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Following the Money: A Comprehensive Exploration of Cash Flow



The financial stability and sustainability of businesses depend heavily on cash flow. It supplies the money required for daily operations, such as paying contractors, staff members, and other operational costs.

Additionally, cash flow protects firms against financial instability and insolvency by enabling them to weather economic downturns or unforeseen occurrences. Any business’s smooth operation and long-term success depend on maintaining a steady cash flow.

What is cash flow?

Cash flow is the net amount of cash and cash equivalents entering and leaving a business. Money spent and money received reflect inflows and outflows, respectively.

Simply put, cash flow tracks the input and outflow of actual cash over a specified period. Positive cash flow suggests that more money is entering the company’s or person’s finances than leaving, whereas negative cash flow means more money is leaving than entering.

Types of cash flow

Operating Cash Flow

  • Regular business operations are included in a company’s operating activities. Selling commodities or providing services, including collecting various debtors, generates inflows. 
  • Acquiring inventory, paying salaries, releasing taxes, and other miscellaneous operating costs (OpEx) are just a few examples of how money is expended. The buying and selling of trading securities is also included.

Investing Cash Flow

  • Investing activities are the money contributed to or obtained by buying or selling securities or investments. The acquisition of property, plant, equipment (PPE), and other investment instruments causes a cash outflow in this scenario.
  • By selling the owned securities, money is brought in. Securities kept for dealing and trading purposes are not included in such exchanges.

Financing Cash Flow

  • Any capital-related receipts and payments are considered to be financing operations. The inflow of finance refers to the funds obtained through issuing long-term debt or equity. Cash inflows from the issue of bonds, common stock, preferred stock, and various short- and long-term borrowings are included. Thus, shareholders and creditors are two critical sources of funding.
  • The repayment of loans, the redemption of bonds, the purchase of treasury shares, and dividend payments are all examples of money outflow. However, indirect borrowing from accounts payable is categorized as cash flow from operating rather than financing activities.

How to analyze a cash flow?

The cash flow statement can be used with other financial statements to calculate several metrics and ratios that analysts and investors can use to come to conclusions and suggestions. The study provides crucial data about the company’s business results and aids in forecasting future cash flows. The following are some vital ratios that aid in examining the principal cash sources and uses:

  1. Free cash flow (FCF): FCF is the extra cash available after paying for capital expenses. It identifies the profitability of a business’s use of capital.
  1. Operating Cash Flow (OCF): OCF is the revenue produced by a company’s main line of business. A greater OCF reflects the company’s strong liquidity position.
  1. Comprehensive Money-Flow Coverage: Calculating a percentage involves dividing the sum of net operating cash flow and free cash flow by 100. In this instance as well, a positive percentage is preferable.
  1. Current Liability Coverage Ratio: This ratio is calculated as a percentage of current liabilities and cash flow from operations. It establishes if the business can use its operating cash flow to pay down its existing penalties.
  1. Price to Money-Flow Ratio: This ratio is calculated by dividing the operating cash flow per share by the stock price. Thus, it determines a company’s value from the viewpoint of the shareholders.
  1. Money-flow margin ratio is the operating cash flow ratio to sales revenue. As a result, it is equivalent to sales made per dollar.
  1. Cash flow to net income ratio: A company’s net cash flow to its net income is known as the cash flow to net income ratio. It shows how much cash and cash equivalents were used to generate a specific net income. A 1:1 ratio is regarded as optimum.

Role of cash flow in Business

Firstly, it guarantees liquidity by giving the money needed to pay bills on time, pay suppliers, and fulfill financial commitments. Businesses may find it difficult to run efficiently or even risk going bankrupt without a stable cash flow.

Secondly, stable cash flow enables companies to withstand economic downturns and unforeseen difficulties. It acts as a safeguard against monetary ambiguities. In addition, good cash flow management aids in decision-making, valuation, and debt servicing for organizations.

The bottom line

The movement of money is what we refer to when we talk about cash flow. A negative cash flow represents increased spending, whereas a positive cash flow demonstrates an increased inflow of funds. However, if your spending is out of control, you’ll need more cash for emergencies and won’t be able to make payments to your suppliers or lenders.

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IREDA partners with PNB for Power Renewable Energy Projects, stock trades down



New Delhi, February 19, 2024 – The Indian Renewable Energy Development Agency Ltd. (IREDA) and Punjab National Bank (PNB) have formed a strategic alliance, signing a Memorandum of Understanding (MoU) to boost renewable energy initiatives across India. This collaboration aims to co-finance and syndicate loans for diverse renewable energy projects, marking a significant step towards achieving sustainable energy goals. Despite this the stock trades negative in the early session.

Strengthening Renewable Energy Financing

In a significant move at IREDA’s New Delhi office, Dr. R. C. Sharma, IREDA’s General Manager, and Shri Rajeeva, PNB’s Chief General Manager, inked the MoU. This event, witnessed by Shri Pradip Kumar Das, IREDA’s CMD, and Shri Atul Kumar Goel, PNB’s MD & CEO, along with senior officials from both entities, sets the stage for a transformative partnership in renewable energy financing.

A United Front for Green Energy

“This strategic partnership between IREDA and PNB represents a major leap in our mission to accelerate renewable energy growth in India,” stated Shri Pradip Kumar Das, CMD of IREDA. By leveraging their combined strengths, IREDA and PNB are committed to offering substantial financial backing to renewable energy projects, thus supporting sustainability and environmental conservation. This initiative aligns perfectly with the Hon’ble Prime Minister’s COP26 announcement to achieve a 500 GW Non-Fossil-based electricity generation capacity by 2030.

Broadening Support for Renewable Projects

The MoU includes provisions for joint lending, loan syndication, and underwriting, as well as managing Trust and Retention Account (TRA) for IREDA borrowers. It also facilitates investments in bonds issued by either organization, ensuring competitive terms of sanction and pricing for IREDA borrowings.

Building a Coalition for Clean Energy

IREDA’s collaboration with PNB enhances its portfolio of partnerships with premier financial institutions aimed at co-lending and loan syndication for renewable energy projects across India. Moreover, these strategic alliances underscore the collective drive towards meeting India’s renewable energy aspirations.

Recent development for IREDA

Bhubaneswar, February 11 – IREDA takes a groundbreaking step by partnering with the Indian Institute of Technology, Bhubaneswar, to foster innovation and research in the renewable energy sector. Signed at the 100 Cube Start-up Conclave at IIT Bhubaneswar, this MoU aims to support collaborative innovation, technology transfer, and the nurturing of the start-up ecosystem in renewable energy.

Pioneering Renewable Energy Research

Shri Pradip Kumar Das, CMD of IREDA, and Dr. Debi Prasad Dogra, Independent Director of IIT Bhubaneswar, sealed the partnership in the presence of Shri Dharmendra Pradhan, the Hon’ble Union Minister, and Prof. Shreepad Karmalkar, Director of IIT Bhubaneswar. “Our partnership with IIT Bhubaneswar marks a pivotal milestone in promoting sustainable development and innovation within the renewable energy sector,” said Shri Pradip Kumar Das.

Advancing Clean Energy Development

The collaboration promises to jumpstart joint research initiatives, facilitate technology transfers, and offer comprehensive support to start-ups in clean energy. It also includes capacity-building efforts such as training programs and workshops to bolster IREDA officials’ expertise in renewable energy.

Why IREDA share is going up?

Litsed just a month ago, shares of IREDA have more than doubled in the PSU rally. This increase in stock price is primarily because of the PSU stock growth we witnessed in the early half of Febuary. Moreover, we feel the stock was undervalued at a listing price. Despite the recent up stock currently trades at a PE of 35, this is fairly valued as per the valuations of the competitors. Investors must explore into balance sheet of companies before making a buy or sell decision.

Embracing a Sustainable Future

These partnerships signal IREDA’s commitment to advancing India’s renewable energy capabilities. Through strategic collaborations and fostering innovation, IREDA aims to pave the way for a sustainable and energy-secure future, aligning with national and global clean energy targets. Read more on renewable energy and Tata Power below.

Also follow us on Tradealone for more such timely updates on your favourite stocks.

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Manorama Industries Limited Takes New Steps in Stock Split and Business Growth




Key Developments at Manorama Industries

Raipur, January 15th, 2024 – Manorama Industries Limited, a front-runner in specialty fats, butters, and exotic products, is hitting the headlines with two major announcements that could reshape its market presence and shareholder value.

1:5 Stock Split: Making Shares More Accessible

The Board of Directors has given the green light to a stock split, changing the face value of its shares from INR 10 to INR 2. What does this mean for investors? Simply put, it’s going to make the company’s shares more affordable and increase their liquidity in the market. A smart move that could attract more investors!

Geographic Expansion and Product Diversification

The company isn’t just stopping at a stock split. They’re setting their sights on bigger, global goals. Manorama plans to strengthen its roots in key international markets by setting up entities in the UAE, Russia, and other strategic locations. This expansion aims to bolster their business operations significantly.

Chocolate & Confectionery: The New Frontier

But there’s more brewing at Manorama. They’re eyeing the lucrative Chocolate & Confectionery sector. Think real chocolate, super compound slabs, compound chocolate, and specialty cocoa products. It’s a natural extension of their existing business line, tapping into both domestic and international markets.

Updates and Developments:

  • New Fractionation Plant: The company is gearing up to complete its new fractionation plant’s CAPEX by FY24. This expansion is set to boost its production capacity, solidifying its position in the global market for CBE and specialty butter & fats.
  • Credit Rating Upgrade: Manorama’s commitment to growth and excellence has been recognized with an upgraded credit rating by CARE, now standing at ‘CARE A-, Stable’.
  • Investor Relations: Ernst & Young LLP has been roped in to manage their investor relations, signaling a step towards strengthening stakeholder communication.
  • Manorama Industries share has jumped around 100% in the last 1 year, doubling from 1000 to 2000 rupees per share. It’d be interesting to see how the stock price reacts to this news.
manorama share price double

Words from the President

Mr. Ashish Saraf, President of Manorama Industries, expresses confidence in these strategic moves. The stock split, geographic expansion, and foray into new product lines are not just about growth but also about enhancing shareholder value and meeting global demands.

About Manorama Industries Limited (MIL)

Since 2005, MIL has been a leader in the manufacturing of specialty fats & butters. With a focus on R&D and quality, MIL offers customized solutions to top global companies. Their commitment to ESG practices underscores their dedication to sustainable and responsible growth.

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EaseMy Trip jumps into the Insurance Sector with a New Subsidiary



EaseMy Trip popularly known for for its travel services, just stepped into the insurance world with the launch of its new arm, EaseMyTrip Insurance Broker Private Limited. This move aims to expand their services and cater to the insurance market’s growing needs. By venturing into insurance, the company plans to leverage its customer base of 20 million users.

EaseMy Trip is looking at Opportunities in the Insurance Market

India’s insurance sector is on the rise, with annual growth rates of 32-34%. By 2027, experts believe that the sector can reach a milestone of US$200 billion. EaseMy Trip sees this as an opportunity to expand its offerings and expand its business horizons.

Pioneering Change in the Industry

The incorporation of EaseMyTrip Insurance Broker Private Limited as a distinct entity under the parent brand signifies the company’s dedication to innovation. Mr. Nishant Pitti, a driving force behind the company, takes the helm as the Director, ushering in a new era for the company.

CEO’s Enthusiasm and Vision

Mr. Nishant Pitti, CEO and Co-Founder of EaseMyTrip, is excited about this leap into the insurance domain. He aims to elevate their customer offerings by providing a comprehensive travel ecosystem that now includes insurance solutions.

A Vision for Innovation

EaseMyTrip Insurance Broker Private Limited is set to redefine the insurance sector. Fueled by innovation and a customer-centric approach, the company aims to meet customers’ evolving needs effectively.

A Glimpse into EaseMyTrip

EaseMyTrip, a prominent online travel platform listed on NSE and BSE, has been flourishing at a remarkable rate. Offering end-to-end travel solutions with no booking fees, it provides access to a vast network of airlines, hotels, and transportation services. Read more Finance news with Tradealone.

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