CAPITAL STRUCTURE

year 14-Mar 15-Mar 16-Mar 17-Mar 18-Mar

Total
shareholder 248208 264519 309346 374151 404218
fund
Total reserve
245828 262138 306965 371770 401862
and surplus

Total
442651 475112 414991 426023 447985
borrowings

CAPITAL STRUCTURE
500000
475112
450000 447985
442651
426023
414991
400000 404218
374151
350000

309346
300000

264519 YEAR
250000 248208
Shareholder's Funds
Total Liabilities
200000

150000

100000

50000

0 2014 2015 2016 2017 2018

1 2 3 4 5

Shareholders’ funds have been increasing over years along with the reserves and surplus. But on
the other hand, we have noticed even fall in borrowings in year 2016 and 2017. To obtain a clear
understanding about the capital structure, we consider Leverage ratio.
LEVERAGE RATIO

year 2014 2015 2016 2017 2018

equity 248208 264519 309346 374151 404218

liability 686856 707028 689417 700890 709042

d/e 2.76725972 2.67288172 2.22862749 1.87328111 1.75410793

800000

700000

600000

500000

400000 equity
liability
300000

200000

100000

0
2014 2015 2016 2017 2018

Here the debt-equity ratio ranges between 1.75 to 2.76 which is quite higher. when the debt-
equity ratio is higher than 2 for any company then it denotes that the company relies mostly on
debt than its own fund which is 2/3 it relies on debt. So high risk is involved for the shareholders.
 DIVIDENT
Divident in Dividend
year type divident % divident per share(in rs) millions yield
2018 final 300 3 707.50 0.41
2017 final 300 3 0 0.45
2016 final 300 3 1072.40 0.75
2015 final 150 1.5 357.50 0.49
2014 final 100 1 238.30 0.47

divident %
350

300

250

200

divident %
150

100

50

0
2018 2017 2016 2015 2014

The dividend percent is high during the years 2016 2017 and 2018. Which gave 3 rs as dividend
per share. Dividend given by the company is 1072.50 million in year 2016 which is highest of
these years the dividend yield is also 0.75 which is also highest. In all these year the company
gave good dividend yield. The decrease in dividend yield in 2017-2018 is due to market
instability due to loosening of financial regulation and FDA bill for all business sectors in India.
SHARE PRICE

MONTHYE OPEN_PRIC HIGH_PRI LOW_PRI CLOSE_PRI VOLU

AR E CE CE CE ME VALUE MCAP PE

48909. 130061
2016 390 685.35 354.55 546.3 9543 61 .3 19.6

18735. 93445.
2015 344.2 405.5 270 392.5 5576 08 14 20.62

27306. 81825.
2014 192 380 155.55 343.8 10500 59 7 47.05

19965. 45356.
2013 246.2 269 136 190.6 8994 45 96 25.65

30645. 58302.
2012 102 253.45 101.15 245 18702 98 5 13.28

P/E
50

45

40

35

30

25
PE
20

15

10

0
2016 2015 2014 2013 2012

Initially the p/e ratio for 2012 is less as the markets where stabilizing from the recession period.
In year 2013 and 2014 p/e ratio is good. In 2014 it is at peak of 47.05 but dude to market
instability and complex external factors like political and financial factors decreased its p/e value
to 19.6 in 2016. Still there is no data for year 2017-2018.
COST OF EQUITY

Cost of Equity: E(Ri) = Rf + βi * [E(Rm) – Rf]

Where: E(Ri) = Expected return on asset, Rf = Risk-free rate of return,
βi = Beta of asset I,
E(Rm) = Expected market return

Risk free rate of

YEAR
beta value expected market return retuen cost of equity
2013-2014 1.27 0.07 0.0842 0.066166
2014-2015 1.27 0.07 0.0828 0.066544
2015-2016 0.83 0.07 0.0772 0.071224
2016-2017 0.83 0.07 0.0693 0.069881
2017-2018 0.83 0.07 0.0696 0.069932

Cost of debt

year expenses tax borrowings cost of DEBT cost of DEBT in %

2018 311965 34% 447985 205896.9 0.46

2017 293092 34% 426023 193440.72 0.45

2016 250116 34% 414991 165076.56 0.40

2015 275435 34% 475112 181787.1 0.38

2014 330611 34% 442651 218203.26 0.49

WACC WEIGHTED AVERAGE COST OF CAPITAL

AMOUNT OF % OF COST OF AMOUNT % OF COST OF

YEAR EQUITY EQUITY EQUITY OF DEBT DEBT DEBT WACC

2018 404218 0.474321259 0.069932 447985 0.53 0.46 0.274982455

2017 374151 0.46758705 0.069881 426023 0.53 0.45 0.272261278

2016 309346 0.42707469 0.071224 414991 0.57 0.40 0.259588092

2015 264519 0.357636443 0.066544 475112 0.64 0.38 0.267896711

2014 248208 0.359274468 0.066166 442651 0.64 0.49 0.337727265

WACC
0.4

0.35

0.3

0.25

0.2
WACC

0.15

0.1

0.05

0
2018 2017 2016 2015 2014
WACC is a calculation of firm’s cost of capital in which each category of capital is
proportionately weighed. We have considered both equity and debt of the firm to obtain the
result and could see that wacc being affected based on beta and rate of return. WACC ranges
“Between” 0.25 to 0.35 which shows investors can invest in this company as the risk is less.

Even though the calculated WACC of ramco cement is less. To further reduce the risk and
capital cost the company can review the use of its debt in an offer to reduce the WACC. One
choice of capital rebuilding includes substituting debt for equity, since it means bring down
expenses after tax collection. For instance, the way toward raising value pulls in negligible
expense of capital - that is, the expense of bringing new capital up notwithstanding value hazard
premium. The difference in capital structure to suit more debt than equity of these expenses and
reduces WACC. On the other hand, your company can substitute regular stock with prefered
stock to reduce the WACC. prefered stock is less expensive than regular stock, since it draws in
lower value premium rates by ethicalness of its need in dividend payout or remuneration in case
of bad finacial situations like bankruptcy.

REFERENCE

http://www.aceanalyser.com.library-.remotexs.in/Analyser.aspx?MenuTab

https://www.investopedia.com/ask/answers/063014/what-formula-calculating-weighted-
average-cost-capital-wacc.asp

https://www.business-case-analysis.com/cost-of-capital.html

https://finance.yahoo.com/quote/RAMCOCEM.NS/key-statistics?p=RAMCOCEM.NS

https://www.bseindia.com/stock-share-price/the-ramco-cements-limited/ramcocem/500260/

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/valquestions/mktvalofdebt.htm