Sobha Developers Limited Analysis
Autor: Sparsh Patel • December 3, 2015 • Research Paper • 1,415 Words (6 Pages) • 1,150 Views
1. Credit Rating of Sobha Developers Limited.
An assessment of the credit worthiness of a borrower in general terms or with respect to a particular debt or financial obligation. A credit rating can be assigned to any entity that seeks to borrow money—an individual, corporation, state or provincial authority, or sovereign government.
ICRA and CARE has rated bond of Sobha Developers Limited as “A” (Stable) in respect of the various Fund and Non-Fund Based Credit Facilities sanctioned to the Company.
2. Cost of Debt of Sobha Developers Limited.
A company will use various bonds, loans and other forms of debt, so this measure is useful for giving an idea as to the overall rate being paid by the company to use debt financing. The measure can also give investors an idea as to the riskiness of the company compared to others, because riskier companies generally have a higher cost of debt.
YTM Approach
Cost of Debt (kd) = Yield of Security × (1-t)
Where,
t = marginal tax rate
Yield of Sobha Developers Limited is 11.92% and marginal tax rate is 33.5%. Calculating the cost of debt…
kd = 0.1192 × (1 - 0.3350)
= 0.1192 × (0.665)
= 0.079268 i.e. 7.927%
3. Total Debt of Sobha Developers Limited
Total debt of Sobha Developers Limited for previous five financial year is mentioned as follows:
Year | 2015 | 2014 | 2013 | 2012 | 2011 |
Total Debt | 1,810.34 | 1,108.20 | 1,093.37 | 221.78 | 327.19 |
The increasing debt of Sobha Developers …
The company have spent heavily on land or project acquisition to scale up in the past few years have seen a steeper escalation of debt and furthermore Weak cash-flow from projects in the context of high debt and inadequate demand has pulled the plug on margins. Companies operations in the NCR and Mumbai markets have had a tougher year due to micro-market specific issues than those present in Bangalore.
4. Equity Share Price of Sobha Developers Limited
Share price of Sobha Developers Limited listed on BSE as on 21/11/15
300.70 [pic 1] -5.35 (-1.75%) VOLUME 14,021
5. Debt Equity of Sobha Developers Limited.
Debt/Equity Ratio is a debt ratio used to measure a company's financial leverage, calculated by dividing a company’s total liabilities by its stockholders' equity. The D/E ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholders’ equity.
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