1. EXECUTIVE SUMMARY

EQUITY ANALYSIS is the systematic study of the performance of companies in stock

market with help of fundamental analysis and technical analysis. Equity analysis consists

of fundamental analysis & technical analysis. While decision in investment of shares

should be base on actual movement of shares price measured more in money &

percentage term & nothing else.

In equity analysis, calculations are based on FACTS & not on HOPE. The subject of

equity analysis is an attempt to determine future share price movement with the help of

RATIO ANALYSIS, STUDY OF GRAPH. Equity analysis does not discuss how to buy

& sell shares, but does discuss the methods, which enables the investor to arriving at

buying & selling decision.

The Technical Approach to investment is essentially a reflection of the idea that prices

moves in a trend that are determined by the changing attitude of investors toward a

variety of economic, monetary, political and psychological forces. The art of technical

analysis, for it is an art, is to identify a trend reversal at a relatively early stage and ride

on that trend until the weight of the evidence shows or proves the trend has reversed.

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INTRODUCTION TO BSE AND NSE

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich

heritage. Popularly known as “BSE”, it was established as “ The Native Share & Stock

Brokers Association ” in 1875. It is the first stock exchange in country to obtain

permanent recognition in 1956 from the Government of India under the Securities

Contracts (Regulation) Act, 1956. The Exchange’s pivotal and pre-eminent role in the

development of the Indian capital market is widely recognized and its index, SENSEX, is

tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a

demutualised and corporative entity incorporated under the provisions of the Companies

Act, 1956, pursuant to the BSE (Corporatisation and Demutualization) Scheme, 2005

notified by the Securities and Exchange Board of India (SEBI).

With demutualization, the trading rights and ownership rights have been de linked

effectively addressing concerns regarding perceived and real conflicts of interest. The

Exchange is professionally managed under the overall direction of the Board of

Directors. The Board comprises eminent professionals. Representatives of Trading

Members and the Managing Director of the Exchange. The Board is inclusive and is

designed to benefit from the participation of market intermediaries.

The Exchange has a nation-wide reach with a presence in 417 cities and towns of India.

The systems and processes of the Exchange are designed to safeguard market integrity

and enhance transparency in operations. During the year 2004-2005, the trading volumes

on the Exchange showed robust growth.

The Exchange provides an efficient and transparent market for trading in equity, debt

instruments and derivatives. The BSE On Line Trading System (BOLT) is a proprietary

system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing

and settlement functions of the Exchange are ISO 9001:2000 certified.

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SENSEX – THE BAROMETER OF INDIAN CAPITAL MARKETS For the premier Stock Exchange that pioneered the stock broking activity in Indian, 128

years of experience seems to be a proud milestone. A lot has changed since 1875 when

318 persons became members of what today is called “The Stock Exchange, Mumbai” by

paying a princely amount of Re1. Till the decade of eighties, there was no scale to

measure the ups and downs in the Indian stock market. The Stock Exchange, Mumbai

(BSE) in 1986 came out with a stock index that subsequently became the barometer of

the Indian stock market.

First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing a

sample of large, liquid and representative companies. The base year of SENSEX is 1978-

79 and the base value is 100. The index is widely reported in both domestic and

international markets through print as well as electronic media. The entry and exit of any

specific stock depends on the market capitalization of the top 30 companies in the market

and are from different sectors.

NATIONAL STOCK EXCHANGEThe National Stock Exchange (NSE) is India’s leading stock exchange covering various

cities and towns across the country. NSE was set up by leading institutions to provide a

modern, fully automated screen-based trading system with national reach. The Exchange

has brought about unparalleled transparency, speed & efficiency, safety and market

integrity. It has set up facilities and procedures.

NSE has played a catalytic role in reforming the Indian securities market in terms of

microstructure, market practices and trading volumes. The market today uses state-of-art

information technology to provide an efficient and transparent trading, clearing and

settlement mechanism, and has witnessed several innovations in products & services viz.

demutualization of stock exchange governance, screen based trading, Professionalisation

of trading members, fine-tuned risk management systems, emergence of clearing

corporations to assume counter party risks, market of debt and derivative instruments and

intensive use of information technology. IDBI & other financial institution with paid

equity capital of Rs 25 cores set up NSE. It started operation in Wholesale debt market in

June 1994 & in equity, in Nov 1994.

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2. COMPANY PROFILE

KBB INVESTMENTS

KBB INVESTMENTS is a financial services enterprise that brings investors an array

of financial products, all under one roof. This is investor’s one stop financial shop.

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KBBINVESTMENTS

Stock Broking Distribution Services

Portfolio Management.

Equities, commodities, forex

trading services.

Distribution house for financial

products.

Managing portfolios of medium and big

investors.

ANGEL BROKING LTD

KBB INVESTMENTS are channel partners of Angel Broking Ltd., one of the major

broking houses and lead sponsors of CNBC TV 18 investor camp, to offer investors

Equity, Futures & Commodities trading platform. KBB INVESTMENTS are associates

of all Mutual Fund Houses. KBB INVESTMENTS help investors choose a Mutual fund

based on study of the Fund performance. KBB INVESTMENTS are agency to major

Insurance companies to bring to investors Life Insurance, General Insurance, ULIP and

other insurance products.

However KBB INVESTMENTS are not here just to sell investment products. It is

foremost effort to educate investors of the concept and functionality of every financial

product. KBB INVESTMENTS bring to light the associated risk & returns, benefits &

drawbacks. KBB INVESTMENTS remain transparent of hidden costs and also related

Income Tax implications.

As the relationship with investors matures, KBB INVESTMENTS endeavor to know

investors more, their financial obligations, current cash flow and understand their future

expected financial needs. Upon this, using Fund Flow Calculator KBB INVESTMENTS

craft investor’s financials and suggest them investment avenues best suited to their needs.

EFPM is a unique service KBB INVESTMENTS offer. KBB INVESTMENTS take pride

to manage investors Equity and Futures portfolio with investors having no worries of the

bulls and bears of the stock markets. Based on KBB INVESTMENT’S tireless research

and advice of experts KBB INVESTMENTS pool investor’s money in potential stocks to

exploit the higher returns of the stock Market.

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WHY KBB INVESTMENTS:-

Strong industry focus leading to innovative and informed

strategic services.

Long term relationships with both strategic and financial

buyer community.

Deep understanding of Indian market and clients.

Strong momentum-significant increase in market share in

last 2 years.

Increase in number of franchise and clients.

Transparent and speedy transaction.

Dedicated focus on medium clients.

Comprehensive range of financial products and services.

Working with leading broking firms(Angel Broking Ltd).

Tie up with many mutual fund and financial services

provider.

KBB INVESTMENT is committed to be investor’s friend in their financial growth &

prosperity. KBB INVESTMENTS look forward to have a long-term business association

offering investors a complete transparency in their conduct.

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Experiencedmanagement

Fast growingFranchise

Comprehensivefin. services. sseservices

Strategic partners

3. OBJECTIVES

It was good opportunity to familiarize myself with the stock market i.e. the capital market

& its co-relation with economical environment through “EQUITY RESEARCH”. The

analysis of equity gives me the opportunity to understand thoroughly this behavioral

patterns of different equity & overall capital market.

The main objectives of the project research is as follows.

1. To study the equity analysis and obtain the knowledge of equity market

2. To study the present behaviors & predicting the future behavior of equity in stock

market.

3. Obtain the knowledge about how to select the companies for investment.

4. To analyze the performance of a company through Balance Sheet & Technical

graph of their shares.

RATIONALE

The present market scenario is not good as compare to situation prior to six months. Now

it is showing some resistance from investors as well as financial institutions. But some

of the research firms showed that Share Market will be the fastest growing in India as

compare to global markets.

From last two years share market was in boom. Now it is possible for the investors to

trade from their own place. As compare to last two years where there was a growth in the

number of share brokers and market analysts, which is stabilizing now. Media is playing

an important role in these regards. As inflation is on rise, rate of return of different

government securities and bank fixed deposits are not varying accordingly giving

negative rate of return. Now the common man is also thinking of some investment in

share market. Too many investors invest their money for the short span, the intention is

speculative

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4. RESEARCH METHODLOGY

Formation of need for project work

When I got introduced to the primary information on stock market I was attracted by

make easy money nature of the market. But after acknowledging the risk involved and

the volatility of the market I stepped do ground. The only way out for this was the

thorough study of the stock market and analysis of various investment options.

Literature survey

The first step forward was the Literature survey as much as possible. I went through

various books and magazines related to investment analysis. I could collect a lot of data

and theory from academic books, government reports, magazines, newspaper, etc.

Developing working hypothesis

Working hypothesis is a tentative assumption made in order to draw out and test it’s

logical and empirical consequences. They provide focal point for research. They also

affect the manner in which test must be conducted in analysis of data and directly the

quality of data which is required to be analyzed.

I developed working hypothesis in following ways:

Discussion with colleagues and experts on stock market and it’s functioning.

Examination of data and records

Review of similar studies and their results

Through personal observations and investigation

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Collection of data

Primary source includes:-

1) Discussion with branch manager

2) Discussion with experts

3) Questionnaires for investors

4) Live trading in the market

Secondary source includes:-

1) Various books related to stock market

2) Books related to Financial Management

3) Web sites were used as the vital information source

Analysis of data

The data collected from primary and secondary resources was well organized and made

ready for analysis. Analysis of the data was made through the application of various

statistical and analytical methods. The interrelationship between various parts of the data

was found out. The necessary interpretation was drawn out of it. In this way using

different statistical methods, the data collected was being analyzed and important and

relevant information was being extracted from it.

After analysis and thereof interpretation triggered off new questions which in turn gave

new horizons to the project work.

KBB INVESTMENTS felt need of evaluating the price patterns of leading scripts mainly

from the different sector companies and also interested in determining the trends along

with price performance in near future. This equity analysis will facilitate to investor for

profitable investment.

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5. EQUITY ANALYSIS

5. a. FUNDAMENTAL ANALYSIS

A investor, while buying stock, has the primary purpose of gain. If he invests for a short

period of time, it is speculative but when he holds it for a fairly long period of time, the

anticipation is that he would receive some return on his investment. The fundamental

analysis is a method of finding out the future price of a stock, which an investor wishes to

buy. The method for forecasting the future behaviors of investment and the rate of return

on them is clear through an analysis of the broad economic forces, industry analysis, the

company analysis and ratio analysis.

A. Influence of the economy on the company.

These are the following factor: -

01. Economic Growth

02. Populations

03. Monsoons and Agriculture Production

04. Natural resources and availability of raw material

05. Industrial Productions

06. Inflation

07. Interest rate

08. Foreign exchange reserve

09. Balance of payment position

10. Budget deficits

11. Public debt and foreign debt

12. Domestic saving and capital output rate

13. Employments

14. Taxation policies

15. Infrastructure facilities

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16. Government policies

17. Political Stability

18. International developments

19. Capital formations

20. Saving pattern

21. Economic indicators

22. Foreign direct investments

23. Rupee-Dollar Fluctuation

24. Stock News

B. Industrial Analysis.

The industry analysis should take into account the following factors that influence

the performance of the company, whose share prices are to be analyzed.

Product Line.

It is also necessary to know the industries with a high growth potential like

computers, electronics, chemicals, diamonds, textiles etc. and whether the

industry is in the priority sector of the key industry group of capital goods or

consumers goods group.

Raw Material and Inputs.

Under these head, we have to look in to industries depending on imports of scare

raw materials, competition from other companies and industries and the barriers

to entry of new company, protection from foreign competition, import and export

restriction etc.

Capacity Installed and Utilized.

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The demand for industrial product in the economy is estimated by the planning

commission and the Government, and the units are given licensed capacity on the

basis of these estimates.

Industry Characteristics.

It included whether the industry is cyclical, fluctuating of stable. It is also

important whether industry produce seasonal product or FMCG. It also includes

demand of product, freight charges, cost of production, advertisement cost, skill

of operation, profitability.

Demand and Market.

It includes demand of the product in the market and price of raw material and

other input cost like freight, electricity, season, monsoon, etc. if the nature of

product is such as drugs, fertilizer or other consumer goods, whose price and

distribution control by Government.

Government Policy with regard to Industry

Government Policy is announced in the industrial policy resolution and

subsequent announcement from time to time by the Government. The Policy

strategy as laid down in the five years plans according to planning commission

and expected demand in the economy.

Management.

If the promoters and the management are efficient and capable of steering the

company through the difficult days such management likes TATA & BIRLA,

who have reputation, buildup their companies on the strong foundation. The

management has to be assessed in the terms of their capabilities, popularity,

honesty and integrity.

5. b. TECHNICAL ANALYSIS

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The methods used to analyze securities and make investment decisions fall into two very

broad categories: Fundamental Analysis and Technical Analysis. Fundamental

analysis involves analyzing the characteristics of a company in order to estimate its value.

Technical analysis takes a completely different approach; it doesn’t care one bit about the

“value” of a company or a commodity. Technicians (some time called chartists) are only

interested in the price movement in the market.

Despite all the fancy and exotic tools it employs, technical analysis relies on just studies

of supply and demand in a market in an attempt to determine what direction, or trend,

will continue in the future. In other words, technical analysis attempts to understand the

emotions in the market by studying the market it self, as opposed to its components. If

you understand the benefits and limitation of technical analysis it can give you a new set

of tools or skills than will enable you to be a better trader or investor.

DEFINITION

Technical analysis is a method of evaluating the securities by analyzing the statistics

generated by the market activity, such as past price and volume. In technical analysis,

analysts use charts and other tools to identify patterns that can suggest future activity.

Just as there are many investment styles on fundamental side, there is also much different

type of technical traders. Some rely on chart patterns. In any case, technical analysts

exclusive use of historical price and volume data, is what separates them from their

fundamental counterparts. Unlike fundamental analysts, technical analysts don’t care

whether a stock is undervalued or overvalued the only thing that matter is a security’s

past trading data and what information this data can provide about where the security

might move in the future

Assumptions:

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1. The Market Discounts Everything

A major criticism of technical analysis is that it only considers price movement, ignoring

the fundamental factors of the company. However, technical analysis assumes that, at any

given time, a stocks price reflects everything that has or could affect the company-

including fundamental factors. Technical analysts believe that the company’s

fundamentals, along with broader economic factors and market psychology, are all priced

into the stock, removing the need to actually consider these factors separately.

This only leaves the analysis of price movement, which technical theory views as a

product of supply and demand for a particular stock in the market.

2. Price Moves In Trends

In technical analysis, price movements are believed to follow trends. This means that

after a trend has been established, the future price movement is more likely to be in the

same direction as the trend that to be against it. Most technical trading strategies are

based on this assumption.

3. History Tends To Repeat Itself

Another important idea in technical analysis is that history tends to repeat itself, mainly

in terms of price movement. The repetitive nature of price movement is attributed to

market psychology; in other words, market participants tend to provide a consistent

reaction to similar market stimuli over time. Technical analysis uses chats patterns to

analyze market movements and understand trends. Although many of these charts have

been use for more than 100 years they are still believed to be relevant because they

illustrate patterns in price movements that often repeat themselves.

Line charts

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A style of charts that is created by connecting a series of data points together with a line.

This is the most basic type of charts used in finance and connecting a series of past prices

together with a line generally creates it.

Bar chart

A style of chart used by some technical analysts, on whom as illustrated below, the top of

the vertical line indicates the highest price a security traded at during the day, and the

bottom represents the lowest price. The closing price is displayed on the right side of the

bar, and the opening price is shown on the left side of the bar. A single bar like the one

below represents one day of trading.

These are the most popular type of chart used in technical analysis. The visual

representation of price activity over a given period of time is used to spot trends and

patterns.

Candlestick

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A price chart that displays the high, low, open and close for a security each day over a

specified period of time.

There are many trading strategies based upon patterns in candlestick charting.

Technical analysis: The use of trend

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One of the most important concepts in technical analysis is that of trend. The meaning in

finance isn’t all that different from the general definition of the term- a trend is really

nothing more than the general direction in which a security or market is headed.

The Importance of Trend

It is important to be able to understand and identify trends so that you can trade with

them rather than trade against them. Two important sayings in technical analysis are “ the

trend is your friend” and “ don’t buck the trend” Illustrating how important trend analysis

is for technical trade.

Types of Trend

There are three types of trend:

Up Trends

Downtrends

Sideways/ Horizontal Trends

As the names imply, when each successive peak and trough is higher, is referred to as an

upward trend. If the peaks and troughs are getting lower. It is a downtrend. When there is

little movement up or down in the peaks and troughs, it’s a sideways or horizontal trend.

If you want to get really technical, you might even say that a sideways trend is actually

not a trend on its own, but a lack of a well-defined trend in either direction. In any case,

the market can really only trend in these three ways: up, down or nowhere.

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Uptrend

Describes the price movement of a financial asset when the overall direction is upward. A

formal uptrend is when each successive peak and trough is higher than the ones found

earlier in the trend.

Notice how each successive peak and trough is located above the previous ones. For

example, the peak at trend is higher than the peak at uptrend. The uptrend will be deemed

broken if the next low on the chart falls below trend.

Downtrend

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Describes the price movement of a financial asset when the overall direction is

downtrend. A formal downtrend occurs when each successive peak and trough is lower

than the ones found earlier in the trend. Notice how each successive peak and trough is lower than the previous one. For example,

the low trend is lower than the low at Point. The downtrend will be deemed broken once

the price closes above the high at high direction trend.

Downtrend is the opposite of uptrend.

Head and Shoulders Pattern

A technical analysis term used to describe a chart formation in which a stocks price:

1 Rises to a peak and subsequently declines.

2. Then, the price rises above the former peak and again declines

3. And finally, rises again, but not to the second peak, and declines once

more.

The First and Third peaks are shoulders, and second peak forms the head.

The “Head -and –Shoulders” pattern is believed to be one of the most reliable trend

reversal patterns.

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Moving Average- MA

An indicator frequently used in technical analysis showing the average value of a

security’s price over a set of period. Moving averages are generally used to measure

momentum and define areas of possible support and resistance.

The moving average line of price of the stock under consideration helps a investor in

following ways to take buy or sell decisions:

When the actual market price line cuts the moving average line of price from

below it the right time to buy.

When the actual market price line cuts the moving average line of price from

above it the right time to sell.

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Dow Theory

Dow Theory asserts that major market trends are composed of three phases:

1) An Accumulation Phase: The accumulation phase is a period when investors "in

the know" are actively buying (selling) stock against the general opinion of the

market. During this phase, the stock price does not change much because these

investors are in the minority absorbing (releasing) stock that the market at large is

supplying (demanding).

2) A Public Participation Phase: Eventually, the market catches on to these astute

investors and a rapid price change occurs. This occurs when trend followers and

other technically oriented investors participate.

3) A Distribution Phase: Second phase continues until rampant speculation occurs.

At this point, the astute investors begin to distribute their holdings to the market.

Elloitt Wave theory

The wave principle posits that collective investor psychology (or crowd psychology)

moves from optimism to pessimism and back again. These swings create patterns, as

evidenced in the price movements of a market at every degree of trend.

Practically all developments which result from (human) socialeconomic processes follow

a law that causes them to repeat themselves in similar and constantly recurring serials of

waves or impulses of definite number and pattern. R. N. Elliott, in Nature’s Law: The

Secret of the Universe Elliott's model says that market prices alternate between five

waves and three waves at all degrees of trend, as the illustration shows. As these waves

develop, the larger price patterns unfold in a self-similar fractal geometry. Within the

dominant trend, waves 1, 3, and 5 are "motive" waves, and each motive wave itself

subdivides in five waves. Waves 2 and 4 are "corrective" waves, and subdivide in three

waves. In a bear market the dominant trend is downward, so the pattern is reversed—five

waves down and three up. Motive waves always move with the trend, while corrective

waves move opposite it.

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6. a. INDUSTRY ANALYSIS – IT SECTOR

The Indian IT services market has witnessed strong growth over the past few years, on

the back of increased offshore outsourcing initiatives from global corporations. More and

more global corporations are trying to improve their cost efficiency and, thus,

outsourcing their technology requirements to low-cost countries like India. In fact, it is

the offshore component that has been seeing impressive traction, driven by increasing

acceptance of the ‘global delivery model’. While the rupee’s appreciation against the US

dollar and rising wages have taken some toll on the companies’ profitability, the fact that

demand now seems to be shifting from low-end services to high-end ones, like IT

consulting, package implementation and systems integration, seems to augur well for the

larger and more technology intensive players in the sector

BUDGET 2008-09 MEASURES RELATED TO IT SECTOR

The budget has allocated Rs 1,680 crore to the Department of Information Technology in 2008-09 as against Rs 1,500 crore in 2007-08 and has announced three new schemes namely:

1. Two schemes for establishing 100,000 broadband internet-enabled Common Service Centres in rural areas and State Wide Area Networks (SWAN) with Central assistance. This is already under implementation. Rs 7,500 crore is allocated for common service centre and Rs 750 crore for SWAN.

2. New scheme with budgetary allocation of Rs 275 bn launched for State Data Centres.

Customised software has been brought under the service tax net and will attract 12% service tax

Excise duty has been increased on packaged software from 8% to 12% to bring it at par with customised software.

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BUDGET IMPACT

IT/ITES sector will benefit largely because of increase spending on education, which will result in large talent pool of professionals. This spending on education will also help in reducing the supply side constraints that is currently faced by the leading companies in hiring quality professionals

The service tax on customised software is a negative for technology companies but it will be passed on to the clients.

COMPANY IMPACT

While the Tier-I IT companies will not be severely impacted as they can easily move to SEZ, it is the mid tier IT companies which will feel the heat.

Companies like NIIT Technologies and MindTree Consulting will be adversely impacted from April 2009 onwards when the tax benefits end. These companies will find it difficult to migrate to SEZ, as it would entail huge cash outflow.

Companies like NIIT, Educomp Solutions and Everonn Systems, which are functioning in the e-learning area will benefit due to the increased thrust on education to raise the talent pool in the country.

Tulip IT services will benefit due to implementation of SWAN projects

KEY POSITIVES

Moving up the value chain: Indian software companies are consistently broadening their portfolio of offerings and moving fast up the value chain. Given that traditional services, such as application development and maintenance (ADM), are getting commoditised, it is imperative for these companies to move higher up the value chain into areas like consulting, package implementation and systems integration. Not only will this help Indian companies get higher billing rates from their clients, it will also give them an opportunity to work closely with the top managements of client companies.

Moving up the value chain: Indian software companies are consistently broadening their portfolio of offerings and moving fast up the value chain. Given that traditional services, such as application development and maintenance (ADM), are getting commoditised, it is imperative for these companies to move higher up the value chain into areas like consulting, package implementation and systems integration. Not only will this help Indian companies get higher billing

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rates from their clients, it will also give them an opportunity to work closely with the top managements of client companies.

KEY NEGATIVES

High reliance on the US markets: The US market's share in India's software and services exports is fairly high, at around 60% to 65%. Even though it has come down a little during the last year but such a large degree of dependence on a single geographical location spells high risk for the Indian software sector. Over that, the backlash in the US against outsourcing of jobs to low-cost countries like India has raised some medium-term concerns for Indian software companies.

Decreasing competitive advantages: Increasing competition from global technology majors has not only threatened the Indian IT industry's cost leadership, Indian software companies have also been made to face intense competition for talent. All these pressures mean flat billing rates and higher employee costs going forward. This is likely to affect margins and, consequently, the profitability of Indian companies. The BPO service providers have achieved maturity in practices like relationship management and knowledge management. They need to diversify to employee engagement, process improvement, recruitment, migration planning and workforce management. If this is not done, the IT companies could find maintaining the current client satisfaction level as challenging.

High rates of attrition: High attrition, especially in the middle and senior positions, continue to damage the performance of Indian software companies to a certain extent. The average industry rate is around 18% which when compared to other industries is on the higher side. The companies, in a bid to overcome high attrition rates, are recruiting science graduates and training them, which means higher training cost and loss of billable hours. Apart from competition for talent from MNC technology majors, internal factors like job dissatisfaction and higher aspirations (in case of BPO companies) have led to such high attrition rates in the Indian software sector.

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INFOSYS

Infosys Technologies Ltd (Infosys) was incorporated on July 2, 1981, as a private ltd

company. It became public limited company. To became public limited company on June

1992 and subsequently the name was also changed to Infosys Technologies Ltd. It was

the first Indian company to be listed on American Stock Exchange. The company is one

of India’s leading information technologies (IT) services companies. Enterprise Services,

Product R&D services and Consulting Services. The company is having its Headquarters

in Banglore and has 17 offshore development facilities like Aerospace & Defense,

Automotive, and Banking & Capital Markets. Communication Services, Energy,

Insurance, Healthcare, Media, Transportation Services etc., Infosys Technologies came

out with an IPO in Feb. 1993 at a premium of Rs 95 for a face value of Rs 10 per share.

Since then, it has issued three bonus issues (each in the ratio of 1:1) and split its face

value of Rs 5 each. In Feb 2000, the ADRs were split in the ratio of 2:1. In 2004-05 the

company has signed up 136 new clients and had a total client base of 438 at the end of

the year. The company’s product-FINACLE, is an integrated core banking solution that is

centralized, muliti-currency and multi-language-enabled, functionally rich, and addresses

both retail and corporate banking requirements. During 2002, GOI has raised the

investment limit in an Indian Company for FII from 49% to the maximum level approved

by FDI and the maximum limit for the software industry as approved by FDI is 100% at

present, the company is in the plan of increasing the limit of such investment to 100%. In

2006 The Company has completed the construction of an employee training facility in

Mysore, India to further enhance our employee training capabilities. The Mysore

Training complex wills accommodate 4,500 trainees at a time.

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Balance Sheet

  Mar ' 08  Mar ' 07  Mar ' 06  Mar ' 05 SOURCES OF FUNDS       Owner's Fund       Equity Share Capital   286.00  286.00  138.00  135.29Share Application Money   0.00  0.00  0.00  0.00Preference Share Capital   0.00  0.00  0.00  0.00Reserves & Surplus   13,204.00  10,876.00  6,759.00  5,106.44Loan Funds       Secured Loans   0.00  0.00  0.00  0.00Unsecured Loans   0.00  0.00  0.00  0.00Total   13,490.00  11,162.00  6,897.00  5,241.73       USES OF FUNDS       Fixed Assets       Gross Block   4,508.00  3,889.00  2,837.00  2,182.72Less : Revaluation Reserve   0.00  0.00  0.00  0.00Less : Accumulated Depreciation   1,837.00  1,739.00  1,275.00  1,005.82Net Block   2,671.00  2,150.00  1,562.00  1,176.90Capital Work-in-progress   1,260.00  957.00  571.00  317.52       Investments   964.00  839.00  876.00  1,328.70       Net Current Assets       Current Assets, Loans & Advances   12,326.00  9,040.00  6,105.00  3,764.65Less : Current Liabilities & Provisions   3,731.00  1,824.00  2,217.00  1,346.04Total Net Current Assets   8,595.00  7,216.00  3,888.00  2,418.61Miscellaneous expenses not written   0.00  0.00  0.00  0.00Total   13,490.00  11,162.00  6,897.00  5,241.73Note :       Book Value of Unquoted Investments   964.00  839.00  876.00  1,328.70Market Value of Quoted Investments   0.00  0.00  0.00  0.00Contingent liabilities   603.00  670.00  523.00  289.87Number of Equity shares outstanding (in Lacs)   5,719.96  5,712.10  2,755.55  2,705.71

26

Key Ratios  Mar ' 08  Mar ' 07  Mar ' 06  Mar ' 05 PER SHARE RATIOS              Adjusted E P S (Rs.)   78.06  65.42  90.65  68.38Dividend Per Share   33.25  11.50  45.00  11.50       Net Profit Margin (%)   27.37  28.05  26.17  27.28       LEVERAGE RATIOS              Long Term Debt / Equity   0.00  0.00  0.00  0.00Total Debt/Equity   0.00  0.00  0.00  0.00Owners fund as % of total Source   100.00  100.00  100.00  100.00Fixed Assets Turnover Ratio   3.47  3.38  3.18  3.20       LIQUIDITY RATIOS              Current Ratio   3.30  4.96  2.75  2.80Current Ratio (Inc. ST Loans)   3.30  4.96  2.75  2.80Quick Ratio   3.28  4.91  2.73  2.77Inventory Turnover Ratio   0.00  0.00  0.00  0.00       PAYOUT RATIOS              Dividend payout Ratio (Net Profit)   49.77  19.85  58.32  18.48Earning Retention Ratio   50.17  79.91  43.48  80.98

Interpretations: Current ratio is high. Hence, it shows huge blockage of funds in current assets,

Leverage ratios shows that company has no debt capital. The total capital is

contributed by shareholders. This makes it safe to invest.

Dividend payout ratio is fairly good.

27

Infosys vis-à-vis IT majors.

 Mar ' 08 

INFOSYS TCS WIPROReported EPS (Rs.)   78.06  46.07  20.96Dividend Per Share   33.25  14.00  6.00Net Profit Margin (%)  27.37  24.11  17.19Reported Return On Net Worth (%)  33.13  41.34  26.51Return On long Term Funds (%)  37.77  42.96  23.32Long Term Debt / Equity  0  0.01  0.33Current Ratio  3.3  1.99  2.54Dividend payout Ratio (Net Profit)  49.77  35.55  33.47Earning Retention Ratio  50.17  62.47  66.53

Interpretations:

1. EPS and DPS is highest for Infosys.

2. Infosys is a fully owned company.

3. The current ratio is comparatively high.

Price Fluctuations of Infosys Tech

28

29

Graph No.1

Technical analysis of Infosys Technology ltd.

From the chart of Infosys Technology Ltd we can say that script is having bearish trend

as it is breaking new lows, it may further go down.

Fundamental: -

30

1. There is a fluctuation in equity dividend. There is no fixed policy regarding

payment of dividend.

2. Rupee Dollar Fluctuation- As most of software companies in India having their

clients in the abroad, mostly in USA. Therefore, their earning are in dollars. But

currently dollar is getting strong as compare to rupee, so company can get more

rupee in return of dollars which they get from their clients. So company is

currently looking in good position in dollar – rupee fluatuation.

3. In India, salary of software professional will be increasing, and it will marginally

affect profit of companies and because of that, EPS will be come down.

4. Infosys technology Ltd. On July 2007 has announced that it has signed a multi-

million dollar outsourcing contract with Royal Philips Electronics. The deal with

Philips reinforces the company’s leadership position in transformation based BPO

services. The company’s BPO has significant growth over 70% in revenues and

an increase in client base of over one-third in FY 2007.

5. Gross Profit Ratio of the Company is stable from last five years. It is a good sign

of consistency and smooth working of the company.

6. The Net Profit Ratio is constant for last four years. It means company has good

Future.

7. But due to current slowdown in world economy and mainly America, it will affect

the business of Infosys and as a whole to IT and ITES industry.

6. b. INDUSTRY ANALYSIS – ENGINEERING SECTOR

31

World-class infrastructure has emerged as one of the most important necessities for

unleashing high and sustained growth and alleviation of poverty in any economy. And

with poor infrastructure to support other growth initiatives, the Indian economy continues

to be a laggard when compared to its developing peers. From a policy perspective,

however, there has been a growing consensus that a private-public partnership is required

to remove difficulties concerning the development of infrastructure in the country. The

realisation finally seems to be setting in. This makes the future of the Indian engineering

sector extremely bright. Apart from highway development and construction and

modernisation of airports, the potential for the sector lies in the oil and gas space, where

high global demand has led to increased action in exploration and production activities. .

However, scale and execution capabilities remain the mantras for success.

BUDGET 2008-09 MEASURES RELATED TO ENGINEERING SECTOR Rajiv Gandhi Grameen Vidyutikaran Yojana to be continued during the Eleventh

Plan period with a capital subsidy of Rs 280 bn; allocation of Rs 55 bn for FY09.

Rs 8 bn to be provided for Accelerated Power Development and Reforms Project

(APDRP) in FY09.

Proposal to set up a national fund for transmission and distribution (T&D) reform

in the power sector.

Exemption from 4% additional duty of customs has been withdrawn on power

generation projects (other than mega power projects), transmission, sub

transmission and distribution projects, and specified goods for high voltage

transmission projects.

Custom duty on project imports reduced from 7.5% to 5%

Initiatives like skill development programme and setting up of industrial training

institutes to be taken

Defense allocation to be increased by 10%

Excise duty being exempted on end-use basis, on refrigeration equipment

(consisting of compressor, condenser units, evaporator, etc) above 2 TR (tonne

refrigeration) utilising power of 50 KW and above.

32

Parent company allowed to set-off the dividend received from its subsidiary

company against dividend distributed by the parent company; provided that the

dividend received has suffered DDT and the parent company is not a subsidiary of

another company. cale and execution capabilities remain the mantras for success

BUDGET IMPACT

Aggressiveness in allotting UMPPs to prospective bidders expected to be helpful

for engineering companies providing equipments and EPC services for power

plants.

Setting up of a national fund for T&D reforms to aid growth prospects of

equipment suppliers and T&D project developers.

Removal of exemption from additional customs duty on power generation,

transmission and distribution projects to increase cost for companies importing

such projects, which shall consequently be beneficial for domestic project

developers. However, on the other hand, reduction in custom duty on project

imports to nullify the impact.

Initiatives like skill development programme and setting up of industrial training

institutes to reduce talent crunch for engineering companies, which are reporting

high levels of attrition

Increase in defense allocation to aid prospect of companies providing defense

equipments and technologies.

COMPANY IMPACT

Allocation of UMPPs to support growth if equipment and service providers like

BHEL, L&T and Siemens.

33

Greater focus on the T&D front to be beneficial for ABB, Siemens, Crompton

Greaves, Emco, Bharat Bijlee. Also, companies providing T&D project services

like Jyoti Structures and Kalpataru Transmission to benefit.

Removal of exemption from additional customs duty on power generation,

transmission and distribution projects to benefit domestic companies like BHEL,

L&T, Siemens and Reliance Energy.

Skill development initiatives to pare pressure of attrition from companies like

L&T and BHEL.

Increase in defense allocation to aid prospects of Tata Power, L&T and Bharat

Electronics.

KEY POSITIVES

Power play: Since power utilities are one of the biggest consumers (generation,

transmission and distribution) for engineering companies, reforms introduced in

the power sector like privatisation of SEBs will help in strengthening the order

book size. Huge addition in power generation capacity, in order to meet the

demand supply gap will be a big positive for the sector.

Infrastructure development: The government is focusing on development of

infrastructure like housing, airports, roads and ports. This will be big positive for

engineering and construction companies.

Industrial ‘act’: Industrial divisions of engineering companies are likely to

benefit from the increased focus on automation and capacity addition plans drawn

by the India Inc.

KEY NEGATIVES

34

Captive competition: Duty free import of T&D equipments by captive power

generation units, if allowed by government, can have some impact on margins of

the T&D majors because of competition.

People problem: Engineering companies, across the board, are facing troubled

times retaining key employees. This is due to increased levels of competition for

talent from MNCs, who have deep pockets and thus better paying capabilities. As

a result of increasing levels of attrition, some companies are facing execution

issues.

L & T Ltd.

35

Larsen & Toubro Limited (L&T) is a technology-driven engineering and construction

organization, and one of the largest companies in India's private sector. It has additional

interests in manufacturing, services and Information Technology. A strong, customer-

focused approach and the constant quest for top-class quality have enabled the Company

to attain and sustain leadership in its major lines of business across seven decades.

L&T has an international presence, with a global spread of offices. A thrust on

international business over the last few years has seen overseas earnings growing to 18

per cent of total revenue. With factories and offices located around the country, further

supplemented by a wide marketing and distribution network, L&T's image and equity

extends to virtually every district of India.

L&T believes that progress must necessarily be achieved in harmony with the

environment. A commitment to community welfare and environmental protection

constitute an integral part of the corporate vision.

History

The evolution of L&T into the country's largest engineering and construction

organizations is among the more remarkable success stories in Indian industry. The

company was founded in Bombay (Mumbai) in 1938 by two Danish engineers, Henning

Holck-Larsen and Soren Kristian Toubro - both of whom were strongly committed to

developing India's engineering talent and enabling it to meet the demands of industry.

Beginning with the import of machinery from Europe, L&T rapidly took on engineering

and construction assignments of increasing sophistication. Today, the company sets

engineering benchmarks in terms of scale and complexity.

Balance Sheet

36

  Mar ' 08  Mar ' 07 Mar ' 06 

Mar ' 05 

SOURCES OF FUNDS       Owner's Fund       Equity Share Capital   58.47  56.65  27.48  25.98Share Application Money   0.00  0.00  0.00  0.00Preference Share Capital   0.00  0.00  0.00  0.00Reserves & Surplus   9,470.71  5,683.85  4,583.32  3,312.25Loan Funds       Secured Loans   308.53  245.40  465.79  793.72Unsecured Loans   3,275.46  1,832.35  987.78  1,065.34Total   13,113.17  7,818.25  6,064.37  5,197.29       USES OF FUNDS       Fixed Assets       Gross Block   4,188.91  2,876.30  2,300.68  2,106.55Less : Revaluation Reserve   25.90  27.93  29.37  30.90Less : Accumulated Depreciation   1,242.47  1,122.83  982.22  1,089.54Net Block   2,920.54  1,725.54  1,289.09  986.11Capital Work-in-progress   699.00  471.22  286.06  65.82       Investments   6,922.26  3,104.44  1,919.52  960.70       Net Current Assets       Current Assets, Loans & Advances   16,496.48  12,049.35  9,669.13  8,962.64Less : Current Liabilities & Provisions   13,928.17  9,542.14  7,121.41  5,817.87Total Net Current Assets   2,568.31  2,507.21  2,547.72  3,144.77Miscellaneous expenses not written   3.06  9.84  21.98  39.89Total   13,113.17  7,818.25  6,064.37  5,197.29Note :       Book Value of Unquoted Investments   6,642.82  2,917.11  1,893.92  926.16Market Value of Quoted Investments   1,403.92  1,289.46  999.29  537.94Contingent liabilities   405.35  270.22  305.59  625.10Number of Equity shares outstanding (in Lacs)   2,923.27  2,832.71  1,373.86  1,299.24

Key Ratios

37

 Mar ' 08 

Mar ' 07 

Mar ' 06 

Mar ' 05 

PER SHARE RATIOS              Adjusted E P S (Rs.)   69.13  49.36  59.80  44.01Dividend Per Share   17.00  13.00  22.00  27.50       PROFITABILITY RATIOS              Operating Margin (%)   12.98  11.52  8.63  7.66Gross Profit Margin (%)   12.19  10.61  7.91  7.00Net Profit Margin (%)   8.54  7.74  6.69  7.33       LEVERAGE RATIOS              Long Term Debt / Equity   0.27  0.24  0.25  0.38Total Debt/Equity   0.37  0.36  0.31  0.55Owners fund as % of total Source   72.66  73.42  76.03  64.23Fixed Assets Turnover Ratio   6.09  6.21  6.50  6.32       LIQUIDITY RATIOS              Current Ratio   1.18  1.26  1.36  1.54Current Ratio (Inc. ST Loans)   1.09  1.16  1.28  1.34Quick Ratio   0.86  0.93  1.03  1.12Inventory Turnover Ratio   6.00  6.11  6.95  5.92       PAYOUT RATIOS              Dividend payout Ratio (Net Profit)   26.29  30.04  34.05  41.32Dividend payout Ratio (Cash Profit)   23.96  26.97  30.79  37.95Earning Retention Ratio   71.72  69.85  58.05  28.89Cash Earnings Retention Ratio   74.40  72.95  62.89  38.33

Interpertations

Earning retention ratio is consistently rising which indicates company’s expansion

plans and other investments.

Current ratio is less than standard 2:1. There is increase in current liabilities.

L & T vis-à-vis other Engg. Majors

38

  Mar ' 08

L & T Ltd. BHEL Bharat Ele. Ltd.

Reported EPS (Rs.)  74.35 58.41 103.34

Dividend Per Share  17 15.25 20.70

Net Profit Margin (%)  8.54 13.87 19.35

Reported Return On Net Worth (%)  22.81 26.53 25.57

Return On long Term Funds (%)  28.73 41.56 34.89

Long Term Debt / Equity  0.27 0.01 0.00

Current Ratio  1.18 1.38 1.73

Dividend payout Ratio (Net Profit)  26.29 30.54 23.43

Earning Retention Ratio  71.72 70.07 74.45

Interpretations:

Current ratio is low

Net profit is also comparatively low

L & T is a private sector company while BHEL and BEL are PSUs. Even then the performance of L &

T is impressive.

Price Fluctuations of shares of Larson & Toubro Ltd.

39

40

Graph No.4

Technical Analysis: The chart of Larson & Toubro shows a good support at 2100 levels

from which the stock price reversed and is moving north wards. Also the stock is

breaking new resistances and hopes to grow at faster rate.

Fundamental: -

1. Larsen & Toubro Ltd (L&T) has announced that the Company has secured two

more Design and Build contracts from Delhi Metro Railway Corporation

(DMRC) for the construction of the underground station at Saket (Delhi) and a

tunnel as part of its Phase II Project.

2. Larsen & Toubro Ltd has announced that the Company has bagged an order for

Rs. 980 corers for the supply and installation of Blast Furnace from Tata Steel

for its project in Kalinganagar, Orissa.

3. Larsen & Toubro Ltd (L&T) going to set up IT special economic zone with

Arun Excello at Vallancheri, Tamilnadu.

4. The company currently has order book worth Rs. 41600 corers.

41

6. c. INDUSTY ANALYSIS – TELECOM SECTOR

The telecommunication industry is growing at a break neck speed with leading players

lapping up mobile subscribers by millions month on month. The country’s telecom

market is the 4th largest in the world in terms of wireless subscribers and 5th largest in

terms of total telecom subscribers (Source: Bharti Airtel presentation). After growing its

wireless (GSM and CDMA) subscriber base to over 200 m by the end of December 2007,

the country is expected to take the number to 500 m telecom subscribers by the end of

March 2010. This growth is likely to be aided by the availability of cheaper handsets,

focus of regulatory measures to take telephony to rural markets, lower tariffs and general

buoyancy in the economy.

BUDGET 2008-09 MEASURES RELATED TO TELECOM SECTOR

Roll out of national rural employment guarantee scheme to all 596 districts in

India with a provision of Rs 160 bn.

Specified inputs and raw materials for manufacture of specified electronics/ IT

hardware items have been exempted from excise duty.

Additional duty of 1% to be levied on imported mobile phones towards national

calamity contingency reserve.

Countervailing duty on wireless data modem cards with exempted by way of

excise duty exemption. These goods are already exempt from customs duty.

However, 4% additional duty of customs will be attracted.

Internet telecommunication service brought under the service tax net.

Customs duty on convergence products to be reduced from 10% to 5%.

Parent company allowed to set-off the dividend received from its subsidiary

company against dividend distributed by the parent company; provided that the

dividend received has suffered DDT and the parent company is not a subsidiary of

another company.

42

BUDGET IMPACT

Roll out of national rural employment guarantee scheme to all 596 districts in

India to aid faster penetration of mobiles.

Exemption from excise duty for specified inputs and raw materials for

manufacture of specified electronics/ IT hardware to lower the network cost for

telecom service providers.

Additional duty on imported mobile phones to make handsets expensive, thus

prohibiting a faster acceptance.

Reduction in customs duty on convergence products to help establish parity

between devices used in the information/communication sector and the

entertainment sector.

Parent company allowed to set-off the dividend received from its subsidiary

company against dividend distributed by the parent company; provided that the

dividend received has suffered DDT and the parent company is not a subsidiary of

another company.

COMPANY IMPACT

Wider rollout of national rural employment guarantee scheme to aid faster

penetration of mobiles and consequently faster growth of Bharti Airtel, Reliance

Communications and Vodafone in these areas.

Lower network equipment costs to benefit mobile service players like Bharti

Airtel, Vodafone, Idea and Reliance Communications.

Additional duty on imported mobile phones to restrict volume (subscriber) growth

for mobile services companies, though not in a major way.

Reduction in customs duty on convergence products to help companies like Bharti

Airtel and reliance Communications in lowering their costs for DTH expansion.

43

KEY POSITIVES

Connecting India: The telecom sector has been one of the fastest growing sectors

in the Indian economy in the last 4 years. This has been witnessed due to strong

competition that has brought down tariffs as well as simplification of policy

environment that has promoted healthy competition among various players. Due

to this reason, telecom density in the country has risen to nearly 20% at the end of

January 2008, from 3.5% in January 2001.

It's ringing mobile: The Indian mobile sector has been growing rapidly and has

emerged as the fastest growing market in the whole world. Currently of a size of

over 200 m subscribers (GSM plus CDMA), this sector is expected to reach a size

of nearly 500 m subscribers by the year 2010. The increasing monthly addition to

the subscriber base (currently at around 7 to 8 m) is indicative of the same.

Broadband push: The government is expected to increase its thrust on the use of

Internet. This will come about as PC penetration increases. We expect to see some

positive measures being initiated to increase broadband usage in the country.

KEY NEGATIVES

Spectrum woes: The telecom sector continues to expand at a rapid pace adding

coverage and increasing teledensity as more and more people get connected.

However, as subscriber base continues to swell and the need for wireless data

transfers over mobile grows, the operators are likely to face increased shortage of

spectrum availability (as they are facing now). This problem is especially acute in

urban areas, which have got higher teledensity.

Highly taxed sector: The COAI has indicated that the telecom sector, especially

the cellular services segment, continues to pay very high duties and levies.

Currently, the sector is paying duties and levies under various heads including

annual license fees, spectrum charges and access deficit charge. In addition to the

above, significant levies are also imposed on the industry on account of sales tax,

service tax and import duties on handsets and other telecom hardware.

44

Bharti Airtel

Bharti Airtel:-Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises.

The Bharti Group, has a diverse business portfolio and has created global brands in the

telecommunication sector. Bharti has recently forayed into retail business as Bharti Retail

Pvt. Ltd. under a MoU with Wal-Mart for the cash & carry business. It has successfully

launched an international venture with EL Rothschild Group to export fresh agri products

exclusively to markets in Europe and USA and has launched Bharti AXA Life Insurance

Company Ltd under a joint venture with AXA, world leader in financial protection and

wealth management. Airtel comes to you from Bharti Airtel Limited, India’s largest

integrated and the first private telecom services provider with a footprint in all the 23

telecom circles. Bharti Airtel since its inception has been at the forefront of technology

and has steered the course of the telecom sector in the country with its world class

products and services. The businesses at Bharti Airtel have been structured into three

individual strategic business units (SBU’s) - Mobile Services, Airtel Telemedia Services

& Enterprise Services. The mobile business provides mobile & fixed wireless services

using GSM technology across 23 telecom circles while the Airtel Telemedia Services

business offers broadband & telephone services in 94 cities. The Enterprise services

provide end-to-end telecom solutions to corporate customers and national & international

long distance services to carriers. All these services are provided under the Airtel brand

45

Business division:-

Mobile Services:-

Bharti Airtel offers GSM mobile services in all the 23-telecom circles of India and

is the largest mobile service provider in the country, based on the number of customers

Airtel Telemedia Services:-

The group offers high speed broadband internet with a

best in class network. With Landline services in 94 cities we help you stay in touch with

your friends & family and the world.

Enterprise Services(Corporates):-

The group focuses on delivering

telecommunications services as an integrated offering including mobile, broadband &

telephone, national and international long distance and data connectivity services to

corporate, small and medium scale enterprises

Enterprise Services(Carrier Services):-

The Company compliments its mobile and

broadband & telephone services with national and international long distance services. It

has over 35,016 route kilometers of optic fibre on its national long distance network. For

international connectivity to east, it has a submarine cable landing station at. For

international connectivity to the west, the Company is a member of the South East Asia-

Middle East-Western Europe – 4 (SEA-ME-WE-4) consortium along with 15 other

global telecom operators.

46

Balance Sheet  Mar ' 08  Mar ' 07  Mar ' 06  Mar ' 05 SOURCES OF FUNDS       Owner's Fund       Equity Share Capital   1,897.91  1,895.93  1,893.88  1,853.37Share Application Money   57.63  30.00  12.13  2.72Preference Share Capital   0.00  0.00  0.00  0.00Reserves & Surplus   18,283.82  9,515.21  5,437.42  2,675.38Loan Funds       Secured Loans   52.42  266.45  2,863.37  3,959.88Unsecured Loans   6,517.92  5,044.36  1,932.92  1,034.41Total   26,809.70  16,751.95  12,139.72  9,525.76       USES OF FUNDS       Fixed Assets       Gross Block   28,115.65  26,509.93  17,951.74  13,240.63Less : Revaluation Reserve   2.13  2.13  2.13  2.13Less : Accumulated Depreciation   9,085.00  7,204.30  4,944.86  3,475.64Net Block   19,028.52  19,303.51  13,004.75  9,762.86Capital Work-in-progress   2,751.08  2,375.82  2,341.25  994.46       Investments   10,952.85  705.82  719.70  931.90       Net Current Assets       Current Assets, Loans & Advances   8,439.38  5,406.81  3,338.88  2,486.31Less : Current Liabilities & Provisions   14,362.33  11,042.67  7,272.80  4,708.12Total Net Current Assets   -5,922.95  -5,635.86  -3,933.92  -2,221.80Miscellaneous expenses not written   0.20  2.66  7.94  58.35Total   26,809.70  16,751.95  12,139.72  9,525.77Note :       Book Value of Unquoted Investments   9,379.62  580.43  476.52  460.83Market Value of Quoted Investments   1,574.29  125.85  243.99  472.71Contingent liabilities   7,140.59  7,615.04  4,740.34  3,017.26Number of Equity shares outstanding (in Lacs)   18,979.07  18,959.34  18,938.79  18,533.67

47

Key Ratios

 Mar ' 08 

Mar ' 07 

Mar ' 06 

Mar ' 05 

PER SHARE RATIOS              Adjusted E P S (Rs.)   34.08  21.20  10.60  6.29Dividend Per Share   0.00  0.00  0.00  0.00       PROFITABILITY RATIOS              Operating Margin (%)   41.37  40.65  35.86  36.81Gross Profit Margin (%)   29.08  27.47  23.14  24.29Net Profit Margin (%)   23.99  22.46  17.80  14.83       LEVERAGE RATIOS              Long Term Debt / Equity   0.30  0.43  0.61  0.98Total Debt/Equity   0.32  0.46  0.65  1.10Owners fund as % of total Source   75.43  68.24  60.45  47.55Fixed Assets Turnover Ratio   1.03  0.74  0.72  0.74       LIQUIDITY RATIOS              Current Ratio   0.58  0.48  0.45  0.52Current Ratio (Inc. ST Loans)   0.56  0.47  0.44  0.47Quick Ratio   0.55  0.47  0.44  0.48Inventory Turnover Ratio   453.06  373.35  634.52  257.80       PAYOUT RATIOS              Dividend payout Ratio (Net Profit)   0.00  0.00  0.00  0.00Earning Retention Ratio   100.00  100.00  100.00  100.00

Interpretations Dividend paid by the company is zero and the EPS is on constant increase.

Current ratio is less than standard 2:1. There is increase in current liabilities.

The company has reduced it’s debts over a period of time which is making it safe

to invest.

Bharti Airtel vis-à-vis other players

48

  Mar ' 08

BHARTI AIRTEL IDEA Cell. RCOMM

Reported EPS (Rs.)  32.9  3.96  12.53

Dividend Per Share  0  0.00  0.75

Net Profit Margin (%)  23.99  15.33  17.45

Reported Return On Net Worth (%)  30.94  29.48  10.41

Return On long Term Funds (%)  28.52  18.92  11.81

Long Term Debt / Equity  0.3  1.54  0.48

Current Ratio  0.58  0.59  1.65

Dividend payout Ratio (Net Profit)  0  0.00  7.00

Earning Retention Ratio  100  100.00  91.36

Interpretations:

EPS is highest for Airtel.

Net profit is highest.

Earning retention ratio is 100, which indicate internal investments and expansions

and diversifications plans.

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Price fluctuations of Airtel:-

50

Technical analysis:-

The stock has corrected in july and is now looking strong. The

graph has shown that the stock is making new highs and is expected to grow further.

Fundamental Analysis:-

1. The sales of the company has shown a good growth in last four quarters.

2. The total expenditure is being reducing from last four quarters which shows the

initiatives of cost cutting in the company.

3. Net profit as well as EPS of company is increasing and well over the industry

standards.

4. Company is bidding for 3G services in India which will increase its revenue to a

great extend.

5. Company has also signed a deal with Apple to bring iPhones in India.

6. Bharti Airtel partners with 15 global telecom majors to build Europe India

Gateway (EIG), a cable system from India to United Kingdom which will give

company a strategic advantage.

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6. d. INDUSTRY ANALYSIS – ENERGY SECTOR

Energy security occupies a high priority on the government agenda. In order to accelerate

hydrocarbon discoveries, increased emphasis has been laid on E&P through several

rounds of NELP. They have yielded benefits in the form of huge gas discoveries in the

KG basin and oil discoveries in Rajasthan. If the ongoing NELP VII is any indication, we

expect the government to continue with its policies favoring exploration activities. The

midstream segment will be a direct beneficiary of increased volumes. Thus, prospects of

the upstream and midstream oil and gas sector look bright. The downstream segment

however, continues to suffer on account of government regulations. Till a sustained

reduction in the crude oil prices is observed, the prospects of the oil marketing companies

largely hinge on adhoc government policies

BUDGET 2008-09 MEASURES RELATED TO ENERGY SECTOR

Foreign investment of US$ 3.5 to 8 bn expected for exploration of new blocks

under NELP VII.

Customs duty exemption withdrawn on naphtha used in the manufacture of

polymers. It will be taxed @ 5 %. Naphtha imported for the production of

fertilisers will remain exempt.

Ad valorem excise duty on unbranded petrol and unbranded diesel replaced by an

equivalent specific duty of Rs.1.35 per litre. There will be only a specific duty of

Rs 14.35 per litre on unbranded petrol and Rs 4.60 per litre on unbranded diesel.

Central Sales Tax reduced from 3% to 2% from April 1, 2008.

Dividend tax paid by parent company allowed to be set off against the same paid

by its subsidiary

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BUDGET IMPACT

Polymer industry will be negatively impacted, as costlier Naphtha will push its

cost structure upwards.

Polymer in turn is used in a host of downstream sectors such as plastics and

paints, which will face margin pressures.

Oil downstream segment will continue to suffer under recoveries from petroleum

products as the budget does not address either product prices or the excise duties.

COMPANY IMPACT

The polymer segment of RIL and GAIL will be adversely impacted, as the raw

material costs will go up. Given that the petrochemical segments had a bad

3QFY07, this development comes at a bad time.

No respite for PSU oil marketing companies-IOC, HPCL, BPCL.

The announcement on dividend tax will benefit IOC, HPCL and BPCL as they

have refineries as subsidiaries.

GAIL will benefit from the reduction in CST as natural gas falls under inter state

trade.

KEY POSITIVES

Exploratory success: India has seen a spate of successful oil and gas discoveries

over the past 4-5 years. This could be attributed to favourable government

policies for the E&P segment. With the success of NELP, exploration acreage is

increasing at a fast clip. However, a vast majority of the exploration acreage

remains explored or poorly explored, which promises good potential for

discoveries in the future. While India is likely to remain dependent on imports for

oil; commercialization of natural gas reserves will reduce the imbalance in the

demand supply scenario for the same.

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Robust demand growth: Demand for petroleum products is dependent on the

level of economic activity in an economy. With the Indian economy expected to

register decent growth going forward, the demand for petroleum products is likely

to be on the higher side. Moreover, the per capita consumption of oil products in

India is one of the lowest in the world, leaving a lot of scope for demand growth.

KEY NEGATIVES

Regulatory hindrances: APM (administered pricing mechanism) was dismantled

in 2002, with a view to move towards market-determined prices of petroleum

products. However, the subsequent steep rise in the crude oil prices had forced

government to regulate the prices once again. Thus, profitability of downstream

companies continues to reel under severe pressure.

Subsidy burden: Upstream players (ONGC, GAIL and OIL) continue to share

33% of the gross under-recoveries on the sale of sensitive petroleum products.

This has constrained the growth in their profitability to a large degree. Moreover,

both the upstream as well as downstream segments continue to suffer from lack of

visibility due to the ad-hoc subsidy sharing mechanism.

Lower tariff protection: India has a surplus refining capacity, which is likely to

further increase over the next few years due to various brownfield and greenfield

projects undertaken both by public sector as well as private sector enterprises.

54

ONGCPioneering Efforts:-

ONGC is the only fully–integrated petroleum company in India, operating along the

entire hydrocarbon value chain:

Holds largest share of hydrocarbon acreages in India.

Contributes over 78 per cent of Indian’s oil and gas production.

About one tenth of Indian refining capacity.

Created a record of sorts by turning Mangalore Refinery and Petrochemicals

Limited around from being a stretcher case for referral to BIFR to the BSE Top

30, within a year.

Interests in LNG and product transportation business.

Strategic Vision:- 2001-2010

To focus on core business of E&P, ONGC has set strategic objectives of:

Doubling reserves (i.e. accreting 6 billion tonnes of O+OEG).

Improving average recovery from 28 per cent to 40 per cent.

Tie-up 20 MMTPA of equity Hydrocarbon from abroad.

The focus of management will be to monetise the assets as well as to assetise the money.

55

Global Ranking:-

ONGC is the only Company from India in the Fortune Magazine’s list of the World’s

Most Admired Companies 2007. ONGC is 9th position in the Industry of Mining, crude

oil production.

• ONGC ranks 239th position in the prestigious Forbes Global 2000 and

Numero Uno ranking amongst Indian Companies.

• ONGC ranks 369th position in Fortune Global 500 list for the year 2006

based on Revenues.

• ONGC retains Numero Uno position from India in terms of Profits with

overall global ranking of 121st.

• ONGC ranks 21st among the top 50 publicly traded Companies in Oil & Gas

Industry, based on the year-end (2007) market Capitalization by PFC Energy.

56

Balance SheetSOURCES OF FUNDS       Owner's Fund       Equity Share Capital   2,138.89  2,138.89  1,425.93  1,425.93Share Application Money   0.00  0.00  0.00  0.00Preference Share Capital   0.00  0.00  0.00  0.00Reserves & Surplus   68,478.51  59,785.04  52,533.74  45,419.49Loan Funds       Secured Loans   0.00  0.00  0.00  0.00Unsecured Loans   12,482.71  15,109.07  12,722.61  9,916.22Total   83,100.11  77,033.00  66,682.28  56,761.64       USES OF FUNDS       Fixed Assets       Gross Block   57,463.78  52,038.07  47,882.35  42,983.85Less : Revaluation Reserve   0.00  0.00  0.00  0.00Less : Accumulated Depreciation   46,945.77  43,198.95  40,040.15  37,147.32Net Block   10,518.01  8,839.11  7,842.20  5,836.53Capital Work-in-progress   41,154.63  37,794.16  33,373.92  28,838.35       Investments   5,899.50  5,702.05  4,888.57  4,036.67       Net Current Assets       Current Assets, Loans & Advances   49,833.14  83,784.78  67,849.42  55,340.09Less : Current Liabilities & Provisions   24,979.07  59,601.18  47,638.17  37,821.16Total Net Current Assets   24,854.07  24,183.60  20,211.25  17,518.93Miscellaneous expenses not written   673.90  514.06  366.34  531.16Total   83,100.11  77,032.98  66,682.28  56,761.64Note :       Book Value of Unquoted Investments   0.00  2,945.57  2,132.10  1,280.19Market Value of Quoted Investments   0.00  9,979.81  13,365.52  11,876.20Contingent liabilities   26,006.73  34,157.17  32,907.71  26,593.45Number of Equity shares outstanding (in Lacs)   21,388.92  21,388.73  14,259.34  14,259.34

57

Key Ratios

 Mar ' 08 

Mar ' 07 

Mar ' 06 

Mar ' 05 

PER SHARE RATIOS              Adjusted E P S (Rs.)   76.28  78.69  97.80  90.65Dividend Per Share   32.00  31.00  45.00  40.00       PROFITABILITY RATIOS              Operating Margin (%)   50.31  49.47  56.15  50.96Gross Profit Margin (%)   33.91  43.69  48.12  47.00Net Profit Margin (%)   25.75  25.79  28.93  27.26       LEVERAGE RATIOS              Long Term Debt / Equity   0.17  0.23  0.23  0.17Total Debt/Equity   0.17  0.24  0.23  0.21Owners fund as % of total Source   84.97  80.38  80.92  82.53Fixed Assets Turnover Ratio   1.04  1.10  1.01  1.08       LIQUIDITY RATIOS              Current Ratio   1.99  1.41  1.42  1.46Current Ratio (Inc. ST Loans)   1.99  1.40  1.42  1.40Quick Ratio   1.86  1.28  1.28  1.33Inventory Turnover Ratio   17.28  150.64  121.06  248.60       PAYOUT RATIOS              Dividend payout Ratio (Net Profit)   47.94  48.85  50.70  49.91Earning Retention Ratio   50.92  54.59  47.54  49.88

Interpretations Net profit is near about constant for last couple of years.

Dividend payout ratio is also constant.

Current ratio is close to standard 2:1.

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ONGC vis-a-avis RIL

  Mar ' 08

ONGC RIL

Reported EPS (Rs.)  78.09 133.86

Dividend Per Share  32 13.00

Net Profit Margin (%)  25.75 14.45

Reported Return On Net Worth (%)  23.87 24.66

Return On long Term Funds (%)  30.43 17.18

Long Term Debt / Equity  0.17 0.35

Current Ratio  1.99 1.34

Dividend payout Ratio (Net Profit)  47.94 9.80

Earning Retention Ratio  50.92 86.01

Interpretations:

Dividend Per Share is more than RIL.

Current ratio is as per standard requirement.

Return on Net Worth and Return on long Term Funds is more than RIL.

59

Price fluctuations of ONGC:-

60

Technical Analysis:-

The company is showing good support at around Rs800/share

which it didn’t crossover twice. This gives us impression that now it will have a bull run

and which is shown by the graph. Also the new target of the company is been given to Rs

1300 in next two months.

Fundamental Analysis:-

1. Company has shown a substantial growth in net sales as well as decrease in the

expenditure which is a very rare.

2. The EPS of the company has increased to a great extend as compared to the last

three quarters which is a very good sign for the company.

3. Company declared dividend of Rs 14/share which is 140% and highest given by a

government based company.

4. Company posted a net profit of Rs. 156.429 billion, the Highest by any Indian

company.

5. Company contributed over Rs. 286 billion to the exchequer.

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6. Company is government based and hence has to adhere to the government

policies and cannot take it’s own major decision.

7. Oil fluctuation in international markets affects the company a lot because the oil

prices in India are not directly linked to international prices.

8. Government gives oil bonds as subsidies to these company, which are having

maturity lot further, hence affecting liquidity of the company.

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7. RESEARCH STUDY OF INVESTORS.

1. Where do you invest your money?

In the Reliance money, I have asked 200 people where you like invests your

money.

Investment types No. of respondents Percentage

Stock market 40 20

Bank F.D 60 30

Real estate 80 40

Mutual funds 20 10

Total 200 100

Table. 1

No. of respondents

20%

30%40%

10%

Stock market

Bank F.D

Real estate

Mutual funds

Graph 6

Interpretation:

From the above table & pie chart, it represent that people invest only 20 % of money in

Stock market & 10% in Mutual Funds. 40% of people generally interested in Real estate

and Bank F.D 30%. Because the chances of risk and losses are minimum than Stock

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Market & Mutual Funds. Even the returns are more in Stock Market & Mutual Funds, but

due safety people prefer Real estate and Bank F.D.

2. How will you decide a company for investment?

Selection of company for

investment

No. of Respondents Percentage

Own Decision 30 15

Broker Advice 84 42

Speculation 46 23

Research Reports 40 20

200 100

Table 2

No. of Respondents

15%

42%23%

20%

Own Decision

Broker Advice

Speculation

Research Reports

Graph 7

Interpretation: From the above table & pie chart it represents that 42% of people take

Advice of Broker while investment in stocks, and 23% of people invest on the basis of

speculation, and 20% on basis of Research Reports by Technical analyst and 15% invest

on there own decision. But many experts feel that if people invest money in stock market

by Research Report then chances of profit is high and losses are minimum because

Research Report give good suggestion and already they have calculated risk in stocks so

it will be beneficial while investment. If investment on the basis of speculation the

chances of losses are high and profits minimum. If you do not have, any knowledge of

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stock market so should ask to your Broker who will advice you in better way because

these people have good knowledge than us.

3. What kind of trading you do?

Types of Trading No. of Respondent Percentage

Intra day 86 43

Short term 44 22

Medium Trading 22 11

Long term Trading 48 24

200 100

Table 3

No. of Respondent

43%

22%

11%

24%

Intra day

Short term

Medium TradingLong term Trading

Graph 8

Interpretation: From the above Graph & Pie chart it represent that 43% people do

intraday in which the profit and risk both are the high but many research suggest that

it is always better to investment of money in long term than short term or medium

term or intraday (i.e. speculations). If we invest money on long-term basis then

returns are good & the risk is minimum. Therefore, it is always good invest money

for long-term basis

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4. What are the factors do you consider while selection of company?

Factor consider for

selection of company

No. of Respondents Percentage

Fundamental Analysis 86 43

Technical Analysis 44 22

Both 20 10

Speculation 50 25

200 100

Table 4

No. of Respondents

43%

22%

10%

25%

Fundamental Analysis

Technical Analysis

Both

speculation

Graph 9

Interpretation: From the above Graph & Pie chart it represent that 43% of people

take the help of fundamental and 22% of people take the help of technical analysis by

which the risk can be calculated and profit can be maximize. However, even that 25%

of people invest on the basis of speculation, which is risky. 10% are people invest

money by both (i.e. fundamentally and technical) by which prediction can be good. If

66

people invest money on the basis of analysis then the risk can be minimize and profit

can be maximize.

5. Where will you most prefer to invest your money?

Most prefer companies No. of Respondents Percentage

Large cap 105 52.5

Mid cap 40 20

Small cap 55 27.5

200 100

Table 5

No. of Respondents

52%

20%

28%

Large cap

Mid cap

Small cap

Graph 10

Interpretation: From the above Graph & table, we can say that 50% percent of people

like to invest money in Blue Chips companies because the volumes of trading and good

results are more. Therefore, the profit is more. Mid cap and small, give minimum profit

than blue chips or large cap.

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6. Which Companies shares will you buy?

Like to invest in sectors No. of Respondent Percentage

Auto 110 55%

Banking 60 30%

Engineering 30 15%

200 100

Table 6

Graph 11

Interpretation: From the above Graph & chart, we can say that 55% of people prefer

Auto Sector for investment because these companies are strong by fundamentally and it

have large market than others. After that, 30% of people prefer banking sector it has large

No. of Respondent

55%30%

15%

Auto

Banking

Engineering

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market capitalization and after that, 15% of people like to invest in Engineering

companies.

8. CONCLUSION

Fundamental analysis holds that no investment decision should be without

processing and analyzing all relevant information. It strength lies in the fact the

information analyzed is real as opposed to hunches or assumptions. On the other hand,

while fundamental analysis deals with tangible fact, it does not tend to ignore the fact that

human beings do not always act rationally. Market prices do sometimes deviate from

fundamentals. Prices rise or fall due to insider trading, speculation, rumor, and a host of

other factors. This is true to an extent, but strength of fundamental analysis is that an

investment decision is arrived at after analyzing information and making logical

assumptions and deductions. Furthermore, fundamental analysis ensures that one does not

recklessly buy or sell shares- especially buy.

Fundamental analysis can be valuable, but it should be approached with caution.

If you are reading research written by a sell-side analyst, it is important to be familiar

with the analyst behind the report. We all have personal biases, and every analyst has

some sort of bias. There is nothing wrong with this, and the research can still be of great

value. One should also be aware of all the latest events and developments which directly

or indirectly affect the prices of the stock in the stock market.

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9. LIMITATIONS OF STUDY

To understand the overall working of share market, the period of 60 days is not

enough.

Moreover, very few investor and agents have a detail knowledge of the study.

A study is conducted in Nasik only, which restrict the scope of the market study.

The data provided by the investors and the agents can’t be held true as 100%

correct.

The study was conducted to understand with respect to fundamental and technical

analysis, which is a part of the equity share market.

70

10. Bibliography

Books: Investment Analysis & Portfolio Management- Prasanna Chandra. Investment management- A.V. Avadhani

News Papers: Economic Times Times of India.

Magazines: Capital Market Dalal Street

Websites: www.kotaksecurities.com www.wikipedia.com www.moneycontrol.com www.equitymaster.com www.bseindia.com www.incrediblecharts.com

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