Term Paper on Fuel and Power Industry of Bangladesh

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Table of Contents:
EXECUTIVE SUMMARY
1. Introduction………………………………………… 2. Company Overview, Top-Down Approach-Economic Analysis……………………………………… 3.Treynor & DSharp Measure……………………………………….. 4. Ration Analysis ……………………………………… 5.Risk analysis ………………………………

6.Optimum capital structure
7. Intrinsic value
8. Dividend Policy
9.Conclusion & Recomendation

Executive summary:
The term paper is done in order to evaluate the suitable stock to invest among the five companies Eastern Lubcricants Blenders Limited, Barakatullah electro dynamics limined companies listed at Dhaka Stock Exchange operating under fuel & power industry by following the TOP-DOWN approach to draw a clear picture about their financial position and will work as a investing decision guideline for an investor looking towards these companies. The paper is done therefore from three perspectives-

1. General Economic Influence
2. Industry Influence &
3. Financial Analysis
To decide, how to allocate investment funds among countries, and within countries to bonds, stocks, and cash, Determine which industries will prosper and which industries will suffer on a global basis and within countries and which companies in the selected industries will prosper and which share price is overvalued or undervalued.

Introduction:
This report is going to evaluate Power Grid Company of Bangladesh Ltd., Desco, Sumit power, Khulna power company limited, Eastern Lubcricants Blenders Limited, Barakatullah electro dynamics limined companies listed at Dhaka Stock Exchange operating under fuel & power industry, on different aspects of the discipline of Investment Aalysis and Portfolio Management .To develop our evaluation we have gone through Top-Down three step approach and we have also performed ratio analysis of the company over the same time period. We have calculated and analyzed risk (standard deviation) based on the company’s five year’s returns92006-2010) over the same period. In addition, we have calculated Beta value of the company and standard deviation to find Treynor and Sharp measure for the companies in order to find the highest giving risk premium company per unit of risk bearing. To calculate the Beta value of the company, we have used 60 monthly market returns for the common stock price and 60 monthly market returns of the index during the same period. We have considered a risk free rate of return which is the yearly rate of return on the Treasury bill issued by Bangladesh Bank. We have calculated interest and other cost of financing of debt for the company before and after taxes. We have calculated the Weighted Average Cost of capital for the firm. We have also calculated the optimum debt ratios for Power Grid. We have calculated Power Grid’s intrinsic share price based on dividend discount model. We have used corporate value model if Power Grid pays dividend to the share holders. We have also investigated whether our calculated stock prices reflect true market values or not. We have also developed a clear explanation about the company’s dividend policy. Power Grid Company of Bangladesh (PGCB) was created under the restructuring process of Power Sector in Bangladesh with the objective of bringing about commercial environment including increase in efficiency, establishment of accountability and dynamism in accomplishing its functions. PGCB was incorporated in November 1996 with an authorized capital of Tk.10 billion. It was entrusted with the responsibility to own the national power grid and to operate and expand the same with efficiency. Pursuant to Government decision to transfer of transmission assets to PGCB from Bangladesh Power Development Board (BPDB) and Dhaka Power Distribution Company (DPDC), former...
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