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A study on Fundamental Analysis on Equities

EXECUTIVE SUMMARY
The Introduction of the concept of security analysis, where the investment scenario in the security takes place. The introduction part explains about different approaches to the security that the fundamental approach, modern approach and technical approach. And investors perception about the characteristics of growth and the value associated with securities. In the profile of the respondents it highlights the industries and the companies. In industries, it deals with growth rate of sales of Computer and Software and also analysis of government policies that affects performances. The export performance and competitive positions of said industries provides the guidelines about the future of industries. And come to the companies, it provides overview of four companies in computer and software industry, namely Infosys, Wipro and HCL., The share holding patterns of each company brief history sales growth and earning per share provides the overview of those companies. It also deals with the analysis of the economic factor affect to the stock market. In the second part of analyzing, analyzing industries through comparison of different ratios, sales and dividend growth that helps to select the appropriate industry which outperform other industries. The third part emphasizes on the companies within the Computer and Software industry, where comparison between Infosys, Wipro, and HCL which are all highly traded in that related industry in the stock market, guides the investor for selecting appropriate security which is really doing well than other selected companies. In the background of the study, where the different theories and tools like leverages and betas are supported for studying securities. In the statement of the problem for studying security and explains the areas of the analysis. And it covers source of the data literature review and operation definition of the study.

A study on Fundamental Analysis on Equities

INVESTMENT SCENARIO:

An investment refers to the commitment of funds at present, in anticipation of some positive rate of return in future. Today the spectrum of investment is indeed wide. An investor is confronted with array of investment avenues. Among all investment, investment in equity is best high proportion. This is because the history of stock market world over is booms and bursts over night millionaires an instant pauper. An Indian stock market has been no different. Memories of its crash of December 1990 are still there in the minds of many. After record rise in proceeding few years the index fell precipitously and investor loss heavily. This phenomenon repeated every now and then. Though the equity cult is fast spreading among the investor the hard fact is majority of stocks continue to remain volatile to date. All these are pointers to the fact that the investor market is no longer holding an olive branch to investor in equity. Much of the danger associated with it can be avoided and it need not be such nerve raking experience, provided one approaches it as a rational decision making process. In short Security analysis and portfolio management are hard work, requiring discipline and patience, and the work is not always rewarded with exceptional returns.

A study on Fundamental Analysis on Equities

PART A

1. INDUSTRY PROFILE 1.1 PROFILE OF THE INDUSTRIES


The forgoing section in this report had a perspective of overall Economy in India. The next step is to analyze particular industry and compare them for selecting potential growth industry. Once the economics analysis is over: getting the prospects of the likely trend in the economy, analyzing the industry would be taken importance, knowing which groups are promising in the coming year makes possible better entry into the company. There is however, no perfect correlation between the economy and the industry on one hand and of industries and companies on the other. India has mixed economy, where private and public sectors play a complementary role and promote a planned development. Since the initiation of the reforms in 1991, even foreign enterprises and MNCs given a due role to play in the development of the economy. As per the latest policy barring about 18 scheduled industrial groups, others are both open to public and private sector. But as the security market comprise only marketable securities and they are mostly form private corporate sector and pubic undertakings which are being shifted to the joint sector. Many financial services are thrown open to foreign sector now.

A study on Fundamental Analysis on Equities

2. COMPANY PROFILE 2.1 BACKGROUND AND INCEPTION OF THE COMPANY


The India Infoline Group comprises the holding company, India Infoline Ltd, which has 4 wholly-owned subsidiaries engaged in distinct yet complementary businesses which together offer a whole bouquet of products and services to make your money grow. As on date, the Group employs 4000 plus employees, in over 350 locations, across India. The parent company, India Info line Ltd owns and manages the web properties www.indiainfoline.com and www.5paisa.com. It also undertakes research, customized and off-the-shelf. Launched on 11 May 1999, www.indiainfoline.com is Indias leading and most comprehensive business and financial information website. The site provides quality information and analysis earlier restricted to a few people - to the common man, absolutely free! The site has met with an overwhelming response and has been reviewed as the most comprehensive financial content website in India by BBC World - Money Watch, Business World, Business Line and others. The company also won the Golden Mouse Award in India Internet World 2000 for the "Best Finance" site. In May 2001, our website was included in the Top 200 Best of the Web list by Forbes Global under the Asia Investing category. We were the only website from India to be featured in any category. Since then it has been nominated twice to this list.

A study on Fundamental Analysis on Equities

In its last review, Forbes editors have said, "www.indiainfoline.com is a must read for the investors in South Asia..."Our research is also disseminated electronically through Bloomberg, Investment, First Call/Thomson Financial and Internet Securities.

2.2 NARURE OF THE BUSINESS CARRIED

India Infoline Ltd, being a listed entity, is regulated by SEBI (Securities and Exchange Board of India). It undertakes equities research which is acknowledged by none other than Forbes as 'Best of the Web' and 'a must read for investors in Asia'. India Infoline's research is available not just over the internet but also on international wire services like Bloomberg (Code: IILL), Thomson First Call and Internet Securities where it is amongst the most read Indian brokers.

A study on Fundamental Analysis on Equities

Its various subsidiaries are in different lines of business and hence are governed by different regulators. The subsidiaries of India Infoline Ltd are:

India Infoline Securities Pvt Ltd India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which is engaged in the businesses of Equities broking and Portfolio Management Services. It holds memberships of both the leading stock exchanges of India viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash segment of the BSE.. India Info line Commodities Pvt Ltd India Infoline Commodities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which is engaged in the business of commodities broking. Our experience in securities broking empowered us with the requisite skills and technologies to allow us offer commodities broking as a contra-cyclical alternative to equities broking. We enjoy memberships with the MCX and NCDEX, two leading Indian commodities exchanges, and recently acquired membership of DGCX. We have a multichannel delivery model, making it among the select few to online as well as offline trading facilities. India Infoline Distribution Co Ltd (IILD) India Infoline.com Distribution Co Ltd is a 100% subsidiary of India Infoline Ltd and is engaged in the business of distribution of Mutual Funds, IPOs, Fixed Deposits and other small savings products. It is one of the largest 'vendor-independent' distribution houses and has a wide panIndia footprint of over 232 branches coupled with a huge number of 'feet-on-street', which help source and service customers across the length and breadth of India. Its unique value proposition of free doorstep expert advice coupled with free pick-up and delivery of cheques has been met with an enthusiastic response from customers and fund houses alike.

A study on Fundamental Analysis on Equities

India Infoline Insurance Services Ltd India Infoline Insurance Services Ltd is also a 100% subsidiary of India Infoline Ltd and is a registered Corporate Agent with the Insurance Regulatory and Development Authority (IRDA). It is the largest Corporate Agent for ICICI Prudential Life Insurance Co India Infoline Investment Services Ltd India Infoline Investment Service Ltd is also a 100% subsidiary of India Infoline Ltd. It has an NBFC license from the Reserve Bank of India (RBI) and offers marginfunding facility to the broking customers. India Infoline Insurance Broker Ltd India Infoline Insurance Brokers Ltd is a 100% subsidiary of India Infoline Ltd and is a newly formed subsidiary which will carry out the business of Insurance broking. We have applied to IRDA for the insurance broking license and the clearance for the same is awaited. Heres a look at the rocketing list of whats on offer from The India Infoline Group: Equity Trading and Stock Broking: Cash and Derivatives segments. Member - BSE and NSE, DP with NSDL. Portfolio Management: SEBI-registered, backed by a pool of analysts with over 200 man-years in managing portfolios. Research & Analysis: Exhaustive information and data mining, covering the spectrum of Indian business, industry and financial markets. Mutual Funds: Primary agent for the entire phalanx of leading funds. Something to suit every risk profile. Life Insurance: Leading corporate agent of ICICI Prudential Life Insurance Company, miles ahead of the runner-up! Commodities Broking: Member of the Multi- Commodities Exchange (MCX). Again, rockbottom brokerage and quality research support

A study on Fundamental Analysis on Equities

Fixed Income Instruments: From Fixed Deposits, Post Office Saving schemes to RBI Tax Saving and Infrastructure Bonds. Money Tree Consultancy Services MTCS Is a group company of India Infoline Ltd., focusing distribution on Home Loans, Personal Loans, Credit Cards and Non Life Insurance. MTCS turns the table from a supplier oriented market place to a demand oriented market place. Taking requirements from the customer, MTCS would provide a complete basket of products across the entire retail asset portfolio. MTCS extends the distribution reach of financial services providers by using alternate channels like the Internet, telephone, wireless, sales force and events. The Uniqueness of this model is being a financier neutral loan marketplace, the sole objective being providing end customer the product of his choice based on his requirements irrespective of which bank it is from

2.3 CORPORATE PHILOSOPHY


PEOPLE ORGANIZATION It is rightly said about the services sector that our most prized assets go down the elevator at the end of every day. Being in the services industry, people are our biggest and most important assets. We believe that people make all the difference. OWNER MINDSET what distinguishes India Infoline from other organizations is the fact that all employees are driven by Owner Mindset. This is a privilege as well as a responsibility. The environment will provide tremendous autonomy to operate, be creative and make mistakes. Each employee who is part of India Infoline is expected to have an owners mindset and think and behave like one.

A study on Fundamental Analysis on Equities While there is no the way of doing things, there are millions of things which an owner would do differently as compared to a typical person with an employee mindset. For instance, if work requires, sitting late or carrying the work home and completing it to meet the exigencies of deadlines. Taking complete care of the office property and material like his/her own. Suggestion and action on saving costs many times for activities not pertaining to his/her own department. Helping team members from his/her own functional areas as well as others. Ensuring that she/he projects the best image of the organization outside, have positive influence on colleagues and other team members, help seniors take corrective action against any possible damage, sabotage or negative activity that comes to his/her knowledge. Generate ideas, which may be related to the area of work, or may be general in nature for the benefit of organization and all the people in the organization.

2.4 VISION, MISSION AND QUALITY POLICY


Vision: To be the most respected company in the financial service space.

To be the leading investment intermediary for transaction through both online and offline medium.

To be the premier provider of investment advisory and financial planning services in India.

Mission: One stop shop for all financial requirements

Quality policy: Excellence is all about the quality of work. We strive for delivery that is 100% error free and yet at lightning speed. Excellence deals with the quality of work.

A study on Fundamental Analysis on Equities

2.5 PRODUCT AND SERVICES


India Infoline is a one-stop financial services shop, most respected for quality of its advice, personalized service and cutting-edge technology. Equities India Infoline provided the prospect of researched investing to its clients, which was hitherto restricted only to the institutions. Research for the retail investor did not exist prior to India Infoline. India Infoline leveraged technology to bring the convenience of trading to the investors location of preference (residence or office) through computerized access. India Infoline made it possible for clients to view transaction costs and ledger updates in real time. PMS Our Portfolio Management Service is a product wherein an equity investment portfolio is created to suit the investment objectives of a client. India Infoline invest your resources into stocks from different sectors, depending on your risk-return profile. This service is particularly advisable for investors who cannot afford to give time or don't have that expertise for day-to-day management of their equity portfolio. Research Sound investment decisions depend upon reliable fundamental data and stock selection techniques. India Infoline Equity Research is proud of its reputation for and we want you to find the facts that you need. Equity investment professionals routinely use our research and models as integral tools in their work. Commodities India Infoline extension into commodities trading reconciles its strategic intent to emerge as a one-stop solutions financial intermediary. Its experience in securities broking has empowered it with requisite skills and technologies. The Companys commodities business provides a contra-

A study on Fundamental Analysis on Equities

cyclical alternative to equities broking. The Company was among the first to offer the facility of commodities trading in Indias young commodities market (the MCX commenced operations only in 2003). Average monthly turnover on the commodity exchanges increased from Rs 0.34 bn to Rs 20.02 bn. Mortgages During the year under review, India Infoline acquired a 75% stake in Money tree Consultancy Services to mark its foray into the business of mortgages and other loan products distribution. The Company brings on board expertise in the loans business coupled with existing relationships across a number of principals in the mortgage and personal loans businesses. India Infoline now has plans to roll the business out across its pan-Indian network to provide it with a truly national scale in operations. Home Loans Get expert advice that suits your needs Loan against residential and commercial property Expert recommendations Easy documentation Quick processing and disbursal No guarantor requirement

Personal Loans Freedom to choose from 4 flexible options to repay Expert recommendations Easy documentation Quick processing and disbursal No guarantor requirement

A study on Fundamental Analysis on Equities

Invest ON-LINE India Infoline has made investing in Mutual funds and primary market so effortless. All a person have to do is register with us and thats all. No paperwork no queues and No registration charges. Invest In MF India Infoline offers a host of mutual fund choices under one roof, backed by in-depth research and advice from research house and tools configured as investor friendly. Apply In IPOs You could also invest in Initial Public Offers (IPOs) online without going through the hassles of filling ANY application form/ paperwork. SMS There are three products under SMS Service: Market on the move. Best of the lot. VAS (Value Added Service ) Insurance An entry into this segment helped complete the clients product basket; concurrently, it graduated the Company into a one-stop retail financial solutions provider. To ensure maximum reach to customers across India, we have employed a multi pronged approach and reach out to customers via our Network, Direct and Affiliate channels. The Companys entry into the insurance sector de-risked the Company from a predominant dependence on broking and equity-linked revenues. The annuity based income generated from insurance intermediation result in solid core revenues across the tenure of the policy.

A study on Fundamental Analysis on Equities

Wealth Management Service Imagine a financial firm with the heart and soul of a two-person organization. A world-leading wealth management company that sits down with you to understand your needs and goals. We offer you a dedicated group for giving you the most personal attention at every level. Newsletters The Daily Market Strategy is your morning dose on the health of the markets. Five intra-day ideas, unless the markets are really choppy coupled with a brief on the global markets and any other cues, which could impact the market. Occasionally an investment idea from the research team and a crisp round up of the previous day's top stories. That's not all. As a subscriber to the Daily Market Strategy, you even get research reports of India Infoline research team on a priority basis. The India Infoline Weekly Newsletter is your flashback for the week gone by. A weekly outlook coupled with the best of the web stories from India Infoline and links to important investment ideas, Leader Speak and features is delivered in your inbox every Friday evening. The Daily Market Strategy is your morning dose on the health of the markets. Five intra-day ideas, unless the markets are really choppy coupled with a brief on the global markets and any other cues, which could impact the market. Occasionally an investment idea from the research team and a crisp round up of the previous day's top stories. That's not all. As a subscriber to the Daily Market Strategy, you even get research reports of India Infoline research team on a priority basis. The India Infoline Weekly Newsletter is your flashback for the week gone by. A weekly outlook coupled with the best of the web stories from India Infoline and links to important investment ideas, Leader Speak and features is delivered in your inbox every Friday evening.

A study on Fundamental Analysis on Equities

2.6 AREA OF OPERATION


The India Infoline group, comprising the holding company, India Infoline Limited and its wholly-owned subsidiaries, straddle the entire financial services space with offerings ranging from Equity research, Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, GOI bonds and other smallsavings instruments to loan products and Investment banking. India Infoline also owns and manages the websites www.indiainfoline.com andwww.5paisa.com. The Company has a network of 976 business locations (branches and sub-brokers) spread across 365 cities and towns. It has more than 800,000 customer.

A study on Fundamental Analysis on Equities

2.7 OWNERSHIP PATTERN


1. Promoters share 2. Institutional investor share (if any) 3. Foreign institutional investors share (if any) 4. Share of retail investor (if any) 5. Governments share (if any) 6. Others

Our promoters and promoter group together holds 33.75% of post issue Equity shares. As a result of their shareholding they will have the ability to influence most matters, which require the approval of our shareholders. In addition the collectively have the ability to block any special resolution by shareholders.

Ownership Pattern

Promoters Mutual Funds / UTI FI/Bank Insurance Others Govt FII Non-Institutions Depository Receipts Total

33.75 % 20.36 % 0.05 % 0.00 % 0.51 % 0.00 % 18.88 % 26.95 % 0.00 % 100.00 %

A study on Fundamental Analysis on Equities

2.8 COMPETITORS INFORMATION


1. Bajaj Capital 2. Geogit 3. Indiabulls Securities Ltd. 4. Religare 5. Motilal Oswal 6. Sharkhan

Indiabulls Is one of the top Indian business houses with business interests inreal estate, infrastructure, financial services, securities, retail, multiplex and power sectors. Indiabulls Group companies are listed in Indian and overseas financial markets. Indiabulls was founded by Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal who are engineering graduates from the Indian Institute of Technology in Delhi. The group companies are listed on important Indian and Overseas markets. Indiabulls has been conferred the status of a Business Super brand by The Brand Council, Super brands India.

Indiabulls Financial Services Is an integrated financial services powerhouse providing Consumer Finance, Housing Finance, Commercial Loans, Life Insurance, Asset Management and Advisory services. Indiabulls Financial Services Ltd is amongst 68 companies constituting MSCI - Morgan Stanley India Index. Indiabulls Financial is also part of CLSAs model portfolio of 30 Best Companies in Asia. Indiabulls Financial Services signed a joint venture agreement with Sogecap, the insurance arm of Societe Generale (Soc Gen) for its upcoming life insurance venture. Indiabulls Financial Services in partnership with MMTC Limited, the largest commodity trading company in India, is setting up Indias 4th MultiCommodities Exchange.

A study on Fundamental Analysis on Equities

Indiabulls Securities Limited Is Indias leading capital markets company with All-India Presence and an extensive client base. Indiabulls Securities possesses state of the art trading platform, best broking practices and is the pioneer in trading product innovations. Power Indiabulls, in-house trading platform, is one of the fastest and most efficient trading platforms in the country. Indiabulls Securities Limited is the first and only brokerage house to be assigned the highest rating BQ 1 by CRISIL.

Geojit BNP Paribas Financial Services Started in the year 1987 when Mr. C.J. Georgeand Mr. Ranajit Kanjilal founded Geojit as a partnership firm. In 1993, Mr. Ranajit Kanjilalretired from the firm and Geojit became the proprietary concern of Mr. C .J. George. In 1994, it became a Public Limited Company named Geojit Securities Ltd. The company sells a range of savings and investment products. The valueadded products and services offered range from equities and derivatives to Mutual Funds, Life and General Insurance and third party Fixed Deposits. The needs of over 475 000 clients are met via multichannel services - a country wide network of 500 offices, phone service, Customer Care centre and the Internet. Geojit BNP Paribas has membership in, and is listed on, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). BNP Paribas is the Eurozones leading bank in terms of deposits, and one of the 10 most important banks in the world in terms of net banking income, equity capital and market value. Furthermore, it is one of the 6 strongest banks in the world according to Standard & Poor's. With a presence in 85 countries and more than 205,000 employees, 165,200 of which in Europe. The Group benefits from its four domestic markets Belgium, France, Italy and Luxembourg. BNP Paribas also has a significant presence in the United States and strong positions in Asia and the emerging markets.

Religare A diversified financial services group with a pan-India presence and presence in multiple international locations, Religare Enterprises Limited ("REL") offers a comprehensive suite of customer-focused financial products and services targeted at retail investors, high net worth individuals and corporate and institutional clients.REL, along with its joint venture partners, offers a range of products and services in India, including asset management, life insurance, wealth management, equity and commodity broking, investment banking, lending

A study on Fundamental Analysis on Equities

services, private equity and venture capital. Religare has also ventured into the alternative investments sphere through its holistic arts initiative and film fund.

Religare Operates from seven domestic regional offices, 43 sub-regional offices, and has a presence in 498* cities and towns controlling 1,837* business locations all over India. To make a mark in the global arena, REL acquired UK-based Hichens, Harrison & Co. in 2008 which was subsequently re-named as Religare Hichens Harrison PLC ("RHH"). Hichens, Harrison & Co. was incorporated in London in the year 1803 and is believed to be one of the oldest firms of stockbrokers in the City of London. Pursuant to expansion of REL's business, the company has grown from largely an equity trading company into a diversified financial services company. With the addition of RHH the REL group now operates out of multiple global locations, other than India, (the UK, the USA, Brazil, South Africa, Dubai and Singapore).

Motilal Oswal Securities Ltd. (MOSL) Was founded in 1987 as a small sub-broking unit, with just two people running the show. Focus on customer-first-attitude, ethical and transparent business practices, respect for professionalism, research-based value investing and implementation of cutting-edge technology has enabled us to blossom into an almost 2000member team. Today MOSL is a well diversified financial services firm offering a range of financial products and services such as Wealth Management, Broking & Distribution, Commodity Broking, Portfolio Management Services, Institutional Equities, Private Equity, Investment Banking Services and Principal Strategies. Co. has a diversified client base that includes retail customers (including High Net worth Individuals), mutual funds, foreign institutional investors, financial institutions and corporate clients. We are headquartered in Mumbai and as of December 31st, 2009, had a network spread over 581 cities and towns comprising 1,293 Business Locations operated by our Business Partners and us. As at December 31st, 2009, we had 6,05,986 registered customers.

A study on Fundamental Analysis on Equities

2.9 FUTURE GROWTH AND PROSPECTUS


The asset base will continue to grow at an annual rate of about 30 to 35% over the next few years as investors shift their assets from banks and other traditional avenues. Some of the older public and private sector players will either close shop or be taken over. Out of ten public sector players five will sell out, close down or with stronger players in three to four years. In private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutters in the near future to come. But this does not mean there is no room for other players. The market will witness a flurry of new players entering the arena. There will be a large number of offers from various asset management companies in the time to come. Some big names like Fidelity, Principal and Old Mutual etc. are looking at Indian market seriously. One important reason for it is that most major players already have presence here and hence these big names would hardly like to get left behind. The mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge risk and this in turn would be reflected in its Net Asset Value (NAV).SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives. Importantly, many market players have called on the regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade In Derivatives. Reforms have marked the entry of many of the global insurance measures into the Indian market in the form of joint ventures with Indian companies. Some of the key names are: AIG, New York Life, Allianz, Prudential, Standard Life, Sun Life Canada and Old Mutual. The entry of new player has rejuvenated and monopoly player LIC, which has responded to the competition in an admirable fashion by launching new product and improving service standard.

The ability to successfully implement our growth strategy and expansion plan. The ability to respond to technological changes. Changes in laws and regulations relating to the industry in which we operate. Changes in political and social condition in India. The ability to successful launches the new products.

A study on Fundamental Analysis on Equities

2.10 ACHIEVEMENT/AWARD
Incorporated on October 18, 1995 as Probity Research & Services. Launched Internet portal www.indiainfoline.com in May 1999. Commenced distribution of personal financial products like Mutual Funds and RBI Bonds in April 2000. Launched online trading in shares and securities branded as www.5paisa.com in July 2000. Standard life insurance agency business in December 2000 as a Corporate Agent of ICICI Prudential Life Insurance. Became depository participants of NSDL in September 2001. Launched stock messaging service in May 2003. Acquired commodities broking license in March 2004. Launched portfolio management services in August 2004. Listed on NSE and BSE on May 17, 2005. Acquired NBFC license in May 2005. Acquired 75% stake holding in Money tree Consultancy Services, which is a distribution of Mortgages and other Loan products, in October 2005. Acquired 100% equity of Marchmont Capital Advisors Pvt. Ltd. in December 2005 through which we have ventured in to Merchant Banking. DSP Merrill Lynch Capital subscribed to convertible bonds aggregating Rs. 80 cores in December 2005. Bennett Coleman & Co Ltd. (BCCL) invested Rs. 20 cores in India Infoline by way of preferential allotment in December 2005. Became a depository participant of CDSL in June 2006. Merger of India Infoline Securities Private Limited with India Infoline in January 2007. Entered into an alliance with Bank of Baroda for Baroda e-trading in February 2007. CLSA Institutional equities team joined us in 2007. Formed Singapore subsidiary IIFL (Asia) Pte Ltd. in 2007. Mr. Arun K. Purvar joined as independent director in March 2008. Received Best Broker of India award by Finance Asia in June 2008.

A study on Fundamental Analysis on Equities Received in-principle approval from SEBI for sponsoring Mutual Funds in November 2008. Received Insurance broking license from IRDA in December 2008. Received registration for Housing Finance Company from NHB in February 2009. Entered into a strategic agreement with Interactive Brokers, LLC (USA) to provide our client direct market access to over 80 global exchanges in 18 countries in July 2009.

2.11 INFRASTRUCTURAL FACILITIES


There is a 14 similar offices across Karnataka and regional office for Karnataka in Bangalore. India Infoline has their tea and fresh room for the employees in organization. Special room for the branch manager. Well furniture office. Internet connected computers stock dealers relationship manager and branch manager.

2.12 WORK FLOW MODEL


Every time the proposal are forwarded to the next higher authority through it is processed. This leads duplication of work. As national offices supreme power, zonal offices have supreme power, zonal offices have limited power the resort relay issues with there process and recommendation on the recommendation for regional office. The extent and frequency of value addition at zonal office is not found significance on many issues.

A study on Fundamental Analysis on Equities

3. Mc KINSEY 7-S FRAMEWORK


According to Waterman et al., organizational change is not simply a matter of structure, although structure is a significant variable in the management of change. Again it is also not a simple relationship between strategy and structure, although strategy is also a critical aspect. In their view effective organizational change may be understood to be a complex relationship between Strategy, Structure, Systems, Style, Skills, Staff and Shared Values. The framework suggests that there is a multiplicity of factors that influence an organizations ability to change and its proper mode of change. Because of the interconnectedness of the variables it would be difficult to make significant progress in one area without making progress in the others as well. There is no starting point or implied hierarchy in the shape of the diagram, and it is not obvious which of the seven factors would be the driving force in changing a particular organization at a certain point in time. The critical variables could be different across organizations and in the same organization at different points of time.

Structure

Strategy

System

Shared Values

Skills

Style

Staff

A study on Fundamental Analysis on Equities

1) STRUCTURE: Flow Structure A company's structure affects its strategic planning and its ability to change. A company's structure may have a customer or geographical focus. It contains the salient features of the organizational chart and interconnections within the organization.

Organization structure
Board of Directors Managing Director Executive Director
R. Venkataraman Nirmal Jain

Channels Branches Direct Sales


Corporate & Institutional

Products Mutual Funds Insurance 5paisa Commodities PMS Online Media/ SMS

Research Content Services News desk/ websites Market/ Institutional

Support Finance Technology Marketing Audit Corporate Planning HR & Training Customer Service Compliance

FAN & Venue

2) SKILL:
Interpersonal Skill The skill is closely related to staff are the distinctive abilities and talents that a company possesses. Skills may range from ability of a staff to speak Spanish to an understanding of the statistics to computer literacy etc. Their management team has hands on experience in financial services, especially target edit retail sales and relationship management. They have a strong technical team comprising of qualified engineers and trained personnel. The in house team has been responsible for developing several MIS software and requirements. They believe that they have put in place a working environment that brings out their people's entrepreneurial energy.

A study on Fundamental Analysis on Equities

3) STYLE:
Organizational Culture The Culture or Style is the aggregate of behaviors, thoughts, beliefs and symbols that is conveyed to the people throughout an organization over time. Since it is very hard to change a company's ingrained culture, it is important to bear in mind when developing a new strategy. They have developed a team of Customer Relationship Managers across India to handle customer accounts. These people are experienced in financial services and have undergone in-house training. This allows them to offer unbiased advice on not only equities but also on other investment products like mutual funds ensure that the customer has a single point contact with us.

4) STRATEGY:
Business strategy Strategy refers to those actions that a company plans in response to or in anticipation of changes in its external environment, its customers and its competitors. It is a plan or course of action leading to the allocations of an organization's finite resources to reach identified goals. Our business plan is to become the leading investment advisor and intermediary for financial services in India. The key driver is to increase our customer base in all our products, give them a platform of choice to transact and support them with quality research. The elements of our strategy include: One Stop Shop from advice to transactions. We have emerged as one of the India's leading financial information Internet Portal in India. We distribute mutual funds and life insurance products through our branches as well as directly through our sales team. These factors allow us to provide our customers with an integrated online as well as off line solution to fulfill all their financial information and transaction needs. We believe that our ability to offer multiple products across broking to insurance to mutual funds to commodities to small savings differentiates us from our competition. This also offers significant cross selling opportunities which will help in improving margins as incremental revenue will entail lower customer acquisition and promotion costs.

A study on Fundamental Analysis on Equities

Multi channel delivery model We intend providing a single convenient and reliable platform from which our users can obtain information, trade online or purchase offline a wide range of personal financial products. Our branches have been opened in cities after a detailed study of demographics and investment patterns in different cities.

Expand our retail network We have a retail branch network of 976 branches at 365 locations across India to provide an alternative channel for our customers to transact with us and to support our online services. It has more than 8,00,000 customers. These branches allow our customers the opportunity to purchase personal financial products and trade at such branches with the assistance of our staff. We propose to set up additional 25 branches in 14 cities across India to have a network of 1000 branches strength ensure geographic reach.

Leverage our content advantage for value added offerings We believe that the key to successful investment is research. We have invested considerable resource in building our research domain skills. Our top management has hands on experience in equity research. We will continue to expand the breadth and depth of research and content on Indian business and finance. This research advantage will enable us to acquire customers in high value added product offerings especially PMS.

Continuous investments in technology platform We have leveraged the power for technology to offer an integrated platform to the customer to transact. We will continue to invest in such technologies that could enhance customer experience while interacting with us. We have facilitated integrated trading and depositary accounts for the customer, payment gateways with multiple banks, online Internet enabled back office and MIS. We believe that our technology investments will be key driver in scaling of the business.

A study on Fundamental Analysis on Equities

Acquisition and Takeover We strongly believe that to become a market leader in the investment advisory and intermediation space, we have to expand our business. In our endeavor to do so and as per our business strategy we may pursue inorganic growth.

5) SYSTEM:
Open System The procedures both formal and informal, by which an organization operates and gathers information constitutes the system of the company. This model is concerned with the systems that allocate the control money and materials as well as gather information. They manage the risk associated with their broking operations through use of internally developed credit algorithms implemented through fully automated risk management software and selective direct monitoring of certain operating parameters. Their automated risk management procedures rely primarily on internally developed risk management system and system provided by their vendors. They have developed a team of customer Relationship Managers across India to handle key customer account. These people are experienced in financial services and have undergone in-house training. This allows them to offer unbiased advice on not only equities but also on other investment products like mutual funds and insurance. They intend providing a single convenient and reliable platform from which their can obtain information, trade online or purchase offline a wide range of personal financial products. Their offline network today increased by 45.9% to Rs 13,947 core from the level of Rs 9,559crore account for trading in the NSE cash market as on December 2010 and The average monthly derivative trading in terms of value, on the NSE has increased by 86.6% to Rs 72,618crore in December 2010 from Rs 38,906 core recorded in January 2010.

6) STAFF: Knowledge staff: Staff means the human resource systems which include appraisal, training, wages and the intangibles such as employee motivation, morale and attitude. With a motivation workforce companies are able to adapt well and compete.

A study on Fundamental Analysis on Equities

Their Human Resource Policy on the philosophy of Owner Mindset. They believe that the key to their continued growth lied in unleashing the entrepreneurial energy of their employees. They encourage all employees to behave more as owners of their departments rather than employees. Their people are highly driven and work towards increasing India Infolines brand and market share across product lines. They have developed extensive in-house training modules. In addition, various Asset Companies and ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED train their staff. They lay emphasis on on the job training where an experienced and senior person mentors a junior executive. In addition to salary, their employees get performance-based incentives on a quarterly basis. They have also implemented an employee stock option plan. India Infoline Ltd has informed BSE that the Compensation/ Remuneration Committee of the Board at its meeting on December 10, granted 10,45,000 Employee Stock Options to the identified employees under the ESOP Scheme, 2009 of the company through circular resolution. As on December 31, 2010 the total employee strength of the company and their subsidiaries was15,600.

7) SHARED VALUES: Vision: To be the most respectable company in the financial space. Mission: One stop shop for all financial requirements. India Infoline believes in building an entrepreneurial workforce and wants to inculcate the essentials of an entrepreneur in all team members. 5 essentials of an entrepreneur are: Energy, Execution, Efforts, Ethics, and Excellence.

A study on Fundamental Analysis on Equities

4. SWOT ANALYSIS
Strengths Original research Integrated technology platform One Stop shop Pan - India distribution network India Infoline.com and 5paisa.com have developed into Brands. Opportunities Changing demographics with higher disposable income and increasingly complex financial instruments will drive demand for investment advisory services Rapid penetration of Internet and computers means that technology enabled financial services will gain market share. Threats Economic slowdown Volatile movement in indices Stock markets falls will have a cascading effect on our mutual fund mobilization Increase/decrease in interest rates can affect our debt/ income fund mobilizations Future changes in personal taxation rules can impact insurance sales. Weaknesses Lack of a banking arm to complete the bankbroker-depository chain Insignificant presence in institutional segment.

A study on Fundamental Analysis on Equities

5. ANALYSIS OF FINANCIAL STATEMENT


------------------- in Rs. Cr. ------------

Mar '06 Sales Turnover Other Income Total Income Total Expenses Operating Profit Profit On Sale Of Assets Profit On Sale Of Investments Gain/Loss On Foreign Exchange VRS Adjustment Other Extraordinary Income/Expenses Total Extraordinary Income/Expenses Tax On Extraordinary Items Net Extra Ordinary Income/Expenses Gross Profit Interest PBDT Depreciation Depreciation On Revaluation Of Assets PBT Tax Net Profit Prior Years Income/Expenses Depreciation for Previous Years Written Back/ Provided Dividend Dividend Tax Dividend (%) Earnings Per Share Book Value Equity Reserves Face Value 44.70 3.77 48.47 5.07 39.63 --------43.40 2.18 41.22 1.47 -39.75 13.28 26.47 -----5.87 -45.10 -10.00

Mar '07 269.78 16.94 286.72 188.38 81.40 --------98.34 6.39 91.95 12.33 -79.62 27.50 52.12 -----10.39 -50.17 235.18 10.00

Mar '08 616.11 56.33 672.44 395.19 220.92 ------29.04 --277.25 21.16 227.05 19.44 -207.61 78.92 128.69 -----22.54 -57.10 972.84 10.00

Mar '09 571.50 0.10 571.60 386.72 184.78 --------184.88 7.85 177.03 25.56 -151.47 47.88 103.59 2.23 ----3.66 -56.68 991.50 2.00

Mar '10 698.04 0.15 698.19 422.77 275.27 --------275.42 10.25 265.18 31.87 -233.31 81.29 152.02 -----5.33 -57.04 1,051.07 2.00

A study on Fundamental Analysis on Equities

NOTE
1. The Standalone Results are as per the requirements of Clause 41 of the Listing Agreement and submitted to the Stock Exchanges. The Consolidated Results are given as additional information as they cover the operations of India Infoline Limited and its subsidiaries.

2. The consolidated and standalone audited financial results for the quarter and year ended March 31, 2010, have been reviewed by the Audit Committee and approved by the Board at its meeting held on April 24, 2010.

3. The Company (Standalone) is primarily engaged in equity broking and related services.

4. During the year, the Company had declared and paid two interim dividends totaling to Rs. 3.00/- per share (Face Value of Rs. 2/- per share). The same is considered as final.

5. During the quarter ended on March, 2010, the Company had allotted 18,14,775 equity shares of Rs. 2/- each on exercise of stock options under the Employee Stock Option Scheme 2005, 2007 & 2008 of the Company.

6. On April 6, 2010, the Company had allotted 91,500 equity shares of Rs. 2/- each on exercise of stock options under the Employee Stock Option Scheme 2005, 2007 & 2008 of the Company.

7. Stand alone information of India Infoline Limited is as under:(Rs. In Lakhs)For the Quarter ended March 31, 2010 - Revenues/Turnover : 16,644.05 - Profit before Tax : 3,012.62 - Profit After Tax : 1,995.58Year ended March 31, 2010 - Revenues/Turnover : 69,819.11 - Profit before Tax : 23,330.75 - Profit After Tax : 15,201.65

A study on Fundamental Analysis on Equities

6. LEARNING EXPERIENCE
After entering in this organization I have gained lots of experiences about the equities. At the time of doing work over the organization, I experienced how all corporate works use to handle inside of the organization. Here I experienced how all function department are inter connected and one for other. Along with my works I learnt fundamental analysis equities of different companies in an organization. During my training session I learned segregation of equities for to invest in different equities and different industries. I observed what all promotional activities are done in financial sector. Here I experienced how a financial sector can run there market entire of the huge competition based market system etc,. During my project I learned how maintain best equities through selecting different sectors, industry and analyzed them through different charts.

A study on Fundamental Analysis on Equities

PART B A. GENERAL INTRODUCTION


Title of the study The project is entitled A study on The Fundamental Analysis on equities of Software Companies is done at the INDIA INFOLINE LTD., Bangalore.

An investment is a commitment of funds made in expectation of some positive rate of return in future. An investor makes some sacrifice in the present in the hope of desiring benefits in future. The motive behind investment varies from person to person. Some people invest in order to gain a sense of power or prestige. Often the control of corporate enterprises is a driving motive. For most investor however their interest in investment is largely pecuniary to earn a return on their money. But the return on stock market security is subject to risk. Risk incase refers to the uncertainty surrounding actual realization of the rate of return offered by an investment. The time element refers to period of waiting required to reap the return. Accordingly early investment decision has three key aspects. They are, Return Risk Time

Therefore, investment process must be considered in terms above aspects. One should approach any scheme of investment as a rational decision making process, in which he should attempt to select a package of portfolio securities that meets predetermined set of goals. These investors goal are usually expressed in terms of return. Almost all the cases, the hard fact is that return and risk are inseparable. Further the maximum higher the return the greater the risk. Therefore the ultimate decisions to be made in the investment are two. What securities to be held How many rupees should be allocated to each.

These decisions are made in three steps. 1. Security analysis 2. Security evaluation 3. Portfolio analysis, selections and management.

A study on Fundamental Analysis on Equities

Securities are marketable financial instruments that bestow on their owners the right to make specific claims on particular assets. An individual security provides evidence of their creditor ship or ownership depending on whether it is bond or stock, respectively. A bond is loan that is paid off with interest: the investor lends money to the borrowing company that issued bond. In contrast, stock ownership represents a cash investment a future of a corporation: the investor owns a part of a corporation and share in its profits.

SECURITY ANALYSIS
Traditional investment analysis, when applied to securities, emphasizes projection of prices and dividends. That is, the potential prices of a firms common stock and future dividend stream are forecast, and then discounted back to the present. Basically modern security analysis deeply rooted in the fundamental concept. But the more modern approach to common stock analysis emphasizes risks and return estimate rather than mere price and dividend estimates, of course dependent on share price and accompanying the dividend stream.

SECURITY EVALUATION
It refers to the act of assessing the true worth of security. Before committing the fund on stock exchange securities, the investor should make thorough comparison of the prices of the security with its true value. The price refers to the price quoted for the security at the stock exchange at a given movement of time. Value refers to the intrinsic worth. Only with the help of such evaluation the investor can decide as to buy hold or sell.

DIFFERENT APPROACHES TO EVALUATION


There are essentially three approaches or school of thoughts on the matter of security price evaluation, classified as

FUNDAMENTAL APPROACH
The concept of time value of money is the business of this approach.

A study on Fundamental Analysis on Equities

Money has a time value. A rupee now is worth more than rupee a year from now. For different securities, future benefits may me received at different times. Even when the amount of future payment is the same, differences in the speed of their receipt may create differences in value. Time value of money suggests that earlier receipt is more desirable than later receipt, even when the both are equal in the amount of certainty. Because, earlier receipt can be re invested to generate additional returns before later receipt come in. The force operating is the principle of compound interest.

Framework: The proper order in which to proceed in Fundamental analysis is, first to analyze the overall economy and securities markets. Second, analyze the industry with in which a particular company operates. Finally, analysis of the company should be considered. The above analysis involves making a careful estimate of expected stream of benefits and required return of common stock. The intrinsic value then can be obtained through the present value analysis that is, the dividend discounts model. An alternative method of valuation is the P/E ratio or earning multiplier approach.

ECONOMIC ANALYSIS

INDUSTRY ANALYSIS

COMPANY ANALYSIS Strategic considerations of economic, industry and company analyses are as follows:

(1) ECONOMIC ANALYSIS


a. A study of economic trends as indicated by rate of growth in gross national product, employment, aggregate corporate profits. interest rate, exchange rates, savings and investments, monsoon positions. b. An analysis of the relationship between economic trends and economic policies and the stability of such relationships. c. A study of world economic trends and their impact on Indian economy.

A study on Fundamental Analysis on Equities

(2) INDUSTRY ANALYSIS


a. Implications of projected growth in gross national product for various industries. b. Implications of plan priorities and plan expenditure for various industries. c. Vulnerability of an industry for government regulations, and control of prices and production. d. Implications of industrial and fiscal policies of government for an industry. e. Analysis of competitive conditions as reflected in any barriers to entry.

(3) COMPANY ANALYSIS


a. Trend analyses of companys market share, b. An analysis of turn over of assets, operating and production efficiencies through ratio analysis. c. Leverage and coverage ratio analysis. d. An analysis of book value per share. e. An assessment of quality of management f. An analysis of price-to-earning multiples. g. An analysis of growth in sales and dividends.

(4) TECHNICAL APPROACH


Technical analysis is an alternative approach to predicting the stocks price behavior. Technical analysis is frequently used as a supplement to fundamental analysis rather than as a substitute for it. Thus technical analysis can frequently does, confirm findings based on fundamental analysis. Technical analysis is viewed mainly through price and volume statistics. It helps in measuring price-volume, supply-demand relationship for overall market as well as for individual stocks.

(5) MODERN APPROACH


Markovitize led down the foundation for this approach in 1951. He Studied capital market with the help of fairly sophisticated method of investigation and in general arrived at the

A study on Fundamental Analysis on Equities

following conclusions .Stock markets are reasonably efficient in reacting quickly and rationally to the flow of information. Successive price changes are independent. As a result past price behavior cannot be used to predict future price behavior. GROWTH Vs VALUE Generally, investors follow two types of investing namely growth or value while they deal with investments. Fundamentally these two styles of investing are not alike and hence they take different approaches.

1. GROWTH PERCEPTION The general perception of growth investing is to invest in companies that can grow earning at a faster rate than the overall market. The theory is that if you buy these companies securities, overtime, their stock prices will reflect earning growth and trade accordingly. The criterion in selecting companies boils down to three Ps. People Prospects Price

The most important thing is the business itself. Normally, companies that command high profit margin and high return on invested capital is alone considered for investment under this style of investing. Growth investors are almost agnostic about the economy. In theory, growth company should be able to deliver strong earnings growth whether the economy is weak or strong. This ability highlights the inherent strength of companies. But growth is full of landmines as companies disappoint.

VALUE PERCEPTION The value perception is more focused on buying shares quoted low in the market. The appreciations potential for value investor come with the market realization the intrinsic value in a company. Accordingly investors buy shares that are quoted in the market and sell it the moment the market value cross the intrinsic value.

A study on Fundamental Analysis on Equities

BACKGROUND OF THE STUDY Value investing is more quantitative than qualitative. It has more to do with tangible numbers, balance sheets, and assets and near term earning power. All available information about a company is subject to a thorough scrutiny before deciding about the intrinsic worth of the shares. Consequently there is less volatility in value. While macro economic theory has helped to develop risk factors like interest rate risk, purchasing power risk, market risk and such alike; the theory of the firm helped in delineating factors like firms cash dividend yield, beta coefficient as a numeric surrogates for securitys quality rating, The security investment involves several type of risk diversifiable as well as nondiversifiable, the total risk of an asset may be perceived as being the sum of several different contributing risk factors like interest rate fluctuations, market cyclical, purchasing power instability.

LEVERAGES The employment of assets or sources of funds for which the firm has to pay a fixed cost or fixed return may be termed as leverage. If earning before interest and taxes exceed the fixed return requirement the leverage is called favorable. When they do not the leverage is unfavorable. The Operating Leverage indicates how sensitive profits are to changes in sales. The Financial leverage measures how fixed financial charges used for magnifying the effects of changes in EBIT on earning per share.

OVERVIEW OF THE ECONOMY A top down analysis of the firms prospects must start with a global economy. The international economy might affect a firms export prospects, the price competition it faces from competitors, or profit it makes from abroad. Certainly, despite the tact that the economies of most countries are linked with global economy, there is considerable variation in the economic performance across countries at any time. Given the degree of openness to trade and investment, it is a well accepted fact that the national markets are inter-related and increasingly global. When making decisions, traders incorporate information pertaining to price movements and volatility in the asset they are trading including information about related assets.

A study on Fundamental Analysis on Equities

The movement of markets in rhythm and chorus could nullify much of the gain out of diversification across borders, besides being vulnerable to the caprices of global capital. Companies are part of the industrial and business sector, which in turn is a part of the overall economy. Thus, the performance of the company depends of the performance of the economy in the first place. If the economy is in recession or stagnation, center is paribus; the performance of the company will be bad in general or vise versa. Since India started deregulating its financial markets in the post liberalization phase, her integration with the international financial markets has been proceeding rapidly. Based on the observations it has been concluded that in the post-liberalization era, international financial market integration has accelerated, though not yet complete. As per research studies so far, nearly 50% of the stock prices changes can be attributed to market influences, which are general and caused by the economic, and industry factors. It is therefore important that any stock market investment is preceded by economic analysis and industry analysis.

A study on Fundamental Analysis on Equities

I.

STATEMENT OF PROBLEMS

Problem is the basis for conducting any research. In this context research problem identified is To conduct the Fundamental Analysis on Equities of Software Sector at India Infoline. Many invest in Equities by their emotional forces and many invest with out analyzing economic conditions, budget decisions, industry growth rates and company factors. How much the economic factors could influence the Equity market? Whether positively or negatively have the relationship with the Equity market movements. Answering these questions enables the investors to have the perspective about the overall economy and Equity markets. If the economy prosperous, the industries with in the economy also may also be prosperous although few may be in the bad shape. Which industry is really having the potentiality for growth? Knowing these factors through comparing performances between the industries enables the investors to compare the industries and finally cam selects the company which is having the opportunity.

A study on Fundamental Analysis on Equities

II.

OBJECTIVES OF THE STUDY


To arriving to the value of the equities through forecasting by considering factor influence the equities. To identify the returns of the equities in considering the risk, growth and other related variables. To analyzing the environmental factors affects the equity prices. To aid to investor in assessing the worth of the equities. To study the performance of different companies.

A study on Fundamental Analysis on Equities

III.

SCOPE OF THE STUDY


The fundamental analysis starts from broad environmental factors to the industry, which influences the share price and finally analyzing the companys potentiality by considering possible risks associated with equities.

Since share price of the company is empirically found to depend up to 50% on the performance of the industry and the economy, studying those related field provide insights for selecting the equities.

Budget plays a significant role while selecting the industry, as it may create a opportunity for one industry and may not for other, the analyzing impact of budget plan and its polices is important.

As research studies shows more than 35% of the share price movements depend on the companys performance. So, analyzing the companies potential growth through ratio analysis provides the valuable insights. Comparability between the companies enables the investors selecting particular equities.

A study on Fundamental Analysis on Equities

IV.

LIMITATION OF THE STUDY

The economy and industry are so wide and comprehensive that is difficult to encompass all the likely factors influencing to be captured in any set of possible indicators. Besides, the study has the limitation of the time and resources. Again the study has limited to four big industries and many other sub industries within the industries and small units have been left out. Hence, the applicability of the study is limited to that extent. Finally the study is not free from inherent limitation of collection and analysis of the sources of the data.

A study on Fundamental Analysis on Equities

V.

RESEARCH METHODOLOGY

PERIOD OF STUDY The period of the study is conducted for the period of 10 weeks.

PERIOD OF ANALYSIS I have taken 4 year Balance Sheet, Profit & Loss A/c and Cash Flow Statement for the analysis starting from April 2006 to March 2010 RESEARCH DESIGN SAMPLING DESIGN Definitions of the Population Since the study is mainly related to selecting the appropriate equity, analyzing industries and comparison between those is necessary. Their potentiality For growth also to be consider for selecting particular industry, where the companies in that industry has to be analyzed through comparing between the companies considering their relative advantages over the others. Sample Size All the four industries under the study are randomly selected reconsidering differential ties in the way they do business and the product they produced has been considered as sample and the four companies in that particular industry has been considered as representative sample. Sample Technique Adopted Techniques for selecting industries is nothing but the way they doing business since the product they produce also different. However, for the companies, the out performing industry over the other out of the sample has been selected and the highest sales in the latest period in the Computer and Software industry has been selected for studying their performance

A study on Fundamental Analysis on Equities

METHOD OF DATA COLLECTION


PRIMARY DATA Since the study is mainly based on the financial results of the industries and the company and the facts of the economic factors, no such primary data has been collected. SECONDARY DATA All the data has been collected through secondary sources only. These data are: Indian Meteorological Organization Various magazines, books and journals and papers. Library of the Bangalore stock exchange Web sites of the companies and indices has been collected from Bombay stock exchange FIELD WORK Fieldwork of the study is related to connecting the data about economic, industry, and companies. The government policies and budgets towards the selected industries and companies also collected. The economic data has been collected through referring various magazines and paper and SOfl1C data have been collected by the web sites of various ministries. The financial data has been collected in the library of the stock exchange. Information regarding the companies has been collected through related websites that is Bombay stock exchange of India and companies websites. The news released by the company in various magazines and papers also the b part of fieldwork. The most of the financial result has been collected in the library of the stock exchange.

A study on Fundamental Analysis on Equities

INFOSYS BALANCE SHEET


(Rs crore) Particulars SOURCES OF FUNDS Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total USES OF FUNDS Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity shares outstanding (Lacs) 1,454.00 2760 1,328.70 289.87 2705.71 1,027.38 197.02 666.41 33.2 101.66 662.43 44.44 67.3 661.86 6,105.00 2,217.00 3,888.00 6,897.00 3,764.65 1,346.04 2,418.61 5,241.73 3,139.27 1,883.52 1,255.75 3,253.43 2,757.96 703.23 2,054.73 2,860.65 1,777.04 459.41 1,317.63 2,080.31 2,837.00 1,275.00 1,562.00 571 876 2,182.72 1,005.82 1,176.90 317.52 1,328.70 1,570.23 803.41 766.82 203.48 1,027.38 1,273.31 577.15 696.16 76.56 33.2 960.6 393.03 567.57 150.67 44.44 6,897.00 5,241.73 3,253.43 2,860.65 2,080.31 138 6,759.00 135.29 5,106.44 33.32 3,220.11 33.12 2,827.53 33.09 2,047.22 Mar '10 Mar '09 Mar '08 Mar '07 Mar '06

A study on Fundamental Analysis on Equities

PROFIT & LOSS ACCOUNT


(Rscrore) Particulars INCOME: Operating income EXPENSES Material consumed Manufacturing expenses Personnel expenses Selling expenses Administrative expenses Expenses capitalized Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnings before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 16 854 4,274.00 55 839 6,038.00 2,990.00 221 3,211.00 1 409 2,801.00 303 2,498.00 -77 2,421.00 3,849.00 1,238.00 174 2,437.00 13.55 603.67 3,183.25 82.34 650.65 4,533.46 2,326.20 118.68 2,444.88 1.09 268.22 2,175.57 325.3 9.13 268.89 2,367.35 62.09 469.03 3,176.49 1,584.40 107.96 1,692.36 0.75 230.9 1,460.71 227.49 6.46 198.27 1,677.12 53.58 414.47 2,349.90 1,272.79 81.94 1,354.73 0.75 188.95 1,165.03 199.5 965.53 -6.1 -1.5 957.93 957.93 178.81 12.3 766.82 3.24 122.63 1,117.87 32.7 288.81 1,565.25 1,038.34 53.15 1,091.49 0.71 160.65 930.13 135.43 794.70 13.26 807.96 807.96 132.36 5.06 670.54 9,028.00 6,859.66 4,760.89 3,622.69 2,603.59 Mar '10 Mar '09 Mar '08 Mar '07 Mar '06

1,850.27 54.11 -4.59 1,899.79 1,970.30 309.8 42.17 1,618.33

1,233.22 9.76 0.49 1,243.47 1,243.47 862.46 110.5 270.51

A study on Fundamental Analysis on Equities

CASH FLOW STATEMENT


(Rs crore) PARTICULARS Profit before tax Net cash flow-operating activity Mar ' 10 2,724.00 Mar ' 09 2,184.49 Mar ' 08 1,470.47 Mar ' 07 1,158.93 Mar ' 06 943.39

2,237.00

1,359.70

1,633.97

915.96

820.96

Net

cash

used

in

investing activity

-392

-939.88

-1,332.01

-153.41

-280.23

Net cash used in fin. Activity

244

-580.1

-94.48

-151.97

-104.77

Net inc/dec in cash and equivlnt

2,096.00

-156.32

200.89

611.55

449.22

Cash and equivalnt begin of year

1,683.00

1,839.40

1,638.51

1,026.96

577.74

Cash and equivalnt end of year

3,779.00

1,683.08

1,839.40

1,638.51

1,026.96

A study on Fundamental Analysis on Equities

WIPRO BALANCE SHEET


(Rs crore) PARTICULARS SOURCES OF FUNDS Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total USES OF FUNDS Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity shares outstanding (Lacs) 514.23 2,956.87 509.18 14257.54 782.71 2,088.71 676.65 7035.71 654.63 1,803.84 387.99 2327.59 670.2 782.18 133.46 2325.64 76.67 412.61 44.09 2324.66 4,076.68 2,788.39 1,288.29 6,478.10 2,672.86 1,734.83 938.03 4,955.74 2,038.41 1,680.89 357.52 3,608.28 1,967.64 667.42 1,300.22 3,400.08 2,053.51 599.76 1,453.75 2,559.63 2,364.53 1,246.27 1,118.25 612.36 3,459.20 1,763.49 855.53 907.96 250.24 2,859.51 1,333.68 678.66 655.02 139.71 2,456.03 1,161.71 597.39 564.32 94.83 1,440.72 961.55 450.39 511.16 116.26 478.46 45.06 5.1 6,478.10 21.59 40.5 4,955.74 94.75 5.94 3,608.28 52.56 17.19 3,400.08 25.49 1.37 2,559.63 285.15 7.49 6,135.30 140.71 1.21 4,751.73 46.55 3,461.04 46.51 0.12 3,283.70 46.49 0.24 2,486.05 Mar ' 10 Mar '09 Mar '08 Mar '07 Mar ' 06

A study on Fundamental Analysis on Equities

PROFIT& LOSS ACCOUNT


(Rs crore) PARTICULARS Income: Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Administrative expenses Expenses capitalized Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnings before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 1,367.67 1,020.70 4,279.03 171.05 904.78 7,743.22 2,483.90 113.59 2,597.49 3.13 292.26 2,302.10 286.1 2,016.00 38.33 -33.85 2,020.48 2,020.48 712.88 99.98 1,207.62 1,185.48 846.28 558.07 414.62 746.21 310.58 642.47 54 812.9 165.71 508.37 101.8 878.05 -7.63 2,459.21 966.17 109.49 1,075.66 2.89 141.89 930.88 73.26 857.62 7.66 0.82 866.11 866.11 23.25 842.86 10,227.12 7,233.16 5,134.89 3,992.02 3,425.39 Mar ' 10 Mar '09 Mar '08 Mar '07 Mar '06

2,878.53 864.44 107.15 685.8 -37.12 77.02

1,804.06 1,263.47 -13.99 -15.6

5,377.92 3,992.43 3,001.13 1,855.25 1,142.45 990.89 75.44 88.05 35.3

1,930.68 1,230.50 1,026.19 5.57 185.97 3.52 151.6 2.93 137.94 -

1,739.15 1,075.39 885.31 255.15 141.27 934.12 3.87 -23.11 89.3 796.01 33.5 -16.27 813.23 813.23 23.26 2.98 787

1,484.00 17.88 -7.06

1,494.82 914.88 1,494.82 914.88 351.79 49.34 675 86.48

1,093.70 153.39

A study on Fundamental Analysis on Equities

CASH FLOW STATEMENT (Rs. Crore)


PARTICULARS Profit before tax Net cash flow-operating activity Net cash used in investing activity Net cash used in fin. Activity Net inc/dec in cash and equivlnt Cash and equivalent begin of year Cash and equivalnt end of year Mar ' 10 2,340.43 1,912.25 Mar ' 09 1,757.02 1,666.42 Mar ' 08 1,082.27 913.91 Mar ' 07 978.76 736.66 Mar ' 06 962.54 857.82

-1,694.42 59.8 277.63

-874.58 -550.61 246.8

-1,062.09 28.57 -119.61

-635.38 14.88 116.16

-988.21 -22.93 -153.33

545.38

290.09

409.7

293.54

446.87

823

536.9

290.09

409.7

293.54

A study on Fundamental Analysis on Equities

HCL BALANCE SHEET


(Rs crore) PARTICULARS SOURCES OF FUNDS Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total USES OF FUNDS Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity shares outstanding (Lacs) 1,323.33 10.11 331.01 3234.42 2,622.08 33.26 511.56 3192.15 2,154.54 173.04 205.15 2960.8 1,740.00 189.44 29.98 2884.37 1,119.72 218.92 8.53 2878.84 1,128.61 1,135.10 -6.49 2,590.58 556.96 685.04 -128.08 2,958.31 395.73 580.56 -184.83 2,389.44 463.02 241.56 221.46 2.5 2,321.70 760.28 148.68 611.61 1.32 2,106.43 1,014.08 488.4 525.68 163.63 1,907.76 632.06 272.11 359.95 71.78 2,654.66 412.32 207.04 205.28 118.63 2,250.36 327.79 150.7 177.09 12.05 1,908.60 259.27 95.11 164.16 9.45 1,319.89 13.17 0.21 2,590.58 96.42 0.27 2,958.31 97.9 0.33 2,389.44 5.42 0.41 2,321.70 3.3 2,106.43 64.69 1.33 2,511.18 63.84 1.64 2,796.14 59.22 0.03 2,231.96 57.69 1.71 2,256.47 57.58 1.33 2,044.23 Mar '10 Mar '09 Mar '08 Mar '07 Mar '06

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PROFIT & LOSS ACCOUNT


(Rs crore) PARTICULARS Income: Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Administrative expenses Expenses capitalized Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnings before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 476.97 1,123.51 11.09 611.59 2,223.16 809.76 6.55 816.31 17.81 138.8 659.7 15.45 644.25 -5.87 638.38 1,838.31 516.1 72.38 1,249.83 304.93 488.54 20.88 276.13 1,090.48 356.53 25.53 382.06 11.58 67.56 302.92 12.15 290.77 36.01 2.49 329.27 1,439.05 501.75 68.17 869.13 249.77 362.39 36.31 194.58 843.05 284.93 61.47 346.4 12.22 56.89 2.5 274.79 13.81 260.98 64.74 325.72 1,476.41 295.85 38.21 1,142.35 154.71 254.82 29.92 148.18 587.63 284.1 30.01 314.11 3.74 49.31 0.22 260.84 13.61 247.23 58.45 6.79 312.47 1,313.75 116.85 14.96 1,181.94 97.3 170.16 0.61 121.93 390 333.42 120.72 454.15 3.57 35.47 415.1 21.34 393.76 2.79 5.4 401.95 1,083.51 43.21 1,040.29 3,032.92 1,447.01 1,127.98 871.73 723.42 Mar ' 10 Mar ' 09 Mar '08 Mar '07 Mar '06

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CASH FLOW STATEMENT


(Rs crore) PARTICULARS Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Profit before tax

653.83

338.93

339.53

322.91

417.89

Net cash flow-operating activity

774.04

265.74

598.16

354.21

402.44

Net cash used in investing activity

-133.33

239.51

-391.35

-294.68

-664.28

Net cash used in fin. Activity

-641.79

-493.71

-171.35

-108.56

3.99

Net inc/dec in cash and equivlnt

2.22

11.75

35.66

-47.63

-257.85

Cash and equivalnt begin of year

104

72.78

37.12

84.75

342.52

( I have take information about the Fundamental Analysis to do the Data Analysis and interpretation in journal of international journal of management research and technology volume 4, Number 1, January-June 2010 in this journal D.S. Selvakumar have written about the Fundamental Analysis on Indian telecom sector service providers.) (I have take information about the Fundamental Analysis to do the Data Analysis and interpretation in journal of The IUP Journal of Applied Finance vol.16, No.1, January 2010 in this journal Jijo Lukose PJ and S Narayan Rao have written about the how to find out the EPS,BOOK VALUE,MARKET VALUE,etc. )

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2. DATA ANALYSIS AND INTERPRETATION COMPARATIVE ANALYSIS OF THREE COMPANIES


TABLE NO:1 SHOWING SALES OF INFOSYS, WIPRO, AND HCL (Rs in Crores) Name of the

Company Infosys

Mar ' 10

Mar ' 09

Mar ' 08

Mar ' 07

Mar ' 06

13,149.00

9,028.00

6,859.66

4,760.89

3,622.69

Wipro HCL

10,247.90 3,032.91

7,235.50 1,447.01

5,168.50 1,127.98

4,032.70 871.73

3,467.70 723.42

GRAPH NO:-1 SHOWING SALES OF INFOSYS, WIPRO, AND HCL

Infosys 15,000.00

Wipro

HCL

SALES

10,000.00 5,000.00 0.00 Infosys Wipro HCL

Mar ' 10 13,149.00 10,247.90 3,032.91

Mar ' 09 9,028.00 7,235.50 1,447.01

Mar ' 08 6,859.66 5,168.50 1,127.98 YEAR

Mar ' 07 4,760.89 4,032.70 871.73

Mar ' 06 3,622.69 3,467.70 723.42

INFERENCE: IT IS INFERRED WITH REGARDING EPS


Above figure shows the sales of four companies in Computer and Software industry respectively. Sales of Infosys and Wipro indicate the positive signal in the last year.

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COMPARATIVE STATEMENT OF RATIOS OF THREE COMPANIES


VALUATION RATIOS:

TABLE NO: 2 SHOWING MARKET VALUE RATIO. NAME OF THE COMPANY Infosys Wipro HCL

PRICE EARNING RATIO 9.4 11.4 2.1

MARKET TO BOOK 28.3 32.97 10.86

GRAPH:-2 SHOWING MARKET VALUE RATIO.

PRICE EARNING RATIO 50

MARKET TO BOOK

MARKET VALUE

40 30 20 10 0 MARKET TO BOOK PRICE EARNING RATIO Infosys 28.3 9.4 Wipro 32.97 11.4 COMPANY 10.86 2.1 HCL

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INFERENCE: IT IS INFERRED WITH REGARDING P/E RATIO AND MARKET TO BOOK RATIO The above table shows the P/E ratio for Wipro is the highest followed by Infosys. The general rule is P/E ratio of well-established companies is very high and low in case of weaker ones. Earning of Wipro and Infosys justifies its high PIE ratio. In the table shows the Market Book Ratio of all the companies are high (market price is triple or quadruple to its book value) which indicates, investors having the tremendous confidence in the growth prospects of the company. Viewed in this scene Wipro and Infosys seem to enjoy investors confidence. Remaining two companies also favorable in this regard.

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TABLE NO:-3 SHOWING EPS OF INFOSYS, WIPRO, AND HCL Name of the

Company Infosys Wipro HCL

Mar ' 10 66.14 14.17 19.74

Mar ' 09 87.72 21.25 10.32

Mar ' 08 70.38 13.09 11

Mar ' 07 186.6 34.98 10.83

Mar ' 06 144.62 37.25 13.96

GRAPH NO:-3 SHOWING EPS OF INFOSYS, WIPRO, AND HCL

Infosys 200 180 160 140 120 100 80 60 40 20 0 Mar ' 10 Mar ' 09

Wipro

HCL

RUPEES

Mar ' 08 YEAR

Mar ' 07

Mar ' 06

INFERENCE: IT IS INFERRED WITH REGARDING EPS In this regard Infosys indicates more favorable than others followed by Wipro.and HCL stand poor in this regard. However to calculate the value of shares on the basis of this one needs the information on the normal rate of return expected by investor in the Computer and Software industry. As this can vary from investor to investor the same is not attempted.

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VALUATION RATIOS:

Dividend Per Share DPS

D - Sum of dividends over a period (usually 1 year) SD - Special, one time dividends S - Shares outstanding for the period TABLE NO:-4 SHOWING DIVIDEND PER SHARE RATIO Name of the Mar ' Mar ' Mar ' Mar ' Mar ' Company Infosys Wipro HCL 10 45 5 16 09 11.5 5 16 08 129.5 29 10 07 27 1 4 06 20 1 1.5

GRAPH NO:-4 SHOWING DIVIDEND PER SHARE RATIO

Infosys 140

Wipro

HCL

DIVIDEND PER SHARE

120 100 80 60 40 20 0 Mar ' 10 Mar ' 09 Mar ' 08 YEAR Mar ' 07 Mar ' 06

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INFERENCE: IT IS INFERRED WITH REGARDING DIVIDEND PER SHARE RATIO: Dividend percentage is high in Infosys throughout the period, Wipro and HCL is found to have consistency in this regard. However to ascertain the correct value of shares the correct value of share it is essential to include capital appreciation also. As it is not available it is concluded that Infosys is consistently increasing from the year 2006-07.

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VALUATION RATIOS: Dividend Payout Ratio:

TABLE NO:- 5 SHOWING DIVIDEND PAY OUT RATIO Name of the Company Infosys Wipro HCL

Mar ' 10 58.32 40.23 92.18

Mar ' 09 18.48 26.83 173.08

Mar ' 08 78.24 83.23 102.56

Mar ' 07 19.95 3.22 42.61

Mar ' 06 17 2.68 10.89

TABLE NO:- 5 SHOWING DIVIDEND PAY OUT RATIO

Infosys 200 180 160 140 120 100 80 60 40 20 0 Mar ' 10 Mar ' 09

Wipro

HCL

Mar ' 08 YEAR

Mar ' 07

Mar ' 06

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INFERENCE: IT IS INFERRED WITH REGARDING DIVIDEND PAYOUT RATIO Infosys has an edge over others in this regard from 2006-07 onwards.

Normally young aggressive growth companies have low dividend payout ratios. So it is inferred that all the companies including Wipro and Satyam is encouraging.

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VALUATION RATIOS: Book Value Per Share:

TABLE NO:-6 SHOWING BOOK VALUE PER SHARE Name of the Company Infosys Wipro HCL

Mar ' 10 250.29 45.03 79.64

Mar ' 09 193.73 69.54 89.59

Mar ' 08 488.2 150.7 77.38

Mar ' 07 431.84 143.2 80.14

Mar ' 06 314.31 108.94 72.96

GRAPH NO:-6 SHOWING BOOK VALUE PER SHARE


Infosys 600 500 Wipro HCL

RUPEES

400 300 200 100 0 Mar ' 10 Mar ' 09 Mar ' 08 YEAR Mar ' 07 Mar ' 06

INFERENCE: IT IS INFERRED WITH REGARDING BOOK VALUE PER SHARE This ratio indicates the share of equity shareholders after the company has paid all its liabilities, creditors, debenture holders and preference shareholders. At the time of liquidations, the shareholder can know what remains after making all the payments. In ordinary time also it helps the shareholder to find out his real position in the company. When the book value of the share is high, companies may issue bonus shares to the existing shareholders out of the reserves.

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PROFITABILITY RATIOS SHOWING PROFITABILITY AND MARGIN RATIOS


TABLE NO.:- 7 OPERATING MARGIN % Operating Profit Margin = ( Gross Profit - Operating expenses) / Net Sales Name of the Company Infosys Wipro HCL Mar ' 10 33.11 24.28 26.69 Mar ' 09 33.91 25.64 24.63 Mar ' 08 33.27 22.24 25.26 Mar ' 07 35.13 24.82 32.59 Mar ' 06 39.88 28.20 46.08

GRAPH NO:-7 OPERATING MARGIN

Operating Margin
50 40 30 20 10 0 Mar ' 10 Mar ' 09 Infosys Mar ' 08 Wipro Mar ' 07 HCL Mar ' 06

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TABLE NO.:- 8 GROSS PROFIT MARGIN % Gross Margin Ratio = Net Sales - Cost of Goods Sold / Net Sales Name of the Company Infosys Wipro HCL Mar ' 10 Mar ' 09 28.58 21.42 22.12 30.00 23.07 19.97 Mar ' 08 28.42 19.29 20.21 Mar ' 07 29.91 21.36 26.93 Mar ' 06 33.71 24.06 41.18

GRAPH NO:-8 GROSS PROFIT MARGIN

Gross Profit Margin


45 40 35 30 25 20 15 10 5 0 Mar ' 10 Mar ' 09 Infosys Mar ' 08 Wipro Mar ' 07 HCL Mar ' 06

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TABLE NO.:- 9 NET PROFIT MARGIN % Net Profit Margin = Net Profit / Net Sales Name of the Company Infosys Wipro HCL Mar ' 10 26.17 19.53 21.00 Mar ' 09 27.28 20.45 22.36 Mar ' 08 25.53 17.51 27.38 Mar ' 07 25.85 20.19 34.30 Mar ' 06 30.41 24.50 46.97

GRAPH NO:-9 NET PROFIT MARGIN

Net Profit Margin


50 40 30 20 10 0 Mar ' 10 Mar ' 09 Infosys Mar ' 08 Wipro Mar ' 07 HCL Mar ' 06

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TABLE NO.:- 10 RETURN ON NET WORTH % Return on share holder's investment = {Net profit (after interest and tax) / Share holder's fund} 100 Name of the Company Infosys Wipro HCL

Mar ' 10 35.10 31.46 24.78

Mar ' 09 36.33 30.55 11.51

Mar ' 08 38.22 26.08 14.21

Mar ' 07 33.48 24.41 13.37

Mar ' 06 38.83 34.19 18.87

GRAPH NO:-10 RETURN ON NET WORTH

Return On Net Worth


45 40 35 30 25 20 15 10 5 0 Mar ' 10 Mar ' 09 Infosys Mar ' 08 Wipro Mar ' 07 HCL Mar ' 06

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TABLE NO.:- 11 RETURN ON LONG TERM FUND % Name of the

Company Infosys Wipro HCL

Mar ' 10 40.62 35.87 26.16

Mar ' 09 41.52 35.61 10.63

Mar ' 08 44.92 30.70 12.01

Mar ' 07 40.75 26.51 11.40

Mar ' 06 44.74 36.77 19.88

GRAPH NO:-11 RETURN ON LONG TERM FUND

Return On Long Term Fund


50 40 30 20 10 0 Mar ' 10 Mar ' 09 Infosys Mar ' 08 Wipro Mar ' 07 HCL Mar ' 06

INFERENCE: IT IS INFERRED WITH REGARDING PROFITABILITY AND MARGIN RATIO: Profitability ratios relate the firms profit with factors that generate the profits. The investment is very particular in knowing net profit to sales, net profit to sales, net profit to assets and net profit to equity. The profitability ratios measure the overall efficiency of the firm. The profitability ratios related to investment are no doubt impressive for all four units over the years. However in the last year 2009-10 the ratios of all the companies are low compare to previous two years. So, all the companies indicating good sign in this regard.

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Margin ratios speak in favor of HCL and of course it is impressive for others also. The ratios of Wipro were low in the initial years compare to others, but gradually improving in the coming years. During the year 2009-10 the ratios of all the companies shows good sign comparing the other industries.

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LIQUIDITY RATIOS SHOWING LIQUIDITY RATIOS


TABLE NO: - 12 CURRENT RATIO
Current Ratios. The Current Ratio is one of the best known measures of financial strength. It is figured as shown below: Total Current Assets Current Ratio = ____________________ Total Current Liabilities

Name of the Company Infosys Wipro HCL

Mar ' 10

Mar ' 09

Mar ' 08

Mar ' 07

Mar ' 06

2.75 1.46 0.99

2.80 1.54 0.81

1.67 1.21 0.68

3.92 2.95 1.92

3.87 3.42 5.11

GRAPH NO:-12 CURRENT RATIO

Current Ratio
6 5 4 3 2 1 0 Mar ' 10 Mar ' 09 Infosys Mar ' 08 Wipro Mar ' 07 HCL Mar ' 06

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TABLE NO: - 13 QUICK RATIO


Quick Ratios. The Quick Ratio is sometimes called the "acid-test" ratio and is one of the best measures of liquidity. It is figured as shown below: Cash + Government Securities + Receivables Quick Ratio = _________________________________________ Total Current Liabilities

Name of the Company Infosys Wipro HCL

Mar ' 10 2.73 1.40 0.97

Mar ' 09 2.77 1.45 0.80

Mar ' 08 1.65 1.13 0.66

Mar ' 07 3.87 2.79 1.89

Mar ' 06 3.82 3.26 5.10

GRAPH NO:-13 QUICK RATIO

Quick Ratio
6 5 4 3 2 1 0 Mar ' 10 Mar ' 09 Infosys Mar ' 08 Wipro Mar ' 07 HCL Mar ' 06

INFERENCE: IT IS INFERRED WITH REGARDING LIQUIDITY RATIO: From the point of view of liquidity all the concern is maintaining high liquidity position than standard norm (2:1) incases of current ratio and (1:1) incase of quick ratio, of course in software companies, lot of money associated with inventory only, which is the main variable in current ratio. The above table indicates, both Infosys and Wipro perform well compare to others.

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TURNOVER RATIOS SHOWING TURNOVER RATIOS


TABLE NO: 14 FIXED ASSETS TURNOVER RATIO

Name

of

the

Company Infosys Wipro HCL

Mar ' 10 3.18 4.35 3.31

Mar ' 09 3.20 4.14 2.53

Mar ' 08 3.12 3.89 3.13

Mar ' 07 2.94 3.46 3.06

Mar ' 06 2.71 3.56 2.80

GRAPH NO:-14 FIXED ASSETS TURNOVER RATIO

Fixed Assets Turnover Ratio


5 4 3 2 1 0 Mar ' 10 Mar ' 09 Infosys Mar ' 08 Wipro Mar ' 07 HCL Mar ' 06

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TABLE NO: 15 DEBTOR TURNOVER RATIO


Debtors Turnover Ratio = Net Credit Sales / Average Trade Debtors Debtors Turnover Ratio = Total Sales / Debtors

Name

of

the

Company Infosys Wipro HCL

Mar ' 10 8.54 5.50 4.20

Mar ' 09 8.15 5.89 4.40

Mar ' 08 8.67 6.19 4.40

Mar ' 07 8.00 6.07 4.50

Mar ' 06 8.18 5.54 3.40

GRAPH NO:-15 DEBTOR TURNOVER RATIO

Debtor Turnover Ratio


10 8 6 4 2 0 Mar ' 10 Mar ' 09 Infosys Mar ' 08 Wipro Mar ' 07 HCL Mar ' 06

INFERENCE: IT IS INFERRED WITH REGARDING TURNOVER RATIO: Turnover ratios in general show a favorable trend. This is comes from financial performance of the companies. However the collection for HCL is very slow. But Infosyss performance is encouraging where they manage the debtors also well.

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COMPARISON BETWEEN COMPANIES THROUGH LEVERAGES


TABLE NO: 16 SHOWING LEVERAGES
Operating Leverage Ratio = percent change in EBIT / percent change in sales Financial Leverage Ratio = total debt / shareholders equity Combined leverage Ratio= OLR*FLR

Name of the company Infosys Wipro HCL GRAPH NO:-17 LEVERAGES

Operating 0.51 0.13 -0.87

Financial 0.90 -3.00 0.53

Combined 0.46 -0.38 -0.46

Leverages
1 0.5 0 Operating -0.5 -1 Infosys Wipro HCL Financial Combined

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INFERENCE: IT IS INFERRED WITH REGARDING LEVERAGES The above table shows Infosyss leverages are positive, it indicates that the changes in sales by 100 percent, the changes in profit by 46 percent. However the leverage less than one indicate the company has to bear fixed cost regardless of sales. As the leverages which is more than one is encouraging, the negative leverage indicated by remaining companies suggest not investing on those expect in the Infosys.

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3. SUMMARY OF FINDINGS, SUGGESTIONS & CONCLUSIONS FINDINGS: Except the computer and software industry, all other industrys short term solvency position is not good. Of course, the remaining ratios also far behind compared Computer and Software industry. Then come to the companies, all the units under study are financially sound and performance indicator reveals the same. Earning maximum profit or dividend is the main motto of every investor irrespective of the awareness level of investment. Knowing the risk level of investment and risk associated with security in stock market or secondary market is the important factor for investment. Computer & software is showing maximum liquidity. Of course, the remaining ratios also far behind compared computer & software. Computer & software industry has recorded high level of interest turnover ratio which results in getting more reliable customers and shows good performance in work and management. There is no inventory in computer & software industry, which results in no tie-up of funds, maximum profits. As the main is the sales in the computer & software industry takes place through expert only. it is sensitive to global economy and had high risk. It is also from the fact that the September 11 attack in 2001. Many software companies have been affected then any other industries. Even though the above factors computer & software industry is selected where it shows better opportunities for growth than other industries. Then come to the companies, all the units under study are financially sound and performance indicators reveals the same.

A study on Fundamental Analysis on Equities Fundamental of those companies is quite strong. None of the fundamental signals for disinvestments for moving out of computer & software industry. When compare to the specific indicators like sales growth and EPS the INFOSYS will in the first place then followed by WIPRO and remaining the HCL could be left out because the sales and EPS and other ratios are encouraging. The market to book ratio of all the companies are high indicators the existing investors have an interest about the overall industry and think that still the opportunity exists for these companies. The leverage of Infosys is positive. But except Infosys, all other units shows negative trend.

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SUGGESSION & CONCLUSIONS After a close scrutiny of economy industries and companies in considering the risk, it may be recommended that international economy might affects the firms export prospects, the price competition it faces from competitors, or the profit it makes from abroad. Certainly, despite the fact that the economies of most countries are linked with the global economy, there is a considerable variation in the economic performance across the different countries at any time; investor should properly analyze both globally and domestically before taking investment decision. The investor also should consider the budget decision and present year forecast of different sectors. Comparison between the different is also necessary because of companies perform well when potential opportunity exists for industry. Even though the industry may perform well, the companies in that particular industry may suffer from lack of ability or any other factor, one should scrutinize the performance of the company in considering important factors. sales growth, leverages, P/E ratio and market to book ratios. It may be pointed out that to make out generalization in this regard is not very easy. This is because of share do not always retaining their luster. There are several instances of quite blue chip of yester years now languishing in a colorless state. It is the personal institution, sensing pattern of behavior, there is always something unknown and disconcerted. So the point to be noted areo No one should purchase to whim o Investment in shares is a serious business

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However, there are such things as a final answer to security values, a dozen experts arrive at twelve different conclusions. Market values are fixed only in part by balance sheet and income statement; much more by hopes and fears of humanity: by greed.. by act of god, where the investor should carefully consider the emotional factors influence the market.

Of all the system, the researcher is of the view that fundamental analysis even today holds good. It requires subjecting companies performance and its financial statement to in-depth scrutiny. It also calls for the company and industry in which the company operators.

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4. ANNEXURE RELATED TO PROJECT


COMPUTER AND SOFTWARE INDUSTRY PROFILE OF THE ORGANIZATIONS INFOSYS TECHNOLOGIES LTD

BSE Code NSE Code Employees :

: :

500209 INFOSYSTCHEQ 44900

TABLE: - INFOSYS TECHNOLOGIES- AT A GLANCE Industry Computer and Software Auditors Bharat S Raut & Co.

Name of the company Infosys Technologies LTD

Incorporation year July 2nd 1981

Chairman Mr. N R Narayana Murthy Registered office 44, Electronics City Hosur Road Bangalore Karnataka 561229

Group Not Applicable

BSE group A

Bankers Bank of America ICICI Bank Ltd.

TABLE:-SHARE HOLDING PATTERN OF INFOSYS AS ON 01/02/2011


Major Holder Promoters Institutional Investors Other Investors General Public TOTAL Number Of share 94483178 224585224 139849050 98885658 355676110 Percentage 16.94% 40.26% 25.07% 17.73% 100%

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BACKGROUND INFORMATION The Group's principal activity is to provide information technology services. The Group's services include consulting, software development, software re-engineering, systems integration, package evaluation and implementation, software maintenance and business process management. The Group provides solutions across software and process life cycles using its Global Delivery Model. The Group also provides proprietary software products for the banking industry. The Group operates in five segments namely Financial Services, Manufacturing, Telecom, Retail and Others. The Group serves customers providing banking, finance, insurance services, manufacturing and telecommunication companies, retail industries, utilities, energy, transport and logistics companies. The Group operates in North America, Europe, India and other countries. 14. On July 2 1981 the company was incorporated as Infosys Consultants Private Limited at Mumbai. The company is engaged in software development in the form of services, turnkey projects and products for the domestic and export market. The software development is targeted towards the distribution, banking telecommunication and manufacturing sectors worldwide.

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WIPRO LTD BSE Code NSE Code Employees Face Value : : : : 507685 WIPROEQ 53700 2

TABLE: - SHOWING WIPRO LTD - AT A GLANCE Industry Computer and Software Auditors N M Raiji & Co

Name of the company Wipro LTD

Incorporation year 29th 1945

Chairman Mr. Azim H Premji Registered office Office Doddakannelli Saijapur Road Bangalore Karnataka 560035

Group Wipro

BSE group A

Bankers Not Reported

TABLE :- SHOWING SHARE HOLDING PATTERN OF WIPRO AS ON 01/02/2011 Major Holder Promoters Institutional Investors Other Investors General Public TOTAL Number Of share 1161136260 102625477 80522335 95518250 1439802322 Percentage 80.65% 7.13% 5.59% 6.63% 100%

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BACKGROUND INFORMATION The Group's principal activity is to offer information technology services. The services include integrated business, technology and process solutions including systems integration, package implementation, software application development and maintenance and transaction processing. These services also comprise of information technology consulting, personal computing and enterprise products, information technology infrastructure management and systems integration services. The Group also offers products related to personal care, baby care and wellness products. The operations of the Group are conducted in India, the United States of America and Other countries. The Company was Incorporated on 29th 1945 December, at Mumbai. The Company Manufacture vegetable ghee, vanaspati, and refined oils including salad oil, soap, waxs and tin containers for packing, crushing and oil milling trading in oils and oilseeds and manufacture of fluid power products. The Products trade names were Kisan, Sunflower and Camel.

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HCL TECHNOLOGIES LTD BSE Code NSE Code Employees Face Value : : : : 532281 HCLTECHEQ 32626 2

TABLE: - SHOWING HCL TECHNOLOGIES AT-A GLANCE

Name of the company HCL Technologies LTD

Incorporation year 12th November 1991

Industry Computer and software Auditors BSR & Co. Bankers

Chairman Mr Shiv Nadar

Group HCL

Registered office 806-808, Siddharth, 96, Nehru Place New Delhi Delhi 110019 BSE group A

Deutsche Bank AG ICICI Bank Ltd. Standard Chartered Grindlays Bank

TABLE :- SHOWING SHARE HOLDING PATTERN OF HCL AS ON 01/02/2011 Major Holder Promoters Institutional Investors Other Investors General Public Number Of share 224143125 77236208 14185715 9122302 Percentage 69.02% 23.78% 4.37% 2.83%

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BACKGROUND INFORMATION The Group's principal activity is to provide software services, delivered to customers located globally. The Group also provides networking services including sale of networking equipment, software and business process outsourcing services. Currently, the Group serves global markets through offices in the United States, Asia Pacific, Europe and Japan. HCL Technologies Limited was originally incorporated on

November 1991, as HCL Overseas Limited, The certificate of commencement of business was received on 1 0th February, 1992. On July 14, 1994, the name of the Company was changed to HCL Consulting Limited. The Company changed its name to HCL Technologies Limited on 6th October 1999 to better reflect the line of activities of the Company. HCL provides new technology development services to its clients.

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5. BIBLIOGRAPHY
A. TEXT BOOKS Book Title Publishing Edition & Year Book Title Security Analysis and Portfolio Management Security Analysis and Portfolio Management Investments Mc Grow Hill 2nd (2000) Jack Clark Francis & Richard W Taylor Security Analysis and Portfolio Management Investment Management S Chand & Co. Ltd 11th (2004) V.K. Bhalla 423-466 PHI 6th (2004) Donald E Fischer & Ronald J Jordon 101-284 116-134 Himalaya 6th (2004) V.A. Avadhani 322-339 Publishing Vikas Edition & Year 6th (2010) Author Punithavarthy pandian Page No 215-253 Author Page No

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B. JOURNALS Journal Name Publishing Edition Written By Project Page No Applied Finance IJAF Jan 2010 Jijo Lukose P J & 51 S Narayan Rao International Journal Serials of Management Research and Technology Publications Jan-Jne 2010 D.S. Selvakumar 51

C. NEWS PAPERS a. Economic Times b. Business Lines D. WEB SITES a. www.bseindia.com b. www.nseindia.com c. www.google.com d. www.rediff.com e. www.moneycontrol.com