Avalon Technologies IPO Review: In a time of funding winters and bleak growth, few companies have taken on the challenge of going public despite skeptical market sentiments. We’re going to cover the upcoming initial public offering of Avalon Technologies Limited. The IPO will open for subscription on April 3rd, 2023, and close on April 4th, 2023. It is looking to raise up to ₹865 Crores.
In this article, we will look at Avalon Technologies IPO Review 2023 and analyze its strengths and weaknesses. Keep reading to find out!
About The Company
Avalon Technologies was founded in 1999, making it 24 years old. It started when the founders were assembling circuit boards in California, in 1995. Today they have transitioned to an international manufacturer with over 1,900 employees. They are an end-to-end electronics manufacturing service provider.
Some of the companies they consider clients are Collins Aerospace, e-Infochips, The US Malabar Company, Meggitt, Kyosan India, and Zonar Systems, to name a few.
They have 12 manufacturing plants in two key countries – India as well as the USA. The company’s promoters are Kunhamed Bicha and Bhaskar Srinivasan. They received approval from SEBI for the IPO in the month of January this year.
As per the DRHP of the company, they are one of the leading fully integrated manufacturers having end-to-end operations in delivering box build solutions in India. They provide complete support to their clients from the PCB (printed circuit board) design to the box build of electronic systems. Other services provided by the company include cable assembly, machining, magnetics, injection molded plastics, and sheet metal fabrication.
Avalon is an ISO-certified company, with a presence in major industries such as aerospace and defense, power, railways telecom, clean energy, etc.
Financial Highlights
If we look at the financials of Avalon Technologies Limited we find out that their assets have grown from Rs. 449.65 crore in March 2020 to Rs. 587.96 crores in March 2022. Their revenues also follow a similar trend, it has grown from Rs. 653.15 crore in March 2020 to Rs. 851.65 crores in March 2022.
As of November 2022, the company’s revenue stand at Rs 596.75 crores for FY22-23. Their profits have grown from Rs. 12.33 crores in March 2020 to Rs. 68.16 crores in March 2022. As of November 2022, the company’s profits stand at Rs 34.18 crores for FY22-23. It is also important to note that the company’s borrowing has increased from Rs. 248.48 crore In March 2020 to Rs. 294.05 crores on March 22.
Revenue Breakup of Avalon Technologies Limited
(Source: RHP of the company)
Balance Sheet Of The Company
(Source: RHP of the company)
Profit and loss Statement of the company
(Source: RHP of the company)
Avalon Technologies IPO Review – Competitors
The following are the competitors of the company in India:
Dixon Technologies (India) Ltd, Elin Electronics Ltd, Amber Enterprises India Ltd, Syrma SGS Technology Ltd, Kaynes Technology India Ltd, VVDN Technologies Private Ltd, Bharat FIH Ltd, and SFO Technologies Private Ltd
Strengths
The company offers an integrated and well-diversified solution suite comprising PCB design and assembly, and manufacture of various components which allows them to offer PCB design and analysis for new product development. It is one of the few EMS companies in India to offer one-stop services from PCB design and analysis to new product development and subsequent volume production.
The company has created an entry barrier in the industry to any new participants through its experience in offering EMS services across product and industry verticals for customers globally for several years.
Over the years the company has diversified and expanded its customer bases and developed its operations to cater to various end-use industries across multiple product capabilities
The company’s aim to become a significant player in the EMS industry has hinged its performance and its ability to build longstanding relationships with its customers.
The company has established a global delivery footprint with quality standards and advanced manufacturing and assembly capabilities. As of November 30, 2022, the company operates through 12 manufacturing units spread across California & Georgia in the US, and Karnataka & Tamil Nadu in India.
Weaknesses
The company acquires its raw materials from suppliers mainly on a purchase-order basis. Any non-compliance in fulfilling the contractual obligations by the suppliers, increase in the cost of raw materials,s or any disruption in the supply chain will have an adverse impact on the business operations.
A large portion of the company’s revenue is earned from a few key customers. A loss of relationship with any of these customers can have a huge impact on the profitability of the business.
The company’s business is spread across other nations and as a result, it will have an effect on its earnings and profitability in the case of foreign exchange fluctuations.
Failure to obtain or renew certain accreditations, licenses, and permits from the government, and regulatory authorities in a timely manner can affect the operations of the business.
The company is required to comply with strict quality requirements and delivery schedules at pre-determined prices for its products. Failure to do so will have an impact on the reputation of the company which in turn can affect its financials.
Key IPO Information
Particulars
Details
IPO Size
₹865 Cr
Fresh Issue
₹320 Cr
Offer for Sale (OFS)
₹545 Cr
Opening date
Apr 3, 2023
Closing date
Apr 3, 2023
Face Value
₹ 2 per share
Price Band
₹415 to ₹436 per share
Lot Size
34 Shares
Minimum Lot Size
1 (34)
Maximum Lot Size
13 (442)
Listing Date
Apr 18, 2023
Promoters: Kunhamed Bicha And Bhaskar Srinivasan
Book Running Lead Manager: JM Financial Limited, DAM Capital Advisors Limited, IIFL Securities Limited, Nomura Financial Advisory and Securities (India) Private Limited
Registrar to the Offer: Link Intime India Private Limited
The Objective of the Issue
The net proceeds from this issue will be utilized for the following purposes:
For full or part prepayment or repayment of outstanding borrowings availed by the company and its subsidiary i.e. Avalon Technology and Services Private Limited
Funding the Company’s working capital requirements
General corporate purposes
In Closing
In this article, we looked at the details of Avalon Technologies IPO Review 2023. Analysts remain divided on the IPO and its potential gains. This is a good opportunity for investors to look into the company and analyze its strengths and weaknesses. That’s it for this post.
Are you applying for the IPO? Let us know in the comments below.
Best Flexi Cap Mutual Funds in India: When it comes to investing in equity funds, there are basically 3 categories that one could think about investing in. These categories are large-cap, mid-cap, and small-cap funds. This categorization of investment mainly depends on the market capitalization wherein these funds are invested.
Herein the article we will go through what Mutual Funds mean, an introduction to Flexi Cap mutual funds, the importance & features of the same, and thereby list the Best Flexi Cap mutual funds in India. Keep reading to find out!
What are Mutual Funds
Mutual Fund is a collective investment vehicle that collects & pools money from various investors and invests it in equities, bonds, government securities, and money market instruments.
Money that has been collected and flows into the Mutual Fund schemes is invested by professional fund managers. They invest in segments like stocks and bonds etc in alignment with the scheme’s investment objective.
What Is a Flexi Cap Fund
The Securities and Exchange Board of India (SEBI), on 9th November 2020, announced the introduction of Flexi-cap funds. A Flexi-Cap fund meaning is an investment that allows you to tap into investments in various fields of market capitalization and the same is specified in the fund’s prospectus.
It offers investment options and diversification opportunities to fund managers by investing in high-quality companies regardless of market capitalization, whether large-cap, mid-cap, or small-cap.
One of the most important factors that make Flexi-cap funds attractive and the most favored by investors these days is during a situation of economic uncertainty, a Flexi-cap fund can provide the best returns of any mutual fund.
They are well-balanced funds that could generate stable returns even in bear markets. The more diverse the portfolio mix, the more optimal the balance of the fund’s risk and return aspects ensuring suitable returns.
Importance of Flexi Cap Funds
In the cases where the markets inhibit volatility, Flexi-cap funds automatically allocate their investments to the best opportunities available to grow their investments. These funds strive hard to safeguard the portfolio of investments from witnessing a sharp downfall which generally takes place with dead/underperforming stocks.
Features of Flexi Cap Funds
Flexi-cap finances make investments greater than 65 percent of the property in equities and other associated instruments. They spend money on all spectrums of capitalization without limiting themselves. Transferring from one market capitalization to another is possible in such kind of Mutual Funds in case the fund is not performing as expected.
Due to its flexibility, the management of the portfolio is possible wherein it can adjust among capital marketplace segments and invest in corporations that are performing well and exiting the underperforming options.
Now that we are done with the basic overview of the industry and equipped ourselves with the terminologies, the below list represents the top Flexi-Cap stocks in India with the main focus on the assets under management (AUM).
The following list is based on the ‘Direct’ Plan schemes of the funds which means an investor has to invest directly with the AMC with no distributor facilitating the transaction. Let us have a look one by one.
Best Flexi Cap Mutual Funds in India #1 – Kotak Flexi Cap Fund
Fund Company: Kotak Mahindra Asset Management Co Ltd
Size (AUM ): ₹ 35,775.03 Cr.
3-yr returns (CAGR): 23.32%
1-yr return: 1.47%
Expense ratio: 0.68%
Inception Date: 01/01/2013
Exit Load (0 to 90 days): 1% for 0-1 year & 0% for more than 1 year
No. of Stocks Held: 50
Kotak Flexi Cap Fund is keen to identify sectors that are likely to perform well over the medium term and takes focus exposures to the same. The investment objective of the fund is the generation of long-term capital appreciation from a portfolio of equity and related securities. The fund was established on January 1st, 2013.
With an AUM base of approximately Rs 35,775 crores, the fund performs its operations while maintaining an expense ratio of 0.68 percent. The exit load for the company is 1 percent for 0-1 year and 0 percent for a period of more than 1 year. The minimum investment value on a SIP basis is Rs 500 and on a lumpsum basis, it is Rs 5,000.
Allocation
It has the majority of its money invested in the Financial Services, Information Technology, and Automobile & Auto Components sectors. Its top four holdings are ICICI Bank (9.46%), Infosys (5.82%), L&T (5.42%), and HDFC Bank (5.14%).
Returns
The fund has provided 3-year annualized returns of 23.32 percent which is lower than the benchmark’s return of 27.97 percent. It has provided 5-year annualized returns of 10.37 percent which is lower than the benchmark’s returns of 11.47 percent.
Fund Managers
Mr. Harsha Upadhyaya is a BE (Mechanical) from the National Institute of Technology, Suratkal, a Post Graduate in Management (Finance) from IIM Lucknow, and a Chartered Financial Analyst. He has nearly two decades of experience which is spread over Equity Research and Fund Management.
In his prior experiences, he has been associated with companies such as DSP BlackRock, UTI Asset Management, Reliance Group, and SG Asia Securities.
Best Flexi Cap Mutual Funds in India #2 – HDFC Flexi Cap Fund
Fund Company: HDFC Asset Management Company Limited
Size (AUM): ₹ 31,673 Cr
3-yr returns (CAGR): 33.45%
1-yr return: 10.34%
Expense ratio: 1.00%
Inception Date: 01/01/2013
Exit Load (0 to 90 days): 1% for 0-1 year & 0% for more than 1 year
No. of Stocks Held: 52
The fund is an open-ended dynamic equity scheme investing in companies that are likely to achieve above-average growth, enjoy distinct competitive advantages, and have superior financial strength. The fund was established on January 1st, 2013.
The scheme follows an equity strategy to build a portfolio that represents a cross-section of companies diversified across major industries, economic sectors, and market capitalization that offers an acceptable risk-reward balance.
With an AUM base of approximately Rs 31,673 crores, the fund performs its operations while maintaining an expense ratio of 1.00 percent. The exit load for the company is 1 percent for 0-1 year and 0 percent for a period of more than 1 year. The minimum investment value on a SIP basis is Rs 500 and on a lumpsum basis, it is Rs 5,000.
Allocation
It has the majority of its money invested in the Financial, Energy, Technology, and Healthcare sector. Its top four holdings are ICICI Bank (9.53%), HDFC Bank (6.06%), Infosys (5.78%), and State Bank Of India (5.53%).
Returns
The fund has provided 3-year annualized returns of 33.45 percent which is higher than the benchmark’s return of 27.97 percent. It has provided 5-year annualized returns of 13.14 percent which is higher than the benchmark’s returns of 11.47 percent.
Fund Managers
Ms. Roshi Jain is a Chartered Financial Analyst and has also completed her CA and PGDM courses from IIM Ahmedabad. Prior to joining HDFC Asset Management Company Limited, she was associated with Franklin Templeton Investments, Goldman Sachs (London), Goldman Sachs (Singapore), Wipro Ltd., and S. R. Batliboi & Co.
Best Flexi Cap Mutual Funds in India #3 – Parag Parikh Flexi Cap Fund
Fund Company: PPFAS Asset Management Pvt. Ltd
Size (AUM): ₹ 29,953 Cr
3-yr returns (CAGR): 33.53%
1-yr return: 2.47%
Expense ratio: 0.75%
Inception Date: 13/05/2013
Exit Load (0 to 90 days): 2% for 0-1 year, 1% for 1-2 years & 0% for more than 2 years
No. of Stocks Held: 38
The fund follows a simple investment process. The fund managers attempt to profit from various cognitive and emotional biases displayed by companies and market participants. In other words, along with the dissection of financial statements, there will be an overlay of the study of human emotions.
Having strong conviction in the principle of compounding, it offers investors just the “Growth” Option. The fund was established on May 13th, 2013.
With an AUM base of approximately Rs 29,953 crores, the fund performs its operations while maintaining an expense ratio of 0.75 percent. The exit load for the company is 2 percent for 0-1 year, 1 percent for 1-2 years, and 0 percent for a period of more than 2 years. The minimum investment value on a SIP basis is Rs 1,000 and on a lumpsum basis as well it is Rs 1,000.
Allocation
It has the majority of its money invested in the Financial, Services, Technology, and Consumer Staples sector. Its top four holdings are HDFC (7.81%), ITC (7.63%), Bajaj Holdings & Investment (7.53%), and ICICI Bank (5.57%).
Returns
The fund has provided 3-year annualized returns of 33.53 percent which is higher than the benchmark’s return of 27.69 percent. It has provided 5-year annualized returns of 17.53 percent which is higher than the benchmark’s returns of 11.40 percent.
Fund Managers
Mr. Raj Mehta, is a Commerce Graduate from the University of Mumbai, a fellow Member of ICAI, and a CFA charter holder. Beginning his career as an intern with PPFAS Mutual Fund in 2012, he swiftly moved up the ranks and is currently part of the Fund Management team.
Mr. Rajeev Thakkar is a CA, Cost Accountant, CFA, and CFP and has been associated with PPFAS AMC since 2013.
Mr. Rukun Tarachandani has done B Tech (Information Technology), PGPM (Finance), CFA, and CQF. Prior to joining PPFAS Mutual Fund, he was associated with Kotak Mutual Fund, Goldman Sachs, and Unnati Investment Management & Research Group.
Best Flexi Cap Mutual Funds in India #4 – Franklin India Flexi Cap Fund
Fund Company: Franklin Templeton Asst Mgmt(IND)Pvt Ltd
Size (AUM ): ₹ 9,989 Cr
3-yr returns (CAGR): 29.95%
1-yr return: 1.21%
Expense ratio: 1.10%
Inception Date: 01/01/2013
Exit Load (0 to 90 days): 1% for 0-1 year & 0% for more than 1 year
No. of Stocks Held: 54
The scheme mainly aims to provide growth of capital and regular dividend from a portfolio of equity, debt, and money market instruments and focus on wealth-creating companies across all sectors and market cap ranges. The fund was established on January 1st, 2013.
With an AUM base of approximately Rs 9,989 crores, the fund performs its operations while maintaining an expense ratio of 1.10 percent. The exit load for the company is 1 percent for 0-1 year and 0 percent for a period of more than 1 year. The minimum investment value on a SIP basis is Rs 500 and on a lumpsum basis, it is Rs 5,000.
Allocation
It has the majority of its money invested in the Financial, Technology, Consumer Staples, and Energy sector. Its top four holdings are HDFC Bank (8.81%), ICICI Bank (8.56%), Infosys (6.11%), and Axis Bank (5.49%).
Returns
The fund has provided 3-year annualized returns of 29.95 percent which is higher than the benchmark’s return of 27.97 percent. It has provided 5-year annualized returns of 11.13 percent which is lower than the benchmark’s returns of 11.47 percent.
Fund Managers
Mr. R Janakiraman is a B.E and PGDM (Business Management). Prior to joining Franklin Templeton Investments, he worked with Indian Syntans Inv. Pvt. Ltd., Citicorp Information Tech Ltd., and UTI Securities Exchange Ltd.
Mr. Anand Radhakrishnan is a B.Tech, CFA, and PGDM from IIM Ahmedabad. Prior to joining Franklin Templeton Investments, he worked with Sundaram Asset Management Ltd., SBI Funds Management, and Asian Convertible and Income Fund.
Best Flexi Cap Mutual Funds In India #5 – Quant Flexi Cap Fund
Fund Company: Quant Money Managers Limited
Size (AUM ): ₹ 1,045 Cr
3-yr returns (CAGR): 46.23%
1-yr return: 4.36%
Expense ratio: 0.58%
Inception Date: 01/01/2013
Exit Load (0 to 90 days): 0%
No. of Stocks Held: 38
The primary investment objective of the scheme is to seek to generate consistent returns by investing in a portfolio of Large Cap, Mid Cap, and Small Cap companies. The fund has the discretion to completely or partially invest in any of the securities stated above with a view to maximizing the returns or on defensive considerations. The fund was established on January 1st, 2013.
With an AUM base of approximately Rs 1,045 crores, the fund performs its operations while maintaining an expense ratio of 0.58 percent. The exit load for the company is constant at 0 percent. The minimum investment value on a SIP basis is Rs 1000 and on a lumpsum basis, it is Rs 5,000.
Allocation
It has the majority of its money invested in the Financial, Energy, Consumer Staples, and Metals & Mining sector. Its top four holdings are Reliance Industries (9.17%), ITC (8.67%), State Bank Of India (7.02%), and HDFC Bank (6.07%).
Returns
The fund has provided 3-year annualized returns of 46.23 percent which is way higher than the benchmark’s return of 27.69 percent. It has provided 5-year annualized returns of 17.09 percent which is higher than the benchmark’s returns of 11.40 percent.
Fund Managers
Mr. Sandeep Tandon has 23 years of experience in the financial services industry. Associated with the industry for more than 2 decades, some of his roles include playing a key role in setting up the equity derivatives desk at ICICI Securities as vice president. He started his career with the Economic Times Research Bureau, a research wing of the leading financial daily of India, The Economic Times.
Mr. Sanjeev Sharma is a Commerce Graduate and PGDBA (Finance) from Symbiosis, Pune. He has a total work experience of 17 years including 13 years of experience in the financial market. He specializes in identifying crucial inflection points in securities.
Mr Ankit A Pande has done CFA and MBA. Prior to joining Quant Mutual Fund, he was associated with Infosys Finacle.
Mr. Vasav Sahgal pursued his B.Com. and CFA. Prior to joining Quant Mutual Fund, he worked with Eqestar capital as Equity Research Analyst.
In Closing
In this article, we took a look at some of the best Flexi Cap mutual funds in India. We took a look at their annualized returns, top holdings, expense ratio, exit load, and many more factors which are relevant before making any investment decision into the schemes. It is essential to mention and give a heads-up that mutual funds are subject to market risks.
It is important to read all scheme-related documents carefully before any decision is made. One can consider other securities for creating a diversified portfolio.
That is all from my side, hope you enjoyed reading the article and were able to get some observations on your end. Have a great day, and happy investing!
Best Green Hydrogen Stocks in India: From Adani to Ambani, and even PSUs, India’s various giants have been in the race for green hydrogen since the Union Cabinet approved the National Green Hydrogen Mission in January last year. The intent is to make the country a leading manufacturer and exporter of green hydrogen.
In this article, we’ll look at the best green hydrogen stocks in India that are expected to lead the sector in the future.
Best Green Hydrogen Stocks in India
We’ll study the history and the business of the companies on our list. Alongside this, we’ll briefly read about their financials and the steps they have taken toward green hydrogen production. A table summarizing the top green hydrogen stocks in India and a summary conclude the article in the end.
Reliance Industries Ltd. (RIL) was founded six and a half decades ago in 1958 by Dhirubhai Ambani as a polyester yarn and spices trading corporation.
Over the years, the company has morphed into a global conglomerate with business interests in telecommunications, retail, e-commerce, petroleum refinery & marketing, new energy, petrochemicals, and more under the leadership of Mukesh Ambani.
The company has earmarked a large investment of Rs 5.95 lakh crore towards green & new energy and other projects spread across the next 10 to 15 years. As part of this, it will establish a 100GW renewable energy power plant with green hydrogen ecosystem development.
In the process, RIL will also enable SMEs and entrepreneurs to adopt new energy technologies leading to inhouse utilization of renewable energy and green hydrogen.
Along these lines, the diversified giant is working with Stiesdal A/S of Denmark to manufacture their HygroGen Electrolyzers in India. This will allow it to produce hydrogen at a much cheaper rate compared to current levels.
In the last five years, the revenues of Reliance Industries have grown from Rs 3,90,823 crore in FY18 to Rs 6,98,672 in FY22. During the same period, its net profit has almost doubled to Rs 67,845 crore from Rs 36,080 earlier. It has an adequate debt-to-equity ratio of 0.40 and presently trades at a price-to-earnings ratio of 24.3.
Previously known as Gas Authority of India, GAIL (India) Ltd. was set up in 1984 as a central public sector undertaking (CPSU) under the Ministry of Petroleum and Natural Gas, Government of India.
GAIL is engaged in the business of gas transmission & marketing, gas exploration & production, petrochemicals, renewables, city gas distribution, and more. The company operates 74% of the total natural gas pipelines and 50% of the CNG stations (including JV) in the country. Furthermore, it controls over half of the natural gas sales in the nation.
It announced in May last year that it would set up one of India’s largest Proton Exchange Membrane (PEM) Electrolysers. The facility will manufacture around 4.3 MT of Hydrogen per day or about 10 MW in terms of capacity with a purity of 99.99 volume %. Furthermore, it has started mixing hydrogen into the natural gas system for city gas distribution.
GAIL is a dividend stock with a high dividend yield of 6.36% and a dividend payout ratio remaining upwards of 30% for the last three fiscals. Its revenues have grown at a CAGR of 11.23% during the past five years to Rs 92,770 crore in FY22. During the same period, its net profit more than doubled to Rs 12,304 crore at an annualized rate of 20.69%.
Bharat Petroleum Corporation Ltd. (BPCL) is a diversified public sector oil marketing company with broad business interests spreading across fuel stations, LPG cylinder gas for domestic and commercial use, lubricants, aviation fuel, refineries, and more.
It traces its origins to the late 19th century. It was nationalized in 1976 and came under the ownership of the Ministry of Petroleum and Natural Gas, Government of India when Burmah Shell (as it was previously known) was taken over by the government.
In a recent development, the management of the company communicated that is setting up a 20 MW green hydrogen unit in Madhya Pradesh. The facility will be the largest so far in India and will be used to meet the captive energy requirements of PSU.
Around six to eight firms have expressed interest in the project which is expected to commence in two years.
Recently, the Union Government decided to call off the privatization plans for BPCL. For the last two years, it had been trying to invite bids from interested buyers to meet its disinvestment targets.
Trailing twelve months (TTM) earnings per share stood at a negative of Rs 8.9 for the stock. The bottom line of OMCs has been in red for the last few quarters due to the surge in energy prices brought about by the Russia-Ukraine war. However, the situation is expected to improve as the crude oil prices have come down easing pressure on the margins.
Larsen & Toubro (L&T) Ltd. is a diversified Indian conglomerate with a worldwide presence. It is engaged in various businesses across multiple industries including engineering, infrastructure & construction, manufacturing, information technology, and financial services.
Last year in August, the company commissioned a green hydrogen plant at one of its facilities in Gujarat. It is 3,000 square meters big in terms of size and has a capacity of 800 kW.
It has been set up for manufacturing green hydrogen and oxygen. They will be used as fuels in cutting and welding captive activities after blending 15% hydrogen with natural gas.
Furthermore, this year L&T entered into an agreement with McPhy Energy of France to produce and upgrade its pressurized alkaline electrolyzer technology on a licensed basis in India for domestic and overseas uses.
The diversified giant reported a net profit of Rs 10,419 crore in FY22 on sales of Rs 1,56,521 crore. Its stock presently trades at a price-to-earnings ratio of 31 and has returned an adequate 24% gain to its shareholders.
Indian Oil Corporation Ltd. (IOCL) is a central public sector undertaking (CPSU) under the Ministry of Petroleum and Natural Gas, Government of India. It was established over 6 decades ago in 1959.
As of the present date, the range of the company’s operations is spread across the entire value chain of the petroleum industry: refining, pipeline transportation, petroleum products marketing, and exploration & production of crude oil, natural gas, and petrochemicals.
Recently, IOCL, L&T and ReNew entered into a joint venture (JV) to explore and develop green hydrogen technology in India. In addition to this, L&T and IOCL have also formed JV together to produce and sell electrolyzers for green hydrogen production.
And not just this, in February this year, the petroleum player announced that it will be installing green hydrogen plants at all of its refineries. This is in line with its audacious plan to reach net-zero emissions by 2046.
As a feather in its cap, IOCL established the nation’s green hydrogen plant at its refinery in Mathura. It will now set up a green hydrogen manufacturing site at its oil refinery in Panipat for Rs 2,000 crore. It will have a capacity of 7,000 tonnes per annum and is expected to commence by 2025.
Indian Oil Ltd. is a dividend stock with a high dividend yield of 10.7%. It has consistently paid dividends for more than ten financial years.
List of Best Green Hydrogen Stocks in India
The table below puts together the names of all the best green hydrogen stocks in India.
Company Name
CMP (Rs)
Market Cap (Rs Cr)
Reliance Industries
2,200
1,490,000
GAIL
105
68,500
BPCL
350
76,000
Larsen & Toubro
2,200
310,000
Indian Oil Corporation
80
112,000
ONGC
152
190,000
Jindal Stainless
290
15,000
NTPC
174
168,500
JSW Energy
240
39,500
Adani Green Energy
1,000
160,000
Bonus: Adani Enterprises
Gautam Adani-led Adani Group had earlier announced a large $ 50 billion investment over the next ten years towards green hydrogen and allied ecosystems with an annual capacity of 3 million tonnes of green hydrogen.
The majority of this investment is expected to be done by Adani New Industries Ltd. (ANIL), a subsidiary of Adani Enterprises Ltd.
However, TotalEnergies, a French energy giant has postponed its investment in the conglomerate’s green hydrogen venture. It has been a key partner in various other businesses of the group.
This move came after the New York-based Hindenberg Research accused the Adani Group of fraud and overleverage. This may put some dent in the timeline of the green hydrogen projects of Adani.
In Conclusion
Despite all these developments, the green hydrogen industry in India is still at a nascent stage. According to the draft National Hydrogen Mission guidelines, the overall hydrogen demand is projected to touch 12 MMT by 2030, out of which 40% or 5 MMT is expected to be green. Further by 2050, green hydrogen’s share is expected to rise to 80%.
Which of these stocks do you think are in the best position to ride the green hydrogen wave in India? How about you let us know your thoughts on the sector and these companies in the comments below?
World stock market timings: The markets around the world have evolved to become soo accessible that one can now participate in various stock exchanges around the globe. A stock exchange is a market where shares of companies are purchased and sold.
The ‘stock exchange timings’ are the timings these exchanges are open and investors can trade shares. In this article, we take a look at the world stock market timings as per Indian time. Keep reading to find out!
The timings vary depending on the country’s time zones making it often challenging to participate in these global markets. Even if one does not participate in multiple exchanges, keeping track of global market timings is very important.
Having a good idea of global market timings and when markets around the world are open and how they are performing also helps traders and investors assess the global effects on our domestic markets.
Global Stock Market Timings As Per Indian Time
The stock market remains open from Monday to Friday every week except on days declared as public holidays in advance. The stock exchanges around the world remain closed on weekends. Following is the list of various stock exchanges across continents around the world in Indian Standard Time (IST).
North American Stock Exchange Timings
The major stock exchanges in the North American region are the New York Stock Exchange and the Nasdaq in the US. Apart from these the Toronto Stock Exchange remains another important exchange in the region.
The New York Stock Exchange founded in 1792 is the largest stock exchange in the world. The second-largest stock exchange also belongs to this region i.e. the Nasdaq despite being founded only in 1971.
The stock exchange timings of various important exchanges in the North American region are given below.
Country
Stock Exchange
Opening Time (Indian Timing)
Closing Time (Indian Timing)
US
NASDAQ
7 : 00 PM
1 : 30 AM
US
NYSE
7 : 00 PM
1 : 30 AM
Canada
TMX Group
8:00 PM
2:30 AM
European Stock Exchange Timings
Europe remains the birthplace of stock exchanges. The Amsterdam Stock Exchange was founded in 1602. This was when it was one of the most important trading hubs under the Dutch East India Company. The Amsterdam stock exchange is considered the world’s first stock exchange.
However, the roots Frankfurt stock exchange go all the way back to the year 1585. The major stock exchanges in Europe are the London Stock Exchange, Paris Stock Exchange (Euronext) and the Deutsche Borse Exchange in Germany.
The Stock Market Timings of these exchanges are given below.
Five out of the top ten largest exchanges are in Asia. The third-largest stock exchange in the world is the Shanghai stock exchange. Followed by the Hong Kong Stock Exchange and the Japan Stock Exchange. Their indices have a significant impact on our domestic bourses.
The stock exchange timings of various important exchanges in the Asia-Pacific region are given below.
As traders who participate in multiple exchanges, it is important to keep track of various markets around the globe. But even as investors it is very important to track the performance of foreign market indices around the globe. How many times have you seen negative news from the US further affect the Indian markets?
This itself explains very well the importance of keeping track. Even Asian markets like the Japanese and the Hong Kong index provide many indicators. As they open up before the Indian markets it is assumed that when they perform positively the Indian markets also follow suit.
That’s all for this article of world stock market timings as per Indian time. Let us know what you think about this piece in the comments below. Happy Investing!
The SGX Nifty is a derivative that trades on the Singapore Stock Exchange (SGX) which opens at 06:30 PM IST. It operates from 06:30 AM to 11:30 PM, trading for 16 hours a day on all working days. A lot of Indian traders follow this index to anticipate the direction of the Indian Stock Market.
2. At what time do European markets open in India?
The Euronext Market from the European Union opens at 12:30 PM IST in India. It remains open till 09:00 PM IST. The SIX Swiss Exchange remains open from 01:30 PM IST to 10:00 PM IST, the BME Spanish Exchange from 01:30 PM IST to 10:00 PM IST, The London Stock Exchange from 01:30 PM to 10:00 PM IST. There are about 27 markets in Europe and they remain open around the above-mentioned time. These are the normal trading hours of these markets.
3. At what time do US markets open in India?
Major US stock exchanges, i.e., the New York Stock Exchange (NYSE) and NASDAQ open at 07:00 PM IST, and they close at 01:30 AM IST. These are the normal trading hours of the above markets and the other markets in the US remain open around this time.
4. Can I buy shares at 9 AM?
For the Indian Stock market, you cannot buy stocks at 9 AM as the market opens are 9:15 Am. However, for some foreign exchanges, shares can be bought at 9 AM, if the exchange from which you are willing to buy shares has normal trading hours at that time. Some exchanges also allow you to place a pre-market order or an after-market order, but there is no guarantee that your order will be executed at that time, i.e., whether your shares will be bought or sold. Further, your depository participant also plays a role in the time at which orders are accepted.
5. What is Dow Jones’ timing in India?
Dow Jones is an Index and not a stock exchange. Most US stock markets open at 07:00 PM IST and close at 01:30 AM IST. In their local time, it’s from 09:30 AM to 04:00 PM.
6. What are the hours of the stock market?
The hours of the stock market depend on which market is in question. The normal trading hours of the Indian stock market are from 09:15 AM to 03:30 PM, while in the US, they are from 09:30 AM to 04:00 PM local time, in Europe, they are from 08:00 AM, 09:00 AM or 09:30 AM to 04:30 PM, 05:00 PM or 07:30 PM, depending on the market. Basically, the hours vary from market to market.
Fundamental Analysis of Bharat Dynamics: The defense stocks have been investors’ favorites since the hon’ble PM Narendra Modi announced initiatives to modernize and upgrade India’s defence capabilities, in the process giving a push to the indigenous supply of equipment. Bharat Dynamics Ltd. (BDL), a Mini-Ratna small-cap stock is one such beneficiary company. In this article, we’ll conduct a fundamental analysis of Bharat Dynamics, and see if it is a good defence pick.
Fundamental Analysis Of Bharat Dynamics
We shall start off our fundamental analysis of BDL by learning about the business. Next, we shall read about the defence industry landscape and the recent developments. Then, we’ll race through the financials of the stock to see how the company has fared in the last few years. A section on the future plans and a summary conclude the article in the end.
Company Overview
Bharat Dynamics Ltd. (BDL) is a defence public sector company under the Ministry of Defence, Government of India. It was set up over 5 decades ago in 1970 and presently has a market capitalization of Rs 16,500 crore.
This public sector undertaking (PSU) is involved in the manufacturing of a broad range of defence equipment: surface-to-air missiles (SAM), air-to-air missiles, anti-tank guided missiles (ATGM ), torpedoes, and allied defence equipment.
BDL is headquartered in Hyderabad, Telangana, and has three production facilities located across Telangana and Andhra Pradesh. As of March 2022, the government company employed a total of 2,674 people.
Lately, the management has taken three key actions toward the expansion of the company:
establishing more manufacturing sites in Maharashtra, Uttar Pradesh, Telangana, etc.
overseas sale of some defence products
forming strategic alliances with other PSUs and private sector companies
Industry Overview
Recent years have been a boon for the nation’s defence sector. The Union Government has announced multiple initiatives to propel the growth of the sector. This includes procuring domestically produced defence equipment, putting selected products on the list of banned imports, and higher defence spending.
As recently as in February this year, Finance Minister Nirmala Sitharaman announced the government has earmarked a large Rs 5.94 lakh crore towards the nation’s defence needs for 2023-24. This is 13% higher than the previous year’s allocation of Rs 5.25 lakh crore.
This figure includes the salaries of personnel, modernization of armed forces, production facilities, maintenance costs, and research & development establishments.
But it is not only that India’s defence spending is increasing. The allocation to capital expenditure has risen as a percentage of the total defence budget. The capital expenses which are incurred for the modernization and development of infrastructure have grown by 57% since 2019-20 to Rs 1.62 lakh crore in 2023-24.
Thus, we can say that overall the recent developments have put the nation’s defence sector in a sweet spot.
Bharat Dynamics – Financials
Revenue & Net Profit Growth
Over the last six years, the operating revenue of Bharat Dynamics Ltd. has decreased from Rs 4,887 crore in FY17 to Rs 2,817 crore in FY22. During the same period, the net profit has largely remained flat due to improvement in profit margins.
The table below shows the operating revenue and net profit of Bharat Dynamics for the last five financial years.
Fiscal Year
Operating Revenue
Net Profit
2022
2,817
500
2021
1,914
258
2020
3,095
535
2019
3,069
423
2018
4,588
528
2017
4,887
524
(figures in Rs crore)
Operating & Net Profit Margins
We can see from the data below that the operating profit and net profit margins have considerably improved for the company over the last few years. This has helped the business to sustain its bottom line.
The figures below highlight the profit margins of BDL for the last five fiscals.
Fiscal Year
OPM
NPM
2022
21.25
17.74
2021
12.87
13.47
2020
20.24
17.29
2019
17.44
13.77
2018
14.87
11.51
2017
12.3
10.72
(figures in %)
In the next section on the Fundamental analysis of Bharat Dynamics, we’ll see how profitable is the business by analyzing the return ratios of the stock: RoCE and RoE.
Return Ratios: RoCE & RoE
The return ratios: Return on Capital Employed (RoCE) and Return on Equity (RoE) have sharply fallen over the years as the equity base of the BDL has expanded due to past profits but the bottom line growth has been nil. Thus, we can conclude that the management is finding it tough to invest profits to earn higher returns for its shareholders.
The table below highlights the declining return ratios of Bharat Dynamics.
Fiscal Year
RoE
RoCE
2022
17.6
25.2
2021
9.8
13.2
2020
22.2
30.9
2019
20.2
32.3
2018
25.8
37.9
(figures in %)
In addition to the reduction in return ratios, we can also note that RoE is lower than RoCE across all the years. This tells us that the management has employed little or no financial leverage in the business, thus decreasing the net returns for the investors as the cost of debt is cheaper than the cost of equity for the company.
We’ll read more about this by studying the debt of the stock in the next section.
Debt / Equity & Interest Coverage
We’ll quickly race through the debt analysis of Bharat Dynamics as it is a debt-free stock with a high-interest coverage ratio. We can see in our table below on debt/equity and interest coverage ratios that the company has remained debt free for a considerable number of years.
Fiscal Year
Debt / Equity
Interest Coverage
2022
0.0
245
2021
0.0
112
2020
0.0
160
2019
0.0
160
2018
0.0
237
Future Plans Of Bharat Dynamics
So far we looked at the previous fiscals data for our fundamental analysis of BDL. In this section, we’ll try to get a sense of what lies ahead for the company and its investors.
As of March 2023, the order book of the company stood at Rs 13,708 crore, almost 5 times its FY22 revenue providing strong revenue visibility.
The management has projected a CAPEX of Rs 80 crore during the FY23 period, which is lower than Rs 103 crore it had spent in FY22.
BDL is also exploring export opportunities and has created an assortment of Rs 2,688 crore products that can be sold overseas. In line with this, it has generated leads from various entities from 21 countries for the supply of its defense equipment.
As mentioned above, BDL is also in the process of setting up additional production sites and export capabilities.
Key Metrics
We are almost at the end of our fundamental analysis of Bharat Dynamics. Let us take a look at some of the key metrics of the stock.
CMP
₹906
Market Cap (Cr.)
₹16,500
EPS
₹25.3
Stock P/E
34.1
RoCE
17.6%
RoE
25.2%
Promoter Holding
74.9%
Book Value
₹171
Debt to Equity
0.0
Price to Book Value
5.32
Net Profit Margin
17.74%
Operating Profit Margin
21.25%
In Conclusion
The shares of Bharat Dynamics have rallied by almost 60% in the last twelve months in the hopes of brighter prospects for the defence PSU. Even though the company has not grown a lot previously, the broader sentiment is bullish toward future performance. Thus, investors of BDL should keep a close eye on the quarterly results and progress on the export revenue of the company.
Do you think this recent share price in the price of BDL is justified? Will the company be able to earn higher sales and profits in the near future? How about we continue this conversation in the comments below?
Top Blue chip Mutual Funds in India: Did you know that less than a third of India’s population is financially literate? They are the ones who can make effective decisions, making use of their financial skills. Many others, even if they have the skills, do not have adequate time to manage their portfolio. They then invest in mutual funds. Fund managers are professionals who give superior returns and manage risks by managing investors’ money. Most investors make it a point to invest in at least one blue-chip mutual fund.
Top Blue chip Mutual Funds in India
In this article, we are going to take a look at some of the top blue chip mutual funds in India. We’ll compare them based on parameters like annualized returns, expense ratios, assets under management (AUM), and more. We have considered direct-growth plans for these funds. Keep reading to find out!
Top Blue chip Mutual Funds in India #1 – Canara Robeco Bluechip Equity Fund
Fund Company
Canara Robeco Asset Management Company
1-year Returns
6.03
Date of Inception
August 20, 2010
3-year Returns (annualized)
18.93
Fund Size (AUM in Cr)
8,642
5-year Returns (annualized)
14.60
No. of Stocks Held
45
Expense Ratio
0.42%
Stock Allocation
96.03%
Exit Load (after 1 year)
0.00%
Canara Robeco Bluechip Equity Fund is a bluechip fund from Canara Robeco Asset Management Company. The fund has been in existence since August 20, 2010, and has an AUM of ₹ 8,642 crores. It tracks the S&P BSE 100 India Index. The fund’s objective is to provide capital appreciation by predominantly investing in companies having a large market capitalization.
Allocation
96.03% of the fund’s money is allocated in equity with a focus on the financial, technology, energy, consumer staples, and automobile sectors. These investments are in 45 stocks. The fund’s top holdings include HDFC Bank (9.79%), ICICI Bank (8.19%), Infosys (7.16%), Reliance Industries (6.26%)State Bank of India (4.20%). 51.69% of its assets are in its top ten holdings.
Returns
The fund has the ability to deliver returns consistently and is in line with most funds of its category. Canara Robeco Bluechip Equity Fund has given 1-year returns of 6.03% against 6.38% by the benchmark. It has 3-year annualized returns of 18.93% (benchmark 20.37%) and 5-year annualized returns of 14.60% (Benchmark 12.28%).
It has an exit load of 0.00% after one year and an expense ratio of 0.42%. The minimum amount to be invested in the case of SIP is ₹ 1,000 and a lump sum is ₹ 5,000.
Fund Manager
Shridatta Bhandwaldar is a BE (Mechanical) and MMS (Finance). He has worked with SBI Pension Funds Pvt. Ltd. as Head-Research, Heritage India Advisory Pvt. Ltd. as Senior Equity Analyst, Motilal Oswal Securities, and MF Global Securities earlier.
Vishal Mishra has more than 10 yrs of experience in the areas of equity research & credit research. associated with IL&FS Investment Ltd, Crisil Ltd, and Quantum Information Services Ltd earlier.
Top Blue chip Mutual Funds in India #2 – Kotak Bluechip Fund
Fund Company
Kotak Mahindra Asset Management Company
1-year Returns
8.00%
Date of Inception
January 01, 2013
3-year Returns (annualized)
20.23%
Fund Size (AUM in Cr)
5,259
5-year Returns (annualized)
12.88%
No. of Stocks Held
58
Expense Ratio
0.64%
Stock Allocation
98.53%
Exit Load (after 1 year)
0.00%
Kotak Bluechip Fund is a bluechip fund from Canara Robeco Asset Management Company. Kotak Mahindra Asset Management Company. The fund has been in existence since January 01, 2013, and has an AUM of ₹ 5,259 crores. It tracks the S&P BSE 100 India Index.
The fund’s objective is to generate capital appreciation from a portfolio of predominantly equity and equity-related securities falling under the category of large-cap companies.
Allocation
98.53% of the fund’s money is allocated in equity with a focus on the financial, technology, automobile, energy, and consumer staples sectors. These investments are in 58 stocks. The fund’s top holdings include ICICI Bank (7.07%), HDFC Bank (6.54%), Reliance Industries (6.14%), Infosys (5.66%), and ITC (4.01%). 46.32% of its assets are in its top ten holdings.
Returns
Kotak Bluechip Fund has given 1-year returns of 8.00% against 6.38% by the benchmark. It has 3-year annualized returns of 20.23% (benchmark 20.37%) and 5-year annualized returns of 12.88% (Benchmark 12.28%). It has an exit load of 0.00% after one year and an expense ratio of 0.64%. The minimum amount to be invested in the case of SIP is ₹ 1,000 and a lump sum is ₹ 5,000.
Fund Manager
Harish Krishnan has been managing the fund since January 01, 2014. He has 13 years of experience spread over Equity Research and Fund Management. He was associated with Infosys Technologies in his earlier stint. He holds a CFA, PGDBM (IIM Kozhikode), and B.Tech (Electronics & Communications).
Top Blue chip Mutual Funds in India #3 – ICICI Prudential Bluechip Fund
Fund Company
ICICI Prudential Asset Management Company
1-year Returns
7.83%
Date of Inception
May 23, 2008
3-year Returns (annualized)
20.48%
Fund Size (AUM in Cr)
34,199
5-year Returns (annualized)
11.70%
No. of Stocks Held
71
Expense Ratio
1.67%
Stock Allocation
91.15%
Exit Load (after 1 year)
0.00%
ICICI Prudential Bluechip Fund is a bluechip fund from ICICI Prudential Asset Management Company. The fund has been in existence since May 23, 2008, and has an AUM of ₹ 34,199 crores. It tracks the NIFTY 100 Index. The fund’s objective is to generate long-term capital appreciation and income distribution to investors from a portfolio that is predominantly invested in equity and equity-related securities of large-cap companies.
Allocation
91.15% of the fund’s money is allocated in equity with a focus on the financial, energy, technology, automobile, and construction sectors. These investments are in 71 stocks. The fund’s top holdings include ICICI Bank (9.34%), Reliance Industries (8.02%), HDFC Bank(7.08%), Infosys (6.65%), and Larsen & Toubro (6.55%). 55.56% of its assets are in its top ten holdings.
Returns
ICICI Prudential Bluechip Fund has given 1-year returns of 7.83% against 6.38% by the benchmark. It has 3-year annualized returns of 20.48% (benchmark 20.37%) and 5-year annualized returns of 11.70% (Benchmark 12.28%). It has an exit load of 0.00% after one year and an expense ratio of 1.67%. The minimum amount to be invested in the case of SIP is ₹ 100 and a lump sum is ₹ 100.
Fund Manager
Anish Tawakley is a PGDM (MBA) from IIM Bangalore and B. Tech (Mechanical Engineering) from IIT Delhi. He has worked with Barclays India – Equity Research, and Credit Suisse India – Equity research – Indian financial services sector, prior to joining ICICI AMC.
Vaibhav Dusad has done B. Tech, M.Tech, and MBA. He has worked with Morgan Stanley, HSBC Global Banking and Markets, CRISIL, Zinnov Management Consulting, and Citibank Singapore earlier.
Top Blue chip Mutual Funds in India #4 – Axis Bluechip Fund
Fund Company
Axis Asset Management Company Ltd.
1-year Returns
-3.54
Date of Inception
January 05, 2010
3-year Returns (annualized)
10.87
Fund Size (AUM in Cr)
33,050
5-year Returns (annualized)
11.08
No. of Stocks Held
35
Expense Ratio
1.65%
Stock Allocation
86.42%
Exit Load (after 1 year)
0.00%
Axis Bluechip Fund is a bluechip fund from Axis Asset Management Company. The fund has been in existence since January 05, 2010, and has an AUM (assets under management) of ₹ 33,050 crores. It tracks the S&P BSE 100 India Index. Its objective is to achieve long-term capital appreciation by investing in a diversified portfolio predominantly consisting of equity and equity-related securities of Large Cap companies including derivatives.
Allocation
86.42% of the fund’s money is allocated in equity, and 12.77% of its money is currently in cash. Most of its money is invested in the financial, technology, energy, services, and automobile sectors. These investments are in 35 stocks. Its top holdings include ICICI Bank (9.12%), HDFC Bank (9.08%), Bajaj Finance (7.95%), Infosys (6.68%), and Avenue Supermarts (5.84%). 59.16% of its assets are in its top ten holdings.
Returns
Axis Mutual Fund has given 1-year returns of -3.54% against 6.38% by the benchmark. It has 3-year annualized returns of 10.87% (benchmark 20.37%) and 5-year annualized returns of 11.08% (Benchmark 12.28%). It has an exit load of 0.00% after one year and an expense ratio of 1.65%. The minimum amount to be invested in the case of SIP is ₹100 and a lump sum is ₹ 500. The fund is mainly suitable for long-term investments.
Fund Manager
Shreyash Devalkar is a B.Tech from UDCT Mumbai and PGDM (Management) from JBIMS Mumbai University, He has worked with BNP Paribas Mutual Fund as a Fund Manager, IDFC Capital, JP Morgan Services India, and Calyon Bank earlier.
List of Top Blue chip Mutual Funds in India
Here is a summary of the top blue chip mutual funds in India:
Size (AUM in Rs Cr)
Inception Date
1-yr return
3-yr return (annualized)
Expense ratio
Exit Load (after 1-yr)
Assets in Top 10 Holdings (%)
No. of Stocks Held
Stock Allocation (%)
Canara Robeco Bluechip Equity Fund
8,642
August 20, 2010
6.03%
18.93%
0.42%
0.00%
51.69%
45
96.03%
Kotak Bluechip Fund
5,259
January 01, 2013
8.00%
20.23%
0.64%
0.00%
46.32%
58
98.53%
ICICI Prudential Bluechip Fund
34,199
May 23, 2008
7.83%
20.48%
1.67%
0.00%
55.56%
71
91.15%
Axis Bluechip Fund
33,050
January 05, 2010
-3.54%
10.87%
1.65%
0.00%
59.16%
35
86.42%
In Closing
In this article, we took a look at some of the top blue chip mutual funds in India. Mutual funds are long-term investments and looking at one-year returns is insufficient. Certain funds may not do well in the short term but they may provide good returns in the long term. It is better to choose funds that have a low expense ratio but tend to give higher returns. That’s all for this article folks. Happy investing until next time.
What is EBITDA Margin in Stock Market: You’ve probably watched the TV series “Shark Tank”, where entrepreneurs pitch their business ideas to sharks (or investors) to convince them of their business valuation and negotiate a deal with them. They typically buy a stake or a percentage of ownership and a share of profits in the entrepreneurs’ business. Their financial jargon includes the term “EBITDA”, in addition to many other terms that they use.
When companies start releasing their results and we hear analysts’ comments on business news channels, we find that they mention something called the EBITDA margin again and again. EBITDA margin is an important measure of profitability that is considered before investing in a company’s stock.
Investors look at a company’s financials before investing in its stock. Profitability is one of the most important factors that they consider. They make their decision based on past records and in comparison with the company’s peers. In this article, we’ll understand EBITDA, take a look at what is EBITDA margin in stock market, and know about its interpretation, limitations, and more. Keep reading to find out!
What is EBITDA?
EBITDA stands for Earnings Before Interest, Taxes Depreciation, and Amortization. It is a type of operating profit used to measure a company’s financial health, performance, and ability to generate cash flow. It helps investors to understand a company’s financial decisions based on a business’ operating decisions.
No investor or analyst would say that a company’s interest, taxes, depreciation, and amortization are irrelevant. However, EBITDA helps to establish the worth of a company, by eliminating the effects of non-operating decisions taken by the current management, such as those involving major intangible assets, tax rates, or interest costs. It focuses on the essentials like profitability due to operations and cash flow of a business.
How is EBITDA calculated?
There are two simple ways to calculate the EBITDA margin. The first is to add depreciation and amortization to another type of operating profit called EBIT (Earnings before Interest and Taxation).
EBITDA= Operating profit or EBIT + Depreciation + Amortization
or
The second way is to add interest, taxes, depreciation, and amortization to the net income.
EBITDA= Net Income + Interest + Taxes + Depreciation + Amortization
Interest, taxes, depreciation, and amortization are not part of a company’s operating costs, and are not associated with the day-to-day operations of a business. Therefore, these costs are added back to EBIT, or net income, to arrive at EBITDA.
What is EBITDA Margin?
The EBITDA margin is an estimation of an organization’s operating gains as a percentage of its overall revenues. It allows investors and analysts to compare the performance of companies operating in the same sector, regardless of their size. It shows the magnitude by which a company’s operating costs reduce its gross profit.
EBITDA provides a near-accurate representation of a company’s profitability and cash flow. However, it is a non-cash metric as opposed to its counterparts. Calculating a company’s EBITDA margin helps in gauging the effectiveness of a company’s cost-cutting efforts. The higher a company’s EBITDA margin is, the lower its operating expenses are, in relation to its total revenue.
How to calculate EBITDA margin?
EBITDA Margin is calculated as a percentage of total revenue.
EBITDA Margin = (EBITDA ÷ total revenue) * 100
Interpretation of EBITDA Margin
Let’s assume that there are two companies Company A and Company B in the FMCG (Fast Moving Consumer Goods) industry.
Company A
Company B
Revenue
60,00,000
6,00,00,000
EBITDA
40,00,000
2,50,00,000
EBITDA Margin
66.67
41.67
In this case, company A’s EBITDA is lower than company B’s EBITDA, but its EBITDA margin is higher than Company B, indicating that it is better managed and more cost-efficient as compared to company B.
Limitations of EBITDA
EBITDA is a non-GAAP financial figure. In other words, it does not follow generally accepted accounting principles (GAAP). These standards are essential for ensuring the overall accuracy of financial reporting. However, these standards are more than what is wanted by financial analysts and investors.
The exclusion of debt has drawbacks when measuring the performance of a company. Debt-laden companies may highlight their EBITDA margins to draw attention away from their debt and enhance the perception of their financial performance. Therefore, companies with high debt levels should not be measured using their EBITDA margins.
The EBITDA margin is usually higher than the profit margin. Companies with low profitability may highlight their EBITDA margin as a measurement of their success.
Difference between EBITDA Margin and Operating Margin
Though used interchangeably, EBITDA margin and Operating margin are two different metrics.
EBITDA’s major focus is on overall profitability. The operating margin also tells us how much money is in hand to pay the external expenses that take place outside the business operations.
EBITDA is used at the time of mergers and acquisitions. The operating margin is used to analyze the performance between companies and suggests the right investment options.
In Closing
In this article, we took a look at what is EBITDA margin in the stock market. For this, we understood the meaning of EBITDA, understood how to calculate it, learned how to interpret EBITDA margin, went through its limitations, and took a look at the differences between EBITDA margin and operating margin. That’s all for this article, folks. We hope to see you around and happy investing until next time.
