INDUSTRY PROFILE

NBFCs have been playing a complementary role to the other financial institutions
including banks in meeting the funding needs of the economy. They help fill the gaps in
the availability of financial services that otherwise occur in the unbanked & the
underserved areas. NBFCs account for 12.3% assets of the total financial system.

An NBFC is defined in terms of Section 45I(c) of the RBI Act 1934 as a company
registered under the Companies Act 1956  engaged in granting loans/advances or in the
acquisition of shares/securities, etc. or hire purchase finance or insurance business or
chit fund activities or lending in any manner provided the principal business of such a
company does not constitute any non-financial activities such as (a) agricultural
operations (b) industrial activity (c) trading in goods (other than securities) (d)
providing services (e) purchase, construction or sale of immovable property.

The NBFC segment has witnessed considerable growth in the last few years and is now
being recognised as complementary to the banking sector due to implementation of
innovative marketing strategies, introduction of tailor-made products, customer-
oriented services, attractive rates of return on deposits and simplified procedures, etc.

NBFCs have been at the forefront of catering to the financial needs and creating
livelihood sources of the so-called unbankable masses in the rural and semi-urban
areas. Through strong linkage at the grassroots level, they have created a medium of
reach and communication and are very effectively serving this segment. Thus, NBFCs
have all the key characteristics to enable the government and regulator to achieve the
mission of financial inclusion in the given time

Types of NBFCs
NBFCs have been classified on the basis of the kind of liabilities they access, the type of
activities they pursue, and of their perceived systemic importance.

Liabilities based classification

NBFCs are classified on the basis of liabilities into two categories, viz, Category ‘A’
companies, (NBFCs having public deposits or NBFCs-D), and Category ‘B’ companies, (NBFCs
not having public deposits or NBFCs-ND).
Activity Based Classification
NBFCs are classified in terms of activities into five categories, viz., Loan Companies (LCs),
Investment Companies (ICs), Asset Finance Companies (AFCs), Infrastructure Finance
Companies (IFCs) and Systemically Important Core Investment Companies (CICs-ND-SI).
Size Based Classification
non-deposit taking NBFCs with assets of Rs. 100 crore and above were labelled as
Systemically Important Non-Deposit taking NBFCs (NBFCs-ND-SI), and prudential regulations
such as capital adequacy requirements, exposure norms along with, reporting requirements
were made applicable to them.
THEORTICAL BACKGROUND

BALANCE SHEET

The Balance Sheet of any organization gives its financial position as

at the end of the financial year. It gives information about the assets,
liabilities, share capital, reserves, etc.

In nut shell it is a snapshot of the company’s financial position.

Summary of assets, and liabilities and capital of a business as on a
specific date is presented in the Balance Sheet. This is usually
prepared and published at the end of the Financial Year.

The values shown under various heads of the balance sheet do not
reflect the current market values. Those are basically historical costs.
The assets comprises of enterprise’s investment in plant and
machinery with which use the enterprise generates benefits. With
the use of the machinery and equipment the business enterprise
manufactures products which have demand in the market which in
turn generates cash inflow.
FINANCIAL ANALYSIS

The success of any commercial firm largely depends on its cost

consciousness. Therefore, the management of the firm must always
bear in mind the cost consciousness is the key to success. Financial
analysis studies the monetary transactions of the firm.

It throws light how the long term and short term resources of the
firm are used. Is there any miss matching. Whether short term funds
are used for the long term purposes like acquiring any machinery or
equipment etc., if it is then the firm will be facing working capital
crunch and its recycling will adversely affect. The analysis should
point out as to what is the trend of the firm in extending credit to its
customers. If it is unreasonably long then naturally the firm will have
to bear the incidence of interest on its working capital raised from
the bank and in turn the profitability will adversely affected. It should
also try to find out ways and means like sale against letters of credit.
In such a case receivables are realized faster, i.e. as soon as the
documents are presented the firm gets the sale proceeds.

The firm can also make use of various other modes available to it
like co-accepted bills by the purchaser’s bankers so that the firm can
extend larger period credit and in case of need the firm can raise bill
discounting facilities from its bankers. Even for acquiring fixed assets
the firm can explore the possibility of obtaining the machinery or the
equipment under the Deferred Payment Guarantee Scheme of the
banks. Thus, in nut shell financial analysis helps the owners to
understand where the firm’s creditworthiness stands.
In the case of large corporate organizations there are outside credit
agencies like Bloomberg Financial Markets, Moody's Investors
Service, Standard and Poor's Corporation, Fitch Ratings, and
Value Line, etc. who assess the standing of the company and accord
their credit rating to the company which enables it to have an
independent assessment of its standing. If it is good rating naturally
it helps in raising money from the public and the bankers and vice
versa.

The investors domestic or the foreign investors give due weightage

to the credit rating given by the standard credit rating organizations
to the company and then invest in it.
Users of Financial Analysis

Financial analysis is used and examined by an alternate gathering of

gatherings, these gatherings comprises of individuals both inside and
outside a business. By and large, the clients include:

Inside Users : are proprietors, administrators, representatives and

different gatherings that are specifically associated with an
organization:

1. The financial analysis is mainly used by the owners and the chief
executive of the firm. With the use of this analysis they are able to
take vital financial decisions to conduct the organization’s future
course of operations. The executives then get a definite direction for
taking various management decisions to shape the performance of
the organization which is then reflected in the Annual report.

2. Similarly the financial analysis is also used by the representatives

of the trade union organizations for placing their demands for
remuneration and also for career path planning.

Users from outside: These comprise of banks, government offices,

potential investors, etc. for their varied purposes. E.g. Bank’s require
it to assess the data for working out the credit needs of the
organization, and to ascertain as to how the credit provided by the
bank has been utilized, whether the organization is capable of
honouring its commitment of repayment of loans availed etc.

The government 44 officials requires for working out tax liability as

well as whether the company is complying with various
commitments given by it to the Govt. e.g. export obligation
undertaken, payment of employees dues, compliance to other
statutory requirements such as compliance of Corporate Social
Responsibility etc.
RATIO ANALYSIS
Overview
Ratio analaysis is a tool to study financial analysis of the company
This analysis describes a particular relationship between elements of
one with the other elements in a financial report.
Financial statements referred to is the balance sheet and income
statement. Balance sheet shows assets, debt and the company's capital
at a given time. Income statement reflects the results achieved by the
company within a certain period (usually one year).
Financial ratio analysis of a company used to assess the situation and
trends also measure the performance of management. Through
analysis of the ratio can be used as a basis to assess whether
management's performance has reached a predetermined goal or not,
and early knowing on trends or trends that management performance
can be anticipated earlier. The results of analysis can be used to
observe the weakness of the company during the period of time to
walk, is there any weaknesses in the company can be repaired, while
the results are good enough to be maintained in the future.
Further historical ratio analysis can be used for the preparation of
plans and policies in the coming years in order to determine the right
policy direction
Financial Ratio Analysis
Financial analysts often compare financial ratios (of solvency,
profitability, growth, and other conditions):

 Past Performance - Across historical time periods for the same

firm (the last 5 years for example),
 Future Performance - Using historical figures and certain
mathematical and statistical techniques, including present and
 future values, This extrapolation method is the main source of
errors in financial analysis as past statistics can be poor
predictors of future prospects.
 Comparative Performance - Comparison between similar firms.
Comparing financial ratios is merely one way of conducting
financial analysis.
 Financial ratios face several theoretical challenges:
1. They say little about the firm's prospects in an absolute
sense. Their insights about relative performance require a
reference point from other time periods or similar firms.
2. One ratio holds little meaning.
3. As indicators, ratios can be logically interpreted in at
least two ways.
4. One can partially overcome this problem by combining
several related ratios to paint a more comprehensive
picture of the firm's performance.
5. Seasonal factors may prevent year-end values from being
representative.
6. A ratio's values may be distorted as account balances
change from the beginning to the end of an accounting
period.
7. Use average values for such accounts whenever possible.
8. Financial ratios are no more objective than the
accounting methods employed. Changes in accounting
policies or choices can yield drastically different ratio
values.
9. They fail to account for exogenous factors like investor
behavior that are not based upon economic fundamentals
of the firm or the general economy (fundamental
analysis). There are many ratios analysis that can be used
by the analysts in accordance with the needs and
specifications of the business or organization that will be
analyzed.
Interpretation of the ratios
Ratios are the vital instruments which help the user to analyze the
performance of the organization. Every businessman does make use
of these ratios as those are significant. These ratios throw light on the
relationship between the two variables with which the ratios derived.
The ratios can be utilized to understand the direction of the business:
 Whether it is productive
 Whether it has sufficient cash to settle its bills and obligations
 Whether the organization is paying its workers higher wages,
compensation or so on
 Whether it is ready to pay its duties
 Whether it is utilizing its benefits effectively or no
 Has an adapting issue or all is well
 Is a possibility for being purchased by another organization or
speculator
In any case, as it is evident there are a wide range of angles that these
ratio can illustrate. So to use them first we need to choose what we
need to know, at that point we can choose which ratio we need and
afterward we should start to ascertain them. Purpose of each ratio
The ratios are worked out with specific purpose to establish
relationship between two related variables. These ratios are useful to
different stake holders for their various purposes.
USES OF RATIO
Financial investors: Shareholders and the investors in the other
investment instruments like debentures, who have invested their
money in the company do use these ratios to understand how the
money raised have been utilized by the company. On the basis of the
performance of the company on financial front, the investors can
decide whether to retain their investment in the company or
otherwise.
If the company is showing cash losses no one would like to retain
their investment for further deterioration. However, if the company is
earning good profits, naturally it will prompt the investors to further
pour in their investment in the company. The Return of Investment is
one of such ratio which is useful for the investors.
Moneylenders: Banks, term lending institutions, money lenders who
have extended financial assistance to the company also require the
information about the financial analysis using various ratios which
reflect the repaying capacity of the borrowing company. They are
interest in Debt Service Coverage Ratio, Gearing ratios, as well as
various other ratios which enable them to work out the borrowing
company’s credit needs. Therefore, the analysis of the financial
statements of the borrower is of prime importance to these financing
organizations.
Manager: Naturally the managers of the company are interested to
know the outcome of their contribution to the overall performance of
the company. They are interested to understand the profitability
position of the organization which depicts the well being of the
organization.
Employee: The employees are also one of the stake holders in the
organization. They are also concerned about the profitability and the
growth of the organization as their career is also wedded with the well
being of the organization. If the company is performing well naturally
they will be in a position to demand compensation hike as well as for
the bonus payment. If the organization is expanding it will create
employment opportunities including the creation of promotional
posts. Thus the employees are also interested to know several ratios
like per employee profitability, per employee business mix, return on
investment, staff cost to net profit etc.
Providers and other exchange banks: In a manufacturing
organization there is one more stake holders who are the suppliers of
various inputs required by the company. These suppliers are
interested to understand the business strategy of the organization. The
sales growth and the company’s plans for the future, it’s past
performance are of interest to them. They are also interested to know
the stock turnover ratio, liquidity ratios of the company on which their
payment schedule is dependent. Therefore, the suppliers are also keen
to understand the financial performance of the company to which they
are supplying the raw materials / services.
Clients: The consumers of the company’s products / services are also
interested to understand the financial performance of the company
analysed with the help of the various ratios.
Governments and their offices: The government is also a stake
holder in various companies and therefore they are also interested to
know the financial performance of the company. The financial
analysis depicts as to what are the taxes that have paid by the
company. What is the trend of profit? If there is any export
commitment under any agreement (SEEPZ), import of capital goods,
then whether the company has fulfilled that commitment or not? The
government is also concerned about various other aspects like
government dues under various heads like Employees Provident
Fund, Employees State Insurance Contribution, Statutory bonus
payment etc.
Nearby people group: The society in the vicinity of the location of
the manufacturing unit is also interested to know the financial
performance of the unit. Their interest is more in the generation of the
employment for local youth. They are also interested for the
Company’s donations under Corporate Social Responsibilities etc. for
their social and educational organizations. If such a progressive
company is there in the vicinity the government also takes care of the
roads and other infrastructure facilities like electricity, drinking
facilities etc.
Analysts: Financial analysts are specialist in analysing the financial
performance of the companies. They also create data base for a
particular type of companies depending on their business portfolio.
Through such analysis of similar companies the analysts come to
know the trend in a particular type of industry which helps them while
preparing forecasts etc.
CLASSIFICATION OF RATIOS
Liquidity Ratio Current ratio
The current ratio is a commonly used measure of short-run solvency,
the ability of the firm to meet its debt requirements as they come due.
Current liabilities are used as the denominator of the ratio because
they are considered to represent the most urgent debts, requiring
retirement within one year or one operating cycle. The available cash
resources to satisfy these obligations must come primarily from cash
or the conversion to cash of other current assets. The ideal ratio is 2:1.
The current ratio formula is: Current ratio= Current assets/Current
liabilities

Quick ratio or acid test ratio

Quick ratio is an indicator of a company’s short-term liquidity. It
measures current (short term) liquidity and position of the company.
The analysis is done by weighing current assets of the company
against the current liabilities which result in the ratio that highlights
the liquidity of the company.
The ideal ratio is 1:1 and is calculated as follows:
Quick ratio = current assets – (cash and equivalents + marketable
securities + accounts receivable) / current liabilities
Profitability Ratio
Profit margin
A ratio of profitability calculated as profit after tax by net sales. Profit
margin is very useful when comparing companies in similar
industries. A higher profit margin indicates a more profitable
company that has better control over its costs compared to its
competitors.
It is calculated as: Profit margin = Profit after tax / Net sales
Net profit margin
Net profit margin represents the firm’s ability to translate sales into
profits at different stages of measurement. The operating profit
margin, a measure of overall operating efficiency, incorporates all of
the expenses associated with ordinary business activities.The net
profit margin measures profitability after consideration of all revenue
and expense, including interest, taxes, and non-operating items.
It is calculated as: Net Income or Net Profit / Net Sales
Return on shareholder’s equity (RONW)
An amount of net income returned as a percentage of shareholders
equity. It reveals how much profit a company earned in comparison to
the total amount of shareholder equity found on the balance sheet.
RONW = Net Income / Shareholder’s Equity

Return on assets
An indicator used to evaluate the profitability of the assets of a firm
i.e. the return on average assets indicates what a company can do with
what it possesses.
Generally, it is used by companies, banks and other financial
institutions as an appraisal for determining their performance.
The formula for return on assets is: - Net Income / Avg. total assets
Market based Ratios
Earning Per Share
It represents the portion of a company's earnings, net of taxes and
preferred stock dividends, that is allocated to each share of common
stock. It can be calculated by dividing net income earned in a given
reporting period (usually quarterly or annually) by the total number of
shares outstanding during the same term. Because the number of
shares outstanding can fluctuate, a weighted average is typically used.
It is calculated as: EPS = Earning available / No. of share issued to
shareholders.
Price earning ratio
A valuation ratio of a company's current share price compared to its
per-share earnings.
It is calculated as: P/E Ratio = Market price per share/ EPS
Solvency Ratio
Inventory turnover ratio
It measures the number of times a company's investment in inventory
is turned over during a given year. The higher the turnover ratio, the
better, since a company with a high turnover requires a smaller
investment in inventory than one producing the same level of sales
with a low turnover rate. The days in the period can then be divided
by the inventory turnover formula to calculate the days it takes to sell
the inventory on hand or "inventory turnover days.
It is calculated as: Inventory turnover ratio = Cost of goods sold /
Average inventory
It indicates the number of times average debtors are turned over
during a year.
This ratio is also known as accounts receivable turnover ratio. It
indicates the speed at which the sundry debtors are converted in the
form of cash and the number of times the debtors are turned over a
year. It is the reliable measure of receivables from credit sales.
It is calculated as: Debtor turnover ratio = Credit sales / Average
debtors
Working capital turnover
A measurement comparing the depletion of working capital to the
generation of sales over a given period is known as working capital
turnover. This provides some useful information as to how effectively
a company is using its working capital to generate sales.
It is calculated as: Working capital turnover = Sales / Working
capital
Total asset turnover
The total assets turnover considers only the firm’s investment in
property, plant, and equipment and is extremely important for a
capital-intensive firm. The total assets turnover measures the
efficiency of managing all of a firm’s assets.
It is calculated as: Total asset turnover = Net sales / Total assets
Leverage Ratios
Debt to equity
A measure of a company's financial leverage is calculated by
dividing its total liabilities by stockholders' equity. It indicates what
proportion of equity and debt the company is using to finance its
assets.
It is calculated as: Debt to equity = Long term debt or liabilities /
Total equity
Interest coverage ratio
A ratio used to determine how easily a company can pay interest on
outstanding debt. The interest coverage ratio is calculated by dividing
a company's earnings before interest and taxes (EBIT) of one period
by the company's interest expenses of the same period:
It is calculated as: Interest coverage ratio = EBIT / Interest expenses
 OBJECTIVES

1. To study and understand fast moving consumer goods sector in India

2. To study the financial performance of selected companies
3. To study the important metric of financial performance of selected FMCG companies of
India.
4. To study the profitability , solvency , liquidity, leverage of the selected companies
5. To offer the suggestions in the light of findings based on the study to improve the financial
efficiency of selected FMCG Companies.
 LITERATURE REVIEW
NBFCs: Review of Literature Jafor Ali Akhan (2010) writes on “Non-Banking Financial
Companies (NBFCs) in India”. The book discussed the financial system in India. It covers the financial
intermediaries including commercial banks, regional rural banks, cooperative banks and Non-
Banking Financial Companies in India. The book is good source in getting information on businesses,
classification, management of assets, risk coverage, etc of the NBFCs in India.

Shailendra Bhushan Sharma and Lokesh Goel (2012) write on “Functioning and Reforms in
Non-Banking Financial Companies in India”. Non-Banking Financial Companies do offer all sorts of
banking services, such as loans and credit facilities, retirement planning, money markets,
underwriting and merger activities. These companies play an important role in providing credit to
the unorganized sector and to the small borrowers at the local level. Hire purchase finance is by far
the largest activity of NBFCs. The rapid growth of NBFCs has led to a gradual blurring of dividing lines
between banks and NBFCs, with the exception of the exclusive privilege that commercial banks
exercise in the issuance of cheques. This paper provides an exhaustive account of the functioning of
and recent reforms pertaining to NBFCs in India.

Subina Syal and Menka Goswami (2012) writes on “Financial Evaluation of Non-Banking
Financial Institutions: An Insight”in ‘Indian Journal of Applied Research’. The Indian financial system
consists of the various financial institutions, financial instruments and the financial markets that
facilitate and ensure effective channelization of payment and credit of funds from the potential
investors of the economy. Non-banking financial institutions in India are one of the major
stakeholders of financial system and cater to the diversified needs by providing specialized financial
services like investment advisory, leasing, asset management, etc. Non-banking financial sector in
India has been a considerable growth in the recent years. The aim of the present study is to analyze
the financial performance and growth of non-banking financial institutions in India in the last 5
years. The study is helpful for the potential investors to get the knowledge about the financial
performance of the non-banking financial institutions and be helpful in taking effective long-term
investment decisions.

Sornaganesh and Maria Navis Soris17 (2013) B “A Fundamental Analysis of NBFCs in India” in
‘Outreach’. The study was made to analyze the performance of five NBFCs in India. The annual
reports of these companies are evaluated so as to ascertain investments, loans disbursed, growth,
return, risk, etc. To sum up, the study is concluded that the NBFCs are earning good margins on all
the loans and their financial efficiency is good.

Taxmann’s (2013) published “Statutory Guide for Non-Banking Financial Companies” is published
by Taxmann’s Publications, New Delhi. The book listed the laws relating to Non-Banking Financial
Companies. The rules and laws governing the kinds of businesses undertaken by different types of
NBFCs are also discussed.

Amit Kumar and Anshika Agarwal (2014) published a paper entitled “Latest Trends in  Non-
banking  Financial Institutions” in ‘Academicia: An International Multidisciplinary Research Journal’.
In Indian Economy, there are two major Financial Institutions, one is banking and other is Non-
Banking. The Non-Banking Financial Institutions plays an important role in our economy as they
provide financial services on wide range, they also work to offer enhanced equity and risk-based
products, along with this they also provide short to long term finance to different sectors of the
economy, and many other functions. This paper examines the latest trends in Non-Banking Financial
Institutions. This paper analyzes the growth and enhanced prosperity of financial institutions in
India.

Dash Saroj K, et al (2014) writes on “Housing Loan Disbursement in India: Suggestive

Metrics to Prevent Bad Debts” in ‘International Journal of Management, IT and
Engineering’. Non-Banking Financial Corporation (NBFC) in each of the countries involved in the
business of lending mortgage loans took stock of their policies and terms & conditions while
disbursement of loans. Critics and some experts might argue that given the technologically advanced
systems in place to do credit scoring, it is enough to have certain set of quantitative parameters to
do a check. The parameters, which are discussed in the credit scoring software, are primarily
quantitative parameters and some qualitative features whose measurements are also quantified.

Naresh Makhijani (2014) writes on “Non-Banking Finance Companies: Time to Introspect”

in ‘Analytique’. Over the last few years the Non Banking Finance Companies (NBFC) sector has
gained significant advantages over the banking system in supplying credit under-served and
unbanked areas given their reach and niche business model. However, off late the Reserve Bank of
India has introduced and suggested various changes in the existing regulatory norms governing
NBFCs with a view to bring NBFCs regulations at par with the banks. The ongoing and proposed
regulatory changes for the NBFCs in terms of increased capital adequacy, tougher provision norms,
removal from priority sector status and changes in securitization guidelines could bring down the
profitability and growth of the NBFC sector. NBFCs will need to introspect and rethink their business
models as they will now not only have to combat stringent regulatory norms but also have to face
the challenge of rising cost of funds, scare capital and direct competition from banks.

Ravi Puliani and Mahesh Puliani (2014) writes a book entitled “Manual of Non-Banking
Financial Companies”. The book discussed the glossary of terms that are used in banking
operations and non-banking activities. The book covers the circulars and directions issued by
Reserve Bank of India from time to time to control, manage and regulate the business of NBFCs.
Shail Shakya (2014) published a working paper entitled “Regulation of Non-banking
Financial Companies in India: Some Visions & Revisions”. Non-Banking Financial Companies
are pioneer in their cash deployment, accessibility to the markets and others to count. NBFCs are
known for their higher risk taking capacity than the banks. Despite being an institution of attraction
for the investors, NBFCs have played a significant role in the financial system. Many specialized
services such as factoring, venture capital finance, and financing road transport were championed by
these institutions. NBFC sector has more significantly seen a fair degree of consolidation, leading to
the emergence of large companies with diversified activities. However, the recent financial crisis has
highlighted the importance of widening the focus of NBFC regulations to take particular account of
risks arising from the regulatory gaps, from arbitrage opportunities and from inter-connectedness of
various activities and entities associated with the financial system. The regulatory regime is lighter
and different than the banks. The steady increase in bank credit to NBFCs over the recent years
means that the possibility of risks being transferred from more lightly regulated NBFC sector to the
banking sector in India can’t be ruled out.

Thilakam and Saravanan (2014) writes on “CAMEL Analysis of NBFCs in Tamil Nadu” in
‘International Journal of Business and Administration Research Review’ . Financial
intermediation is a crucial function of Banks, Non Banking financial companies (NBFCs) and
Development Financial Institutions (DFIs) the post reform period in India is characterized by
phenomenal growth of NBFCs complementing the role of banks in mobilizing funds and making it
available for investment purposes. During the last decade NBFCs have undergone wide volatility and
change as an industry and have been witnessing considerable business upheaval over the last
decade because of market dynamics, public sentiments and regulatory environment. To evaluate the
soundness of NBFCs in Tamil Nadu over a decade, the authors made an attempt of CAMEL criteria
for analysis of selected Companies. Based on findings the suggestions were offered to overcome the
difficulties face by selected NBFCs in their development.
 RESEARCH METHODOLOGY
In this study 5 Non-Banking Financial Companies (NBFC) are considered
depending upon the availability of data. Secondary research is the basis of
the study. Few data is collected from the annual reports of the selected
insurance companies, besides few websites have been consulted. 5
consecutive financial years are considered for the study from 2015- 16 to
2019- 20. The aim of the study is to measure the financial performance of
the NBFC’S by calculating ratios such as operating profit per share, net
operating profit per share, gross profit margin, cash profit margin, net
profit margin, return on capital employed, return on net worth, current
ratio, quick ratio, fixed assets turnover ratio, total assets turnover ratio,
assets turnover ratio, cash earning retention ratio taking into valuation
consideration investment ratio, profitability ratios, liquidity and solvency
ratios, management efficiency ratio and cash flow indicator ratio.
 RESEARCH DESIGN
Quantitative research design will be used, as in this research statistical
measures are used to conclude the outcomes.
 SAMPLING DESIGN
Simple Random sampling will be used. From a total of 20 NBFC in India, 5
listed Non-Banking Financial Companies will be randomly selected.
 SAMPLE SIZE
5 Non-Banking Financial companies (NBFC) will be selected.
 TIME PERIOD
The time period of the study is Five Years, i.e. the financial performance of
the NBFC from 2016 to 2020 will be considered.
SCOPE OF THE STUDY
 DATA COLLECTION
Data will be collected from secondary sources like the annual reports of the
NBFC and from different websites like moneycontrol.com.
 Data Analysis
VARIABLES FORMULAS
Operating profit per share Net earnings / total no. of shares
Net operating profit per share Net operating margin / value of
sales
Gross profit margin Total revenue - COGS / Total
revenue
Net profit margin Net income / Total sales revenue *
100
Cash profit margin Cash flows from operating
activities / Net sales * 100
Return on capital employed EBIT / Capital employed * 100
Return on net worth Net income / Shareholder’s equity *
100
Current ratio Current assets / Current liabilities
Quick ratio Liquid assets / Current liabilities
Total assets turnover ratio Net sales / Average total assets
Assets turnover ratio Net sales / Net fixed assets
Cash Earning retention ratio Net income – Dividends / Net
income
DESCRIPTIVE STATISTICS
The ratios of selected companies are mentioned below:
(1) PROFITABILITY RATIO
Gross Profit Mar 20 Mar 19 Mar 18 Mar 17 Mar 16
Margin (%)
Bajaj Finance 64.79 70.03 65.70 67.14 67.73

Ltd
Muthoot 77.36 76.98 76.29 74.08 74.61

Finance Ltd
Mahindra & 59.69 70.39 68.05 57.06 63.14

Mahindra
Financial
Srvices Ltd
Manappuram 73.25 68.83 62.43 70.82 65.84

Finance Ltd
Bajaj 76.70 81.27 85.73 75.48 92.

Holdings Ltd

100

90

80

70
Bajaj Finance Ltd
60 Series2
Muthoot Finance Ltd
50
Mahindra & Mahindra Financial
Srvices Ltd
40
Manappuram Finance Ltd
30 Bajaj Holdings Ltd

20

10

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
(2) Operating Margin :-

Operating Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Margin
(%)
Bajaj 63.68 69.25 64.94 66.43 66.96

Finance Ltd
Muthoot 76.75 76.30 75.51 73.20 73.42

Finance Ltd
Mahindra & 76.75 76.30 75.51 73.20 73.42

Mahindra
Financial
Srvices Ltd
Manappura 70.25 67.03 60.43 68.95 63.48

m Finance
Ltd
Bajaj 68.22 80.31 84.48 74.84 91.49

Holdings
Ltd

400

350

300

250 Bajaj Holdings Ltd

Manappuram Finance Ltd
200 Mahindra & Mahindra Financial
Srvices Ltd
150 Muthoot Finance Ltd
Bajaj Finance Ltd
100

50

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
Net Profit Mar 20 Mar 19 Mar 18 Mar 17 Mar 16
Margin (%)
Bajaj 19.95 21.60 19.89 19.89 17.50

Finance Ltd
Muthoot 32.72 27.69 27.46 20.42 16.62

Finance Ltd
Mahindra & 8.75 17.55 15.03 7.41 12.01

Mahindra
Financial
Srvices Ltd
Manappuram 27.08 22.69 19.76 22.40 15.04

Finance Ltd
Bajaj 5.68 51.80 64.30 58.86 72.70

Holdings
Ltd

(3) Net Profit Margin:-

160

140

120

100 Bajaj Holdings Ltd

Manappuram Finance Ltd
80 Mahindra & Mahindra Financial
Srvices Ltd
60 Muthoot Finance Ltd
Bajaj Finance Ltd
40

20

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
Return Ratio :-
(1)Return On Networth :-

Return On Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Networth
Bajaj 16.28 20.28 16.16 19.12 17.21

Finance Ltd
Muthoot 26.52 20.92 23.29 18.35 14.48

Finance Ltd
Mahindra & 8.98 16.21 12.02 7.35 11.93

Mahindra
Financial
Srvices Ltd
Manappura 25.68 20.69 17.72 22.48 12.81

m Finance
Ltd
Bajaj 10.77 11.31 10.53 13.88 14.81

Holdings
Ltd

30

25

20
Bajaj Finance Ltd
Muthoot Finance Ltd
15 Mahindra & Mahindra Financial
Srvices Ltd
Manappuram Finance Ltd
10 Bajaj Holdings Ltd

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
(2)ROCE

ROCE Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Bajaj 15.55 15.21 13.62 14.95 3.82

Finance Ltd
Muthoot 15.55 15.21 13.62 14.95 3.82

Finance Ltd
Mahindra & 15.53 15.75 9.60 1.54 2.77

Mahindra
Financial
Srvices Ltd
Manappura 26.90 26.77 21.77 11.39 7.84

m Finance
Ltd
Bajaj 0.82 1.27 1.40 3.52 14.77

Holdings
Ltd

30

25

20
Bajaj Finance Ltd
Muthoot Finance Ltd
15 Mahindra & Mahindra Financial
Srvices Ltd
Manappuram Finance Ltd
10 Bajaj Holdings Ltd

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
Return On Mar 20 Mar 19 Mar 18 Mar 17 Mar 16
Assets
Bajaj 3.20 3.21 3.07 2.88 2.75

Finance Ltd
Muthoot 5.71 4.97 5.43 3.72 2.97

Finance Ltd
Mahindra & 1.31 2.45 2.01 0.96 1.71

Mahindra
Financial
Srvices Ltd
Manappura 5.06 4.59 3.96 4.98 2.75

m Finance
Ltd
Bajaj 9.12 11.28 10.50 13.82 14.64

Holdings
Ltd

(3)Return On Assets
16

14

12

10 Bajaj Finance Ltd

Muthoot Finance Ltd
8 Mahindra & Mahindra Financial
Srvices Ltd
6 Manappuram Finance Ltd
Bajaj Holdings Ltd
4

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
Liquidity And Solvency Ratios :-

Current Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Ratio
Bajaj 2.87 3.06 1.66 1.55 1.57

Finance Ltd
Muthoot 1.73 1.85 22.58 1.55 1.77

Finance Ltd
Mahindra & 2.17 2.56 16.79 1.15 1.21

Mahindra
Financial
Srvices Ltd
Manappura 1.90 1.98 2.18 1.63 1.43

m Finance
Ltd
Bajaj 54.00 218.05 782.66 58.55 11.03

Holdings
Ltd

(1)Current Ratio :-
900

800

700

600
Bajaj Holdings Ltd
500 Manappuram Finance Ltd
Mahindra & Mahindra Financial
400 Srvices Ltd
Muthoot Finance Ltd
300 Bajaj Finance Ltd

200

100

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
(2)Quick Ratio :-

Quick Ratio Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Bajaj 2.87 3.06 1.66 1.55 1.57

Finance Ltd
Muthoot 1.73 1.85 22.58 1.55 1.77

Finance Ltd
Mahindra & 2.17 2.56 16.79 1.15 1.21

Mahindra
Financial
Srvices Ltd
Manappura 1.90 1.98 2.18 1.63 1.43

m Finance
Ltd
Bajaj 53.99 218.05 782.66 58.54 11.03

Holdings
Ltd

800

700

600

500 Bajaj Finance Ltd

Muthoot Finance Ltd
400 Mahindra & Mahindra Financial
Srvices Ltd
300 Manappuram Finance Ltd
Bajaj Holdings Ltd
200

100

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
Turnover Ratios :-

(1)Assets Turnover Ratios

Assets Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Turnover
Ratios
Bajaj 16.04 14.88 15.48 15.63 15.72

Finance Ltd
Muthoot 17.64 18.19 19.93 18.36 17.95

Finance Ltd
Mahindra & 14.52 13.90 13.42 13.42 14.56

Mahindra
Financial
Srvices Ltd
Manappura 18.87 20.44 20.08 22.34 18.38

m Finance
Ltd
Bajaj 1.20 1.57 1.66 4.70 3.03

Holdings
Ltd
80

70

60

50 Bajaj Holdings Ltd

Manappuram Finance Ltd
40 Mahindra & Mahindra Financial
Srvices Ltd
30 Muthoot Finance Ltd
Bajaj Finance Ltd
20

10

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
Inventory Mar 20 Mar 19 Mar 18 Mar 17 Mar 16
Turnover
Ratios
Bajaj 0.00 0.00 0.00 0.00 0.00

Finance Ltd
Muthoot 0.00 0.00 0.00 0.00 0.00

Finance Ltd
Mahindra & 0.00 0.00 0.00 0.00 0.00

Mahindra
Financial
Srvices Ltd
Manappura 0.00 0.00 0.00 0.00 0.00

m Finance
Ltd
Bajaj 117.08 0.00 0.00 3,007.54 3,614.15

Holdings
Ltd

(2)Inventory Turnover Ratios :-

4000

3500

3000

2500 Bajaj Finance Ltd

Muthoot Finance Ltd
2000 Mahindra & Mahindra Financial
Srvices Ltd
1500 Manappuram Finance Ltd
Bajaj Holdings Ltd
1000

500

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
Leverage Ratios :-

(1)Debt To Equity

Debt To Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Equity
Bajaj 4.02 5.16 3.42 4.38 4.99

Finance Ltd
Muthoot 3.46 3.03 3.04 2.69 2.45

Finance Ltd
Mahindra & 5.48 5.22 4.56 4.60 3.95

Mahindra
Financial
Srvices Ltd
Manappura 3.82 3.37 3.31 2.80 3.03

m Finance
Ltd
Bajaj 0.00 0.00 0.00 0.00 0.00

Holdings
Ltd

4
Bajaj Finance Ltd
Muthoot Finance Ltd
3 Mahindra & Mahindra Financial
Srvices Ltd
Manappuram Finance Ltd
2 Bajaj Holdings Ltd

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
(2)Interest Coverage Ratios

Interest Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Coverage
Ratios
Bajaj 1.77 1.93 1.88 1.74 1.67

Finance Ltd
Muthoot 2.34 2.29 2.38 1.83 1.58

Finance Ltd
Mahindra & 1.29 1.63 1.55 1.26 1.43

Mahindra
Financial
Srvices Ltd
Manappura 2.10 2.08 2.01 2.00 1.58

m Finance
Ltd
Bajaj 21.40 -- -- -- --

Holdings
Ltd

25

20

15

10

5
Mar-20
0 Mar-19
Mar-18
td

Ltd
Ltd

td
Ltd

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Mar-17
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an

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Mar-16
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Valuation Ratios :-

(1)P/E Ratios

P/E Ratios Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Bajaj 0 4.63 5.26 8.63 0.8

Finance Ltd
Muthoot 0 6.18 5.46 9.76 9.49

Finance Ltd
Mahindra & 0 10.79 12.25 32.38 14.19

Mahindra
Financial
Srvices Ltd
Manappura 0 28.49 31.12 32.67 46.25

m Finance
Ltd
Bajaj 0 1.17 1.05 1.32 0.95

Holdings
Ltd

50

45

40

35

30 Bajaj Finance Ltd

Muthoot Finance Ltd
25 Mahindra & Mahindra Financial
Srvices Ltd
20 Manappuram Finance Ltd
Bajaj Holdings Ltd
15

10

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
(2) P/B Ratio

P/B Ratio Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Bajaj 4.11 8.86 6.15 6.69 5.00

Finance Ltd
Muthoot 2.07 2.48 2.08 2.26 1.26

Finance Ltd
Mahindra & 0.76 2.30 2.88 2.56 2.12

Mahindra
Financial
Srvices Ltd
Manappura 1.40 2.31 2.41 2.45 1.07

m Finance
Ltd
Bajaj 0.72 1.41 1.16 1.36 1.06

Holdings
Ltd

6
Bajaj Finance Ltd
5 Muthoot Finance Ltd
Mahindra & Mahindra Financial
4 Srvices Ltd
Manappuram Finance Ltd
3 Bajaj Holdings Ltd

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
(3)EV/EBITDA

EV/EBITDA Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Bajaj 15.29 21.30 17.90 15.83 14.71

Finance Ltd
Muthoot 7.94 9.02 7.72 7.03 5.51

Finance Ltd
Mahindra & 10.33 11.47 13.61 12.10 9.35

Mahindra
Financial
Srvices Ltd
Manappura 6.55 8.58 9.89 7.14 6.90

m Finance
Ltd
Bajaj 81.04 109.66 80.93 38.00 34.08

Holdings
Ltd

120

100

80
Bajaj Finance Ltd
Muthoot Finance Ltd
60 Mahindra & Mahindra Financial
Srvices Ltd
Manappuram Finance Ltd
40 Bajaj Holdings Ltd

20

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
(4)P/S

P/S Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Bajaj 5.04 9.44 7.57 6.44 5.08

Finance Ltd
Muthoot 2.53 3.25 2.43 2.50 1.44

Finance Ltd
Mahindra & 0.76 2.50 3.60 2.49 2.09

Mahindra
Financial
Srvices Ltd
Manappura 1.46 2.51 2.69 2.44 1.25

m Finance
Ltd
Bajaj 50.91 89.15 69.58 28.70 34.61

Holdings
Ltd

90

80

70

60
Bajaj Finance Ltd
50 Muthoot Finance Ltd
Mahindra & Mahindra Financial
40 Srvices Ltd
Manappuram Finance Ltd
30 Bajaj Holdings Ltd

20

10

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
GROWTH RATIOS
(1)3 Yr CAGR Sales (%)

3 Yr Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

CAGR
Sales (%)
Bajaj 38.32 36.28 35.68 2052.04 1840.26

Finance Ltd
Muthoot 17.89 15.57 15.78 1708.07 1600.8

Finance Ltd
Mahindra & 18.47 16.53 9.4 10.65 16.97

Mahindra
Financial
Srvices Ltd
Manappura 17.31 20.98 19.86 17.25 144.74

m Finance
Ltd
Bajaj -22.41 -3.16 -7.13 29.62 11.73

Holdings
Ltd

2500

2000

1500
Bajaj Finance Ltd
Muthoot Finance Ltd
Mahindra & Mahindra Financial
1000 Srvices Ltd
Manappuram Finance Ltd
Bajaj Holdings Ltd
500

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16

-500
(2) 3 Yr CAGR Net Profit (%)

3 Yr Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

CAGR Net
Profit (%)
Bajaj 42.05 46.19 43.88 1124.58 985.38

Finance Ltd
Muthoot 37.94 37 40.03 964.8 835.17

Finance Ltd
Mahindra & 25.22 32.23 8.63 -18.12 -5.36

Mahindra
Financial
Srvices Ltd
Manappura 24.97 38.74 35.54 49.72 128.86

m Finance
Ltd
Bajaj -64.39 -13.5 -13.28 15.89 10.42

Holdings
Ltd

2500

2000

1500
Bajaj Holdings Ltd
Manappuram Finance Ltd
1000 Mahindra & Mahindra Financial
Srvices Ltd
Muthoot Finance Ltd
Bajaj Finance Ltd
500

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16

-500
Pre Share Ratios :-

(1)Basic EPS (Rs)

Basic EPS Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

(Rs)
Bajaj 89.77 69.33 47.54 34.01 242.3

Finance Ltd
Muthoot 78.30 51.92 45.79 30.06 20.46

Finance Ltd
Mahindra & 17.48 29.73 20.40 9.06 13.69

Mahindra
Financial
Srvices Ltd
Manappura 17.54 11.26 8.03 8.98 4.20

m Finance
Ltd
Bajaj 268.80 273.90 238.50 222.20 203.50

Holdings
Ltd
300

250

200
Bajaj Finance Ltd
Muthoot Finance Ltd
150 Mahindra & Mahindra Financial
Srvices Ltd
Manappuram Finance Ltd
100 Bajaj Holdings Ltd

50

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
Diluted EPS Mar 20 Mar 19 Mar 18 Mar 17 Mar 16
(Rs)
Bajaj 89.07 68.75 47.05 33.67 238.85

Finance Ltd
Muthoot 78.20 51.82 45.64 29.95 20.22

Finance Ltd
Mahindra & 17.44 29.67 20.37 9.00 13.58

Mahindra
Financial
Srvices Ltd
Manappura 17.49 11.24 8.01 8.98 4.20

m Finance
Ltd
Bajaj 268.80 273.90 238.50 222.20 203.50

Holdings
Ltd

(2)Diluted EPS (Rs)

300

250

200
Bajaj Finance Ltd
Muthoot Finance Ltd
150 Mahindra & Mahindra Financial
Srvices Ltd
Manappuram Finance Ltd
100 Bajaj Holdings Ltd

50

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
(3) Dividend/Share:-

Dividend/ Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

Share
Bajaj 10.00 6.00 4.00 3.60 25.00

Finance Ltd
Muthoot 15.00 12.00 10.00 6.00 6.00

Finance Ltd
Mahindra & 0.00 6.50 4.00 2.40 4.00

Mahindra
Financial
Srvices Ltd
Manappura 2.75 2.15 2.00 1.50 1.80

m Finance
Ltd
Bajaj 40.00 32.50 40.00 32.50 32.50

Holdings
Ltd
40

35

30

25 Bajaj Finance Ltd

Muthoot Finance Ltd
20 Mahindra & Mahindra Financial
Srvices Ltd
15 Manappuram Finance Ltd
Bajaj Holdings Ltd
10

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16