ABSTRACT
The study intends to analyse the profit matrices that are associated with shareholder's value, as measured through MVA (Market Value Added). This study incorporates MVA cap as the dependent variable and considers net profit after taxes, return on equity, return on capital employed, cash from operations, free cash flow, dividend paid, and MPS as the independent variables. It primarily employs correlation and multiple regression analysis to assess which of the above profit indicators have a close association with MVA. A sample of 61 companies is chosen from the listed companies on NSE, ensuring a diverse mix of industries to provide a holistic perspective on shareholder value creation. This study aims to identify the key profit indicators most closely linked to MVA, providing actionable insights for investors and corporate managers. Investors can make informed stock selections based on profitability metrics, while managers can optimize financial parameters that significantly impact shareholder wealth. This study employs a longitudinal research design using Multiple Linear Regression (MLR) to analyze the relationship between explanatory variables—CFO, net profit, DPS, ROE, ROCE, and FCF—and the dependent variable, MVA. Secondary data is sourced from Moneycontrol, Capitaline, company annual reports, and BSE/NSE websites. The analysis shows that Net Profit (AV PAT) and Cash Flow from Operations (AV CFO) positively impact AV MVA, while Free Cash Flow (AV FCF) has an inverse effect. Dividend Per Share (AV DPS), Return on Equity (AV ROE), and Return on Capital Employed (AV ROCE) have minimal influence, suggesting investors may not prioritize them. Market Price per Share (AV MPS) weakly correlates with AV MVA, indicating short-term stock fluctuations do not fully reflect intrinsic value. Overall, profitability and cash flow drive firm value, while other financial indicators have a limited effect.
