Analysis of Capital Structure & Dividend Policy: A Case

Analysis of GBB Power Limited and United Power

Generation and Distribution Company Limited (UPGDCL)

Presented By,
Deboshri Tripura
ID: 30036
Valuation
Valuation
 Cost of Capital: GBB

Beta
0.6219
Adjusted Beta
0.7478
Market Return
0.0065
Market Return - Yearly
0.0780
Ks(GBB)
7.46%

Kd 0.2121

Kd after tax 0.2053

Ke 0.0746

Tax rate 0.0320

WACC 7.72%
Cost of Capital: UPGDCL

Beta -0.0490
Adjusted Beta 0.3003
Market Return 0.0065
Market Return - Yearly 0.0780
Ks(UNITED) 7.17%

Kd 0.1769

Kd after tax 0.1757

Ke 0.0717

Tax rate 0.0068

WACC 8.33%
Analysis Of Capital Structure
Analysis Of Capital Structure
Analysis Of Capital Structure
Analysis Of Capital Structure
Analysis Of Capital Structure
Checklist Analysis of Capital Structure

Factors Relationship with Debt Ratio

Tangibility Positive

Uncertainty Negative

Operating Profitability Positive

Financial Slack Negative

Growth Positive
GBB Power Limited: Tangibility to Debt
Ratio
GBB Power Limited: Uncertainty of
EBIT to Debt Ratio
GBB Power Limited: Operating
Profitability to Debt Ratio
GBB Power Limited: Financial Slack to
Debt Ratio
GBB Power Limited: Growth to Debt
Ratio
UPGDCL: Tangibility to Debt Ratio
UPGDCL: Uncertainty of EBIT to Debt
Ratio
UPGDCL: Operating Profitability to
Debt Ratio
UPGDCL: Financial Slack to Debt Ratio
UPGDCL: Growth to Debt Ratio
 Dividend Policy: GBB Power
Particulars 2013 2014 2015 2016 2017
Cash Dividend Per Share (CDPS) 0% 0 0% 15% 5%
Stock Dividend per Share (SDPS) 15% 15% 15% 0% 5%
Total Dividend (%) 15% 15% 15% 15% 10%
Dividend Payout Ratio 0.00 0.00 0.00 0.09 0.04
Retention ratio 1.00 1.00 1.00 0.91 0.96
EPS (Basic) 2.13 1.90 1.55 1.68 1.15
Scaling Factor 1.00 0.83 1.09 1.00 1.00
Rescaled EPS 2.13 1.58 1.70 1.68 1.15
OCF per Share 19.08 27.93 33.31 62.12 48.08
FCF per share 1.01 0.29 1.71 2.33 1.52
Market Price 30.90 27.40 18.70 14.40 23.00
P/ E ratio 65.817 52.06 28.985 24.192 26.45
BV per share 18.78 24.44 23.85 21.21 22.18
Growth Rate 11.34% 7.77% 6.50% 7.22% 4.96%
GDP Growth Rate 6.50% 6.00% 6.10% 6.60% 7.10%
No. of shares outstanding 88,333,333 73,294,211 80,187,097 93,297,619 92,043,478
 Dividend Policy: UPGDCL
Particulars 2013 2014 2015 2016 2017
Cash Dividend Per Share (CDPS) 50% 0 10% 0% 10%
Stock Dividend per Share (SDPS) 15% 35% 30% 125% 90%
Total Dividend (%) 65% 35% 40% 125% 100%
Dividend Payout Ratio 0.05 0.00 0.01 0.00 0.01
Retention ratio 0.95 1.00 0.99 1.00 0.99
EPS (Basic) 10.21 5.98 8.30 15.19 11.50
Scaling Factor 1.00 1.50 1.00 1.00 1.00
Rescaled EPS 10.21 8.97 8.30 15.19 11.50
OCF per Share 8.512299 6.893071 8.993879 15.968080 12.194337
FCF per share -0.526453 -6.716775 7.121913 15.463155 11.049948
Market Price N/A N/A 165.600000 147.870000 185.000000

P/ E ratio N/A N/A 19.95180723 9.734693878 16.08695652

BV per share 26.50 23.64 31.94 34.22 41.22

Growth Rate 36.63% 25.27% 25.67% 44.40% 27.66%
GDP Growth Rate 6.01% 6.06% 6.55% 7.11% 6.01%
No. of shares outstanding 197,966,484 296,949,726 296,949,726 362,944,698 362,944,698
Thank You