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Industry Internship Project 2015-17

“Retail Equity & Future of Auto Ancillaries in India”

Submitted by:

Suyesh Nigam

PGDM 151701104

Program: - PGDM-Finance

Batch – F1

ITM Business School

Plot No. 25 / 26, Institutional Area,

Sector – 4, Kharghar, Navi Mumbai

1. Company Guide: - Mrs. Sonal Parmar

Designation: - Manager

2. Company Guide: - Mr. Pranoy Kurian

Designation: - Senior Research Analyst

Presented To: - Prof. Rama Devi Mantha

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Acknowledgment

Gratitude cannot be seen or expressed. It can only be felt deep in heart and is beyond

description. Although thanks are poor expression of debt of gratitude, yet there is no

better way to express it with sincerity and immense pleasure.

I acknowledge my inexplicable and deep sense of gratitude to Mr. Pranoy Kurian (Senior

Research Analyst) and Mrs. Sonal Parmar (Manager-Technical) IDBI Capital Market &

Services for constructive counsel, meticulous supervision untiring inspiration and moral

support during the entire internship and preparation of this manuscript.

I am highly thankful to Professor Rama Devi Mantha and Placement Guide Mr. Vipin Jog,

ITM Business School Navi Mumbai, for permitting me to take up my internship work and

for encouraging me during entire course of the present project.

Help and support provided by friends cannot be matched with mere thanks. Still I want to

thank my friends for their unmatched support...

At last I want to thank the most important person of my life, My Parents, who made my

work tension free with their warmth and support.

Suyesh Nigam

PGDM151701104

ITM Business School

“Time is your biggest ally when it comes to involve in comprehensive

financial planning. The sooner you initiate, the more likely you are

going to harness growth for your future comings. Prepare now for the

next time!”

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Index

Certificate from Company Guide 04

Executive summary 05

List of figures and charts 06

Introduction 07-12

i. Introduction of internship 07-08

ii. Problem on hand 09

iii. Importance and scope of internship 10

iv. Objective of project 10

v. Entire modus operandi and process 11-12

Introduction of organization 13-26

i. Details of the organization 13

ii. Services of the organization 14-22

iii. Structure of Research Team 23-24

iv. Role of IT and Marketing Team 25

v. SWOT Analysis of the organization 26

Task assigned 27-51

i. Project 1- Retail Equity 28-31

ii. Project 2- Future of Auto Ancillaries in India 32-40

iii. Working on financial models 41-49

iv. Applications of financial modelling 50

v. Impact of GST on the Auto Ancillaries Industry 51

Conclusion 52

Recommendation 53

Bibliography 54

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Executive Summary

Summer Internship Project (SIP) is a very crucial aspect of MBA/PGDM course. It opens up a

whole new door of opportunities for a management graduate who in future will manage the

workings of an organization. Duration of this SIP vary from college to college, in our college the

duration of the SIP is five months. I am thankful to my college that they assign five months for

this SIP which gave us a huge opportunity to understand corporate scenarios and get familiar with

the corporate life

I have done my Internship from IDBI Capital Market & Services, Mumbai which is a wholly-

owned subsidiary pf IDBI Bank. It is a Capital Market and Services Company dealing with stock

market ‘Bombay Stock Exchange’ & ‘National Stock Exchange’ and it was my immense pleasure

to be a part of this organization for five months as the Company furnished me with great

opportunities to enhance my professional as well as technical skills.

My project was focused on stock market and its analysis. Basically my project was a combination

of Retail Equity and Fundamental Equity. In Retail Equity, I worked with Technical team in

maintaining the portfolio and tracking critical point of stocks which are given calls on stop loss

and target price. In Fundamental Equity, I worked with Research Analyst dealing with Auto

Industry. I worked with him on financial models of Automobile companies and Auto Ancillaries.

In Retail Equity, I worked with the technical team to track critical point of stocks with the help of

a software named as “TCS Bancs Securities Trading - INDIA (TWS)”. In Fundamental Equity, I

worked with a Research Analyst and worked on financial model of companies through their

Annual Reports and Quarter Results. I worked in Fundamental department for two and a half

months and in this span of time I worked on several companies of Auto Industry and analyzed

their first quarter result and also attended conference call of those companies.

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List of figures & charts

Serial no. Name of figures & charts Page no.

1. Equity Research 22

2. Hierarchical structure of the Research team 23-24

3. Stock Analysis of Eicher Motors 30-31

4. Aggregate turnover 33

5. Power deficit 35

6. Lead price 36

7. Investment in Auto component sector 36

8. Exports 37

9. Production volume 38

10. Domestic market share by segment 38

11. New competitors and M&HCV volumes 39

12. Income Statement (yearly and quarterly) and Balance Sheet 42-44

13. Template Sheet, Quarterly Sheet and Summary Sheet 45-48

14. Capex 49

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INTRODUCTION

“Internship, can play a very significant part in our life as it is where we, as students, get a real and

good exposure of the working world. My Journey here has by far, been very full filling. IDBI

Capital Market Services Ltd. is a capital market firm dealing with stock market and other financial

services like investment banking and investor relations which is a good exposure to me, as I have

done finance related work that is necessary in financial modelling of the companies, which

enhanced my skills in excel as well as in concepts of finance.

During the first two months there were many challenges, as I was working with technical team in

retail equity department. As an initiator my mentor supported me, they gave me a software to work

and due to that my work became much easier than expected. Finally after a week I overcame this

challenge as I came to understand how to deal with this work more efficiently and effectively.

In the next following months I continued to do the same work. After two and half months, I was

transferred to fundamental equities and I assisted a Research Analyst dealing with Auto Industry.

I worked with him on financial models of companies in Auto Industry and also worked on their

Quarterly Financial Results.

Overall it’s been amazing to be a part of this organization and it was a learning experience which

help me learn more about business environment and corporate culture.”

In my five months IIP, I worked in two departments, first I joined Retail Equity team and then I

was shifted Fundamental or Institutional department.

Retail Equity Department: - It is a department which deals with retail clients for buying and

selling of shares of a company and. In retail equity department, I was supposed to update news

that comes on BSE and NSE website and to track the critical point of stocks by watching it on the

screen of my laptop with the help of a software. Working with the retail equity department was a

good experience, came to know about the companies that are listed and also how to anticipate the

movement of stocks. It helped me to learn the volatility and fluctuation of the stocks.

Fundamental Equity Department: - After two and half months, I was shifted to fundamental

equity department. In this department, I assisted auto analyst and worked with him on the financial

models of automobile companies and its ancillaries. Working with him was a good experience and

I got to know how this industry works, what affects the industry, what are essentials of this

industry.

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Auto Ancillaries: - Auto Ancillaries are the each and every component or device or equipment

that is used to manufacture a vehicle. A complete vehicle is made up of auto ancillaries. Auto

ancillaries are – head light, tail light, gears, gear box, brakes, tyres, etc. There are many companies

in India working on auto ancillaries and many foreign automobile manufacturers are also buying

ancillaries from Indian companies. Some of the Indian Auto Ancillaries companies are as under: -

a) Exide Battery Ltd.

b) Amara Raja Battery Ltd.

c) Castrol Oil India Ltd.

d) Shivam Auto Ltd.

e) Gabriel India Ltd.

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Problem on hand

The task which was given was to me as soon as I joined IDBI was to assist retail equity

team (Technical team).

I started working there, and they provided me a software to analyze about various

company’s stocks. Along with it I was supposed to submit news of listed companies to our

head research, it was team work and we all interns had to do it daily.

Then I was given a software to track the stock market.

Very soon, I became user friendly to that software.

During the result time I updated financial results of the companies, it was team work and

we all interns had to do it daily till the result season was over.

After working for 2.5 months with the technical team, I was shifted to fundamental equity

department to assist a Research Analyst who deals with auto industry.

I started working with him and continued till the end of my IIP.

Worked on financial models of companies in auto sector.

In these 5 months tenure, I worked for two departments and I got so much of learning in both the

departments. With technical team, I learnt how stock moves, how market moves, what impact

financial results have on stocks and stock market. With Auto Industry Research Analyst, I learnt

about the auto industry, got to know that only automobile companies don’t do all the work they

are also dependent on someone, what’s the impact of international price of commodities like steel,

aluminum and lead.

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Importance and Scope of Internship

Internship provides extensive knowledge about the working condition and work culture. My

internship provided me extensive knowledge in these five months on these parameters.

I worked in two departments during my internship and they gave me extensive and par knowledge

on the subject matter and also helped me to understand the main areas to focus while doing

research. The job a Research Analyst is not an easy job, he has to learn the industry and the

company completely so that he can analyze on all parameters by which company or industry get

affected.

Objectives of the project

To understand the stock market.

To understand the movement of stocks through various factors.

To gain extensive and par knowledge of Auto Industry.

To understand the working of Auto Industry.

Growth drivers of Auto Ancillaries Industry.

To work on financial models, which gave me more extensive knowledge of finance.

By doing the news analysis, learnt how company’s stock reacts to it.

Updated financial (yearly and quarterly) results of the listed companies, got to know how

stock market reacts to it and how that particular company reacts.

Any news on economy and its impact on the stock market.

News of the IPO launch and its impact on the stock market.

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Entire modus operandi and process My complete research process was based on two approaches

1. Primary Approach

2. Secondary Approach

1. Primary Approach: - It is the approach in which we meet people personally, do

surveys and also meet company officials if necessary and ask questions them about our

research. It is a complete face-to-face interaction approach. As an intern, I was not

supposed to ask questions or get information by company members who were working in

the research team.

As soon as I joined IDBI I was appointed to technical team I worked with my mentor

parallel as I was not having anything on which I could work. Then they provided me a

software named ‘ChartNexus’ with the help of IT team and when I got that software to

work, I asked my mentor to guide me on that and also asked IT people to guide me on that

software so that I can easily get familiar to it.

While working with the Research Analyst I asked him and to other concerned person for

the problem while doing any work as in doing financial modelling. As it was my first

experience to work on financial modelling so I asked my colleagues who were working it

since 2.5 months.

In my primary approach, I was constrained to some people so I used some other sources to

make it easier for me.

i. Conference Call: - I attended the conference call of some companies like Amara

Raja, Bajaj Auto, Eicher Motors, etc. Through their conference call I was able to

get so many information which I was seeking to get, like royalty for the quarter.

ii. Meeting with the mentor: - My mentor helped me a lot in my work, he cleared

my doubts and also answered everything wherever I was struck. He cleared my

views on this industry and how it depends on several parameters.

iii. Marketing Team: - They helped me to understand how they sell these shares to

institutional clients and how their work goes.

iv. IT Team: - They helped me understand how software ChartNexus and TCS

BaNCS works, to get me hands on it. While working on these software provided

by my mentor with the help of IT people, they helped me a lot to teach how to work

on it but there were still some issues which occurred some times and that I sorted

out by using internet and finding the solution for my problem.

2. Secondary Approach: - It consist of the existing data, research reports and anything

which we can get in advance or pre-defined.

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In Retail Equity and Fundamental Equity, being an intern and as per my profile I was

constrained to some aspects. To get the appropriate data I have to do many work on internet

and all the other resources that were available in my office. To get the data as per my

requirements I used following sources; -

i. Analysis of stocks: - I analyzed stocks by watching their historical data, also I saw

their financials and their pattern in technical chart.

ii. Company’s website: -In financial modelling sometimes I needed data of 4-5 years

back, for that I go to company’s website and fetch the data as per my requirement.

iii. BSE and NSE website: - To get the historical news of respective company or to

get their quarterly results, I directly go to BSE and NSE website and get it from

there.

iv. Annual Reports: - To obtain yearly financial of the company and their break ups

and also to get some information about the company that how they are performing

and what are their future plans, I downloaded annual reports of the company and

from company’s website.

v. Research Reports: - While doing the modelling sometimes I needed research

reports which were released by other analysts’ and for getting them I use

Bloomberg, through which I get all the research reports till the time analysts’ started

uploading their reports on Bloomberg. The main financials of company like

Balance Sheet, Income statement and Cash Flow, this data I take from Bloomberg.

Sometimes I also needed data to compare financials of company’s which are not

listed on Indian stock market or some data of any commodity regarding its price in

the international market, for such things I used Bloomberg terminal which was very

helpful for me to make my work much easier and time savior.

vi. Conference call transcripts: - To get more detailed about the company that how

it worked in a particular quarter and what was some of their key financials which

they do not disclose in quarter results like royalty and foreign income, I used it. It

was helpful to know about the new products that company will be launching in next

quarter and to estimate on the basis of this, how that company will be performing

in that quarter.

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DETAILS OF THE ORGANIZATION

IDBI Capital Market Services Ltd. (IDBI Capital), a wholly owned subsidiary of IDBI Bank, is a

fully integrated financial services provider catering to the needs of retail, institutional and

corporate clients. Incorporated in December 1993, today it has a net-worth of around INR 3 billion

and employs over 200 employees in 12 branches, spread over 12 cities across India. The online

investing portal of IDBI Capital, www.idbipaisabuilder.in, was launched in January 2006, and has

only seen an uptrend in the number of clients since then.

IDBI also introduced a new user friendly design and content layout on their electronic face i.e.

their home page; and with new design and started in January 1, 2016. IDBI paisabuilder is renamed

as IDBI Direct new website URL would be https://www.idbidirect.in .

It caters services in various financial products with its prominent and efficient team. They are

India’s leading MF distributors and offers a full suite of products and services to Corporates,

Institutional and Individual clients.

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IDBI Capital services

IDBI Capital caters services in various financial services. They are playing a key role in the market

among their competitors and successfully leading them. IDBI CAPITAL MARKETS &

SECURITIES Ltd., (IDBI Capital) is a wholly owned subsidiary of IDBI Bank Ltd and is a leading

Investment Banking & Securities Company.

IDBI Capital offers a full suite of products and services to Corporates, Institutional and Individual

clients. The range of services include:-

1. Capital Market

2. Investment Banking

3. Fund Management

4. Institutional Broking and Distribution

5. Retail Broking and Distribution

6. Research.

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Capital Market

“Capital markets are markets for buying and selling equity and debt instruments. Capital markets

channel savings and investment between suppliers of capital such as retail

investors and institutional investors, and users of capital like businesses, government and

individuals. Capital markets are vital to the functioning of an economy, since capital is a critical

component for generating economic output. Capital markets include primary markets, where

new stock and bond issues are sold to investors, and secondary markets, which trade

existing securities.”

IDBI Capital as an institutional player provides the entire gamut of Capital Market services

encompassing: 1. Public Offerings

2. Qualified Institutional Placements

3. Buyback

4. Takeover

5. Preferential Allotments

6. External Commercial Borrowings, FCCBs, etc.

The above activities entails liasioning with institutional investors such as treasury departments of

Domestic Institutions, Banks and corporates, fund managers of mutual funds, private equity firms,

FIIs, HNIs.

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Investment Banking

“Investment banking is a specific division of banking related to the creation of capital for other

companies, governments and other entities. Investment banks underwrite new debt and

equity securities for all types of corporations, aid in the sale of securities, and help to

facilitate mergers and acquisitions, reorganizations and broker trades for both institutions and

private investors. Investment banks also provide guidance to issuers regarding the issue and

placement of stock.”

IDBI Capital’s clients and team: -

Clients

IDBI Capital represent Government organizations, Public Sector Enterprises and Indian

Corporates covering sectors such as Steel and other metals, Mines, Minerals, Chemicals,

Healthcare, Hospitality, Financial Services and other Core Sectors.

Team IDBI Capital have a combination of professionals with varied background who shares our values

of truthfulness, objectivity, innovation and analytical accuracy. The professional qualification of

our team provide a rock solid foundation for giving consulting services and our depth of experience

ranges from young management graduates from premier business schools to experienced finance

professional and qualified chartered accountants as well.

The investment banking division team of IDBI Capital delivers its service at an optimum level and

give their clients maximum return on their investments.

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Fund Management

IDBI CAPITAL MARKETS & SECURITIES Ltd. (ICMS) is a leading Fund Manager in the

country for Provident, Pension and Re0tirement Benefit Funds. The Company is a SEBI

registered Portfolio Manager and manage its Client’s assets under both discretionary and non-

discretionary mandates. These services are provided to various public and private sector

undertakings and their provident, pension, retirement benefit and surplus funds. The Company’s

client base includes leading pension and provident funds in the country.

IDBI capital has been advising institutions, banks and corporates for their investment in Debt,

Mutual Funds and Equities over several years. Its services include managing Client Assets--

Pension & Provident Funds, Surplus fund Management, Equity Portfolio Management and

Mutual Fund Advisory.

The funds have continuously yielded superior returns, which are significantly higher than the

benchmark.

ISO Certification 9001:2000

Keeping in view the importance of standardized processes and service levels, the Company has

gone in for ISO Certification for Fund Management, and is the only company to have done so in

this sector. Being a public sector, the Company is also audited by Comptroller and Auditor

General (CAG) office and follows transparent practices.

Regulatory Approval

IDBI Capital is a registered Portfolio Manager with Securities and Exchange Board of India

(SEBI) since 1998 and is authorized to undertake Funds Management activities (Debt & Equity)

for clients. These activities would be governed by Securities and Exchange Board of India

(Portfolio Managers) Rules and Regulations, 1993. SEBI Registration No. of IDBI Capital is

INP000000209

The Key strengths of IDBI capital Market Services in the areas of Debt Fund Management

are:

1. Fund Management experience of 10 years

2. Expertise in managing large corpus

3. Expertise in both Debt & Equity Market

4. IDBI Capital is the only Portfolio Manager in the Country to achieve ISO 9001: 2000

Standard for Quality Management Systems in Fund Management operations, with

certification from TUV NORD an accredited German standards firm

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5. Substantial Returns Over Benchmark

6. IDBI Capital is a SEBI registered Portfolio Manager

7. Minimum Idle Days

8. Our fund management skill covers Portfolio Analysis that includes ALM, Asset Allocation,

Risk Analysis, Maturity Analysis and Yield Analysis

9. Transparency of Operations

10. Strict adherence to Compliance Procedures

11. Highly Rated Debt Research

12. Presence in All Segment/ Asset of the Financial Services: IDBI Capital deals in Equity and

Equity related products and is one of the highly rated Mutual Fund Distributor (won two

consecutive CNBC TV18 Institutional Financial Advisor Award). In Investment Banking

and Debt Capital Market- Rated in Top 15 by Prime Database

13. Group Strength in Debt Market: IDBI Capital is one of the leading players in debt market

with presence in primary dealership since July 2007. The current operations of primary

dealership is conducted by a group company, IDBI Gilts

Infrastructure

Experienced Fund Management Team: The Fund Management team comprises of

experienced professionals (experience ranges between 2 years to 15 years) in Portfolio

Management with requisite exposure in the fixed income and equity segment and

qualifications

Experienced Back-Office: The Clearing and Settlement Operations are manned by

experienced personnel with requisite exposure to capital market and particularly debt

market. The process is standardized as per the regulatory and other specific norms and

mainly technology driven in most areas

Accounting: Real time accounting of Remittances, Investments, Interest and Redemption

proceeds ensures accurate reconciliation

Professional Custodian: Member of NSDL for demat services and offers Constituent

SGL Account facility for Government securities through IDBI Gilts Ltd.

Functional Separation of Front and Back Office: Separate personnel handle the front

and back office functions to ensure transparency and complete regulatory compliance

Internal Controls: Adequate Risk Management systems in place to ensure complete

regulatory compliance

Audit Systems: Audit of all transactions and reports by an independent firm of chartered

accountants. The accounts and transactions are also subject to CAG audit and other

regulators

Belongs to IDBI Group: IDBI is a leading bank, classified under ‘Other Public Sector

Bank’. Established in 1964 by Government of India under an Act of Parliament, IDBI has

essayed a significant role in the country’s industrial and economic progress for over 40

years – first as apex Development Financial Institution (DFI) and now as a full service

commercial bank

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Institutional Broking & Distribution

“Distribution stock refers to a large block of a security which is sold into the market gradually in

smaller blocks rather than in a single large block. This is typically done to avoid inundating the

market with the security and driving down the average selling price of the securities.”

Institutions and Corporates have surplus funds to manage on daily basis as well as investible

surplus for a defined period. The risk differs for Institution and Corporates subject to their

preferences. The reward by way of return is always in proportion to the risk taken. IDBI Capital

define, advice and manage the same by blending caution with aggression in the desired proportion

to teach client. The range of services include from Equity Broking with customized research,

advisory and distribution services for investment in Mutual Funds, Debt/Bonds, Equity IPOs to

placement of Equities etc.

IDBI’s institutional broking team is a well-organized team which provides their services in several

industries like IT, Auto, Plastic, Oil, Banking, Pharmacy, Plywood and Media & Entertainment.

They have a team of six research analyst who work on their respective industries and get

institutional investors, and they parallel work with the marketing team of the company.

All the analyst works under a Head research, who leads the whole research team.

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Retail Broking & Distribution

If we define Retail Broking in a simple way then, “A brokerage most of whose customers are retail

investors rather than institutional investors.”

In addition to offering corporate, institutional clients, IDBI Capital also offers a gamut of financial

products and services that cater to a varied cross section of investors.

IDBI Capital also offers to financial planners, retail intermediaries and consumers to deliver

lasting, innovative solutions.

Looking at the opportunities in our market and the growth of our country, we believe it is high

time investors are educated about the nuances of investments. The knowledge and awareness

gained will empower investors and help them create wealth. We firmly believe brokers, media and

regulators have a pivotal role in assisting the individuals to become wealthy. We will go extra mile

to empower the investors in managing their wealth to ensure a more rewarding future.

IDBI Capital aims to provide a single-point source for retail investors in their requirements for

trading and investment products.

The technical team (or Retail Equity) team of IDBI consist of two members and they leaded by

Head Research of the Research team. Marketing team makes parallel coordination with the

technical team and refer clients which stock to buy for intraday or long term basis.

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Equity Research

Equity research is the study of equities or stocks for the purpose of investments. In simpler terms,

equity research is the act of gathering information:

1. Information that helps investors to decide where to put in their money

2. Information that traders require to understand whether to enter or exit a market position.

3. Information that financiers (bankers and firms) need to evaluate companies.

Equities or common stock comprises a big chunk in any company’s capital and shareholders need

to know whether to stay invested in the company or sell the shares and come out. Both the buy-

side and the sell-side companies invest in maintaining an equity research division. This research

may also include bonds and commodities. The function of the equity researcher is to present a

detailed analysis of a company, enabling investors to make an informed decision. The research

report is used by investment banks and private equity firms to evaluate the company for IPO, LBO,

mergers and others.

For an investment bank, the equity research segment produces revenue as buy-side firms pay the

equity research team to delve into its records and analyze information.

IDBI has research desks covering all aspects of the equities. Their equities research desk publishes

high quality research on all major sectors of the industry and covers a wide spectrum of companies

listed on the Indian stock exchanges. Their derivatives research team publishes daily/monthly

reports on the trends in the equity derivatives markets.

Their objective, uncomplicated and reliable research reports on global markets and equity

empower institutional investors and make it possible for them to make informed investment

decisions. Our research teams have made a name for themselves in a very short time.

The application of equity research varies. Primarily, equity research is used in the mutual

funds industry, investment evaluation, merger and acquisition deals, financial publications and

charitable endowments. It also involves understanding current market trends, both from the

perspectives of macro economy and micro economy, and report findings. Since the equity research

targets a specific audience, it is necessary to tailor the findings to the audience demand.

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Figure: - Equity Research

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Hierarchical structure of the Research team: -

Fig.: - Institutional Research team

Fig.: - Research team

Head Research

Vice President Research

AVP Reseach and Senior Research Analyst

Retail Broking

Institutional Broking

Research Team

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Fig.: - Research Process

Fig.: - Research team

Institutional Broking Team

Marketing Team

Retail Broking Team

Research

Team

Retail Broking

Team

IT Team

Marketing Team

Institutional

Broking Team

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Role of Marketing & IT Team: -

Marketing Team: -

All the research done by the analysts on the companies and their financial over the years and also

their expectations in the coming years, of their respective sectors, they present it to the client or

institutional investors along with the research analysts in meeting. Marketing team plays a

significant role in maintaining relationship with clients and in making more relations. Marketing

team organizes meeting of analysts with the HNI clients or investors and plays the role of a

mediator. Marketing team also have people who controls their work from the desk, they don’t have

to visit the clients or go for meeting with them. There work is to call and update retail clients about

the stocks and to make new customers.

IT Team: -

IT team plays one of the most important role in research team and in other words we can call it a

‘back stage team’ who performs all the necessary work which analyst needs while doing research

on any company. They help to maintain database of all the companies on which researchers are

working.

In every research organization, there is a Bloomberg terminal which is the responsibility of IT

Team to maintain that and shouldn’t be get malfunctioned due to any small technical glitch.

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SWOT Analysis: -

Strength

1. A wholly owned subsidiary of a Public

Sector Bank (PSB).

2. Offer services in number of departments

which works efficiently.

3. A core competent research team.

4. Amongst top 10 MF distributors.

5. Existing distribution and sales network.

6. High profitability and revenue.

Weakness

1. Number of branches are less across India

as compare to competitors.

2. Research team still do not deal with some

sectors.

3. Productivity.

4. Cost structure.

Opportunity

1. They can focus on sectors which are still

left.

2. Growing economy.

3. New products and services.

4. New acquisitions.

Threats

1. Competitors have more branches across

India.

2. Sectors which are not covered plays a

significant role in earnings.

3. Government regulations.

4. Tax changes.

5. Increasing labor rate.

6. Increasing interest rate.

7. Price changes.

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Tasks Assigned: -

1) News update: -

Everyday my office timing started at 8:00 A.M. and there is a meeting of all the analysts,

trading team and head of the research and we all interns were supposed to attend that. In

that meeting the analysts give important news about their respective sectors and also about

the companies which are having any important news. The head of research updates about

which is most trending stock and what step they will take if market goes as per their

expectation. The senior member of the trading team gives the information about previous

days’ stock indices and also market volatility and fluctuation; in short, market overview in

brief.

After attending this meeting we all were supposed to give news analysis about the listed

companies and also related to industry, economy or anything which can have impact on

our economy, we covered news all the important news of previous day especially which

came after the market was closed i.e., after 03:30 P.M., we have to submit our news to our

mentor before 09:00 A.M. so he can review it and then he allow us to send it to head of the

research department. We also have to update market capitalization of the companies of

which we give news.

2) Results Update: -

During the financial result time of the companies, we all interns were supposed to update

results of all the companies whose market capitalization is more Rs 100 Crore and whose

results were declared that day. This we did two times, first time when financial results came

after financial year and quarter ended on 31st March 2016 and second time we did when

financial results came after the quarter ended on 30th June 2016. In those results we have

to show the previous quarters’ result of the previous financial year and also previous year’s

result and the latest results. We have to compare it on quarter-on-quarter basis and also

year-on-year basis and show the percentage change in it. Along with it we have update the

Bloomberg expectation of the companies whose it was given, with that results. This helped

me to understand how company’s result affects its share price and what the impact on share

market is. This also helped to understand the price movements and we compared it with

Bloomberg’s expectation so got an idea how to do it. We updated it on the basis of quarters

and also showed changes on Quarter-on-Quarter basis and also yearly changes.

28 | P a g e

Project 1: - ‘Retail Equity’

Working of Retail Equity team: -

The Retail Equity department of IDBI Capital Market Services deals with the live market scenario

i.e., which provides customers to buy stocks on low volumes as well as on intraday and long term

basis. The retail team deals with the retail clients who buys share(s) of a company or companies

for intraday purpose or long term purpose. Their work also depends on the work of marketing team

because marketing team get them the customer base.

The Retail Equity team consist of two person, a manager and an associate and they are headed by

a head research. They analyze stocks by technical analysis using technical chart for the period they

want i.e., and use several indicators to analyze it. They mainly use candle-stick chart to analyze

stocks and their movement over a period of time and give calls on them accordingly. They give

calls on stocks either buy or sell as per the movement of stock and its analysis through various

parameters.

They use Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) press release also

to predict or assume the movement of stocks, especially during market hours (9:00 A.M.-03:30

P.M.).

Technical Analysis: -

As soon as I joined IDBI Capital Market Services, after few days I was appointed to assist technical

team. I assisted them for two and half months. In the initial stage they gave a software named as

‘ChartNexus (CNX)’ to learn the movement of stocks and I was told to make reports on stocks. I

used candlestick pattern to learn the movement of stocks and along with it used several indicators

to make prediction of those stocks. As per my requirement and convenience I used following

indicators to analyze the movement of stocks: -

i. Accumulation/Distribution

ii. Chaikin Money Flow

iii. Moving Average Convergence Divergence Indicator (MACD)

iv. Relative Strength Index (RSI)

v. Smoothed Relative Strength Index (RSI)

vi. Stochastic

vii. Volume

viii. Volume Moving Average

These indicators helped me a lot to understand the movement of stocks and the candlestick pattern

is itself capable to tell the movement of stocks at some certain points. Chart Nexus does not provide

live market data, it gives data of the previous day of both BSE and NSE of all the companies that

are listed in them. Chart Nexus gives us around 3-3.5 years data of any company for free and it

can also provide data up to 15 years but on paid service.

29 | P a g e

Along with this I was assigned to track the calls i.e., track target price or stop loss of stocks. As

we were two interns in this department so we used to track those calls week by week and the intern

who was not tracking calls he used to update press release that comes in BSE and NSE official

website.

To track the calls I was given a software named as “TCS Bancs Securities Trading - INDIA

(TWS)”. With the help of this software I was able to track the calls of the stocks. It gives the live

market data or simply say live scenario of the stocks and their price movements. It was easy to

track critical points of the stocks through this software. This software has a log in ID and a

password which was given by mam or her associate to me every time and it needs to be change at

regular intervals. The stocks which are tracked, they are maintained in an excel sheet with their

date and if possible then time also. It is not necessary that there is always a call for buy or sell, it

can also be a call for high or low. This software gives us seconds to seconds update of the stocks

which we are tracking, also provides data about traded volume of that stock, open, close, high,

low, strike price, percentage change, equity name, expiry date and some others. There is a message

box in the screen of this software which appears after log in and whatever calls are made for a

particular or any news about a stock which is being tracked whether it is changing its target price

or stop loss or whatever it is, or giving a new call for a new stock it is displayed in that and can be

seen by everyone who is working on it. This software is really helpful in in watching market live.

Working with the Retail Equity team was really helpful for me to learn the movement of stocks

and its analysis. I got to know, how stock moves, what are the effect of their financial results in

their movement and most importantly how to anticipate that what will be its movement in future.

TCS Bancs Securities Trading - INDIA (TWS): - The Securities Trading solution from TCS

BaNCS offers multi-asset, multi-market and multi-channel trading with real-time risk management

in the securities market space.

With advancements in trading technologies, increasing cost pressures, changing regulatory

frameworks and customer preferences, broking firms are looking at:

Reducing operational costs through centralized multi-asset and multi-market trading

systems.

Increasing reach through convenient, personalized and content rich access channels.

Enhancing connectivity to buy-side, sell-side order routing networks

With features like real-time risk management and exposure monitoring, TCS BaNCS for Securities

Trading helps firms achieve the aforementioned goals, alongside complete integration between

front- and back-office systems.

30 | P a g e

Additionally, this solution supports business models such as:

Institutional brokerage

Retail brokerage

Bank-brokers

Financial superstores.

Reports: - While assisting the technical team, I have to prepare reports on the analysis of

companies. At that time, I prepared reports of some companies and also recommended the position

whether to hold, buy, reduce or accumulate the shares of that company.

During that time, I analyzed stocks of some companies. I was mainly interested in manufacturing

companies and prepared my report on their stock analysis. This was very helpful for me to

understand the stocks and also the indicators. I came to know about the movement of stock and

also the volume, that how volume affects and how it gets affected by just a one announcement

company makes. How company’s stocks trend when its financial result is released and when it

makes any new merger & acquisition or anything which can affect company’s stocks.

Below is the stock analysis of Eicher Motors, which I did in May. I recommended ‘As per these

indicators, we can easily say that the stocks of eicher motors will be bullish because we can also

see through the volume indicator that price and volume of stock are moving proportionate to each

other and also if we see MACD then it can be clearly seen that it has never gone below zero (i.e.,

negative region) since February’. Here I have used all the indicators which I had mentioned above.

31 | P a g e

Figure: - Stock analysis of Eicher Motors

Similarly, I did stock analysis of some other companies

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Project 2: - Future of Auto Ancillaries in India

What are Auto Ancillaries?

Auto Ancillaries are everything in a vehicle except a whole or complete vehicle or it can also be

said as all the components or equipments which are used to manufacture a vehicle are called auto

ancillaries. Head light, tail light, engine, gears, breaks, tyres, clutch, wipers, battery, lubricating

oil, etc. comes under auto ancillaries. Auto Ancillaries and its price plays a vital role in automobile

industry.

After two and half months of work in the Retail Equity department, I was shifted to Fundamental

Equity department and there I assisted a senior analyst who deals with Auto Industry. Here Auto

Industry means complete automobile and its ancillaries companies.

I worked on the financial models of the companies. My work was to update financial results of the

companies for the quarters and years. I updated the volume with respect to sales from Bloomberg

for as many years I can get. I worked on several companies of auto industry in this two and half

month period which includes automobile and its ancillaries companies. I worked on the following

companies: -

A. Automobile companies

a. Tata Motors

b. Maruti Suzuki

c. Bajaj Auto

d. Hero MotoCorp

e. Ashok Leyland

f. Eicher Motors

g. Mahindra

B. Auto Ancillaries

a. Amara Raja Batteries

b. Exide Batteries

c. Shivam Auto

d. Gabriel India

e. Castrol Oil India

f. MRF Ltd.

g. Gulf Oil

Scope of the industry: - As I have mentioned that my research is on Auto Ancillaries, that

how it will go in future and so on. The auto ancillaries industry in India is growing at a rapid rate

and it will continue to grow as the market is going. As we know that, maximum automobile

companies in foreign countries buys auto components from Indian Auto Ancillaries companies

and due to that this industry is growing at a rapid rate.

33 | P a g e

The scope or future if the industry is very bright. The major reasons behind growth of this industry

are as follows: -

i. Robust growth in auto component: - Turnover of the Indian auto component sector stood

at USD38.5 billion in FY2014–15; the industry is expected to reach USD115 billion by

2020. The continuous and large quantity of demand from foreign automobile

manufacturers is making this industry grow faster and not only foreign players but Indian

automobile companies are also increasing their production and growing at a rapid rate.

Due to the robust demand in automobile sector, auto ancillaries’ demand is also increasing.

The large population of our country, is forcing manufacturers to increase their volume of

production. The Indian Auto Ancillaries market size in FY2015 was $38.5 billion and it is

expected to be $115 billion by FY21. The market size of auto ancillaries grew by 9.7% in

FY15 and it grew by CAGR of 12% between FY08-16. There are some other which are

proving as a boon for the manufacturers, they are as follows: -

India is going to be in the list of top 5 vehicle manufacturing nations.

The large population and especially youth plays a vital role in this.

The cost effective manufacturing base keeps costs lower by 10-25 per cent relative to

operations in Europe and Latin America.

India is the 3rd largest producer globally so it’s a cost advantage for the foreign

manufacturing companies and it is also a global hub for automobile component sourcing.

100% FDI allowed without any prior government approval.

Figure: - Aggregate Turnover (USD Billion)

ii. Rising Indigenization: - The growth of global OEM sourcing from India and the increased

indigenization of global OEMs is turning the country into a preferable designing and

manufacturing base. The Indian and foreign automobile companies buys small and large

CAGR: 12.08 %

26.5 24.1

30.8

41.3 42.2 39.7

35.1 38.5

66

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E

34 | P a g e

auto components from Indian companies and these Indian auto ancillaries companies are

expanding their network in foreign countries.

iii. Growing automobile industry: - The Indian automobile market is estimated to become the

third largest in the world by 2016 and will account for more than 5 per cent of the global

vehicle sales; India is expected to become the fourth largest automobiles producer globally

by 2020 after China, US and Japan. The Indian automobile industry, and in that especially

two wheeler and passenger vehicles are growing at a devastating rate. Automobile

manufacturing companies are increasing their production year by year which directly

impacts auto ancillaries industry. Also due to good road network commercial vehicles are

also increasing.

iv. Demographic Advantage: - The total working population (between ages 15–64) in India

was around 825 million in 2015; it is expected to increase to nearly 900 million by 2030.

As we know that, India is having maximum population of youth in the world which plays

a significant role in the sales of automobiles. Now people in rural areas are also buying

new and modern bikes and due to great number of youth in rural and semi-urban areas also,

they are buying vehicles and so the ancillaries business has reached to rural areas also.

v. Expanding Middle Class: - The total working population (between ages 15–64) in India

was around 825 million in 2015; it is expected to increase to nearly 900 million by 2030.

The major portion or simply say the most dominating society in the market, which can

solely change market trend.

vi. Among top steel producers: - In July 2015, India overtook USA to become the third-largest

producer of steel in the world and among the lowest-cost ones as well; Steel is a key raw

material used in automobiles. The price of steel in international market affects the price of

automobiles and its ancillaries. The price of steel is one of the major reason behind

company’s earnings in a particular year or quarter. As we are one of the top steel producer

so we also dominate the international steel market. Its price depends on the production.

vii. Steel Price: - Price of steel is one of the key factor that drives this industry. Its price in the

international market is very important. It can have a major impact in the price of final

product as well as on the production volume. The amount of steel India exports and its

wholesale price, all these things affect this industry significantly. To estimate growth of

this industry and also to estimate companies financial I analyzed steel prices given by

World Steel Association, RBI, Press information and India Central Statistical

Organization.

35 | P a g e

viii. Aluminum Price: - As the price of steel affects this industry, similarly price of aluminum

affects it. Its price in the international market affects the price of the final product. The

price of aluminum and its alloys have great impact on this industry.

ix. Power Deficit: - Power deficit also plays a major role in consumption of batteries in our

country. As we know that, batteries are not only used in automobiles but they are also used

for domestic purpose in ‘inverters’. Power deficit in India is reducing. Government has

initiated many projects to reduce the power deficit and those projects are doing well. Power

deficit has been reduced in many states and some are still working on to reduce it. It has

reduced to a remarkable point and will continue if these projects will do well in future.

Under these projects new thermal, solar and hydro-electric power plants are established.

New wind mills and also biogas plays a major role here.

Figure: - Power Deficit

ix. Lead Price: - Auto Ancillaries also accounts battery used in automobiles. The price of lead

in international market affects its production cost. Battery companies depends on its price.

Lead is the main constituent used in batteries, so its price in the international market affects

the final price of batteries.

Fig.: Narrowing Power deficit remains an overhang

Fig.: Rising Depreciation to impact Net profit

20%

15%

10%

5%

0%

- 12 %

- % 10

- % 8

- % 6

- % 4

- 2 %

% 0

India Monthly Power Deficit

0

500

1,000

1,500

2,000

2,500

FY13 FY14 FY15 FY16 FY17E FY18E

Depreciation (LHS) As a Share of EBITDA (RHS)

36 | P a g e

LME LEAD SPOT ($) (LHS) LME Spot Lead Price (INR) (RHS)

150

100

50

0

Figure: - Lead Price

Investment in Auto Ancillary industry: - The investment in auto ancillary industry have

been rising at a rapid rate. Since this industry is based on the capital, the amount of money anybody

will invest in this industry is huge because automobile ancillaries is also a work of precision and

it also requires Research & Development department which take care of the raw material which is

to be used to manufacture the components. It’s a capital driven industry and gives high Return on

Investment (ROI). The capital employed in this industry and its ROI depends on several factors

like how automobile industry is going and will go in future, raw material prices, market

fluctuations and many other factors

Figure; - Investment in Auto Component Sector (USD Billion)

0

10

20

30

40

50

0 20 40 60 80

100 120 140

LME Lead Spot (INR) - LHS Gross margin (%) - RHS

0.7

1

1.8

0.1

1.7

2.3

1.8

1.5

0.7

0.4

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

0 500

1,000 1,500 2,000 2,500 3,000 3,500

37 | P a g e

Exports: - Exports have played a significant role in the growth of this industry. Foreign

companies like BMW, Mercedes, Ford and many others buys auto equipments from Indian

companies. The Indian Auto Ancillaries company manufacture and sell their goods to these

companies and earn foreign income which directly gives profit to our economy. This industry’s

exports of auto components increased at a CAGR of 14.01% to USD 11.2 billion during FY09-15.

As we know that, Indian Auto Ancillary industry is one of the largest industry in the world in this

sector and they sell their components at a low price in comparison to other companies present in

foreign countries.

Products: - When it comes to products, then it comprises of all the components or equipments

which comes under this category. The components like engine and its components, battery, oil &

lubricants, tyres, head light, gears and several others. I worked on the companies which

manufactures all these components and apart from these components several other components

also. From ancillaries’ business point of view, the component which has captured maximum share

as selling component that is engine and its components. ‘Engine parts’ accounts for 31 per cent of

the entire product range of the auto components sector followed by ‘drive transmission and

steering parts’ (19 per cent).

36.3%

25.2%

% 23.2

7.2% 7.0% 0.7%

Europ

Asi

North

Afric

Latin America Caribbea

Oceani

5.4.

6.

8.9. 10.

11.

FY0 FY1 FY1 FY1 FY1 FY1 FY1

Figure: - Value of Auto Components

(USD Billion)

Figure: - Share in exports volume by

Geography (FY15)

38 | P a g e

Figure: - Production volume by product range (FY15)

Segment-wise: - When it comes to segment-wise distribution, this justifies the simple

distribution among two wheelers, three wheelers, passenger vehicles, commercial vehicles and

medium and heavy commercial vehicles. The maximum share in terms of segment wise

distribution is captured by two wheelers and then followed by three wheelers and then followed

by other segments. Two wheelers covers almost 75-80% of the share in this sector. In Indian roads

two wheelers are increasing at a rapid rate daily and so as the pace of auto ancillaries also.

Passenger vehicles gave a good response in FY16 and so as given by M&HCV.

Figure: - Domestic market share by segment (FY15)

% 31

19 % 12 %

12 %

10 %

9 %

7 %

Engine Parts

Drive Transmission and Steering Parts

Body and Chassis

Suspension and Braking Parts

Equipments

Electrical Parts

Others

79.17 %

13.78 %

2.98 % 4.06 %

Two Wheelers

Passenger Vehicle

Commercial Vehicle

Three Wheelers

39 | P a g e

Working on Auto Ancillaries company: -

Along with my company guide I worked on several ancillary companies. To estimate the future

results, financials, volume of consumption and production all depends on the factors stated above.

The price of its major constituents steel, aluminum and lead in the international market affects its

growth. The major driver for the growth of this industry is automobile and its growth. The more

the number of automobiles on road, the more will be the growth of auto ancillary industry.

To understand this industry more thoroughly, I worked on the performance of automobile

companies. I analyzed there performance in order to figure out how ancillaries industry will go in

future. I compared volumes of the top models of automobiles of auto companies with foreign

companies like Harley Davidson. This industry is basically driven by automobile and its

consumption.

Figure: - New competitors have been increasing share

Figure: - M&HCV volumes, Domestic & Exports

% 0 % 20 % 40

60 % 80 %

100 %

Total AL Volumes Share Total Tata Motors Share Total Volvo/VECV Share Others Share

40 | P a g e

As we can see that, growth in the automobile industry is good and its impact will be directly on

auto ancillaries industry. Since this industry is very huge and there are some major players which

runs the market. Due to new schemes and policies of government if India infrastructure sector is

also increasing and because of that CV’s and M&HCV’s volumes is increasing at a significant

level.

To understand this industry at much higher level, I and my boss compared vehicular penetration

(2015) vs GDP per capita. We got the data for cars, of the countries which are having maximum

car owners and compared it to India. So by doing this, we got an ideal about the number of car

owners in our country and so we can estimate the consumption of auto ancillaries in our country.

“As far as growth is seen in auto ancillaries industry, it is good and it will continue in future

because of the rapid growth in automobile industry and as we have seen that this industry is doing

exceptionally well not only domestically but in foreign market also. The exports of the companies

have risen significantly which itself tells that this industry is growing at a good pace. The share

it has captured in terms of products and geography, it is remarkable and it has given strong

competition to the ancillaries companies of foreign countries.”

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Working on Financial Models

I worked on financial model of the companies dealing with auto ancillaries. I used annual reports,

quarterly results, monthly updates, company’s website, research reports and Bloomberg to get the

data as per my needs and requirements. Bloomberg terminal provides almost all the information

about a company and also research reports of the company if any analyst has worked on it. During

my research, I worked on several companies like –

i. Amara Raja Batteries

ii. Exide Batteries

iii. Gulf Oil

iv. Castrol India

v. Shivam Auto

vi. Gabriel India

vii. MRF Ltd.

Out of these, I carried my research on Castrol India and Exide Batteries. I analyzed their financials

and also their performance to estimate their performance in future. Since auto ancillaries plays a

vital role in the final price of the vehicles for the end user and each and every ancillary has its own

significance.

The areas which I covered on financial model of Exide Batteries are as follows: -

1) Results: - The financial yearly and quarterly results of the companies, I updated them.

Working on Balance Sheet and Profit & Loss Statement both Standalone and Consolidated (if

given), to update these and not only for the current year but also for the previous years. In those

results I have to show break-up of some certain things which was mentioned in annual report.

Break-up includes, break-up of other expenses, break-up of tax, break-up of other income (if

needed) and break-up of tax also. Every financial model has a template sheet, a quarterly table

sheet and a summary sheet. While updating the results, it should be kept in mind that whatever

we are updating whether yearly results or quarterly results then these sheets should also get

updated automatically.

Since, I continued my research on Exide Batteries and Castrol India, here I am showing the

key financials of Exide Batteries on which I worked.

42 | P a g e

Figure: - Income Statement (yearly)

43 | P a g e

Figure: - Income Statement (Quarterly)

44 | P a g e

Figure: - Balance Sheet

45 | P a g e

a) Template Sheet: - It consists of the yearly results like profit and loss statement, balance

sheet and cash flow. It can be standalone or consolidated depends on research analyst

requirements. The template sheet tells everything about a financial statement. If one has a

knowledge about it then he/she has to not check where is the profit and loss sheet or balance

sheet or cash flow sheet, he can just use some shortcuts on the template and can directly go

to that sheet where he wants to work. Actually this template sheet act as a link for the

researcher to make his/her work easier. The profit and loss or balance sheet or cash flow

sheet are linked to that template sheet which makes this work much easier. It contains all

the years for which the income statement and balance sheet is designed.

Figure: - Template Sheet

46 | P a g e

b) Quarterly table sheet: - It consists of the yearly results that is profit and loss statement. It

can be standalone or consolidated depends on research analyst requirements. The quarterly

table sheet tells everything about a financial statement. If one has a knowledge about it

then he/she has to not check where the profit and loss sheet is, he can just use some

shortcuts on the quarterly table sheet and can directly go to that sheet where he wants to

work. Actually this quarterly table sheet act as a link for the researcher to make his/her

work easier. The profit and loss is linked to that quarterly table sheet which makes this

work much easier. It contains all the years for which the income statement is designed.

Figure: - Quarterly Sheet

47 | P a g e

c) Summary: - This sheet consist of Profit and loss statement, balance sheet, cash flow,

valuations and ratios for few years, generally 4-5. This sheet does not show break-up of

anything like other expenses in income statement or fixed assets in balance sheet is shown

in template sheet. This sheet shows the main headings of results and it only shows yearly

values. It shows ratios and valuations also which are calculated on the basis the values that

comes in income statement and balance sheet. This sheet is also linked and it works on the

values of that sheet. The value of income statement, balance sheet and cash flow will be

same as in template sheet and it can be consolidated or standalone as per the requirement

of the research analyst.

48 | P a g e

Figure: - Summary Sheet

2) Volume: - The sales volume of the companies also, I updated. Every company has to declare

its sales volume in their quarterly results and some companies updates monthly data also. I

updated and yearly volumes by using annual report (if released). For the previous years I used

annual reports to update the volume. To update quarter volumes I used company’s monthly

declaration of sales volume and if it is not available then I used Bloomberg to get the data on

monthly or quarterly or yearly basis, but sometimes it provides data only on monthly then I

have to calculate it on quarterly and yearly basis.

3) Capex: - I have to update capex that company has employed in that year. My guide usually

ask me find for 4-6 years. I calculate the R&D expenses, the amount incurred on assets and the

various other expenditure which are done on capital. In capex portion, I was supposed to

calculate Gross Block, Accumulated Depreciation, Net Block and CWIP. R&D expenses and

cash flow from investing, financing and operating activities also comes under this.

49 | P a g e

Figure: - Capex

4) Foreign Income: - Companies who do business in foreign countries, I have to update their

earnings for that respective year. This earning of the company affects its financial performance

as it is company’s income part.

50 | P a g e

Applications of Financial Model

1) Investment Banking: - Financial modelling helps the Investment Banker in valuing the

company by forecasting the revenues. On the basis of valuation they recommend the buyer

or seller on acquisition of new funds or investments in new funds respectively.

2) Equity Research: - Financial modelling enables the analyst in examining an

organization’s financial projections, competitors’ projections and other dynamics to

determine whether it is smart or risky investment.

3) Credit rating: - Financial modelling equips credit analysts in collecting historical

information and outstanding debts and forecasting future growth on excel sheet to

determine the degree of risk factor, which helps in giving rating.

4) Project finance: - Financial modelling helps in assessing in financial viability of a project

and creating a funding plan through debt and equity components.

5) Mergers and acquisitions: - Financial modelling helps the companies in assessing the

value of the company in which they want to merge or acquire by forecasting the revenues,

preparing debt schedules, by doing competitors analysis.

6) Financial analysis: - Financial modeling helps companies in assessing their own finances

and build financial models for their projects and in creating funding plan through debt and

equity components.

51 | P a g e

Impact of GST on Auto Ancillaries Industry

1) The share of organized and unorganized sector of this industry is 15% and 85% at present

respectively, it will change after its implementation.

2) The share of organized sector will increase, as it is the branded part and people will buy

more products from the branded side.

3) Vehicle prices will fall by 10-17%, demand for automobiles will increase, and eventually

demand of ancillaries will also increase.

4) Organized battery and other spares will become more cost competitive and will gain market

share.

5) It will be beneficial for PVs, UVs, MPVs, two wheelers and three wheelers but will be

quite negative for M&HCV (short-term).

6) The cascading effect of tax will reduce.

Overall if see industry growth after the implementation of GST, it will have positive impact

everywhere.

52 | P a g e

Conclusion: -

It helped me to understand stock market, in a deeper sense.

I got to know the price fluctuation of stocks.

Came to know about many companies that are listed and was not aware.

Learnt, movement of a particular stock over a period of time.

Got knowledge on candle-stick pattern.

Got to learn technical chart and its analysis.

Used various indicators to study the stock analysis which gave me enough information

about the stocks.

It helped me to understand, how stock market moves and how stock moves.

Institutional Equity helped me to understand, how industry analysis is done.

By working on financial models, background of core got strengthen.

Got to know, that industry doesn’t work solely. Other industry and there factors affects

each other.

It helped me to understand how industry analysis and company analysis is done.

I learnt, what the factors that affect this industry are.

I learnt, what is to be more focused while doing company analysis and also industry

analysis.

I learnt, what main parameters that should be given more consideration while doing

analysis of any company and comparing it with other are.

It helped me a lot to understand that, how price of commodities (Steel, Aluminum & Lead)

in international market affects the industry as a whole.

Got to learn, industry does not compete only with its rivals but also with other factors which

is played by government.

Learnt, how does new accounting standards affect results of the companies.

Also learnt that, what is the impact of new policies or rules or schemes or any regulation

in acts (for e.g. BS-IV norm, GST) implemented by government.

Learnt about the impact of one industry on other industry.

Most importantly, in my 5 months internship program I learnt the corporate culture and working

in a corporate. Got to know, how to work in a corporate office and how to deal with people. Learnt,

what are the parameters which one should keep in mind while working in a corporate office.

53 | P a g e

Recommendations

.

Company is not covering steel industry which plays a significant role in auto industry and

if they will be having any analyst working on that then it can provide much better results

on Auto Industry and will help Auto Analyst to estimate more accurate results.

MNC’s like Bosch are yet to be covered.

Apart from auto industry, company do not have any analyst working on FMCG, Plastic

and service industry which can increase their revenue.

The retail equity team needs one more member in their team of two people which will help

them to some great extent.

As recommended by my mentor to reduce the stocks of Exide, the company will be

suffering downfall in their margins by 50 bps due to reduction in power deficit and good

competition by Amara Raja. I will suggest that, company can gain more by increasing their

reach to small towns (sub-urban and rural) and to the states where power deficit is still high

as compared to other states, so that people will buy their product. They can also increase

their production so that they can increase their share in Home UPS segment to compete

Amara Raja.

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Bibliography http://www.idbicapital.com/

https://en.wikipedia.org/wiki/IDBI_Capital

http://www.ibef.org/industry/autocomponents-india.aspx

http://www.siamindia.com/

http://www.investopedia.com/

IDBI research reports.

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NOTES