcher has selected those ratios which are generally used by

investment market players.

Table 4.5 Profitability and Valuation Ratios of State Bank of India

Years ROCE RONW GPR NPR EPS DPS PER PBR

2005-2006 5.72 17.04 21.32 12.25 81.77 14 11.84 1.84

2006-2007 5.62 15.41 22.09 12.19 83.91 14 11.83 1.67

2007-2008 6.57 16.75 22.71 13.75 103.94 21.5 15.38 2.06

2008-2009 6.77 17.05 23.43 14.3 139.76 29 7.63 1.17

2009-2010 6.07 14.08 20.93 12.91 140.65 30 14.78 2

2010-2011 5.6 12.62 19.59 10.15 126.27 30 21.92 2.7

2011-2012 6.38 15.72 18.3 10.99 170.05 35 12.32 1.67

AVERAGE 6.1 15.52 21.2 12.36 120.91 24.79 13.67 1.87

AAGR 0.73 -2.43 -2.33 -2.25 10.53 14.92 4.04 1.95

t-Value 0.549 1.511 2.188 1.234 5.252 5.904 0.741 0.442

Sig./ Non-Sig. NS NS NS NS S S NS NS

Source: Financial Statements of the Company but Calculation and Analysis by the Researcher

Note: Average Capital Employed has been taken for calculating ROCE and Average Net

Worth has been taken for calculating RONW.

95

Table 4.5 reveals the profitability and valuation ratios of State Bank of India. The

average of return on capital employed ratio was 6.10 and the Annual Average

Growth Rate was 0.73 percent. The return on capital employed ratio was non-

significant at 95 percent confidence level. (t=.549, d.f. =5 and critical value= 2.571)

The average of return on net worth ratio was 15.52 and the annual average growth

rate was -2.43 percent. The return on net worth ratio was non-significant at 5 percent

level of significance at degree of freedom 5 because the calculated value of t=1.511

was less than the tabulated value=2.571.

The Gross Profit Ratio was increasing trends from 2005-06 to 2008-09. The average

of Gross Profit Ratio was 21.20 and the Annual Average Growth Rate was -2.33

percent. The gross profit ratio was non- significant at 95 percent confidence level.

(t=2.188, d.f. =5 and critical value= 2.571)

The Net Profit Ratio was increasing trends from 2005-06 to 2008-09. The Average

of Net Profit Ratio was 12.36 and the Annual Average Growth Rate was -2.25

percent. The return on net profit ratio was non-significant at 5 percent level of

significance at degree of freedom 5 because the calculated value of t=1.234 was less

than the tabulated value=2.571.

The earning per share ratio was increasing trends. The average of earning per share

was 120.91 and the Annual Average Growth Rate was 10.53 percent. The earning

per share ratio was significant at 95 percent confidence level. (t=5.252, d.f. =5 and

critical value= 2.571)

The Dividend per Share ratio was increasing trend throughout the study period. The

average of Dividend per Share ratio was 24.79 and the Annual Average Growth Rate

was 14.92 percent. The dividend per share ratio was significant at 5 percent level of

significance at degree of freedom 5 because the calculated value of t=5.904 was

more than the tabulated value=2.571.

The price-to-earning ratio of the company was highest (21.92) in 2010-11 that

indicated expensive share and in 2008-09 was lowest (7.63) that indicated cheapest

share during the study period. The average of Price-to-earning Ratio was 13.67 and

the Annual Average Growth Rate was 4.04 percent. The price-to-earning ratio was

96

non-significant at 95 percent confidence level. (t=0.741, d.f. =5 and critical value=

2.571)

The price-to-book ratio of the company was more than one throughout the study

period and it indicated that the stock was overvalued. The Annual Average Growth

Rate of Price-to-book Ratio was 1.95 percent and average was 1.87. The price-to-

book ratio was non-significant at 5 percent level of significance at degree of freedom

5 because the calculated value of t=0.442 was less than the tabulated value=2.571.

It was found that annual average growth rates of ROCE ratio, EPS ratio, DPS ratio,

PE ratio, PB ratio were positive and RONW ratio, GP ratio, NP ratio were negative

during the study period. There was consistency in six ratios (ROCE, RONW, GP,

NP, PE and PB) and there was inconsistency in rest of the ratios.

Table 4.6 Profitability and Valuation Ratios of HDFC Ltd.


2005-2006 8.84 30.11 37.43 29.86 47.58 20 28.08 7.46

2006-2007 9.9 31.35 34.04 26.93 58.33 22 26.06 6.93

2007-2008 11.01 22.59 41.46 29.8 81.53 25 29.24 5.67

2008-2009 11.96 18.2 29.44 20.76 75.3 30 18.74 3.06

2009-2010 10.52 19.95 34.7 24.93 92.47 36 29.34 5.13

2010-2011 40.17 21.74 38.02 27.5 22.64 9.1 30.84 5.92

2011-2012 19.2 22.69 32.81 23.78 26.13 11 25.78 5.23

AVERAGE 15.94 23.8 35.41 26.22 57.71 21.87 26.87 5.63

AAGR 16.58 -5.02 -1.06 -2.44 -10.2 -9.19 0.25 -4.37

t-Value 2.439 1.916 0.561 1.236 1.272 1.242 0.087 0.96

Sig./Non-Sig. NS NS NS NS NS NS NS NS




Table 4.6 portrays the profitability and valuation ratios of HDFC Ltd. The return on

capital employed ratio of the company was increasing trends from 2005-06 to 2010-

11. The annual average growth rate of return on capital employed ratio was 16.58

percent and average was 15.94. The return on capital employed ratio was non-

significant at 95 percent confidence level. (t=2.439, d.f. =5 and critical value=

2.571)

97

The average of return on net worth ratio was 23.80 and annual average growth rate

was negative (-5.02) percent. The return on net worth ratio was non-significant at 5

percent level of significance at degree of freedom 5 because the calculated value of

t=1.916 was less than the tabulated value=2.571.

The annual average growth rate of gross profit ratio was (-1.06) percent and average

was 35.41. The gross profit ratio was non- significant at 95 percent confidence level.


The average of net profit ratio was 26.22 and the annual average growth rate was

negative (-2.44) percent. The return on net profit ratio was non-significant at 5



The earning per share ratio of the company was increasing trends from 2005-06 to

2009-10. The annual average growth rate of earning per share ratio was -10.20

percent and average was 57.71. The earning per share ratio was non-significant at 95

percent confidence level. (t=1.272, d.f. =5 and critical value= 2.571)

The dividend per share ratio of the company was increasing trends from 2005-06 to

2009-10. The annual average growth rate of dividend per share ratio was negative (-

9.19) percent and average was 21.87. The dividend per share ratio was non-

significant at 5 percent level of significance at degree of freedom 5 because the

calculated value of t=1.242 was less than the tabulated value=2.571.



share during the study period. The annual average growth rate of price-to-earning

ratio was 0.25 percent and average was 26.87. The price-to-earning ratio was non-


2.571)


period and it indicated that the stock was overvalued. The annual average growth

rate of price-to-book ratio was negative (-4.37) percent and average was 5.63. The

price-to-book ratio was non-significant at 5 percent level of significance at degree of

98

freedom 5 because the calculated value of t=0.960 was less than the tabulated

value=2.571.

It was found that annual average growth rates of ROCE ratio, PE ratio were positive

and RONW ratio, GP ratio, NP ratio, EPS ratio, DPS ratio, PB ratio were negative

during the study period. There was consistency in all the eight ratios.

Table 4.7 Profitability and Valuation Ratios of Maruti Suzuki Ltd.


2005-2006 34.68 24.19 16.94 9.9 40.65 3.5 21.51 4.63

2006-2007 35.63 25.38 17.36 10.63 53.29 4.5 15.38 3.46

2007-2008 30.51 22.67 17.17 9.67 59.03 5 14.05 2.85

2008-2009 15.76 12.08 11.65 5.96 41.57 3.5 18.65 2.04

2009-2010 31.95 23.58 15.18 8.58 85.43 6 16.58 3.46

2010-2011 23.35 17.81 11.36 6.3 77.98 7.5 16.2 2.63

2011-2012 13.29 10.06 9.23 4.59 55.37 7.5 24.37 2.57

AVERAGE 26.45 19.4 14.13 7.95 59.05 5.36 18.11 3.09

AAGR -10.5 -9.48 -8.08 -9.95 6.41 11.11 1.96 -6.2

t-Value 2.275 2.111 3.71 3.525 1.511 3.4 0.589 1.754

Sig./Non-Sig NS NS S S NS S NS NS




Table 4.7 shows the profitability and valuation ratios of Maruti Suzuki Ltd.

Company. The average of return on capital employed ratio was 26.45 and the annual

average growth rate was negative (-10.5) percent. The return on capital employed

ratio was non- significant at 95 percent confidence level. (t=2.275, d.f. =5 and


The annual average growth rate of return on net worth was negative (-9.48) percent

and average was 19.40. The return on net worth ratio was non-significant at 5



The annual average growth rate of gross profit ratio was negative (-8.08) percent and

average was 14.13. The gross profit ratio was significant at 95 percent confidence

level. (t=3.71, d.f. =5 and critical value= 2.571)

99


negative (-9.95) percent. The return on net profit ratio was significant at 5 percent


was more than the tabulated value=2.571.


2007-2008. The annual average growth rate of earnings per share ratio was (6.41)




2007-2008. The annual average growth rate of dividend per share ratio was (11.11)

percent and average was 5.36. The dividend per share ratio was significant at 5


t=3.4 was more than the tabulated value=2.571.




ratio was (1.96) percent and average was 18.11. The price-to-earning ratio was non-


2.571)



rate of price to book ratio was negative (-6.2) percent and average was 3.09. The



value=2.571.

It was found that annual average growth rates of EPS ratio, DPS ratio and PE ratio

were positive and ROCE ratio, RONW ratio, GP ratio, NP ratio and PB ratio were

negative during the study period. There was consistency in five ratios (ROCE,

RONW, EPS, PER and PBR) relating to fundamental analysis and there was

inconsistency in rest of the ratios.

100

Table 4.8 Profitability and Valuation Ratios of Infosys Ltd.


2005-2006 45.09 39.89 34.84 26.82 81.41 44.85 36.62 11.93

2006-2007 45.99 41.9 35.14 28.77 64.35 11.4 31.28 10.31

2007-2008 41.52 36.26 36.19 28.57 72.5 33.25 19.73 6.06

2008-2009 42.92 37.18 36.56 28.72 97.74 23.5 13.55 4.25

2009-2010 37.76 29.13 39.39 27.45 96.92 25 26.98 6.81

2010-2011 37.89 27.69 37.66 25.38 102.35 60 31.62 7.58

2011-2012 42.66 31.22 39.59 27.1 139.93 47 20.47 5.53

AVERAGE 41.98 34.75 37.05 27.54 93.6 35 25.75 7.5

AAGR -1.94 -5.24 1.85 -0.78 8.96 10.06 -4.17 -8.12

t- Value 1.893 3.753 5.053 1.083 3.736 1.091 0.737 1.703

Sig./Non- Sig. NS S S NS S NS NS NS




Table 4.8 indicates the profitability and valuation of Infosys Ltd. Company. The

average of return on capital employed ratio was 41.98 and the annual average

growth rate was -1.94 percent. The return on capital employed ratio was non-

significant at 95 percent confidence level. (t=1.893, d.f. =5 and critical value=2.571)


rate was negative (-5.24) percent. The return on net worth ratio was significant at 5



The gross profit ratio was increasing trends. The average of gross profit ratio 37.05

and the annual average growth rate was 1.85 percent. The gross profit ratio was


2.571)





101

The average of earning per share ratio was 93.6 and annual average growth rate was

8.96 percent. The earning per share ratio was significant at 95 percent confidence


The average of dividend per share ratio was 35 and the annual average growth rate

was 10.06 percent. The dividend per share ratio was non-significant at 5 percent



The price-to-earning of the company was highest (36.62) in 2005-06 that indicated

expensive share and in 2008-09 was lowest (13.55) that indicated cheapest share

during the study period. The average of price-to-earning ratio was 25.75 and annual

average growth rate was -4.17 percent. The price-to-earning ratio was non-


2.571)


period and it indicated that the stock was overvalued. The average of price-to-book

ratio was 7.5 and annual average growth rate was -8.12 percent. The price-to-book

ratio was non-significant at 5 percent level of significance at degree of freedom 5

because the calculated value of t=1.703 was less than the tabulated value=2.571.

It was found that annual average growth rates of GPR ratio, EPS ratio, DPS ratio

were positive and ROCE ratio, RONW ratio, NP ratio, PE ratio, PB ratio were

negative during the study period. There was inconsistency in three ratios (RONW

ratio, GP ratio and EPS ratio) and there was consistency in rest of the ratios.

Table 4.9 Profitability and Valuation Ratios of Tata Steel Ltd.


2005-2006 50.13 41.7 39.74 23.17 61.51 13 8.72 3.04

2006-2007 36.63 35.4 40.56 24.18 69.95 16.25 6.43 1.87

2007-2008 23.27 25.97 40.2 23.85 61.06 16 11.35 2.32

2008-2009 17.23 21.88 34.04 21.36 66.75 16 3.09 0.61

2009-2010 13.7 14.19 33.16 20.17 54.97 8 11.51 1.52

2010-2011 16.58 16.36 37.16 23.36 69.93 12 8.87 1.27

102

2011-2012 15.32 13.45 32.44 19.73 67.07 12 7.01 0.87

AVERAGE 24.69 24.14 36.76 22.26 64.46 13.32 8.14 1.64

AAGR -15.73 -15.4 -2.9 -2.15 1.62 -4.54 0.01 -13.88

t-Value 4.47 7.926 2.791 2.002 0.911 1.188 0.0009 2.103

Sig./Non-Sig. S S S NS NS NS NS NS




Table 4.9 depicts the profitability and valuation ratios of Tata Steel Ltd. Company.

The return on capital employed ratio of the company was decreasing trends from

2005-06 to 2009-2010. The average of return on capital employed ratio was 24.69

and the annual average growth rate was negative (-15.73) percent. The return on

capital employed ratio was significant at 95 percent confidence level. (t=4.47, d.f.

=5 and critical value= 2.571)

The return on net worth ratio of the company was decreasing trends from 2005-06

to 2009-2010. The annual average growth rate of return on net worth ratio was

negative (-15.4) percent and average was 24.14. The return on net worth ratio was

significant at 5 percent level of significance at degree of freedom 5 because the

calculated value of t=7.926 was more than the tabulated value=2.571.

The average of gross profit ratio was 36.76 and the annual average growth rate was

negative (-2.9) percent. The gross profit ratio was significant at 95 percent

confidence level. (t=2.791, d.f. =5 and critical value= 2.571)

The annual average growth rate of net profit ratio was negative (-2.15) percent and

average was 22.26. The return on net profit ratio was non-significant at 5 percent



The average of earning per share ratio was 64.46 and the annual average growth rate

was (1.62) percent. The earning per share ratio was non-significant at 95 percent


The annual average of dividend per share ratio was negative (-4.54) and average was

13.32. The dividend per share ratio was non-significant at 5 percent level of

103





share during the study period. The average of price-to-earning ratio was 8.14 and the

annual average growth rate was (0.01) percent. The price-to-earning ratio was non-


2.571)

The price-to-book ratio of the company was less than one in 2008-09 and 2011-12 it

indicated the stock was undervalued and in all other financial year it was more than

one that indicated that the stock was overvalued. The annual average growth rate of

price-to-book ratio was negative (-13.88) percent and average was 1.64. The price-

to-book ratio was non-significant at 5 percent level of significance at degree of


value=2.571.

It was found that annual average growth rates of EPS ratio and PE ratio were

positive and rest of the ratios were negative during the study period. There was

consistency in five ratios (NP, EPS, DPS, PE and PB) relating to fundamental

analysis and there was inconsistency in rest of the ratios.

Table 4.10 Profitability and Valuation Ratios of Tata Motors Ltd.


2005-2006 31.25 31.36 12.69 7.53 37.59 13 24.81 6.48

2006-2007 30.52 30.98 11.62 7.04 47.1 15 15.45 4.1

2007-2008 21.28 23.91 11.31 7.11 50.52 15 12.34 3.08

2008-2009 6.88 5.34 7.51 3.98 18.81 6.05 9.59 0.76

2009-2010 11.2 11.32 11.03 6.4 36.93 15.05 20.46 2.89

2010-2011 11.07 10.37 7.53 3.84 25.51 20.05 48.9 3.96

2011-2012 9.83 8.27 5.43 2.29 1.34 4 82.54 4.46

AVERAGE 17.43 17.36 9.59 5.46 31.11 12.59 30.58 3.68

AAGR -16.92 -18.89 -9.86 -13.72 -23.33 -8.53 21.37 -3.71

t-Value 2.932 2.688 3.521 3.508 2.317 0.922 1.889 0.32

Sig./Non-Sig. S S S S NS NS NS NS




104

Table 4.10 indicates the profitability and valuation ratios of Tata Motors Ltd.



ratio was significant at 95 percent confidence level. (t=2.932, d.f. =5 and critical

value= 2.571)

The annual average growth rate of return on net worth ratio was negative (-18.89)

and average was 17.36. The return on net worth ratio was significant at 5 percent



The gross profit ratio of the company was decreasing trends. The annual average

growth rate of gross profit ratio was negative (-9.86) percent and average was 9.59.

The gross profit ratio was significant at 95 percent confidence level. (t=3.521, d.f.



negative (-13.72) percent. The return on net profit ratio was significant at 5 percent



The annual average growth rate of earning per share ratio was negative (-23.33)



The annual average growth rate of dividend per share ratio was negative (-8.53) and

average was 12.59. The dividend per share ratio was non-significant at 5 percent





share during the study period. The price-to-earning ratio of the company was

decreasing trends from 2005-06 to 2008-09. The average of price-to- earning ratio

was 30.58 and the annual average growth rate was (21.37) percent. The price-to-

105

earning ratio was non-significant at 95 percent confidence level. (t=1.889, d.f. =5

and critical value= 2.571)

The price-to-book ratio of the company was less than one in 2008-09 it indicated

that the stock was undervalued and in all other financial year it was more than one it

indicated the stock was overvalued.. The average of price-to-book ratio was 3.68 and

the annual average growth rate was negative (-3.71) percent. The price-to-book ratio

was non-significant at 5 percent level of significance at degree of freedom 5 because

the calculated value of t=0.32 was less than the tabulated value=2.571.

It was found that annual average growth rates of PE ratio was positive and ROCE

ratio, RONW ratio, GP ratio NP ratio, EPS ratio, DPS ratio, PB ratio were negative

during the study period. There was consistency in four ratios (EPS, DPS, PE and

PB) and there was inconsistency in rest of the ratios.

Table 4.11 Profitability and Valuation Ratios of Bharti Airtel Ltd.


2005-2006 22.55 31.82 34.13 17.91 10.62 0 38.87 10.67

2006-2007 34.07 43.04 38.96 22.59 21.27 0 35.88 12.68

2007-2008 34.43 39.46 39.45 24.29 32.9 0 25.11 7.75

2008-2009 33.17 32.35 33.42 22.77 40.45 2 15.47 4.3

2009-2010 26.27 29.28 40.7 26.47 24.65 1 12.65 3.24

2010-2011 18.54 19.09 33.98 20.3 20.16 1 17.73 3.1

2011-2012 14.24 12.25 30.94 13.77 14.93 1 22.56 2.59

AVERAGE 26.18 29.61 35.94 21.16 23.57 0.71 24.04 6.33

AAGR -8.29 -13.46 -1.61 -2.73 1.91 0.00 -10.64 -21.3

t-Value 1.906 3.415 0.978 0.759 0.24 0.00 2.104 6.97

Sig./Non-Sig. NS S NS NS NS NS NS S




Table 4.11 shows the profitability and valuation ratios of Bharti Airtel Ltd.


average growth rate was (-8.29) percent. The return on capital employed ratio was

non- significant at 95 percent confidence level. (t=1.906, d.f. =5 and critical value=

2.571).

106


percent and average was 29.61. The return on net worth ratio was significant at 5




average was 35.94. The gross profit ratio was non- significant at 95 percent







2008-09. The annual average growth rate of earning per share ratio was 1.91 percent

and average was 23.57. The earning per share ratio was non-significant at 95 percent


The annual average of dividend per share ratio was (0) and average was 0.71. The

dividend per share ratio was non-significant at 5 percent level of significance at

degree of freedom 5 because the calculated value of t=0 was less than the tabulated

value=2.571.



share during the study period. The price-to-earning ratio of the company was

decreasing trends from 2005-06 to 2009-10. The average of price-to-earning ratio

was 24.04 and the annual average growth rate was (-10.64) percent. The price-to-

earning ratio was non-significant at 95 percent confidence level. (t=2.104, d.f. =5

and critical value= 2.571).




price-to-book ratio was significant at 5 percent level of significance at degree of

107

freedom 5 because the calculated value of t=6.970 was more than the tabulated

value=2.571.

The study found that there was consistency in profitability and valuation ratios of

Bharti Airtel Ltd. company because six null hypotheses were accepted out of eight

null hypotheses. The annual average growth rates of six ratios have been negative

and only one ratio has positive and one ratio has zero annual average growth rate.

Table 4.12 Profitability and Valuation Ratios of L&T Ltd.


2005-2006 24.16 21.27 10.11 6.87 70.58 22.3 34.47 7.25

2006-2007 30.92 27.11 12.3 7.97 47.65 13.2 33.98 7.99

2007-2008 31.82 28.47 13.41 8.7 71.73 16.95 42.17 9.28

2008-2009 26.89 23.96 14.73 10.27 57.71 10.5 11.66 3.17

2009-2010 23.85 21.48 17.29 11.82 70.83 12.5 22.96 5.45

2010-2011 22.9 17.7 14.77 9.03 63.15 14.55 26.18 4.69

2011-2012 24.11 18.95 13.18 8.38 71.11 16.5 18.38 3.18

AVERAGE 26.38 22.71 13.68 9.01 64.68 15.21 27.11 5.86

AAGR -2.67 -4.37 4.37 3.54 1.74 -3.01 -8.7 -11.56

t-Value 1.357 1.904 1.909 1.315 0.671 0.756 1.4 2.372

Sig./Non-Sig. NS NS NS NS NS NS NS NS




Table 4.12 portrays the profitability and valuation ratios of L&T Ltd. The return on

capital employed ratio of the company was increasing trends 2005-06 to 2007-08.

The annual average growth rate of return on capital employed ratio was -2.67

percent and average was 26.38. The return on capital employed ratio was non-


2.571)

The return on net worth ratio of the company was increasing trends 2005-06 to

2007-08. The average of return on net worth ratio was 22.71 and the annual average

growth rate was negative (-4.37) percent. The return on net worth ratio was non-sig

nificant at 5 percent level of significance at degree of freedom 5 because the

calculated value of t=1.904 was less than the tabulated value=2.571.

108

The gross profit ratio of the company was increasing trends 2005-06 to 2009-10.

The annual average growth rate of gross profit ratio was (4.37) percent and average



The net profit ratio of the company was increasing trends 2005-06 to 2009-10. The

average of net profit ratio was 9.01 and the annual average growth rate was (3.54)

percent. The net profit ratio was non-significant at 5 percent level of significance at

degree of freedom 5 because the calculated value of t=1.315 was less than the

tabulated value=2.571.

The annual average growth rate of earning per share ratio was 1.74 percent and

average was 64.68. The earning per share ratio was non-significant at 95 percent


The annual average growth rate of dividend per share ratio was negative (-3.01)

percent and average was 15.21. The dividend per share ratio was non-significant at 5






ratio was -8.7 percent and average was 27.11. The price-to-earning ratio was non-

significant at 95 percent confidence level. (t=1.40, d.f. =5 and critical value= 2.571)



rate of price-to-book ratio was negative (-11.56) percent and average was 5.86. The



value=2.571.

It was found that annual average growth rates of GP ratio, NP ratio, EPS ratio were

positive and ROCE, RONW, DPS, PE, PB were negative during the study period.

109

There was consistency in all the eight ratios (ROCE, RONW, GP, NP, EPS, DPS,

PE and PB).

Table 4.13 Profitability and Valuation Ratios of ITC Ltd.


2005-2006 37.73 26.55 36.34 22.84 5.58 2.65 34.94 8.13

2006-2007 40.02 27.86 35.47 22.33 6.65 3.1 22.62 5.45

2007-2008 40.44 27.88 35.99 22.41 7.68 8.02 3.7 23.04

2008-2009 37.38 25.42 34.43 20.9 8.02 3.7 23.04 5.1

2009-2010 43.65 29.33 36.49 22.37 8.98 10 2.93 7.17

2010-2011 48.69 33.35 37.44 23.56 5.72 4.45 31.72 8.83

2011-2012 51.34 35.58 38.12 24.48 7.15 4.5 31.73 9.46

AVERAGE 42.75 29.42 36.33 22.7 7.11 5.2 21.53 9.6

AAGR 4.29 3.97 0.8 0.95 1.82 7.94 0.47 0.76

t-Value 3.934 3.143 1.716 1.259 0.611 0.981 0.025 0.087

Sig./Non-Sig. S S NS NS NS NS NS NS




Table 4.13 portrays the profitability and valuation ratios of ITC Ltd. Company. The

return on capital employed of the company was increasing trends from 2005-06 to

2007-2008. The average of return on capital employed ratio was 42.75 and the

annual average growth rate was 4.29 percent. The return on capital employed ratio

was significant at 95 percent confidence level. (t=3.934, d.f. =5 and critical value=

2.571)

The return on net worth ratio of the company was increasing trends from 2005-06 to

2007-2008. The annual average growth rate of return on net worth ratio was 3.97




The average of gross profit ratio was 36.33 and the annual average growth rate of

gross profit ratio was 0.8 percent. The gross profit ratio was non- significant at 95


110


0.95 percent. The return on net profit ratio was non-significant at 5 percent level of




2009-2010. The annual average growth rate of earning per share ratio was (1.82)




2007-2008. The average of dividend per share was 5.20 and the annual average was

(7.94) percent. The dividend per share ratio was non-significant at 5 percent level of






ratio was (0.47) percent and average was 21.53. The price-to-earning ratio was non-


2.571)



ratio was (9.60) and the annual average growth rate was 0.76 percent. The price-to-



It was found that annual average growth rates of all the eight ratios (ROCE, RONW,

GP, NP, EPS, DPS, PE and PB) were positive during the study period. There was

consistency in six ratios (GP, NP, EPS, DPS, PE and PB) and there was


111

Table 4.14 Profitability and Valuation Ratios of BHEL


2005-2006 36.37 25.2 20.91 12.49 66.57 14.5 33.75 7.53

2006-2007 45.16 30.02 23.15 13.94 94.86 24.5 23.83 6.3

2007-2008 45.23 29.23 24.26 14.67 55.82 15.25 36.84 9.34

2008-2009 40.73 26.47 19.49 11.8 61.22 17 24.57 5.69

2009-2010 35.94 29.88 21.65 12.94 84.15 23.3 28.35 7.34

2010-2011 49.83 33.33 22.63 14.25 117.69 31.15 17.51 5.01

2011-2012 28.56 30.93 23.15 14.68 27.72 6.4 9.27 2.48

AVERAGE 40.26 29.29 22.18 13.54 72.58 18.87 24.87 6.24

AAGR -2.26 2.59 0.44 1.22 -5.25 -4.57 -13.37 -11.46

t-Value 0.732 2.140 0.345 0.874 0.690 0.534 2.811 2.361

Sig./ Non-Sig. NS NS NS NS N S NS S NS




Table 4.14 portrays the profitability and valuation ratios of BHEL Company. The

average of return on capital employed ratio was 40.26 and the annual average

growth rate was -2.26 percent. The return on capital employed ratio was non-


2.571)

The annual average growth rate of return on net worth ratio was 2.59 percent and

average was 29.29. The return on net worth ratio was non-significant at 5 percent



The average of gross profit ratio was 22.18 and the annual average growth rate was

0.44 percent. The gross profit ratio was non- significant at 95 percent confidence


The average of net profit ratio was 13.54 and the annual average growth rate of net

profit ratio was 1.22 percent. The return on net profit ratio was non-significant at 5



The annual average growth rate of earning per share ratio was -5.25 percent and



112

The average of dividend per share ratio was 18.87 and the annual average growth

rate was -4.57 percent. The dividend per share ratio was non-significant at 5 percent






ratio was -13.37 percent and average was 24.87. The price-to-earning ratio was


2.571)



ratio was 6.24 and the annual average growth rate was -11.46 percent. The price-to-



It was found that annual average growth rates of RONW ratio, GP ratio, NP ratio

were positive and rest of the ratios were negative during the study period. There was

consistency in seven ratios (ROCE, RONW, GP, NP, EPS, DPS, and PB) and there

was inconsistency in one ratio (PE).

Table 4.15 Profitability and Valuation Ratios of Reliance Industries Ltd.


2005-2006 18.76 21.9 17.44 11.21 63.7 10 12.5 2.46

2006-2007 20.12 22.45 17.31 10.69 84.28 10.3 16.24 3.11

2007-2008 18.66 21.64 20.82 14.54 131.97 11.2 17.16 4.17

2008-2009 13.21 15.69 16.64 10.78 95.24 12.05 15.99 2.09

2009-2010 11.89 13.37 16.13 8.44 48.59 6.3 22.12 2.74

2010-2011 13.64 14.78 15.65 8.17 60.79 7.3 17.24 2.35

2011-2012 13.92 12.97 11.26 6.07 60.01 7.75 12.47 1.5

AVERAGE 15.74 17.54 16.46 9.99 77.8 9.27 16.25 2.63

AAGR -6.21 -8.35 -5.2 -8.44 -5.38 -5.94 1.11 -7.17

t-Value 2.815 5.057 2.423 3.004 1.019 1.877 0.32 1.652

Sig./Non-Sig. S S NS S NS NS NS NS




113

Table 4.15 indicates the profitability and valuation ratios of Reliance Industries Ltd.

Company. The annual average growth rate of return on capital employed ratio was

negative (-6.21) percent and average was 15.74. The return on capital employed


value= 2.571)

The return on net worth ratio of the company was decreasing trends. The annual

average growth rate of return on net worth ratio was negative (-8.35) percent and

average was 17.54. The return on net worth ratio was significant at 5 percent level of

significance at degree of freedom 5 because the calculated value of t=5.057 was

more than the tabulated value=2.571.




The net profit ratio of the company was decreasing trends. The annual average

growth rate of net profit ratio was negative (-8.44) percent and average was 9.99.

The return on net profit ratio was significant at 5 percent level of significance at

degree of freedom 5 because the calculated value of t=3.004 was more than the

tabulated value=2.571.

The annual average growth rate of earning per share ratio was negative (-5.38) and



The annual average growth rate of dividend per share ratio was (-5.94) percent and

average 9.27. The dividend per share ratio was non-significant at 5 percent level of






ratio was 1.11 percent and average was 16.25. The price-to-earning ratio was non-

114


2.571)






value=2.571.



during the study period. There was consistency in five ratios (GP, EPS, DPS, PE and

PB) relating to fundamental analysis and there was inconsistency in rest of the

ratios.

Table 4.16 Profitability and Valuation Ratios of Hindalco Industries Ltd.


2005-2006 17.95 19.17 25.58 14.89 16.49 2.2 11.06 1.87

2006-2007 21.86 23.28 22.42 14.17 24.34 1.7 5.35 1.09

2007-2008 14.52 19.17 19.11 15.13 23.01 1.85 7.16 1.17

2008-2009 10.47 10.83 18.47 12.35 12.89 1.35 4.03 0.37

2009-2010 7.66 7.41 15.14 9.88 9.79 1.35 18.56 1.25

2010-2011 8.08 7.42 13.89 9.04 10.92 1.5 19.11 1.35

2011-2012 7.6 7.25 12.88 8.41 11.48 1.55 11.28 0.79

AVERAGE 12.59 13.5 18.21 11.98 15.56 1.64 10.94 1.13

AAGR -14.55 -16.95 -9.34 -8.76 -10.14 -4.76 11.34 -6.12

t-Value 5.402 5.169 17.139 6.578 2.526 2.219 1.159 0.734

Sig./Non-Sig. S S S S NS NS NS NS




Table 4.16 portrays the profitability and valuation ratios of Hindalco Industries Ltd.



115


value= 2.571)





The gross profit ratio of the company was decreasing trends throughout the study

period. The average of gross profit ratio was 18.21 and the annual average growth

rate was negative (-9.34) percent. The gross profit ratio was significant at 95 percent


The annual average growth rate of net profit ratio was negative (-8.76) percent and

average was 11.98. The return on net profit ratio was significant at 5 percent level of



The average of earning per share ratio was 15.56 and the annual average growth rate

was (-10.14) percent. The earning per share ratio was non-significant at 95 percent


The annual average growth rate of dividend per share ratio was negative (-4.76)







ratio was (11.34) percent and average was 10.94. The price-to-earning ratio was


2.571)

The price-to-book ratio of the company was less than one in 2008-09 and 2011-12 it

indicated that the stock was undervalued and in all other financial year it was more

116

than one that indicated the stock was overvalued. The average of price to book ratio

was 1.13 and the annual average growth rate was negative (-6.12) percent. The



value=2.571.



during the study period. There was consistency in four ratios (EPS, DPS, PE and

PB) relating to fundamental analysis and there was inconsistency in rest of the

ratios.

Table 4.17 Profitability and Valuation Ratios of ONGC Ltd.


2005-2006 35.68 28.63 50.14 30.08 94.89 45 13.8 3.46

2006-2007 33.17 27 44.63 27.62 68.4 31 12.84 3.03

2007-2008 31.82 25.2 44.5 27.91 72.65 32 13.51 2.97

2008-2009 27.3 21.59 40 25.37 69.96 32 11.14 2.12

2009-2010 25.38 20.2 43.7 27.96 72.96 33 15.06 2.69

2010-2011 24.93 20.48 44.99 28.75 20.7 8.75 14.01 2.55

2011-2012 28.41 23.87 49.76 32.85 27.81 9.75 9.61 2.02

AVERAGE 29.53 23.85 45.39 28.65 61.05 27.36 12.85 2.69

AAGR -4.37 -3.90 -0.08 1.05 -16.74 -19.26 -2.39 -6.02

t-Value 3.328 2.496 0.055 0.792 3.147 3.434 0.973 3.157

Sig./ Non-Sig. S NS NS NS S S NS S

Source: Financial Statements of the Company but Calculation and Analysis by tbe Researcher



Table 4.17 reveals the profitability and valuation ratios of ONGC Ltd. The return on

capital employed ratio was decreasing trends from 2005-06 to 2010-11. The average

of return on capital employed ratio was 29.53 and the Annual Average Growth Rate

was -4.37 percent. The return on capital employed ratio was significant at 95 percent


The return on net worth ratio was decreasing trends from 2005-06 to 2009-10.The

average of return on net worth ratio was 23.85 and the annual average growth rate

117

was -3.90 percent. The return on net worth ratio was non-significant at 5 percent



The Gross Profit Ratio was decreasing trends from 2005-06 to 2008-09. The average

of Gross Profit Ratio was 45.39 and the Annual Average Growth Rate was -0.08

percent. The gross profit ratio was non- significant at 95 percent confidence level.

(t=0.055, d.f. =5 and critical value= 2.571).

The Average of Net Profit Ratio was 28.65 and the Annual Average Growth Rate

was 1.05 percent. The net profit ratio was non-significant at 5 percent level of



The average of earning per share ratio was 61.05 and the Annual Average Growth

Rate was -16.74 percent. The earning per share ratio was significant at 95 percent


The average of Dividend per Share ratio was 27.36 and the Annual Average Growth

Rate was -19.26 percent. The dividend per share ratio was significant at 5 percent





share during the study period. The average of Price-to-earning Ratio was 12.85 and

the Annual Average Growth Rate was -2.39 percent. The price-to-earning ratio was


2.571)


period and it indicated that the stock was overvalued. The Annual Average Growth

Rate of Price-to-book Ratio was -6.02 percent and average was 2.69. The price-to-

book ratio was significant at 5 percent level of significance at degree of freedom 5

because the calculated value of t=3.157 was more than the tabulated value=2.571.

118

It was found that annual average growth rates of NP ratio was positive and ROCE


during the study period. There was consistency in four ratios (RONW, NP, GP and

PE) relating to fundamental analysis and there was inconsistency in rest of the ratios.

Table 4.18 Profitability and Valuation Ratios of HDFC Bank


2005-2006 5.09 17.74 32 19.46 27.04 5.5 28.61 4.57

2006-2007 5.84 19.46 27.95 17.17 34.55 7 27.48 4.71

2007-2008 6.38 17.74 25.23 15.72 43.42 8.5 30.4 4.07

2008-2009 7.71 16.91 22.4 13.75 51.08 10 18.95 2.81

2009-2010 5.95 16.12 28.96 18.23 62.43 12 30.95 4.11

2010-2011 6.08 16.74 31.69 19.7 81.72 16.5 28.67 4.3

2011-2012 7.31 18.69 29.52 18.94 21.32 4.3 24.39 4.08

AVERAGE 6.34 17.63 28.25 17.57 45.94 9.11 27.06 4.09

AAGR 3.37 -0.72 0.44 1.04 4.23 4.07 -1.13 -1.54

t-Value 1.683 0.661 0.2 0.459 0.516 0.507 0.385 0.532

Sig./ Non- Sig. NS NS NS NS NS NS NS NS




Table 4.18 portrays the profitability and valuation of HDFC bank. The annual

average growth rate of return on capital employed ratio was 3.37 percent and

average was 6.34. The return on capital employed ratio was non- significant at 95



rate was negative (-0.72) percent. The return on net worth ratio was non-significant

at 5 percent level of significance at degree of freedom 5 because the calculated value

of t=0.661 was less than the tabulated value=2.571.

The annual average growth rate of gross profit ratio was 0.44 percent and average



119

The annual average growth rate of net profit ratio was 1.04 percent and average was

17.57. The return on net profit ratio was non-significant at 5 percent level of



The earning per share ratio of HDFC bank was increasing trends from 2005-06 to

2010-2011. The annual average growth rate of earning per share ratio was 4.23

percent and average was 45.94. The earning per share ratio was non- significant at

95 percent confidence level. (t=0.516, d.f. =5 and critical value= 2.571)

The dividend per share ratio of HDFC bank was increasing trends from 2005-06 to

2010-11. The annual average growth rate of dividend per share ratio was 4.07



t=.507 was less than the tabulated value=2.571.



share during the study period. The annual average of price-to-earning ratio was

negative (-1.13) percent and average was 27.06. The price-to-earning ratio was non-


2.571)



ratio was 4.09 and the annual average growth rate was (-1.54) percent. The price-to-



It was found that annual average growth rates of ROCE ratio, GP ratio, NP ratio EPS

ratio, DPS ratio were positive and RONW ratio, PE ratio, PBR ratio were negative

during the study period. There was consistency in all the eight ratios.

120

Table 4.19 Profitability and Valuation Ratios of ICICI Bank


2005-2006 6.16 14.62 25.98 17.76 27.35 8.5 21.54 2.36

2006-2007 6.7 13.37 19.05 14.14 32.88 10 25.95 3.16

2007-2008 7.65 11.75 18.29 13.51 36.03 11 21.37 1.84

2008-2009 7.14 7.83 18.63 12.09 32.4 11 10.27 0.75

2009-2010 6.17 7.96 23.19 15.66 34.63 12 27.51 2.06

2010-2011 6.16 9.65 28.18 19.83 42.97 12 25.09 2.33

2011-2012 7.18 11.2 27.79 19.27 54.17 16.5 16.38 1.69

AVERAGE 6.74 10.91 23.02 16.04 37.2 11.57 21.16 2.03

AAGR 0.29 -5.4 3.76 3.28 7.99 7.65 -1.9 -4.22

t- Value 0.149 1.614 1.255 1.088 4.31 5.523 0.322 0.59

Sig./Non-Sig. NS NS NS NS S S NS NS




Table 4.19 shows the profitability and valuation of ICICI Bank. The average of

return on capital employed ratio was 6.74 and the annual average growth rate was

0.29 percent. The return on capital employed ratio was non- significant at 95 percent


The average return on net worth ratio was 10.91 and the Annual average growth rate

was -5.40 percent. The return on net worth ratio was non-significant at 5 percent



The Annual average growth rate of gross profit ratio was 3.76 percent and average



The annual average growth rate of net profit ratio was 3.28 percent and average was

16.04. The return on net profit ratio was non-significant at 5 percent level of



121

Earning per share ratio of the company were increasing trends. The Annual average

growth rate of earning per share ratio was 7.99 percent and average was 37.20. The

earning per share ratio was significant at 95 percent confidence level. (t=4.310, d.f.


The dividend per share ratio of the company was increasing trends throughout the

study period. The annual average growth rate of dividend per share ratio was 7.65

percent and average was 11.57. The dividend per share ratio was significant at 5





share during the study period. The average of price-to-earning ratio was 21.16 and

the Annual average growth rate of price earning ratio was negative (-1.90) percent.

The price-to-earning ratio was non-significant at 95 percent confidence level.


The price-to-book ratio of the company was less than one in 2008-09 it indicated

that the stock was undervalued and in all other financial year it was more than one it

indicated that stock was overvalued. The annual average growth rate of price-to-

book ratio was negative (-4.22) percent and average was 2.03. The price-to-book

ratio was non-significant at 5 percent level of significance at degree of freedom 5

because the calculated value of t=0.590 was less than the tabulated value=2.571.

It was found that annual average growth rates of ROCE ratio, GP ratio, NP ratio,

EPS ratio, DPS ratio were positive and RONW ratio, PE ratio, PB ratio were

negative during the study period. There was consistency in six ratios (ROCE,

RONW, GP, NP, PE and PB) and there was inconsistency in rest of the ratios.

122

Table 4.20 Profitability and Valuation Ratios of Wipro Ltd.


2005-2006 41.01 35.72 25.64 19.68 13.47 5 41.47 12.4

2006-2007 39.72 36.11 25.7 20.66 18.61 6 30 8.74

2007-2008 28.7 29.35 22.23 17.35 19.94 6 21.33 5.38

2008-2009 22.72 24.71 18.88 13.76 19.62 4 12.51 2.87

2009-2010 28.41 32.43 27.25 21.29 32.49 6 21.75 5.87

2010-2011 24.85 24.83 23.88 18.35 18.84 6 25.39 5.51

2011-2012 25.76 20.52 21.04 14.79 18.08 6 24.28 4.43

AVERAGE 30.17 29.1 23.52 17.98 20.15 5.57 25.25 22.17

AAGR -6.83 -6.74 -1.61 -2.65 4.3 1.66 -5.63 -11.17

t-Value 2.87 3.436 0.754 1.011 1.015 0.623 0.992 1.889

Sig./Non-Sig. S S NS NS NS NS NS NS




Table 4.20 depicts the profitability and valuation ratios of Wipro Ltd. Company.

The return on capital employed ratio of the company was decreasing trends from

2005-06 to 2008-09. The average of return on capital employed was 30.17 and the

annual average growth rate was negative (-6.83) percent. The return on capital

employed ratio was significant at 95 percent confidence level. (t=2.87, d.f. =5 and



rate was negative (-6.74) percent. The return on net worth ratio was significant at 5






The average of net profit ratio was 17.98 and the annual average growth rate was -

2.65 percent. The return on net profit ratio was non-significant at 5 percent level of



123


2007-08. The annual average growth rate of earning per share ratio was (4.3) percent

and average was 20.15. The earning per share ratio was non-significant at 95 percent


The average of dividend per share ratio was 5.57 and the annual average growth rate

was (1.66) percent. The dividend per share ratio was non-significant at 5 percent






ratio was negative (-5.63) percent and average was 25.25. The price-to-earning ratio

was non-significant at 95 percent confidence level. (t=0.992, d.f. =5 and critical

value= 2.571)






value=2.571.

It was found that annual average growth rates of EPS ratio and DPS ratio were

positive and rest of the ratios were negative during the study period. There was

consistency in six ratios (GP, NP, EPS, DPS, PE and PB) and there was


Documents

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