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Mar '16
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Profitability analysis
Mar '16

Mar '15

Mar '14

Mar '13

Mar '12

Operating Profit
Margin (%)

15.54

13.43

11.66

9.7

7.06

Profit Before
Interest And
Tax Margin (%)

10.57

8.35

6.76

5.33

3.77

Gross Profit
Margin (%)

10.65

8.49

6.89

5.43

3.86

Cash Profit
Margin (%)

12.7

12.16

10.93

9.57

7.61

Adjusted Cash
Margin (%)

12.7

12.16

10.93

9.57

7.61

Net Profit
Margin (%)

7.91

7.42

6.36

5.48

4.59

Adjusted Net
Profit Margin
(%)

7.85

7.3

6.25

5.38

4.49

Return On
Capital
Employed (%)

24.42

21.24

16.91

15.92

13.53

Return On Net
Worth (%)

16.92

15.65

13.26

12.87

10.76

Adjusted
Return on Net
increaeWorth
(%)

16.92

15.65

13.26

12.87

10.76

Return on
Assets
Excluding
Revaluations

894.04

784.7

694.45

615.03

525.68

Profitability Ratios

Operating profit margin: Ebit/net

sales
The operating margin ratio, also known as the
operating profit margin, is a profitability ratio that
measures what percentage of total revenues is made
up by operating income. In other words, the operating
margin ratio demonstrates how much revenues are left
over after all the variable or operating costs have been
paid.

In above data the operating profit

margin gradually increased
from
2012 to 16, with sustainability because of

Reducing Cost of Goods Sold

Increasing Sales Revenue.

Reducing Labour and Operations Costs.
Audit Utilities and Insurance.

GROSS PROFIT MARGIN: gross profit /net

sales
Gross profit margin is a profitability ratio that
calculates the percentage of sales that exceed
the cost of goods sold. In other words, it
measures how efficiently a company uses its
materials and labour to produce and sell
products profitably.

In above data the gross profit margin

gradually increased from 2012 to 16, with
sustainability because of
Increasing selling price

0000000000000000000

 Increasing the sales

Reducing the cost of goods sold by
with changing selling price.
Net profit margin: net income / net sales
Net profit margin is the percentage of revenue left after
all expenses have been deducted from sales. The
measurement reveals the amount of profit that a
business can extract from its total sales.

The Difference Between Gross and Net Profit Margin.

In above data the net profit margin

gradually increased from 2012 to 16,
with sustainability.
To increase net profit, a company may attempt
to decrease its expenses or increase its
revenue.
Companies can increase their revenue by
attracting more clients through ads making
sales in new markets or raising the price of the
goods.
Companies can lower expenses by making
fewer purchases, cutting the cost of labour or
improving the efficiency of production.

Return on capital employed :it is the

financial ratio that measures profitability
of the company that employed
Roce = ebit/capital employed

In above data the net profit margin

gradually increased from 2012 to 16,
with sustainability

 By Maintaining operating profit but reduce the

value of capital employed,
improving the top line i.e. increase operating
profit without corresponding increase in capital
employed.
.

Return on assets: it is a profitability ratio

that how efficiently company it using
assets and producing earnings.
ROA = Net income/total assets
You must constantly find ways to reduce asset costs and
increase income to keep your ROA as high as possible.
ROA Formula, Return on assets is a ratio you get by
subtracting expenses
from total revenues, then
dividing this figure by the cost of your assets. ...
Reducing Asset Costs.
Increasing Revenues.
Reducing expenses.

Return on equity : it measures how much

return gained by shareholders money
Roe = net income /shareholders
equity

In above data, the net profit margin

gradually increased from 2012 to 16,
with sustainability
Use more financial leverage
Increase profit margin
Improve asset turnover
Lower of taxes.

Analysis on sustainable growth

Businesses see growth as a good thing. The more and the faster a business
can growth the better.
Sustainable Growth Rate : The sustainable growth rate in a business is the
maximum growth rate a
business can achieve without having to increase its financial leverage or debt
financing. Stated
another way, it is the maximum growth rate that can be achieved given the
company's profitability,
asset utilization, dividend pay-out, and debt ratios.
Sustainable growth: retention ratio * return on equity
Retention on equity= net income -dividend /net income
Return on equity

= net income /total shareholders equity

Retention ratio : The retention ratio is the proportion of earnings kept back in
the business as

retained earnings. The retention ratio refers to the percentage of net income
that is retained
to grow the business, rather than being paid out as dividends. It is the
opposite of the payout
ratio, which measures the percentage of earnings paid out to shareholders as
dividends.

2012

2013

2014

2015

2016

Net income

1635

2392

2783

3711

4571

Dividends

216

241

362

755

1057

Retention
ratio

86.75

89.90

86.98

79.66

76.88

In the above table in 2012 retention ratio is 86.75 and in 2013 it is 89.90 and
in 2014 it is 86.98 the company retaining more income to increase the company
business rather paying dividends to the shareholders.and in 2015 and 2016 it
decline to 79.66 and76.88 here company released the funds to pay dividends not
interested to plough back the income

Sustainable growth rate (SGR) : retention ratio *return on equity

2012

2013

2014

2015

2016

Return on
equity

10.76

12.87

13.26

10.76

16.92

Retention
ratio

0.86

0.89

0.87

0.79

0.76

Sgr

12.85

8.5

11.53

11.45

9.25.

In 2012 and 2013 there is a gradual decrease of sgr due to increase in equity
and net income fluctuations and fluctuations in in expenses and selling price
etc .and company haven't invested more capital and wouldn't want to increase
financial leverage