IPOs and Under subscription : Bata’s Share Capital Dynamics

  1. Financial Modelling
    1. Financial Modelling Introduction
    2. Financial Modelling Tools & steps
    3. How to Make a Financial Model and choose the best Company and Excel Workbook Setup?
    4. How to build a financial model Step-by-Step Guide to Excel Sheet Setup?
    5. Financial Statements: A Step-by-Step Guide to Extracting Historical Data
    6. Financial modelling excel
    7. Learn financial modelling Balance Sheets, P&L, and Assumptions Know About
    8. What is financial modelling Assumptions and Projections?
    9. Financial modelling and valuation
    10. Investment decision calculation
    11. The balance sheet’s asset side reveals the company’s line items.
    12. Revenue Model & Growth Rate in in P&L Assumptions
    13. Basics of financial modelling CAPEX and Asset Schedule
    14. Financial Analysis: Gross Block and CAPEX
    15. Gross block & Capex: Constructing the Asset Schedule
    16. Depreciation : Connecting P&L and Balance Sheet for Accurate Asset Forecasting
    17. depreciation expense : Exploring Different Methods in Financial Modeling
    18. Debt Management: Connecting P&L and Balance Sheet for Accurate Liability Projection
    19. Interest Rate Calculation & Debt Schedule
    20. Share Capital & Reserves
    21. IPOs and Under subscription : Bata’s Share Capital Dynamics
    22. Reserves & Surplus understanding Bata schedule
    23. Reserves and surplus schedule How to Build on Excel
    24. Financial modelling projections
    25. Balance Sheet Projections and Completing Reserves Schedule
    26. Cash Flow Statements Analysing Operations, Investments, and Financing Activities
    27. What Is Valuation for Investor
    28. Free Cash Flow Key Components, Formulas and How to Calculate?
    29. FCFF and FCFE uses in Mastering Free Cash Flow Calculation
    30. WACC Weighted Average Cost of Capital Analysis
    31. Market Risk Premium analysis
    32. Tax Shield and its Impact on Equity Holder Returns
    33. Weighted Average Cost of Capital and Terminal Growth in Valuation
    34. Terminal Value Understanding Perpetual Cash Flow Projections in DCF Model
    35. Learn Financial Modelling
    36. Free Cash Flow to the Firm (FCFF) Calculation with examples
    37. Stock Valuation DCF Model & Stock Market Value
Marketopedia / Financial Modelling / IPOs and Under subscription : Bata’s Share Capital Dynamics

Let’s delve deeper into Bata’s share capital to gain a better understanding of the different aspects involved. The authorized capital of the company is INR 700 million, with each share having a face value of Rs 5. This results in a total of 140,000,000 shares when dividing the authorized capital by the face value.

Out of the authorized capital, Bata has issued INR 642.85 million worth of shares, which amounts to 128,570,000 shares. This is in line with the issued figure. Additionally, the paid-up and subscribed shares total INR 642.64 million or 128,527,540 shares, which is equal to or less than the issued figure.

Understanding the different types of share capital is crucial. To calculate the number of outstanding shares, divide the share capital value by the face value per share. If the paid-up capital is lower than the issued value, it indicates an undersubscribed Initial Public Offering (IPO), which can be seen in companies like Zomato’s IPO.

Conversely, if the demand for an IPO exceeds the available shares, it is referred to as an oversubscription. In such cases, the company may consider raising more money through equity, leading to an increase in the authorized share capital.

Let’s consider an example of a company that issued 10,000 shares with a face value of Rs. 10 each, resulting in an initial share capital of Rs. 100,000. If the IPO is priced at Rs. 250 per share and all shares are subscribed, the company will obtain Rs. 2,500,000 from the offering. This additional capital will be reflected on the liabilities side of the balance sheet under the heading of “Reserves & Surplus,” with a subheading of “Securities Premium Reserve.”

Now, let’s focus on Reserves and Surplus from a financial modelling perspective.

Reserves and Surplus represent the accumulated profits and retained earnings of a company over time. It includes various components like the General Reserve, Capital Reserve, and Profit and Loss Reserve. These reserves are essential as they provide a buffer against financial downturns, fund expansion plans, and distribute dividends to shareholders.

In a financial model, we need to forecast the growth of Reserves and Surplus over the projection period. This can be based on historical data, management guidance, and industry trends. Analysing the company’s dividend policy is also crucial, as it impacts the retention of earnings and, consequently, the growth of Reserves and Surplus.

Furthermore, understanding the factors that affect Reserves and Surplus, such as dividend pay-out ratio, share buybacks, and stock splits, is essential for accurate financial modelling. These components can significantly impact the company’s equity and financial position.

In conclusion, comprehending the intricacies of share capital, IPOs, and Reserves and Surplus is vital for financial modelling and gaining insights into a company’s financial health and future prospects. As a financial analyst, incorporating these elements into your modelling process will contribute to well-informed decision-making and accurate forecasting.


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