eva, mva & roce

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A

Report on

"Relationship of Economic Value Added, Market Value Added &

Return on Capital Employed with

respect to Share Price”

A Dissertation Submitted In Partial Fulfilment

Of

The Requirement For The Award Of MBA Degree Of

Bangalore University.

Submitted by

Mr. Vijay Kumar Agarwal

(REGD. NO: 06XQCM6084)

UNDER THE GUIDANCE & SUPERVISION OF Prof. Praveen Bhagawan. M

M.P.BIRLA INSTITUTE OF MANAGEMENT ASSOCIATE BHARTIYA VIDYA BHAVAN

43, RACE COURSE ROAD, BANGALORE-560001

2006-2008

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DECLARATION I, hereby, declare that this project report entitled, “Relationship of Economic Value

Added, Market Value Added, Return on Capital Employed with respect to share

prices” Submitted in partial fulfillment for the award of Master of Business

Administration of Bangalore University is a record of independent work carried out

by me under the guidance of Prof. Praveen Bhagawan faculty member, M. P. Birla

Institute of Management, Bangalore.

I, also declare that this report is a result of my own effort and has not been submitted

earlier for the award of any degree or diploma of Bangalore University or any other

University.

Place: Bangalore Vijay Kumar Agarwal

Date: (REGD. NO: 06XQCM6084)

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ACKNOWLEDGEMENT I am extremely grateful to all those who have shared their views, opinions, ideas and

experiences which have significantly improved my inputs for this Project.

I am indebted to my Internal guide Prof. Praveen Bhagawan M for his encouragement

and support for the completion of the study.

I extended my sincere gratitude to our Principal Dr. Nagesh Malavalli.

Finally I would like to extend my warm respects and regards to my family, friends and

well-wishers for their constant support and valuable suggestions.

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M. P. Birla Institute of Management ASSOCIATE BHARATIYA VIDYA BHAVAN

#43, RACE COURSE ROAD, BANGALORE -560001, INDIA Prof. Praveen Bhagawan M Tel 080-22382798/9634, Fax 080-22389635 Email: [email protected], Website:www.mpbim.com

Certificate

This is to certify that this report entitled, “Relationship of Economic Value

Added, Market Value Added, Return on Capital Employed with respect

to share prices” is a compilation of the project carried out by Mr. Vijay

Kumar Agarwal (Reg. No. 06XQCM6084), a Student Executive of M.P.

Birla Institute of Management, Associate Bharatiya Vidya Bhavan,

Bangalore.

Mr. Vijay Kumar Kumar worked under my guidance and supervision.

Bangalore

Date:-

( Prof. Praveen Bhagawan M )

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M. P. Birla Institute of Management

ASSOCIATE BHARATIYA VIDYA BHAVAN #43, RACE COURSE ROAD, BANGALORE -560001, INDIA

Dr. N. S. Malavalli PRINCIPAL

Certificate This is to certify that this report entitled “Relationship of Economic Value

Added, Market Value Added, Return on Capital Employed with respect

to share prices” is the output of final report carried out by Mr. Vijay

Kumar Agarwal, a Student Executive of MP Birla Institute of

Management, Bangalore under the guidance and supervision of Prof

Praveen Bhagawan M , MPBIM, Bangalore (Internal Guide)

Bangalore.

Date:- ( Dr.N. S. Malavalli)

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ABSTRACT

Market prices of the shares reflect the performance of the company. Today, wealth

created by the company is more important than the profit it earns or the dividend it pays

to the shareholders. The objective of this research is to study the relationship that exists

between the wealth/value/ROCE for the shareholders created by the company and market

prices of the shares.

The hypothesis of the study is that, there is significant relationship between EVA, MVA,

ROCE and share prices .EVA is the most significant measure, which is better reflected in

the market prices of the shares as compared to other traditional measures of performance,

MVA is the present value of a series of EVA values and finally ROCE is the rate of

return a business is making on the total capital employed in the business..This is tested on

20 companies of the stock market for a period of 4years beginning from FY 2003-2004 to

FY 2006-2007. Analysis is done using the Regression tool.

From the analysis, it is found that EVA.MVA& ROCE has no significant relationship

with the Market prices and also is not a major influencing factor among the performance

metrics.

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CHAPTERS PARTICULARS PAGE NO’S

ABSTRACT 1 INTRODUCTION 1-7

1.1 Introduction 2 1.2 Background of the study 3 1.3 Purpose of the study 3 1.4 Problem statement 4 1.5 Objectives of the study 4 1.6 Significance Of the Study 4 1.7 Theoretical Framework 5-7

2 REVIEW OF LITERATUR 8-11 3 METHODOLOGY 12-19

3.1 Study Type 13 3.2 Population of the study 13 3.3 Sample Frame 13 3.4 Sampling Technique 13 3.5 Sampling Profile 13 3.6 Data Gathering Procedure 14 3.7 Hypothesis of the study 15 3.8 Testing of hypothesis 15 3.9 Description of tools used 15-17

3.10 Limitations of the study 17 3.11 Industry Profile 18-19

4 ANALYSIS AND INTERPRETATION 20-52 5 CONCLUSION 53-54

5.1 Conclusion 54 BIBLIOGRAPHY 55-56

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List of Charts

Company Particulars Particulars Page No.

Ashokleyland Chart Showing Share Price , EVA & MVA

Chart Showing ROCE 21

Eicher Motors Chart Showing Share Price , EVA & MVA


Hero Honda Chart Showing Share Price , EVA & MVA


Hindustan Motors Chart Showing Share Price , EVA & MVA


kinetic Motors Chart Showing Share Price , EVA & MVA


LML Chart Showing Share Price , EVA & MVA


Punjab Tractors Chart Showing Share Price , EVA & MVA


Mahindra & Mahindra

Chart Showing Share Price , EVA & MVA


Tata Motors Chart Showing Share Price , EVA & MVA


TVS Motors Chart Showing Share Price , EVA & MVA


Bank Of India Chart Showing Share Price , EVA & MVA


Canara Bank Chart Showing Share Price , EVA & MVA


Corporation Bank Chart Showing Share Price , EVA & MVA


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Dena Bank Chart Showing Share Price , EVA & MVA


HDFC Bank Chart Showing Share Price , EVA & MVA


ICICI Bank Chart Showing Share Price , EVA & MVA


IndusInd Bank Chart Showing Share Price , EVA & MVA


State Bank Of India

Chart Showing Share Price , EVA & MVA


Syndicate Bank Chart Showing Share Price , EVA & MVA


Vijaya Bank Chart Showing Share Price , EVA & MVA


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List of Table

Tables Particulars Page No.

4.1 Table Showing Share Price, EVA,MVA,& ROCE of Ashokleyland 21

4.2 Table Showing Share Price, EVA,MVA,& ROCE of Eicher Motors 22

4.3 Table Showing Share Price, EVA,MVA,& ROCE of Hero Honda 23

4.4 Table Showing Share Price, EVA,MVA,& ROCE of Hindustan Motors 24

4.5 Table Showing Share Price, EVA,MVA,& ROCE of Kinetic Motors 25

4.6 Table Showing Share Price, EVA,MVA,& ROCE of LML 26

4.7 Table Showing Share Price, EVA,MVA,& ROCE of Punjab Tractor 27

4.8 Table Showing Share Price, EVA,MVA,& ROCE of Mahindra & Mahindra 28

4.9 Table Showing Share Price, EVA,MVA,& ROCE of Tata Motors 29

4.10 Table Showing Share Price, EVA,MVA,& ROCE of TVS Motors 30

4.11 Table Showing Share Price, EVA,MVA,& ROCE of Bank Of India 31

4.12 Table Showing Share Price, EVA,MVA,& ROCE of Canara Bank 32

4.13 Table Showing Share Price, EVA,MVA,& ROCE of Corporation Bank 33

4.14 Table Showing Share Price, EVA,MVA,& ROCE of Dena Bank 34

4.15 Table Showing Share Price, EVA,MVA,& ROCE of HDFC Bank 35

4.16 Table Showing Share Price, EVA,MVA,& ROCE of ICICI Bank 36

4.17 Table Showing Share Price, EVA,MVA,& ROCE of IndusInd Bank 37

4.18 Table Showing Share Price, EVA,MVA,& ROCE of State Bank Of India 38

4.19 Table Showing Share Price, EVA,MVA,& ROCE of Syndicate Bank 39

4.20 Table Showing Share Price, EVA,MVA,& ROCE of Vijaya Bank 40

4.21 Table Showing Multliple R , R square, a, B1, B2, T1,T2, P1, P2, & F 41

4.22 Table Showing Multliple R , R square, a, b, t, p, F, & Observation 42

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Chapter-1

INTRODUCTION

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1.1 Introduction

Market prices of the shares reflect the performance of the company. Today, wealth

created by the company is more important than the profit it earns or the dividend it pays

to the shareholders. Creation of shareholder’s value is the core of every business. This is

natural since shareholders own the company and as rational investors they expect good

long-term yield on their investment. Commonly used accounting measures are EPS

(Earnings per Share), ROI (Return on Investment), NPR (Net Profit Ratio) etc.

Apart from this, value based metrics of performance evaluation like EVA (Economic

Value Added), MVA (Market Value Added), CVA (Cash Value Added) and CFROI

(Cash Flow Return on Investment) have come into existence. These new performance

metrics seek to measure the periodic performance in terms of change in value.

Maximizing value means maximizing long-term yield on shareholders’ investment.

(Economic Value Added): A measure of a company's financial performance based

on the residual wealth calculated by deducting cost of capital from its operating profit

(adjusted for taxes on a cash basis). (Also referred to as "economic profit".)

The formula for calculating EVA is as follows:

= Net Operating Profit after Taxes (NOPAT) - (Capital * Cost of Capital)

MVA (Market Value Added): A calculation that shows the difference between the market

value of a company and the capital contributed by investors (both bondholders and

shareholders). In other words, it is the sum of all capital claims held against the company

plus the market value of debt and equity.

Calculated as:

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Return On Capital Employed (ROCE)

A ratio that indicates the efficiency and profitability of a company's capital investments.

Calculated as:

ROCE should always be higher than the rate at which the company borrows; otherwise

any increase in borrowing will reduce shareholders' earnings.

1.2 Background of the study Investors are currently demanding Shareholder value more strongly than ever. So the

value created by the company is more linked to the market price of the shares. This study

is undertaken to show the relationship that exists between the various performance

metrics and the share prices as the performance of the company is reflected in the share

prices in the market.

1.3 Purpose of the study The purpose of the study is to show that EVA, MVA & ROCE have relationship with

share prices and this relationship is significant. This shows that value addition by the

company is also a dependant factor for the movement in the share prices. So this study is

helpful to the investors for their investment decision as the study also allows them to

easily identify companies that pursue business strategies with the goal of shareholders

value creation.

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1.4 Statement of the problem:

There are various views with respect to whether traditional measures or value-based

measures influence the share prices. Considering this, it is interesting to examine which

of the performance measures has more influence on the share prices. Question to be

addressed is whether there is relationship between EVA, MVA & ROCE with respect to

share prices and whether this relationship is significant.

1.5 Objective of study: To measure EVA, MVA & ROI for sample companies. To analyse the relationship between EVA, MVA, & ROCE with

respect to share prices. To find out which of the performance metrics is better reflected in the

share prices.

Scope of the study: The scope of the study is limited to two sectors i.e. banking & automobile industry under

which 10 companies from each industry has been taken for my study. And the analysis is

based on the last 4 year data.

1.6 Significance of the study:

The Purpose of the study is to show that EVA, MVA & ROI have relationship with share

prices and this relationship is significant. This shows that value addition by the company

is also a dependant factor for the movement in the share prices.

So this study is helpful to the investors for their investment decision as the study also

allows them to easily identify companies that pursue business strategies with the goal of

shareholders value creation.

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1.7 Theoretical framework

Investors analyze and interpret the financial statements so that they can get an insight into

the firm’s performance. Ratio analysis is one of the tools of financial analysis. It shows

the relationship between two figures in the financial statements. There are various types

of ratios used. Investors of more interested in profitability ratios like Net profit ratio,

Return on capital employed, Return on Equity, etc., and valuation ratios like Price-

Earnings ratio, Earnings per share, Yield, etc

Earnings Before Interest & Tax (EBIT) An indicator of a company's profitability, calculated as revenue minus expenses,

excluding tax and interest. EBIT is also referred to as "operating earnings", "operating

profit" and "operating income", as you can re-arrange the formula to be calculated as

follows:

EBIT = Revenue - Operating Expenses

Return On Assets (ROA)

An indicator of how profitable a company is relative to its total assets. ROA gives an

idea as to how efficient management is at using its assets to generate earnings. Calculated

by dividing a company's annual earnings by its total assets, ROA is displayed as a

percentage. Sometimes this is referred to as "return on investment".

ROA

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Return On Equity (ROE)

A measure of a corporation's profitability that reveals how much profit a company

generates with the money shareholders have invested.

Calculated as:

Also known as "return on net worth" (RONW).

ROI (Return on Investment):

A performance measure used to evaluate the efficiency of an investment or to compare

the efficiency of a number of different investments. To calculate ROI, the benefit (return)

of an investment is divided by the cost of the investment; the result is expressed as a

percentage or a ratio.

Net profit ratio NPR shows the earnings left for the shareholders as a percentage of net sales. It measures

the overall efficiency of production, administration, selling, financing, pricing and

provides a valuable understanding of the cost profit structure of the company. It enables

the analysts to identify the sources of business efficiency/inefficiency.

NPR= Net Profit *100 Sales

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Earnings per share EPS is also a measure of the profitability of the firm. It indicates the

Profitability on a per-share basis.

EPS = Earnings for Equity shareholders * 100

No. of equity shares

Economic Value Added: A measure of a company's financial performance based on the residual wealth calculated

by deducting cost of capital from its operating profit (adjusted for taxes on a cash basis).

The formula for calculating EVA is as follows:

= Net Operating Profit after Taxes (NOPAT) - (Capital * Cost of Capital)

MVA (Market Value Added):

A calculation that shows the difference between the market value of a company and the

capital contributed by investors (both bondholders and shareholders). In other words, it

is the sum of all capital claims held against the company plus the market value of debt

and equity.

Calculated as:


A ratio that indicates the efficiency and profitability of a company's capital investments. Calculated as:

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Chapter-2

LITERATURE REVIEW

Review of literature:

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My preliminary review of the current literature indicates that the application of perceptual

mapping of Relationship of Economic Value Added, Market Value Added & Return on

Investment with respect to Share Price has not been adequately researched. The available

research data is sketchy and scanty. Thus, there is a vital gap in the current research. This

has prompted me to take up this research investigation.

The share prices in the market can be measured by the MVA-Market value added for the

company which is the total market value of the company. This relationship between EVA

and MVA has been studied in the recent years in many studies with many methods - and

with different results

Purpose : Lehn and Makhija

Lehn and Makhija (1996) first studied this relationship with market data of 618 U.S.

companies i.e. relationship between MVA & EVA.

Methodology The data consists of 241 U.S.companies and cover years 1987, 1988, 1992 and 1993. The

researchers first find out that both measures correlate positively with stock returns and

that the correlation is slightly better than with traditional performance measures like

return on assets (ROA), return on equity (ROE) and return on sales (ROS).

Conclusion Lehn and Makhija conclude that their results suggest EVA and MVA to be effective

performance measures that contain information about the quality of strategic decisions

and serve as signals of strategic change.

Purpose : Dodd and Chen

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Dodd and Chen (1996) study the correlation between stock returns and different

profitability measures

Methodology: The study was based on 566 U.S. companies from 1983-1992. In the study ROA

explained stock returns best with R squared of 24.5%. The R squared for other metrics

are: EVA 20.2%, residual income 19.4% and EPS, ROE approximately 5-7%.

Conclusion The writers concluded that firms adopting EVA might as adopt simple residual income

concept, while residual income correlates with share prices almost as well as its adjusted

version called EVA.

Purpose : David M. Szymanski, Sundar G. Bharadwaj and P. Rajan Varadarajan

David M. Szymanski, Sundar G. Bharadwaj and P. Rajan Varadarajan studied

relationship between market share price and profitability.

Methodology: David M. Szymanski, Sundar G. Bharadwaj and P. Rajan Varadarajan, performed a meta-

analysis on 276 market share profitability findings from forty-eight studies to address

whether market share and profitability are possibility related and to examine the factors

that moderate the magnitude of that relationship.

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Conclusion The authors found that, on average, market share has a positive effect on business profitability.

Purpose: Nikil Varaiya and Roger A. Kerin and David Weeks

Nikil Varaiya and Roger A. Kerin and David Weeks research on “The relationship

between growth, profitability and firm value examined predictions drawn from value-

based planning models

Result indicates that profitability and growth do influence shareholder value in the

manner predicated; however the relationships are conditional. This study also shows that,

the market to book value of equity ratio and Tobin’s q ratio are theoretically &

empirically equivalent measures of value creation.

Benefits derived from literature review: � Provide a context for the research

� Justify the research

� Ensure the research hasn't been done before

� Show where the research fits into the existing body of knowledge

� Enable the researcher to learn from previous theory on the subject

� Illustrate how the subject has been studied previously

� Highlight flaws in previous research

� Outline gaps in previous research

� Show that the work is adding to the understanding and knowledge of the field

� Help refine, refocus or even change the topic

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Chapter-3

METHODOLOGY

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Methodology

3.1 Study type

The study type is analytical, quantitative and historical.

Analytical as facts and existing information is used for the analysis.

Quantitative as EVA & MVA is calculated and the variables are expressed in

measurable terms.

Historical as the historical information is used for analysis and interpretation.

3.2 Study population Population includes all the domestic companies.

3.3 Sampling frame

Sampling frame includes all those companies that are listed in the stock Exchange

i.e. banking & automobile sector

3.4 Sampling technique

Simple Random sampling is used because only particular units are selected from the

sampling frame. Such a selection is undertaken as these units represent the population in

a better way. The companies listed in the stock exchange are considered since the market

prices can be obtained.

3.5 Sample Profile

Sample includes 20 companies in the Stock market (for which relevant data was

available), for a period of 5 years starting from FY 2002-2003 to 2006-2007

The following are the sample 20 companies:

1. Tata motors.

2. AshokLeyland

3. Punjab Tractors.

4. Mahindra & Mahindra.

5. Eicher Motors.

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6. Hindustan motors.

7. TVS Motors.

8. Hero Honda Motors

9. LML.

10. Kinetic Motors.

11. Canara Bank.

12. Corporation Bank

13. ICICI Bank

14. SBI Bank

15. Vijaya Bank.

16. HDFC Bank

17. Dena Bank.

18. Syndicate Bank.

19. Bank of India.

20. IndusInd Bank.

3.6 Data gathering procedure and instrumentation Data type: Secondary data

Data:

Historical share prices of the sample companies.

Index values of BSE Sensex

Financial Information of the sample companies.

Data Source:

Historical share prices of the sample companies and the index points for the period has

been taken from the database of Capital Market Publishers (India) Ltd., Capitaline.

Financial statements of the sample companies have also been taken from the same source.

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3.7 Hypothesis :

Hypothesis 1

H0: There is no significant relationship between EVA and Share prices. H1: There is significant relationship between EVA and Share prices.

Hypothesis 2

H0: There is no significant relationship between MVA and Share prices. H1: There is significant relationship between MVA and Share prices.

Hypothesis 3

H0: There is no significant relationship between RO CE and Share prices. H1: There is significant relationship between ROCE and Share prices.

3.8 Testing of Hypothesis The hypothesis is tested using Multliple regression and F statistic.

Regression is the process of predicting one variable from another by statistical means

using previous data.

F statistic is used to test the significance of the regression as a whole.

If the Fcal < Ftab, then the null hypothesis is accepted.

The hypothesis is tested using multiple regression tool and F statistic.

Multiple regressions are a statistical process by which several independent variables are

used to predict one dependant variable.

3.9 Description about the analysis tools used

Simple Regression Y=a+bx Where, Y is the dependant variable – market price of shares a is the constant x is the independent variable ROCE b is the coefficient of the independent variable

Multiple Regression

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Y=a+b1x1+b2x2+b3x3

Where,

Y is the dependant variable – market price of shares

a is the constant

xi are the independent variables – performance metrics like NOCE,

MVA and EVA

bi are the coefficient of the independent variables

Method adopted to calculate EVA is as follows

EVA = NOPAT – WACC* WACC

where-

1. NOPAT is net operating profit after taxes.

2. WACC is weighted average cost of capital (equity and debt)

It is calculated as follows:

WACC = Kd (1-T)*W1+Ke *W2+Kp*W3

W1 is weight of debt

W2 is weight of equity

W3 is weight of preference

Kd is the effective cost of Debt, which is calculated by dividing the total interest by the

total debt.

Ke is calculated using the Capital Asset Pricing Model developed by Modigliani and

Miller.

Ke=Rf+Beta (Rm-Rf)

Kp is the effective cost of preference, which is calculated by dividing the total Dividend

Prefernce by the total preference capital.

Rf is the risk free rate, i.e., the rate of interest for 1-year government securities. These

rates are obtained from the website of Reserve Bank of India.

Rm is the return for the market. It is calculated by using the formula

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given below for the index values. Rm=Average of return on market for all the 4 years

Return = Closing index value-opening index value * 100

Opening index value

Beta values for all the sample companies for all the 4 years are calculated by finding the

slope between log normal of share prices of all the companies and log normal of the

index values. Log normal of the values is considered to remove abnormalities if any and

convert them into normal distribution.

3. Invested Capital is the total long term funds and includes equity shares and the total

debt as at the end of the year.

MVA (Market Value Added): A calculation that shows the difference between the

market value of a company and the capital contributed by investors (both bondholders

and shareholders). In other words, it is the sum of all capital claims held against the

company plus the market value of debt and equity.

Calculated as:


A ratio that indicates the efficiency and profitability of a company's capital investments.

Calculated as:

ROCE

3.10 Limitations of the study

The Study is limited to the 20 companies that are included in BSE-SENSEX.

Availability of dressed data with respect to the financial statements of companies

3.11 Industry Profile

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Banking sector

The growth in the Indian Banking Industry has been more qualitative than quantitative

and it is expected to remain the same in the coming years. Based on the projections made

in the "India Vision 2020" prepared by the Planning Commission and the Draft 10th Plan,

the report forecasts that the pace of expansion in the balance-sheets of banks is likely to

decelerate. The total assets of all scheduled commercial banks by end-March 2010 are

estimated at Rs 40, 90,000 crores. That will comprise about 65 per cent of GDP at current

market prices as compared to 67 per cent in 2002-03. Bank assets are expected to grow at

an annual composite rate of 13.4 per cent during the rest of the decade as against the

growth rate of 16.7 per cent that existed between 1994-95 and 2002-03. It is expected that

there will be large additions to the capital base and reserves on the liability side.

The Indian Banking Industry can be categorized into non-scheduled banks and scheduled

banks. Scheduled banks constitute of commercial banks and co-operative banks. There

are about 67,000 branches of Scheduled banks spread across India. As far as the present

scenario is concerned the Banking Industry in India is going through a transitional phase.

The Public Sector Banks which are the base of the Banking sector in India account for

more than 78 per cent of the total banking industry assets. Unfortunately they are

burdened with excessive Non Performing assets massive manpower and lack of modern

technology. On the other hand the Private Sector Banks are making progress. They are

leaders in Internet banking, mobile banking, ATMs. As far as foreign banks are

concerned they are likely to succeed in the Indian Banking Industry.

In the Indian Banking Industry some of the Private Sector Banks operating are IDBI, ING

Vyasa Bank, SBI Commercial and International Bank Ltd, Bank of Rajasthan Ltd. and

banks from the Public Sector include Punjab National bank, Vijaya Bank, UCO Bank,

Oriental Bank, Allahabad Bank among others. ANZ Grindlays Bank, ABN-AMRO Bank,

American Express Bank Ltd, Citibank are some of the foreign banks operating in the

Indian Banking Industry.

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Automobile sector

A well developed transport network indicates a well developed economy. For rapid

development a well-developed and well-knit transportation system is essential. As India's

transport network is developing at a fast pace, Indian Automobile Industry is growing

too. Also, the Automobile industry has strong backward and forward linkages and hence

provides employment to a large section of the population. Thus the role of Automobile

Industry cannot be overlooked in Indian Economy. All kinds of vehicles are produced by

the Automobile Industry. India Automobile Industry includes the manufacture of trucks,

buses, passenger cars, defense vehicles, two-wheelers, etc. The industry can be broadly

divided into the Car manufacturing, two-wheeler manufacturing and heavy vehicle

manufacturing units.

The major Car manufacturer are Hindustan Motors, Maruti Udyog, Fiat India Private

Ltd., Ford India Ltd ., General Motors India Pvt. Ltd., Honda Siel Cars India

Ltd.,Hyundai Motors India Ltd., Skoda India Private Ltd., Toyota Kirloskar Motor Ltd.,

to name a few.

The two-wheeler manufacturing is dominated by companies like TVS, Honda Motorcycle

& Scooter India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc. The heavy motors like

buses, trucks, defence vehicles, auto rickshaws and other multi-utility vehicles are

manufactured by Tata-Telco, Ashok Leyland, Eicher Motors, Bajaj, Mahindra and

Mahindra, etc.

Page - 30 -

Chapter-4

ANALYSIS AND INTREPRETATION

Page - 31 -

Ashokleyland Table 4.1

C hart Sho wing Share Pr ices,EV A & M V A

0

2 0 0

4 0 0

6 0 0

8 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Years

Share PriceEV AM V A

Interpretation: - The above graph clearly shows that Share Price, EVA & MVA have an

increasing trend i.e. from 2003-04 to 2007-08 except for share price which decrease in

2004-05 & 2006-2007. The share price during 2007-2008 i.e. projected shows a very

high growth rate.

R OC E

0

1 0

2 0

3 0

4 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E

Interpretation: - The above graph clearly shows that ROCE have shown an increasing

trend from 2003-04 to 2006-07 i.e. from 22% to 34.43%.

Ashokleyland Share Price EVA MVA ROCE 2003-04 24.36 275.79 289.94 22 2004-05 21 319.78 363.36 22.04 2005-06 40.25 400.75 461.53 24.18 2006-07 38.45 509.02 570.71 27.77 2007-08 343.3 629.43 705.72 34.73

Page - 32 -

Eicher Motors Table 4.2

C hart Showing Share Price, EV A & M V A

0

5 0

1 0 0

1 5 0

2 0 0

2 5 0

3 0 0

3 5 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

Share Pr iceEV AM V A

Interpretation: - The above graph clearly shows that Share Price, EVA & MVA have

increased in the 1st coming year but in 2005-06 have decreased except for EVA. Again in

2006-07 shares Price of Eicher Motor dip further to 247.65 & EVA to 91.50. In 2007-08

all have increased in comparison to previous year .The above graph clearly shows that

Share Price, EVA & MVA previous year.

R OC E

0

2 0

4 0

6 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E

Interpretation:- In the year 2004-05 ROCE has increased by more than 100% but for

2005-06 & 2006-07 have decreased from 55.69% to 25.63% & 18.80% respectively. And

in the year 2007-08 ROCE is 37.37%.

Eicher Motors Share Price EVA MVA ROCE 2003-04 231.70 79.62 82.71 27.31 2004-05 310.00 92.60 153.87 55.69 2005-06 305.40 172.27 81.73 25.63 2006-07 247.65 91.50 94.34 18.80 2007-08 277.60 105.63 108.90 37.37

Page - 33 -

Hero Honda Table 4.3

C hart Sho wing Share Price , EV A & M V A

- 2 0 0

0

2 0 0

4 0 0

6 0 0

8 0 0

1 0 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7

Y ears


Interpretation: - In 2003-04 to 2006-07 the share Price of Hero Honda is 490.45, 548.15,

888.3, & 685.15 respectively. Both EVA & MVA were negative for all the years.

R OC E

0

2 0

4 0

6 0

8 0

1 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E

Interpretation: - The above graph clearly shows that ROCE is decreasing from 2003-04 to

2006-07. And during 2007-08 have increased from 55.66% to 88.95%.

Hero Honda Share Price EVA MVA ROCE 2003-04 490.45 -8.25 -3.52 83.21 2004-05 548.15 -3.93 -7.27 81.04 2005-06 888.3 -8.11 -3.10 72.75 2006-07 685.15 -3.46 -3.14 51.66 2007-08 NA -3.5 -3.18 85.95

Page - 34 -

Hindustan Motors Table 4.4

C hart Showing Share Pr ice, M V A & EV A

- 4 0

- 2 0

0

2 0

4 0

6 0

8 0

1 0 0

1 2 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears


Interpretation: - In 2003-04 Share Price was 14.05 & EVA was negative. In 2004-05 &

2006-07 MVA was negative & EVA negative for the year 2007-08.

R OC E

- 2 0

- 1 0

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

8 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E

Interpretation: - ROCE was positive for all in years except for 2004-05 & 2006-07. In the

year 2003-04 ROCE was 13.41% and in the year 2007-08 ROCE 15.67%.

Hindustan Motors Share Price EVA MVA ROCE 2003-04 14.05 -30.71 101.78 13.41 2004-05 31.55 112.68 -27.44 -15.72 2005-06 39.9 -30.38 16.17 67.77 2006-07 33.9 17.90 -20.17 -11.16 2007-08 27.57 -22.33 25.16 15.67

Page - 35 -

Kinetic Motors Table 4.5

kinetic Motors Share Price EVA MVA ROCE

2003-04 29.05 6.43 -52.64 -83.68 2004-05 52.65 -57.88 -29.17 -65.64 2005-06 63.4 -32.07 -56.73 -20.22 2006-07 31.05 -62.38 72.55 4.91 2007-08 24.2 79.79 -92.80 -32.21

C hart Showing Share Pr ice , EV A & M V A

- 1 2 0

- 1 0 0

- 8 0- 6 0

- 4 0

- 2 0

0

2 0

4 06 0

8 0

1 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears


Interpretation: - Share price of Kinetic Motors have shown an increasing trend from

2003-04 to 2005-06 then declined to 31.05 & 24.2 in 2006-07 & 2007-08 respectively.

EVA was negative for all years except in the year 2003-04 & 2007-08. And MVA was

also negative for all year except in the year 2006-2007.

R OC E

- 9 0

- 8 0

- 7 0

- 6 0

- 5 0

- 4 0

- 3 0

- 2 0

- 1 0

0

1 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E

Interpretation: - ROCE was also negative for all the years for Kinetic Motors except for

the year 2006-07 in which ROCE was 4.91%.

Page - 36 -

LML Table 4.6


- 1 5 0

- 1 0 0

- 5 0

0

5 0

1 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears


Interpretation: - Share price of LML has decreased from 2004-05 i.e. 43.85 to 9.31 in the

year 2006-07. EVA & MVA were both negative for the year 2004-05 & 2005-06.

R OC E

- 4 0

- 3 5

- 3 0

- 2 5

- 2 0

- 1 5

- 1 0

- 5

0

2003-04 2004-05 2005-06 2006-07 2007-08

Y ears

R OC E

Interpretation: - ROCE of LML was negative for all the years i.e. 2003-04 to 2007-08.

LML Share Price EVA MVA ROCE 2003-04 31.75 16.18 -82.83 -11.13 2004-05 43.85 -90.70 -103.84 -37.87 2005-06 35.20 -113.71 -21.37 -26.51 2006-07 9.31 -23.41 18.81 -1.68 2007-08 NA 20.60 -16.57 -8.42

Page - 37 -

Punjab Tractors

Table 4.7

Punjab Tractors Share Price EVA MVA ROCE 2003-04 224.80 43.34 69.94 17.21 2004-05 159.50 76.20 114.78 26.58 2005-06 252.35 125.05 75.95 19.36 2006-07 305.25 82.75 97.10 12.24 2007-08 96.05 105.80 124.16 34.73

C hart Showing Share Pr ice , M V A & EV A

0

5 0

1 0 0

1 5 0

2 0 0

2 5 0

3 0 0

3 5 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ear s


Interpretation: - Share Price of Punjab Tractors was 224.80, 159.50, 252.35, 305.25 &

96.05 in the year 2003-04 to 2007-08 respectively. And EVA & MVA were highest in the

year 2005-06 & 2007-08 respectively.

R OC E

0

1 0

2 0

3 0

4 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E

Interpretation: - ROCE of Punjab Tractor was 17.21%, 26.58%, 19.367%, 12.24% &

finally 34.43% from 2003-04 to 2007-08 respectively.

Page - 38 -

Mahindra & Mahindra Table 4.8

Mahindra & Mahindra Share Price EVA MVA ROCE

2003-04 464.55 426.24 518.75 20.06 2004-05 497.15 603.47 730.30 27.16 2005-06 627.10 849.58 910.98 26.33 2006-07 780.15 1059.76 1225.85 32.25 2007-08 935 1426.07 1649.56 41.57

C hart Showing Share Pr ice , M V A & EV A

0

2 0 0

4 0 0

6 0 0

8 0 0

1 0 0 0

1 2 0 0

1 4 0 0

1 6 0 0

1 8 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears


Interpretation: - The above graph clearly shows that Share Price, EVA & MVA have

shown an increasing trend starting from the year 2003-04 to 2007-08.

R OC E

0

5

1 0

1 5

2 0

2 5

3 0

3 5

4 0

4 5

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E

Interpretation: - The above graph clearly shows that ROCE of Mahindra & Mahindra

have increased during the years.

Page - 39 -

Tata Motors Table 4.9

Tata Motors Share Price EVA MVA ROCE

2003-04 485.70 1155.34 1376.62 33.77 2004-05 413.95 1501.79 1681.59 32.76 2005-06 932.60 1834.49 2123.94 31.25 2006-07 727.75 2317.06 2671.34 30.52 2007-08 NA 2914.22 3359.81 40.08

C hart Sho wing Share p rice, EV A & M V A

0

1 0 0 0

2 0 0 0

3 0 0 0

4 0 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears


Interpretation: - The above graph clearly shows that EVA & MVA have increased over

the years. Share Price of Tata Motors was highest in the year 2005-2005.

R OC E

0

1 0

2 0

3 0

4 0

5 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E

Interpretation: - The above graph clearly shows that ROCE have shown a decreasing

trend from year 2003-04 to year 2006-07. And in the year ROCE of Tata Motors will be

40.08 %.

Page - 40 -

TVS Motors

Table 4.10 TVS Motors Share Price EVA MVA ROCE

2003-04 86.10 198.63 174.12 36.68 2004-05 69.00 195.67 164.01 22.84 2005-06 140.01 184.30 128.38 18.16 2006-07 59.60 144.27 114.14 10.79 2007-08 64.20 128.26 101.47 12.56

C hart Showing Share p r ice , EV A & M V A

0

5 0

1 0 0

1 5 0

2 0 0

2 5 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears


Interpretation: - The above graph clearly shows that EVA & MVA have decreased over

the years. The price of TVS Motors is highest in the year 2005-06.

R OC E

0

5

1 0

1 5

2 0

2 5

3 0

3 5

4 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E

Interpretation: - The above graph clearly shows that ROCE have decreased over the

years i.e. from 2003-04 to 2006-07. And in the year 2007-08 it is 12.56%.

Page - 41 -

Bank of India Table 4.11

C hart Showing Share Prices,EV A & M V A

0

5 0 0

1 0 0 0

1 5 0 0

2 0 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears


Interpretation: - The above graph clearly shows that Share Prices, EVA & MVA have

showing an increasing trend from the year 2003-04 to the year 2007-08.

ROCE

0

2

4

6

8

1 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E

Interpretation: - The above graph clearly shows that ROCE have showing an increasing

trend from the year 2003-04 to the year 2006-07. And during the year 2007-2008 will be

8.08% slightly lower than 2006-07.

Bank Of India Share Price EVA MVA ROCE 2003-04 58.9 970.36 890.15 7.52 2004-05 103.5 1042.13 939.26 7.26 2005-06 132.0 1099.64 1139.12 7.49 2006-07 167.8 1333.61 1279.13 8.91 2007-08 285.45 1497.53 1436.35 8.08

Page - 42 -

Canara Bank Table 4.12

C hart Sho wing Share Price, EV A & M V A

0

2 0 0

4 0 0

6 0 0

8 0 0

1 0 0 0

1 2 0 0

1 4 0 0

1 6 0 0

1 8 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears


Interpretation:- The above graph clearly shows that Share Prices, EVA & MVA have

showing an increasing trend from the year 2003-04 to the year 2007-08 except in the year

2006-07 in which share price was Rs194.7 per share.

R OC E

0

5

1 0

2003-04 2004-05 2005-06 2006-07 2007-08Y ears

R OC E

Interpretation:- The above graph clearly shows that ROCE have showing an increasing

trend from the year 2003-04 to the year 2007-08 except in the year 2007-08 in which

ROCE will be 8.26%.

Canara Bank Share Price EVA MVA ROCE 2003-04 144.6 1102.98 1121.04 7.66 2004-05 200.4 1222.95 1243.51 7.59 2005-06 266.9 1356.54 1360.53 8.44 2006-07 194.7 1484.20 1500.75 9.29 2007-08 360.0 1637.17 1655.43 8.26

Page - 43 -

Corporation Bank Table 4.13

C hart Showing Share Pr ice, EV A & M V A

01 0 0

2 0 03 0 0

4 0 05 0 0

6 0 07 0 0

8 0 09 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears


Interpretation:- The above graph clearly shows that Share Prices, EVA & MVA have

showing an increasing trend from the year 2003-04 to the year 2007-08 except in the year

2006-07 in which share price was Rs288.90 per share.

R OC E

0

2

4

6

8

1 0

1 2

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E



ROCE will be 8.45%.

Corporation Bank Share Price EVA MVA ROCE 2003-04 194.70 297.86 306.20 7.82 2004-05 348.45 337.13 339.51 7.90 2005-06 381.70 373.81 366.85 8.41 2006-07 288.90 403.90 404.72 9.62 2007-08 763.40 445.60 446.51 8.45

Page - 44 -

Dena Bank

Table 4.14

Dena Bank Share Price EVA MVA ROCE 2003-04 29.0 270.64 305.37 8.04 2004-05 31.9 339.25 271.68 8.13 2005-06 36.4 301.83 305.57 8.30 2006-07 35.0 339.47 328.39 11.26 2007-08 76.1 364.82 352.90 8.69

C hart Sho wing Share Price, EV A & M V A

0

1 0 0

2 0 0

3 0 0

4 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears




R OC E

0

2

4

6

8

1 0

1 2

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E



ROCE will be 8.69%.

Page - 45 -

HDFC Bank

Table 4.15 HDFC Bank Share Price EVA MVA ROCE

2003-04 378.35 402.81 440.37 9.40 2004-05 544.25 519.66 753.61 7.49 2005-06 773.50 889.31 998.00 7.31 2006-07 949.40 1177.70 1448.30 7.47 2007-08 1157.00 1709.08 2101.79 10.17

C hart Showing Share Pr ice, EV A & M V A

0

5 0 0

1 0 0 0

1 5 0 0

2 0 0 0

2 5 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears




R OC E

0

2

4

6

8

10

12

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E

Interpretation: - The above graph clearly shows that ROCE have showing a decreasing

trend for the year 2004-05 & 2005-06. And in the year 2006-07 & 2007-08 it was 7.47%

& 10.17% respectively.

Page - 46 -

ICICI Bank Table 4.16

ICICI Bank Share Price EVA MVA ROCE 2003-04 295.90 1054.69 1139.22 8.69 2004-05 393.01 1316.77 1493.41 7.66 2005-06 589.25 1726.16 1949.54 7.73 2006-07 853.10 2253.38 2520.97 9.64 2007-08 1168.01 2913.88 3259.90 9.94


0

5 0 0

1 0 0 0

1 5 0 0

2 0 0 0

2 5 0 0

3 0 0 0

3 5 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears



showing an increasing trend from the year 2003-04 to the year 2007-08 i.e. 295.90,

1054.90, & 1139.69 respectively in 2003-04 to 1168.01, 2913.88, & 3259.90 respectively

in the year 2007-08.

R OC E

02468

1 01 2

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E


trend from the year 2003-04 to the year 2007-08.

Page - 47 -

IndusInd Bank Table 4.17

IndusInd Bank Share Price EVA MVA ROCE 2003-04 39.15 84.77 90.83 8.59 2004-05 50.05 103.22 126.68 9.15 2005-06 46.85 143.96 130.62 8.80 2006-07 41.95 148.44 157.40 10.18 2007-08 69.51 178.87 189.67 9.35

C hart Showing Share p r ice , EV A & M V A

0

5 0

1 0 0

1 5 0

2 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears



showing an increasing trend from the year 2003-04 to the year 2007-08 i.e. 39.15, 84.77,

& 90.83 respectively in 2003-04 to 69.51, 178.87, & 189.67 respectively in the year

2007-08.

R OC E

7 . 5

8

8 . 5

9

9 . 5

1 0

1 0 . 5

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E


trend from the year 2003-04 to the year 2007-08 except in the year 2005-2006 & 2007-

2008 in which ROCE was 8.80% & 9.35% respectively.

Page - 48 -

State Bank of India Table 4.18

State Bank Of India Share Price EVA MVA ROCE 2003-04 642.60 5571.88 5150.02 9.40 2004-05 584.80 6041.16 6015.12 7.49 2005-06 913.65 7055.96 5893.62 7.31 2006-07 1,105.25 6913.43 6316.59 7.47 2007-08 2,486.00 7409.59 6769.93 10.17


0

2 0 0 0

4 0 0 0

6 0 0 0

8 0 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears




R OC E

0

5

1 0

1 5

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E


trend from the year 2003-04 to the year 2007-08.

Page - 49 -

Syndicate Bank Table 4.19


0

1 0 0

2 0 0

3 0 0

4 0 0

5 0 0

6 0 0

7 0 0

8 0 0

9 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears


Interpretation: - The share Price of Syndicate Bank was 34.45, 53.35, 96.95 & 63.95. And

EVA has shown an increasing trend over the years. Also MVA have increased in first

4years then decrease in 2007-08.

R OC E

6 . 8

7

7 . 2

7 . 4

7 . 6

7 . 8

8

8 . 2

8 . 4

8 . 6

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears

R OC E


trend from the year 2003-04 to the year 2005-06 except in the year 2006-2007 & 2007-

2008 in which ROCE was 8.28% & 7.98% respectively.

Syndicate Bank Share Price EVA MVA ROCE 2003-04 34.45 669.67 651.75 7.40 2004-05 53.35 712.72 704.26 7.55 2005-06 96.95 770.14 711.58 8.43 2006-07 63.95 778.14 746.04 8.28 2007-08 NA 815.82 78.16 7.98

Page - 50 -

Vijaya Bank

Table 4.20 Vijaya Bank Share Price EVA MVA ROCE

2003-04 61.45 225.52 223.88 7.49 2004-05 64.30 249.71 269.68 8.47 2005-06 52.55 300.79 285.30 8.71 2006-07 42.50 318.21 319.98 10.55 2007-08 76.11 356.90 358.88 8.11


0

5 0

1 0 0

1 5 0

2 0 0

2 5 0

3 0 0

3 5 0

4 0 0

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Y ears


Interpretation: - The above graph clearly shows that in 2004-05 share prices have

increased over the previous year. And in the next 2 years the share price of Vijaya Bank

has come down to 42.50 per share from 64.30 in the year 2004-2005. And in the year

2007-08 share price was 76.11. EVA & MVA has shown an increasing trend since from

year 2003-04 to year 2007-08. R OC E

0

2

4

6

8

1 0

1 2

2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5- 0 6 2 0 0 6 - 0 7 2 0 0 7- 0 8

Years

R OC E

Interpretation: - ROCE of Vijaya Bank has shown an increasing trend for the years2004-

05, 2005-06 & 2006-07. And in the year 2007-08 ROCE has come down to 8.11% from

10.55% that was during 2006-07.

Page - 51 -

Table 4.21

Company Multliple R R Square a B1 B2 T1 P1 T2 P2 F

Ashokleyland 0.824728 0.6802 4.075 -0.035 0.096 -0.06 0.959 0.205 0.871 1.063

Eicher Motors 0.961132 0.9238 -163.4 0.083 0.176 0.348 0.787 0.849 0.552 167.7

Hero Honda 0.473109 0.2238 852.3 2.729 42.96 0.04 0.975 0.49 0.71 0.144 Hindustan

Motors 0.934476 0.8732 35.94 -0.111 -0.24 -1.37 0.401 -2.57 0.237 3.445

Kinetic Motors 0.912219 0.8321 19.07 -0.539 -0.32 -1.87 0.312 -2.14 0.279 2.479

LML 0.973175 0.9471 13.25 -0.122 -0.22 -2.16 0.276 -3.62 0.171 8.946

Punjab Tractors 0.465844 0.217 296 0.493 -1.13 0.308 0.81 -0.43 0.741 0.139

Mahindra & Mahindra 0.981338 0.963 202.6 0.192 0.294 0.263 0.836 0.434 0.739 13.02

Tata Motors 0.752871 0.5668 44.27 -2.593 2.551 -0.55 0.678 0.621 0.646 0.654

TVS Motors 0.92927 0.8635 -74.42 2.702 -2.24 2.49 0.243 -2.35 0.256 3.164

Bank Of India 0.961132 0.9238 -163.4 0.083 0.176 0.348 0.787 0.849 0.552 6.059

Canara Bank 0.860465 0.7404 160.8 4.918 -4.83 1.338 0.409 -1.29 0.419 1.426 Corporation

Bank 0.878776 0.7722 391.2 12.23 -12.4 1.558 0.363 -1.44 0.386 1.695

Dena Bank 0.635635 0.404 -1.56 0.052 0.061 0.674 0.622 0.55 0.68 39.36

HDFC Bank 0.993708 0.9875 128.3 0.408 0.251 1.076 0.477 0.794 0.573 0.112

ICICI Bank 0.999996 1 -231.1 1.026 -0.49 33.37 0.019 -18.1 0.035 63413

IndusInd Bank 0.362459 0.1314 37.24 -0.062 0.117 -0.21 0.87 0.341 0.791 0.076 State Bank Of

India 0.851096 0.7244 -994.6 0.303 -0.02 1.118 0.465 -0.06 0.964 1.314

Syndicate Bank 0.93033 0.8655 -106.7 0.935 -0.73 1.977 0.298 -1.18 0.447 3.218

Vijaya Bank 0.911187 0.8303 109 -0.266 0.069 -0.96 0.514 0.229 0.856 2.446

Page - 52 -

Table 4.22

Company Multliple R R Square a b t p f Observation

Ashokleyland 0.7892002 0.62284 -37.03 2.836 1.817 0.211 3.303 4

Eicher Motors 0.6147258 0.37789 225.8 1.502 1.102 0.385 1.215 4

Hero Honda 0.4252759 0.18086 1030 -5.22 -0.66 0.575 0.442 4

Hindustan Motors 0.3110136 0.09673 28.63 0.09 0.463 0.689 0.214 4

kinetic Motors 0.1140235 0.013 45.97 0.047 0.162 0.886 0.026 4

LML 0.9092623 0.82676 13.94 -0.83 -3.09 0.091 9.545 4

Punjab Tractors 0.9433212 0.88985 416.6 -9.61 -4.02 0.057 16.16 4

Mahindra & Mahindra 0.8514839 0.72502 -54.68 24.46 2.296 0.149 5.273 4

Tata Motors 0.7630117 0.58219 4595 -123 -1.67 0.237 2.787 4

TVS Motors 0.0631959 0.00399 84.08 0.208 0.09 0.937 0.008 4

Bank Of India 0.72602 0.52711 -231.6 44.51 1.493 0.274 2.229 4

Canara Bank 0.3312391 0.10972 29.56 20.86 0.496 0.669 0.246 4

Corporation Bank 0.1183888 0.01402 204.9 11.67 0.169 0.882 0.028 4

Dena Bank 0.4504389 0.2029 24.54 0.955 0.713 0.55 0.509 4

HDFC Bank 0.7576909 0.5741 2185 -192 -1.64 0.242 2.696 4

ICICI Bank 0.5740059 0.32948 -743 151.3 0.991 0.426 0.983 4

IndusInd Bank 0.0443559 0.00197 47.33 -0.31 -0.06 0.956 0.004 4

State Bank Of India 0.4802275 0.23062 1744 -118 -0.77 0.52 0.599 4

Syndicate Bank 0.8904303 0.79287 -299 45.61 2.767 0.11 7.656 4

Vijaya Bank 0.8816095 0.77724 115.1 -6.8 -2.64 0.118 6.978 4

Page - 53 -

Interpretation: Table 4.21 & 4.22 Ashokleyland:

Since the Multiple R is more than 50% for EVA, MVA & ROCE, It shows that there

is a highly positively Correlation between EVA, MVA & ROCE with respect to Share

Price.

Since the Value of R square is 68% approximately for EVA & MVA, it shows that

Share Price is affected by EVA & MVA by 68% and remaining 32% by some other

factor. Similarly for ROCE R square is 68% approximately, it shows that Share Price

is affected by EVA & MVA by 68% and remaining 32% by some other factor.

Since value of P1, P2 & P are greater than 5% level of significance; therefore it shows

that there is no significant relationship between EVA & Share Price, MVA & Share

Price and ROCE & Share Price.

Therefore, Null Hypothesis is accepted.

Alternative Hypothesis is rejected.

Eicher Motors: Since the Multiple R is more than 50% for EVA, MVA & ROCE, It shows that there


Price.





Since value of P1, P2 & P are greater than 5% of level of significance; therefore it

shows that there is no significant relationship between EVA & Share Price, MVA &

Share Price and ROCE & Share Price.



Page - 54 -

Hero Honda Motors:

Since the Multiple R is less than 50% for EVA, MVA & ROCE, It shows that there is

a less positively Correlation between EVA, MVA & ROCE with respect to Share

Price.










Hindustan Motors: Since the Multiple R is more than 50% for EVA & MVA, It shows that there is a

highly positively Correlation between EVA & MVA with respect to Share Price.

Similarly Multiple R is less than 50% for ROCE, It shows that there is a less

positively Correlation with respect to Share Price.










Page - 55 -

Kinetic Motors: Since the Multiple R is more than 50% for EVA & MVA, It shows that there is a






factor. Similarly for ROCE R square is 1% approximately, it shows that Share Price is

affected by EVA & MVA by 1% and remaining 99% by some other factor.




Therefore, Null Hypothesis is accepted Alternative Hypothesis is rejected.

LML Since the Multiple R is more than 50% for EVA, MVA & ROCE, It shows that there


Price.

Since the Value of R square is 94approximately for EVA & MVA, it shows that









Page - 56 -

Punjab Tractors:

Since the Multiple R is less than 50% for EVA & MVA, It shows that there is a less

positively Correlation between EVA & MVA with respect to Share Price. Similarly

Multiple R is more than 50% for ROCE, It shows that there is a highly positively

Correlation with respect to Share Price.



factor. . Similarly for ROCE R square is 88% approximately, it shows that Share

Price is affected by EVA & MVA by 88% and remaining 12% by some other factor.





Mahindra & Mahindra: Since the Multiple R is more than 50% for EVA, MVA & ROCE, It shows that there


Price.








Therefore, Null Hypothesis is accepted


Page - 57 -

Tata Motors: Since the Multiple R is more than 50% for EVA, MVA & ROCE, It shows that there


Price.










TVS Motors: Since the Multiple R is more than 50% for EVA, MVA & ROCE, It shows that there


Price.










Page - 58 -

Bank of India: Since the Multiple R is more than 50% for EVA, MVA & ROCE, It shows that there


Price.










Canara Bank: Since the Multiple R is more than 50% for EVA & MVA, It shows that there is a






factor. Similarly for ROCE R square is 11 % approximately, it shows that Share Price






Page - 59 -

Corporation Bank: Since the Multiple R is more than 50% for EVA & MVA, It shows that there is a













Dena Bank:

Since the Multiple R is more than 50% for EVA & MVA, It shows that there is a







is affected by EVA & MVA by20 % and remaining 80% by some other factor.




Therefore, Null Hypothesis is accepted


Page - 60 -

HDFC Bank: Since the Multiple R is more than 50% for EVA, MVA & ROCE, It shows that there


Price.










ICICI Bank: Since the Multiple R is more than 50% for EVA & MVA, It shows that there is a





Share Price is affected by EVA & MVA 100%. Similarly for ROCE R square is 33 %

approximately, it shows that Share Price is affected by EVA & MVA by 33% and

remaining 67% by some other factor.

Since value of P1, & P2 are less than 5% of level of significance; therefore it shows

that there is significant relationship between EVA & Share Price, & MVA & Share

Price a.

Therefore, Null Hypothesis is rejected.

Alternative Hypothesis is accepted. Since value of P is greater than 5% of level of significance; therefore it shows that

there is no significant relationship between ROCE & Share Price.


Alternative Hypothesis is rejected

Page - 61 -

IndusInd Bank: Since the Multiple R is less than 50% for EVA, MVA & ROCE, It shows that there is

a less positively Correlation between EVA, MVA & ROCE with respect to Share

Price.










State Bank of India: Since the Multiple R is more than 50% for EVA, MVA & ROCE, It shows that there


Price.










Page - 62 -

Syndicate Bank: Since the Multiple R is more than 50% for EVA, MVA & ROCE, It shows that there


Price.










Vijaya bank: Since the Multiple R is more than 50% for EVA, MVA & ROCE, It shows that there


Price.










Page - 63 -

Chapter-5

CONCLUSION

Page - 64 -

5.1 CONCLUSION Creating shareholder value is a fundamental requirement for all the companies.

Therefore, most of the leading companies adopt the mantra of shareholder value to meet

the increasing expectations of the share holders.

Academicians, professional communities and evaluating firms do not give importance to

EVA, MVA, ROCE and more over many other factors are also sconsider for the

investment decisions. There is a no significant relationship between EVA; MVA &

ROCE with respect to Share Price. Investors do not use all the available information.

Investors cannot take all investment decisions on the basis of EVA, MVA & ROCE.

Page - 65 -

BIBLIOGRAPHY

Page - 66 -

Bibliography

Websites: • www.Yahoofinance.com • www.EVA.com • www.Capitaline.com • www.MoneyControl.com • www.JSTOR.COM BOOKS:

Chandra, Prasanna Investment Analysis and Portfolio Financial Management, Sixth edition, New Delhi Tata McGraw-Hill Publising Company Limited,2005

Pandey, M.J and Copeland T..E , “Beta Changes around Stock splits A Note”

Page - 67 -

Annexure

Ashokleyland

Eicher Motors

Hero Honda

Hindustan Motors

Ashokleyland Share Price EVA MVA ROCE 2003-04 24.36 275.79 289.94 22 2004-05 21 319.78 363.36 22.04 2005-06 40.25 400.75 461.53 24.18 2006-07 38.45 509.02 570.71 27.77 2007-08 343.3 629.43 705.72 34.73

Eicher Motors Share Price EVA MVA ROCE 2003-04 231.70 79.62 82.71 27.31 2004-05 310.00 92.60 153.87 55.69 2005-06 305.40 172.27 81.73 25.63 2006-07 247.65 91.50 94.34 18.80 2007-08 277.60 105.63 108.90 37.37

Hero Honda Share Price EVA MVA ROCE 2003-04 490.45 -8.25 -3.52 83.21 2004-05 548.15 -3.93 -7.27 81.04 2005-06 888.3 -8.11 -3.10 72.75 2006-07 685.15 -3.46 -3.14 51.66 2007-08 NA -3.5 -3.18 85.95

Hindustan Motors Share Price EVA MVA ROCE 2003-04 14.05 -30.71 101.78 13.41 2004-05 31.55 112.68 -27.44 -15.72 2005-06 39.9 -30.38 16.17 67.77 2006-07 33.9 17.90 -20.17 -11.16 2007-08 27.57 -22.33 25.16 15.67

Page - 68 -

Kinetic Motors

kinetic Motors Share Price EVA MVA ROCE 2003-04 29.05 6.43 -52.64 -83.68 2004-05 52.65 -57.88 -29.17 -65.64 2005-06 63.4 -32.07 -56.73 -20.22 2006-07 31.05 -62.38 72.55 4.91 2007-08 24.2 79.79 -92.80 -32.21

LML

Punjab Tractors

Punjab Tractors Share Price EVA MVA ROCE

2003-04 224.80 43.34 69.94 17.21 2004-05 159.50 76.20 114.78 26.58 2005-06 252.35 125.05 75.95 19.36 2006-07 305.25 82.75 97.10 12.24 2007-08 96.05 105.80 124.16 34.73

Mahindra & Mahindra

Mahindra & Mahindra Share Price EVA MVA ROCE

2003-04 464.55 426.24 518.75 20.06 2004-05 497.15 603.47 730.30 27.16 2005-06 627.10 849.58 910.98 26.33 2006-07 780.15 1059.76 1225.85 32.25 2007-08 935 1426.07 1649.56 41.57

LML Share Price EVA MVA ROCE 2003-04 31.75 16.18 -82.83 -11.13 2004-05 43.85 -90.70 -103.84 -37.87 2005-06 35.20 -113.71 -21.37 -26.51 2006-07 9.31 -23.41 18.81 -1.68 2007-08 NA 20.60 -16.57 -8.42

Page - 69 -

Tata Motor

Tata Motors Share Price EVA MVA ROCE

2003-04 485.70 1155.34 1376.62 33.77 2004-05 413.95 1501.79 1681.59 32.76 2005-06 932.60 1834.49 2123.94 31.25 2006-07 727.75 2317.06 2671.34 30.52 2007-08 NA 2914.22 3359.81 40.08

TVS Motors

TVS Motors Share Price EVA MVA ROCE

2003-04 86.10 198.63 174.12 36.68 2004-05 69.00 195.67 164.01 22.84 2005-06 140.01 184.30 128.38 18.16 2006-07 59.60 144.27 114.14 10.79 2007-08 64.20 128.26 101.47 12.56

Bank of India

Canara Bank

Bank Of India Share Price EVA MVA ROCE 2003-04 58.9 970.36 890.15 7.52 2004-05 103.5 1042.13 939.26 7.26 2005-06 132.0 1099.64 1139.12 7.49 2006-07 167.8 1333.61 1279.13 8.91 2007-08 285.45 1497.53 1436.35 8.08

Canara Bank Share Price EVA MVA ROCE 2003-04 144.6 1102.98 1121.04 7.66 2004-05 200.4 1222.95 1243.51 7.59 2005-06 266.9 1356.54 1360.53 8.44 2006-07 194.7 1484.20 1500.75 9.29 2007-08 360.0 1637.17 1655.43 8.26

Page - 70 -

Corporation Bank

Dena Bank

Dena Bank Share Price EVA MVA ROCE

2003-04 29.0 270.64 305.37 8.04 2004-05 31.9 339.25 271.68 8.13 2005-06 36.4 301.83 305.57 8.30 2006-07 35.0 339.47 328.39 11.26 2007-08 76.1 364.82 352.90 8.69

HDFC Bank

HDFC Bank Share Price EVA MVA ROCE

2003-04 378.35 402.81 440.37 9.40 2004-05 544.25 519.66 753.61 7.49 2005-06 773.50 889.31 998.00 7.31 2006-07 949.40 1177.70 1448.30 7.47 2007-08 1157.00 1709.08 2101.79 10.17

ICICI Bank

ICICI Bank Share Price EVA MVA ROCE 2003-04 295.90 1054.69 1139.22 8.69 2004-05 393.01 1316.77 1493.41 7.66 2005-06 589.25 1726.16 1949.54 7.73 2006-07 853.10 2253.38 2520.97 9.64 2007-08 1168.01 2913.88 3259.90 9.94

Corporation Bank Share Price EVA MVA ROCE 2003-04 194.70 297.86 306.20 7.82 2004-05 348.45 337.13 339.51 7.90 2005-06 381.70 373.81 366.85 8.41 2006-07 288.90 403.90 404.72 9.62 2007-08 763.40 445.60 446.51 8.45

Page - 71 -

IndusInd Bank

IndusInd Bank Share Price EVA MVA ROCE 2003-04 39.15 84.77 90.83 8.59 2004-05 50.05 103.22 126.68 9.15 2005-06 46.85 143.96 130.62 8.80 2006-07 41.95 148.44 157.40 10.18 2007-08 69.51 178.87 189.67 9.35

State Bank of India

State Bank Of

India Share Price EVA MVA ROCE

2003-04 642.60 5571.88 5150.02 9.40 2004-05 584.80 6041.16 6015.12 7.49 2005-06 913.65 7055.96 5893.62 7.31 2006-07 1,105.25 6913.43 6316.59 7.47 2007-08 2,486.00 7409.59 6769.93 10.17

Syndicate Bank

Vijaya Banks

Vijaya Bank Share Price EVA MVA ROCE 2003-04 61.45 225.52 223.88 7.49 2004-05 64.30 249.71 269.68 8.47 2005-06 52.55 300.79 285.30 8.71 2006-07 42.50 318.21 319.98 10.55 2007-08 76.11 356.90 358.88 8.11

Syndicate Bank Share Price EVA MVA ROCE

2003-04 34.45 669.67 651.75 7.40 2004-05 53.35 712.72 704.26 7.55 2005-06 96.95 770.14 711.58 8.43 2006-07 63.95 778.14 746.04 8.28 2007-08 NA 815.82 78.16 7.98

eva, mva & roce

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