INTRODUCTION

India is a developing country. Nowadays many people are interested to invest in financial markets especially on equities to get high returns, and to save tax in honest way. Equities are playing a major role in contribution of capital to the business from the beginning. Since the introduction of shares concept, large numbers of investors are showing interest to invest in stock market. In an industry plagued with skepticism and a stock market increasingly difficult to predict and contend with, if one looks hard enough there may still be a genuine aid for the Day Trader and Short Term Investor. The price of a security represents a consensus. It is the price at which one person agrees to buy and another agrees to sell. The price at which an investor is willing to buy or sell depends primarily on his expectations. If he expects the security's price to rise, he will buy it; if the investor expects the price to fall, he will sell it. These simple statements are the cause of a major challenge in forecasting security prices, because they refer to human expectations. As we all know firsthand, humans expectations are neither easily quantifiable nor predictable. If prices are based on investor expectations, then knowing what a security should sell for (i.e., fundamental analysis) becomes less important than knowing what other investors expect it to sell for. That's not to say that knowing what a security should sell for isn't important--it is. But there is usually a fairly strong consensus of a stock's future earnings that the average investor cannot disprove Fundamental analysis can co-exist in peace and complement each other. Since all the investors in the stock market want to make the maximum profits possible, they just cannot afford to ignore either fundamental analysis.

NEED OF THE STUDY

To start any business capital plays major role. Capital can be acquired in two ways by issuing shares or by taking debt from financial institutions or borrowing money from financial institutions. The owners of the company have to pay regular interest and principal amount at the end. Stock is ownership in a company, with each share of stock representing a tiny piece of ownership. The more shares you own, the more of the company you own. The more shares you own, the more dividends you earn when the company makes a profit. In the financial world, ownership is called Equity.

Advantages of selling stock: A company can raise more capital than it could borrow. A company does not have to make periodic interest payments to creditors. A company does not have to make principal payments

Stock/shares play a major role in acquiring capital to the business in return investors are paid dividends to the shares they own. The more shares you own the more dividends you receive.

The role of equity analysis is to provide information to the market. An efficient market relies on information: a lack of information creates inefficiencies that result in stocks being misrepresented (over or under valued). This is valuable because it fills information gaps so that each individual investor does not need to analyze every stock thereby making the markets more efficient.

PROFILE OF THE COMPANY

Nirmal Bang is a leading full service securities firm providing the entire gamut of financial services. The firm, founded in 1994 by Mr. Anand Rathi and Mr. Pradeep Gupta, today has a pan India presence as well as an international presence through offices in Dubai and Bangkok and London. NB provides a breadth of financial and advisory services including wealth management, investment banking, corporate advisory, brokerage & distribution of equities, commodities, mutual funds and insurance, structured products - all of which are supported by powerful research teams. The firms philosophy is entirely client centric, with a clear focus on providing long term value addition to clients, while maintaining the highest standards of excellence, ethics and professionalism. The entire firm activities are divided across distinct client groups: Individuals, Private Clients, Corporate and Institutions. AnandRathi has been named The Best Domestic Private Bank in India by Asia money in their Fifth Annual Private Banking Poll 2009. The firm has emerged a winner across all key segments in Asia moneys largest survey of high net worth individuals in India. In year 2007 Citigroup Venture Capital International joined the group as a financial partner. Anand Rathi tries and understands the financial needs; to offer personal advice and expert analysis that one needs for assets to go Xtra mile. The ability to think far ahead and formulate long-term strategy coupled with long hours of practice and research are the key drivers which make wealth work harder for you. The company believes that the key to build wealth lies in allocating assets across various markets, financial instruments and industry sectors. Keeping this in mind it leverages its expertise in scientific asset allocation, to help you maximize returns and minimize risks. Slogan: behind every successful investor Vision: To be a shining example as a LEADER IN INNOVATION, and the first choice for clients and employees

Year of incorporation: 1993 Headquarter: 11th Floor, Times Tower Kamala City, Senapati Bapat Marg, Lower Parel. Mumbai - 400013, India. Nature of business: Service provider

Services: Creation of a customized financial strategy Diversification of assets based on a formal process of asset allocation Active tracking, monitoring and review of portfolios Tax planning Structuring of family wealth Creation of private trusts Estate planning Structuring of family wealth

Products:

Equities & derivative Mutual Funds & bonds currency and Commodities Company deposits On line Trading Life insurance and general Insurance Portfolio management services Commodities FX Trading Alternative Assets Private Equity Funds Structured Products Real Estate Opportunities Fund Special Situation Opportunities Offshore Structures & Global Investments

Number of employees: more than 5000 Websites: www.nirmalbang.com

ORGANIZATION STRUCTURE

OBJECTIVES OF THE STUDY

The objective of this project is to analyze whether TCS and Wipro are better opportunities for investment, by monitoring their growth rate and their performance comparing their financials and other parameters.

The main objectives of the Project study are: Comparative study of two tough competitors TCS and Wipro through fundamental analysis. Suggestion as to which companys shares would be best for an investor to invest.

SCOPE OF THE STUDY

The scope of the study is identified after and during the study is conducted. The project is based on tools like fundamental analysis. Further, the study is based on information of last five years.

The analysis is made by taking into consideration two companies i.e. TCS and Wipro ltd The scope of the study is limited for a period of five years. The scope is limited to the fundamental analysis of the chosen stocks.

RESEARCH METHODOLOGY
Research design or research methodology is the procedure of collecting, analyzing and interpreting the data to diagnose the problem and react to the opportunity in such a way where the desired level of accuracy can be achieved to arrive at a particular conclusion. The information is collected from two sources. a. Primary sources: 1. Discussion with Branch Manager 2. Discussion with Dealer 3. Observation b. Secondary Sources: 1. Annual reports of the companies 2. Web 3. Books

The methodology used in the study for the completion of the project and the fulfillment of the project objectives. The sample of the stocks for the purpose of collecting secondary data has been selected on the basis of Random Sampling. The stocks are chosen in an unbiased manner and each stock is chosen independent of the other stocks chosen. The stocks are chosen from the Indian IT sector. The sample size for the number of stocks is taken as 2 for fundamental analysis of stocks as fundamental analysis is very exhaustive and requires detailed study.

LIMITATIONS

This study has been conducted purely to understand Equity analysis for investors. The study is restricted to two companies based on Fundamental analysis. The study is limited to the companies having equities. Detailed study of the topic was not possible due to limited size of the project. There was a constraint with regard to time allocation for the research study i.e. for a period of 60 days. Suggestions and conclusions are based on the limited data of five years.

EQUITY ANALYSIS

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Investment success is pretty much a matter of careful selection and timing of stock purchases coupled with perfect matching to an individuals risk tolerance. In order to carry out selection, timing and matching actions an investor must conduct deep security analysis. Investors purchase equity shares with two basic objectives; 1. 2. To make capital profits by selling shares at higher prices. To earn dividend income.

These two factors are affected by a host of factors. An investor has to carefully understand and analyze all these factors. There are basically two approaches to study security prices and valuation i.e. fundamental analysis and technical analysis

The value of common stock is determined in large measure by the performance of the firm that issued the stock. If the company is healthy and can demonstrate strength and growth, the value of the stock will increase. When values increase then prices follow and returns on an investment will increase. However, just to keep the savvy investor on their toes, the mix is complicated by the risk factors involved. Fundamental analysis examines all the dimensions of risk exposure and the probabilities of return, and merges them with broader economic analysis and greater industry analysis to formulate the valuation of a stock.

FUNDAMENTAL ANALYSIS

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Fundamental analysis is a method of forecasting the future price movements of a financial instrument based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the financial instrument. It is the study of economic, industry and company conditions in an effort to determine the value of a companys stock. Fundamental analysis typically focuses on key statistics in companys financial statements to determine if the stock price is correctly valued. The term simply refers to the analysis of the economic well-being of a financial entity as opposed to only its price movements. Fundamental analysis is the cornerstone of investing. The basic philosophy underlying the fundamental analysis is that if an investor invests re.1 in buying a share of a company, how much expected returns from this investment he has. The fundamental analysis is to appraise the intrinsic value of a security. It insists that no one should purchase or sell a share on the basis of tips and rumors. The fundamental approach calls upon the investors to make his buy or sell decision on the basis of a detailed analysis of the information about the company, about the industry, and the economy. It is also known as topdown approach. This approach attempts to study the economic scenario, industry position and the company expectations and is also known as economic-industry-company approach (EIC approach). Thus the EIC approach involves three steps: 1. 2. 3. Economic analysis Industry analysis Company analysis

1. ECONOMIC ANALYSIS

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The level of economic activity has an impact on investment in many ways. If the economy grows rapidly, the industry can also be expected to show rapid growth and vice versa. When the level of economic activity is low, stock prices are low, and when the level of economic activity is high, stock prices are high reflecting the prosperous outlook for sales and profits of the firms. The analysis of macro economic environment is essential to understand the behavior of the stock prices. The commonly analyzed macro economic factors are as follows: I. Gross Domestic Product (GDP): GDP indicates the rate of growth of the economy. It represents the aggregate value of the goods and services produced in the economy. It consists of personal consumption expenditure, gross private domestic investment and government expenditure on goods and services and net exports of goods and services. The growth rate of economy points out the prospects for the industrial sector and the return investors can expect from investment in shares. The higher growth rate is more favorable to the stock market. II. Savings and investment: It is obvious that growth requires investment which in turn requires substantial amount of domestic savings. Stock market is a channel through which the savings are made available to the corporate bodies. Savings are distributed over various assets like equity shares, deposits, mutual funds, real estate and bullion. The savings and investment patterns of the public affect the stock to a great extent. III. Inflation: Along with the growth of GDP, if the inflation rate also increases, then the real growth would be very little. The effects of inflation on capital markets are numerous. An increase in the expected rate of inflation is expected to cause a nominal rise in interest rates. Also, it increases uncertainty of future business and investment decisions. As inflation increases, it results in extra costs to businesses, thereby squeezing their profit margins and leading to real declines in profitability.

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IV. Interest rates: The interest rate affects the cost of financing to the firms. A decrease in interest rate implies lower cost of finance for firms and more profitability. More money is available at a lower interest rate for the brokers who are doing business with borrowed money. Availability of cheap funds encourages speculation and rise in the price of shares. V. Tax structure: Every year in March, the business community eagerly awaits the Governments announcement regarding the tax policy. Concessions and incentives given to a certain industry encourage investment in that particular industry. Tax reliefs given to savings encourage savings. The type of tax exemption has impact on the profitability of the industries. VI. Infrastructure facilities: Infrastructure facilities are essential for the growth of industrial and agricultural sector. A wide network of communication system is a must for the growth of the economy. Regular supply of power without any power cut would boost the production. Banking and financial sectors also should be sound enough to provide adequate support to the industry. Good infrastructure facilities affect the stock market favorably.

2. INDUSTRY ANALYSIS

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An industry is a group of firms that have similar technological structure of production and produce similar products and Industry analysis is a type of business research that focuses on the status of an industry or an industrial sector (a broad industry classification, like "manufacturing").
Irrespective of specific economic situations, some industries might be expected to perform better, and share prices in these industries may not decline as much as in other industries. This identification of economic and industry specific factors influencing share prices will help investors to identify the shares that fit individual expectations.

I. Industry Life Cycle: The industry life cycle theory is generally attributed to Julius Grodensky. The life cycle of the industry is separated into four well defined stages. Pioneering stage: The prospective demand for the product is promising in this stage and the technology of the product is low. The demand for the product attracts many producers to produce the particular product. There would be severe competition and only fittest companies survive this stage. The producers try to develop brand name, differentiate the product and create a product image. In this situation, it is difficult to select companies for investment because the survival rate is unknown. Rapid growth stage: This stage starts with the appearance of surviving firms from the pioneering stage. The companies that have withstood the competition grow strongly in market share and financial performance. The technology of the production would have improved resulting in low cost of production and good quality products. The companies have stable growth rate in this stage and they declare dividend to the shareholders. It is advisable to invest in the shares of these companies. Maturity and stabilization stage: the growth rate tends to moderate and the rate of growth would be more or less equal to the industrial growth rate or the gross domestic product growth rate. Symptoms of obsolescence may appear in the technology. To keep going, technological innovations in the production process and products should be introduced. The investors have to closely monitor the events that take place in the maturity stage of the industry. Decline stage: demand for the particular product and the earnings of the companies in the industry decline. It is better to avoid investing in the shares of the low growth industry even in the boom period. Investment in the shares of these types of companies leads to erosion of capital.

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II. Growth of the industry: The historical performance of the industry in terms of growth and profitability should be analyzed. The past variability in return and growth in reaction to macro economic factors provide an insight into the future. III. Nature of competition: Nature of competition is an essential factor that determines the demand for the particular product, its profitability and the price of the concerned company scrip. The companies' ability to withstand the local as well as the multinational competition counts much. If too many firms are present in the organized sector, the competition would be severe. The competition would lead to a decline in the price of the product. The investor before investing in the scrip of a company should analyze the market share of the particular company's product and should compare it with the top five companies. IV. SWOT analysis: SWOT analysis represents the strength, weakness, opportunity and threat for an industry. Every investor should carry out a SWOT analysis for the chosen industry. Take for instance, increase in demand for the industrys product becomes its strength, presence of numerous players in the market, i.e. competition becomes the threat to a particular company. The progress in R & D in that industry is an opportunity and entry of multinationals in the industry is a threat. In this way the factors are to be arranged and analyzed.

3. COMPANY ANALYSIS
In the company analysis the investor assimilates the several bits of information related to the company and evaluates the present and future values of the stock. The risk and return

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associated with the purchase of the stock is analyzed to take better investment decisions. The present and future values are affected by a number of factors. I. Competitive edge of the company: Major industries in India are composed of hundreds of individual companies. Though the number of companies is large, only few companies control the major market share. The competitiveness of the company can be studied with the help of the following; Market share: The market share of the annual sales helps to determine a companys relative competitive position within the industry. If the market share is high, the company would be able to meet the competition successfully. The companies in the market should be compared with like product groups otherwise, the results will be misleading. Growth of sales: The rapid growth in sales would keep the shareholder in a better position than one with stagnant growth rate. Investors generally prefer size and growth in sales because the larger size companies may be able to withstand the business cycle rather than the company of smaller size. II. Earnings of the company: Sales alone do not increase the earnings but the costs and expenses of the company also influence the earnings. Further, earnings do not always increase with increase in sales. The companys sales might have increased but its earnings per share may decline due to rise in costs. Hence, the investor should not only depend on the sales, but should analyze the earnings of the company.

III. Financial analysis: The best source of financial information about a company is its own financial statements. This is a primary source of information for evaluating the investment prospects in the particular companys stock. Financial statement analysis is the study of a companys financial statement

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from various viewpoints. The statement gives the historical and current information about the companys operations. Historical financial statement helps to predict the future and the current information aids to analyze the present status of the company. The two main statements used in the analysis are Balance sheet and Profit and Loss Account. The balance sheet is one of the financial statements that companies prepare every year for their shareholders. It is like a financial snapshot, the company's financial situation at a moment in time. It is prepared at the year end, listing the company's current assets and liabilities. It helps to study the capital structure of the company. It is better for the investor to avoid a company with excessive debt component in its capital structure. From the balance sheet, liquidity position of the company can also be assessed with the information on current assets and current liabilities.

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RATIO ANALYSIS
Ratio is a relationship between two figures expressed mathematically. Financial ratios provide numerical relationship between two relevant financial data. Financial ratios are calculated from the balance sheet and profit and loss account. The relationship can be either expressed as a percent or as a quotient. Ratios summarize the data for easy understanding, comparison and interpretations. Ratios for investment purposes can be classified into profitability ratios, turnover ratios, and leverage ratios. Profitability ratios are the most popular ratios since investors prefer to measure the present profit performance and use this information to forecast the future strength of the company. The most often used profitability ratios are return on assets, price earnings multiplier, price to book value, price to cash flow, and price to sales, dividend yield, return on equity, present value of cash flows, and profit margins. 1. Earnings It is often said that earnings are the "bottom line" when it comes to valuing a company's stock, and indeed fundamental analysis places much emphasis upon a company's earnings. Simply put, earnings are how much profit (or loss) a company has made after subtracting expenses. During a specific period of time, all public companies are required to report their earnings on a quarterly basis through a 10-Q Report. Earnings are important to investors because they give an indication of the company's expected dividends and its potential for growth and capital appreciation. That does not necessarily mean, however, that low or negative earnings always indicate a bad stock; for example, many young companies report negative earnings as they attempt to grow quickly enough to capture a new market, at which point they'll be even more profitable than they otherwise might have been. The key is to look at the data underlying a company's earnings on its financial statements and to use the following profitability ratios to determine whether or not the stock is a sound investment.

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2. Earnings Per Share Comparing total net earnings for various companies is usually not a good idea, since net earnings numbers don't take into account how many shares of stock are outstanding (in other words, they don't take into account how many owners you have to divide the earnings among). In order to make earnings comparisons more useful across companies, fundamental analysts instead look at a company's earnings per share (EPS). EPS is calculated by taking a company's net earnings and dividing by the number of outstanding shares of stock the company has. For example, if a company reports $10 million in net earnings for the previous year and has 5 million shares of stock outstanding, then that company has an EPS of $2 per share. EPS = Net income / total outstanding shares 3. P/E Ratio EPS is a great way to compare earnings across companies, but it doesn't tell you anything about how the market values the stock. That's why fundamental analysts use the price-toearnings ratio, more commonly known as the P/E ratio, to figure out how much the market is willing to pay for a company's earnings. You can calculate a stock's P/E ratio by taking its price per share and dividing by its EPS. For instance, if a stock is priced at $50 per share and it has an EPS of $5 per share, then it has a P/E ratio of 10. Or equivalently, you could calculate the P/E ratio by dividing the company's total market cap by the company's total earnings; this would result in the same number. Price/earnings ratio = Current market price / Earnings per share 4. Dividend Payout Ratio The dividend payout ratio shows what percentage of a company's earnings it is paying out to investors in the form of dividends. It is calculated by taking the company's annual dividends per share and dividing by its annual earnings per share (EPS). So, if a company pays out $1 per share annually in dividends and it has an EPS of $2 for the year, then that company has a dividend payout ratio of 50%; in other words, the company paid out 50% of its earnings in dividends. The higher the payout ratio, the less confidence the company has that it would've been able to find better uses for the money it earned. This is not necessarily either good or bad;

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companies that are still growing will tend to have lower dividend payout ratios than very large companies, because they are more likely to have other productive uses for the earnings. Payout Ratio = (Dividend per share / Earnings per share) * 100 5. Return on Equity (ROE) Return on equity (ROE) shows you how much profit a company generates in comparison to its book value. The ratio is calculated by taking a company's after-tax income and dividing by its book value. It is used as a general indication of the company's efficiency; in other words, how much profit it is able to generate given the resources provided by its stockholders. Investors usually look for companies with ROEs that are high and growing ROE = Profit After Tax/ book value 6. Return on Investment (ROI) Ratio: The ROI is perhaps the most important ratio of all. It is the percentage of return on funds invested in the business by its owners. If the ROI is less than the rate of return on an alternative, risk-free investment such as a bank savings account, the owner may be wiser to sell the company, put the money in such a savings instrument, and avoid the daily struggles of small business management. The ROI is calculated as follows: Return on Investment = Net Profit before Tax / Net Worth 7. Debt equity ratio: This ratio reflects the relative claims of creditors and share holders against the assets of the firm, debt equity ratios establishment relationship between borrowed funds and owner capital to measure the long term financial solvency of the firm. A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. The debt/equity ratio also depends on the industry in which the company operates. For example, capital-intensive industries such as auto manufacturing tend to have a debt/equity ratio above 2, while personal computer companies have a debt/equity of under 0.5. Debt equity ratio = Total debt/ equity share capital

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Data Analysis and Data Interpretation Fundamental Analysis:

1. Economy Analysis: Growing Faster, Improving Stability, Progressing on Structural Challenges. The Indian economy this year has been characterized by robust economic growth and steady fiscal consolidation. Inflation continues to be high even though it has come down markedly from where it was at the start of the fiscal year. There are structural challenges that we face, concerning economic governance, efficiency in delivery of subsidies and building up infrastructure. Policies formulated to take care of these can help moderate inflation, accelerate economic inclusion, boost investment and infrastructure, and enable agriculture, which has revived remarkably well this year, to be on a sustained high growth path. a. GDP The economy has emerged with remarkable rapidity from the slowdown caused by the global crisis, with growth of 8.6 percent in 2011-12 and an expected 9 percent next year. This growth is also broader: agriculture is rebounding, manufacturing continues its momentum, and

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private services is picking up.

Fundamentals are also stronger: savings and investment are up, exports are rising rapidly, and inflation is falling, after a prolonged hiatus. Services have been Indias engine of growth and employment. Policies to promote further opportunities may be essential, especially given vast opportunities in new areas in global demand. Infrastructure services are deepening rapidly, as are service delivery standards, thanks to rising and accelerated investment (with rates roughly doubling over the Eleventh Plan period)---from aviation, roads and telecommunications to ports, railways and power. b. Inflation

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The inflation rate in India was last reported at 8.43 percent in July of 2011. From 1969 until 2010, the average inflation rate in India was 7.99 percent reaching an historical high of 34.68 percent in September of 1974 and a record low of -11.31 percent in May of 1976. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy.

INFLATION RATES FOR THE YEAR 2012

c.

Foreign Direct Investment

The service sector in the Indian industry is one of the high performing sectors of the Indian economy. This has contributed largely in making India a prime destination for many international players in the IT industry who wish to set up their businesses in India. Automatic approval for foreign equity investment up to 100 per cent of rendering service permitted.
d. Exports

Despite recession, the Indian IT market continues to perform better than most of the other industries in the economy in coming future; more and more MNCs coming in India to setup their ventures which clearly shows the scope of expansion. During 2011-2012, overall IT exports registered a growth rate of 18.5 percent. 2. Industry Analysis:

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The IT-ITES industry has four major components: IT services, business process outsourcing (BPO), engineering services and R&D, and software products. The growth in the services sector in India has been led by the IT-ITES sector which has become a growth engine for the economy, contributing substantially to increases in the GDP, employment, and exports. This sector has improved its contribution to Indias GDP from 4.1 per cent in 2004-05 to 6.1 per cent in 2009-10 and an estimated 6.4 per cent in 2011-12. IT-ITES Revenue and Exports (US $ billions) Year 200910 Total IT-BPO 63.7 49.7 14.0 8.9 2.2 2.9 2010-11 (Estimated) 76.1 58.9 17.2 10.9 2.8 3.5 Growth Rate CAGR (2005-06 to2011-12) (%) 22.5 22.2 23.7 20.8 29.3 30.7 in2011-12 (%) 19.5 18.5 22.8 22.5 27.3 20.7

Services Revenue Exports Domestic, of which (i) IT Services (ii) ITES-BPO (iii) Software Products

The Indian IT-ITES industry has registered robust growth since 2004-05. According to NASSCOM, the year 2011-12 is characterized by broad-based growth across mature and emerging verticals. The overall Indian IT-ITES revenue has grown to US $ 63.7 billion in 200910 and an estimated US $ 76.1 billion in 2010-11, translating into a CAGR of 22.5 per cent from 2004-05 to 2011-12. The industry grew by an estimated 19.5 percent in 2010-11 compared to the moderate growth of 6.2 per cent in 2009-10. Exports dominate the IT-ITES industry, and constitute about 77 per cent of total industry revenue. Total IT-ITES exports have grown from US$ 17.7 billion in 2004-05 to US $ 49.7 billion in 2009-10 and an estimated US $ 58.9 billion in 2011-12 registering a CAGR of 22.2 per cent from 2004-05 to 2011-12.Though the IT-ITES sector is export driven, the domestic market is also significant with a revenue growth of US $ 14 billion in 2009-10 and an estimated revenue of US $ 17.2 billion in 2010-11. The IT and BPO industry (excluding hardware) witnessed a

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quick rebound in growth and has been estimated to have grown by 19.5 per cent, aggregating revenues of US$ 76.1 billion in 2010-11 with exports at US$ 58.9 billion accounting for a major portion. This sector has also led to employment generation. Direct employment in the IT services and BPO/ITES segment was 2.3 million in 2009-10 and is estimated to reach nearly 2.5 million by the end of financial year 2011-12. Indirect employment of over 8.3 million job opportunities is also expected to be generated due to the growth of this sector in 2011-12. These jobs have been generated in diverse fields such as commercial and residential real estate, retail, hospitality, transportation, and security. The Government has been supporting the IT and ITES sector in many ways. This was continued in the 2011-12 Budget with policies like Government expenditure for improving IT infrastructure and delivery mechanism, reduction in surcharge from10 per cent to 7.5 per cent for IT companies and Governments E-Governance plan.

3. Company Analysis:
The company analysis shows the long-term strenght of the company that what is the financial position of the company in the market, where it stands among its competitors and who are the key drivers of the company, what are the future plans of the company, what are the policies of government towards the company and how the stake of the company divested among different groups of people.company analysis includes a. Study of Balance sheet b. Study of Profit and Loss account

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3.1 Balance Sheet: TCS ltd.

March ' 12 Liabilities Owner's Fund Equity Share Capital Share Application Money Preference Share Capital Reserves & Surplus Loan Funds Secured Loans Unsecured Loans Total 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 Note : Book Value of Unquoted Investments Market Value of Quoted Investments Contingent liabilities Number of Equity shares outstanding (in Lacs) Wipro ltd March ' 11 March ' 10 March ' 09 March ' 08

195.72 0.00 100.00 19,283.77 35.87 5.25 19,620.61 6,030.16 0.00 2,607.98 3,422.18 1,345.37 5,795.49 15,480.07 6,422.50 9,057.57 0.00 19,620.61 5,411.95 1,615.72 3,938.76 19,572.21

195.72 0.00 100.00 14,820.90 29.25 6.49 15,152.36 4,871.21 0.00 2,110.69 2,760.52 940.72 7,893.39 10,837.08 7,279.35 3,557.73 0.00 15,152.36 7,509.85 1,041.76 3,292.50 19,572.21

97.86 0.00 100.00 13,248.39 32.63 7.74 13,486.62 4,359.24 0.00 1,690.16 2,669.08 685.13 5,936.03 9,250.79 5,054.41 4,196.38 0.00 13,486.62 5,992.44 251.41 2,924.33 9,786.10

97.86 0.00 100.00 10,806.95 9.27 8.98 11,023.06 3,240.64 0.00 1,300.11 1,940.53 889.74 4,509.33 7,396.46 3,713.00 3,683.46 0.00 11,023.06 4,095.69 661.29 2,726.11 9,786.10

97.86 0.00 0.00 7,961.13 41.76 8.98 8,109.73 2,315.36 0.00 854.75 1,460.61 757.85 3,252.04 5,294.74 2,655.51 2,639.23 0.00 8,109.73 2,852.58 957.53 3,003.25 9,786.10

March ' 12 Liabilities Owner's Fund Equity Share Capital Share Application Money Preference Share Capital Reserves & Surplus

March ' 11

March ' 10

March ' 09

March ' 08

490.80 0.70 0.00 20,829.40

293.60 1.80 0.00 17,396.80

293.00 1.50 0.00 12,220.50

292.30 58.00 0.00 11,260.40

291.80 3.50 0.00 9,025.10

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Loan Funds Secured Loans Unsecured Loans Total Assets 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 Book Value of Unquoted Investments Market Value of Quoted Investments Contingent liabilities Number of Equity shares outstanding (in Lacs) 1.2 Profit and Loss Account

0.00 4,744.10 26,065.00

0.00 5,530.20 23,222.40

0.00 5,013.90 17,528.90

4.00 3,818.40 15,433.10

23.20 214.80 9,558.40

7,779.30 0.00 3,542.30 4,237.00 603.10 10,813.40 18,466.30 8,054.80 10,411.50 0.00 26,065.00 8,425.70 2,392.30 707.30 24,544.09

6,761.30 0.00 3,105.00 3,656.30 991.10 8,966.50 16,713.50 7,105.00 9,608.50 0.00 23,222.40 7,111.70 1,855.80 778.00 14,682.11

5,743.30 0.00 2,563.70 3,179.60 1,311.80 6,895.30 13,517.20 7,375.00 6,142.20 0.00 17,528.90 6,884.50 0.00 1,045.40 14,649.81

2,282.20 0.00 0.00 2,282.20 1,335.00 4,500.10 12,058.10 4,742.30 7,315.80 0.00 15,433.10 0.00 0.00 749.90 14,615.00

1,645.90 0.00 0.00 1,645.90 989.50 4,348.70 6,338.40 3,764.10 2,574.30 0.00 9,558.40 1,234.10 0.00 661.60 14,590.00

TCS ltd

March ' 12 Income : Operating Income Expenses Material Consumed Manufacturing Expenses Personnel Expenses Selling Expenses Administrative Expenses Expenses Capitalized Cost Of Sales Operating Profit Other Recurring Income 29,275.41 18.62 8,375.57 10,190.31 15.73 1,903.36 0.00 20,503.59 8,771.82 475.42

March ' 11 23,044.45 25.13 6,630.61 7,882.43 7.27 1,831.84 0.00 16,377.28 6,667.17 236.27

March ' 10 22,401.92 51.94 7,111.94 7,370.09 21.35 1,825.77 0.00 16,381.09 6,020.83 232.62

March ' 09 18,533.72 45.85 5,823.39 6,015.19 27.63 1,596.05 0.00 13,508.11 5,025.61 165.01

March ' 08 14,939.97 24.81 3,189.71 6,186.85 31.05 1,206.07 0.00 10,638.49 4,301.48 86.38

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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

9,247.24 20.01 537.82 0.00 8,689.41 1,130.44 7,558.97 11.02 0.00 7,569.99 18,028.12 2,740.10 11.00 450.82 14,826.20

6,903.44 9.54 469.35 0.00 6,424.55 737.89 5,686.66 -54.17 -13.98 5,618.51 15,608.92 3,914.43 17.00 657.51 11,019.98

6,253.45 7.44 417.46 0.00 5,828.55 340.37 5,488.18 -688.86 -103.11 4,696.21 12,071.10 1,370.05 7.00 234.02 10,460.03

5,190.62 3.42 458.78 0.00 4,728.42 457.58 4,270.84 275.44 -37.52 4,508.76 9,428.75 1,370.05 0.08 232.85 7,825.77

4,387.86 3.43 343.41 0.00 4,041.02 410.80 3,630.22 129.66 -2.59 3,757.29 6,590.59 1,125.39 0.00 169.48 5,295.72

Wipro ltd. March ' 12 March ' 11 22,922.00 3,657.80 2,286.70 9,062.80 378.10 2,035.10 0.00 17,420.50 5,501.50 434.20 5,935.70 99.80 579.60 0.00 5,256.30 790.80 4,465.50 432.50 0.00 March ' 10 21,507.30 3,442.60 1,841.80 9,249.80 308.40 1,906.00 0.00 16,748.60 4,758.70 468.20 5,226.90 196.80 533.60 0.00 4,496.50 574.10 3,922.40 -948.60 0.00 March ' 09 17,492.60 2,952.30 299.80 7,409.10 532.10 2,583.70 0.00 13,777.00 3,715.60 326.90 4,042.50 116.80 456.00 0.00 3,469.70 406.40 3,063.30 0.00 0.00 March ' 08 13,683.90 1,889.00 120.50 5,768.20 0.00 2,651.70 0.00 10,429.40 3,254.50 288.70 3,543.20 7.20 359.80 0.00 3,176.20 334.10 2,842.10 0.00 0.00

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

26,300.50 3,774.00 2,979.90 10,937.40 412.70 2,435.60 0.00 20,539.60 5,760.90 662.30 6,423.20 58.60 600.10 0.00 5,764.50 861.80 4,902.70 -59.00 0.00

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Reported Net Profit Earnings Before Appropriation Equity Dividend Preference Dividend Dividend Tax Retained Earnings

4,843.70 4,843.70 981.80 490.80 220.40 3,150.70

4,898.00 4,898.00 880.90 0.00 128.30 3,888.80

2,973.80 2,973.80 586.00 0.00 99.60 2,288.20

3,063.30 3,063.30 876.50 0.00 148.90 2,037.90

2,842.10 2,842.10 873.70 0.00 126.80 1,841.60

RATIO ANALYSIS
I. EARNINGS AFTER TAX:

March ' 08 TCS ltd. Wipro ltd. 3630 2842

March ' 09 4270 3063

March ' 10 5488 3922

March ' 11 5686 4465

March ' 12 7558 4902

8000 7000 6000 5000 4000 3000 2000 1000 0

T CSltd. Wipro ltd.

March ' 08 March ' 09 March ' 10 March ' 11 March ' 12

Interpretation:

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As the graph suggests that the earnings of TCS are consistently increasing comparatively to that of WIPRO. Thus, as per the parameter that of the Earnings after tax it is clear that TCSs performance shows better growth than that of WIPRO.

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II.

EARNINGS PER SHARE:

March ' 08 TCS ltd. Wipro ltd. 38.39 19.48

March ' 09 46.07 20.96

March ' 10 47.99 20.30

March ' 11 28.71 33.37

March ' 12 36.68 21.73

5 0 4 0 3 0 2 0 1 0 0 March ' 08 March ' 09 March ' 10 March ' 11 March ' 12
T CSltd. Wipro ltd.

Interpretation: As the graph depicts, the EPS of TCS was only low in 2010. Apart from that, TCS again shows a consistent increase in their earning per share that it suspends to its investors.

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III.

PRICE/ EARNINGS RATIO (P/E):

March ' 08 TCS ltd. Wipro ltd. 16.04 16.42

March ' 09 9.55 11.68

March ' 10 6.04 7.88

March ' 11 28.38 12.73

March ' 12 30.58 24.32

35 30 25 20 15 10 5 0 March ' 08 March ' 09 March ' 1 0 March ' 1 1 March ' 12
T CSltd. Wipro ltd.

Interpretation: The highest P/E ratio suggests that investors are expecting higher earnings growth in the future compared to companies with lower P/E ratio. Here as graph suggest TCS has higher P/E ratio comparatively that of Wipro. After recession TCSs growth is accelerated. The TCS has P/E of 30.58 % in 2011 that means its investors are willing to pay Rs.30 for Rs.1 of the companys earnings.

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IV.

DIVIDEND PAYOUT RATIO:

March ' 08 TCS ltd. Wipro ltd. 34.46 35.20

March ' 09 35.55 33.47

March ' 10 34.20 23.05

March ' 11 81.61 20.60

March ' 12 42.21 27.61

90 80 70 60 50 40 30 20 10 0

T CSltd. Wipro ltd.

March ' 08 March ' 09 March ' 1 0 March ' 1 1 March ' 12

Interpretation: From the previous interpretation of Total Earnings after Tax, which is seen to be higher of TCS compared to that of WIPRO, the same has an impact on the Dividend payout rate as well. It is consistently seen that as the earnings of TCS being higher than that of WIPRO, the dividend payout is also better and higher of TCS than that of WIPRO.

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V.

RETURN ON EQUITY:

March ' 08 TCS ltd. Wipro ltd. 50.12 33.31

March ' 09 42.96 23.32

March ' 10 43.27 37.17

March ' 11 42.26 30.12

March ' 12 44.38 27.20

60 50 40 30 20 10 0 March ' 08 March ' 08 March ' 1 0 March ' 1 1 March ' 12
T CSltd. Wipro ltd.

Interpretation: The return on equity of is consistently seen to be high of TCS than that of WIPRO. However, it does depict that the percentage is falling of TCS comparatively to its previous year , better it would any day be considered as a better avenue for investment than WIPRO , as TCSs earning power of equity is stronger than that of WIPRO .

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VI.

RETURN ON INVESTMENT:

March ' 08 TCS ltd. Wipro ltd. 1.4236 0.9641

March ' 09 1.224 0.4187

March ' 10 1.0744 0.4841

March ' 11 1.5792 0.5097

March ' 12 0.8357 0.4652

1 .6 1 .4 1 .2 1 0 .8 0 .6 0 .4 0 .2 0

T CSltd. Wipro ltd.

March ' 08 March ' 09 March ' 10 March ' 11 March ' 1 2

Interpretation: The ROI, an important aspect suggests that TCSs capabilities of tapping better opportunities of investment is providing them in turn with better returns . Thus, it has an impact on the dividend payout as well as the EPS. Thus, the graph depicts that the ROI of TCS is better than that of WIPRO.

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VII.

DEBT EQUITY RATIO:

March ' 08 TCS ltd. Wipro ltd. 0.51 1.36

March ' 09 0.18 0.08

March ' 10 0.41 0.06

March ' 11 0.18 0.05

March ' 12 0.21 0.10

1 .4 1 .2 1 0 .8 0 .6 0 .4 0 .2 0 Ma rc h' 0 8 Ma rch' 0 9 Ma rc h' 1 0 Ma rch' 1 1 Ma rch' 1 2

TC Sltd. Wipro ltd.

Interpretation: The ideal debt equity ratio is considered as 1:1, which mean there has to be an equal share of debt and equity. In this case we see, apart from 2008 both the companies have a lower Debt equity ratio. Lower in the sense, it is close to the ideal ratio which is to be maintained. However, analyzing it minutely the Debt Equity ratio of TCS is even more close to the ideal, than that of WIPRO. This suggests nothing but, the relative claims of creditors and shareholders against the assets of the firm, of that of TCS are inappropriate ration as compared to that of WIPRO.

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FINDINGS
From the data analysis and interpretations of the ratios of two companies viz. TCS and Wipro the following findings have been given: By analyzing the current trend of Indian Economy and IT Industry I have found that being a developing economy there is lot of scope for growth and this industry still has to cross many levels so there are huge opportunities to invest in and this is being proved as more and more foreign companies are setting up there ventures in India. Increase in income level, increase in consumer demand, technology development, globalization, foreign investments are few of the opportunities which the industry has to explore for developing the economy.

The earnings trend has been upward and positive in case of both companies. The sales growth looks positive. However, observing minutely TCSs earnings are higher as compared to that of WIPROs. TCS has thus maintained the same upward positive trend and higher Earning rate.

In case of Earnings per share, there were fluctuations during the period 2009-2011, considered due revamping from the recession cycle. Due to recession, the Earnings per share seem to have declined in 20010 for TCS- but for WIPRO it showed a tremendous increase, however it again fluctuates and falls tremendously for the same. This shows the volatility of WIPROs performance having an impact on its Earnings per Share.

The return on investment has been slightly fluctuating since 2008 in case of both the companies amongst which WIPRO has the least rate of returns consistently. It is observed that TCS even during recession was successful in tapping better avenues for investments and had the best possible returns on its investment.

Both the companies seem to have a stable dividend payout ratio since 2008, but that of TCSs being high as compared to that of WIPRO. In 2012 TCS had the highest payout.

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WIPROs payout has remained low as compared to TCS, except that in 2009. Thus TCS shows a positive increasing trend in its dividend payout.

TCS has higher P/E ratio comparatively that of Wipro. After recession TCSs growth is accelerated. The TCS has P/E of 30.58 % in 2012 that means its investors are willing to pay Rs.30 for Rs.1 of the companys earnings.

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SUGGESTIONS / RECOMMENDATIONS
By analyzing the TCS and Wipro ltd with the help of fundamental analysis, it has been revealed that this TCS shows growth so far and has lot of potential to grow. So recommending investing in TCS with no doubt is going to be a good and smart option as this company is booming and its performance has been consistent. From the company analysis, we can know that TCS would be a better option for an investor compared to Wipro. In view of the slump in the domestic and international market, Wipro has recorded a slowdown in sales and income level. Its Earnings per share has also declined drastically. It has reduced its dividend per share from Rs.6 in the previous year to Rs.4 in 2012 and TCS paying higher dividend of Rs.14 per share and previous year TCS paid Rs.20 dividend per share. The return on investment is also very low. In view of all these, Wipro is not a better option for an investor.

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CONCLUSION
This analysis gives an optimistic view about the industry and its growth which recommends the investors to keep a good watch on the major players to benefit in terms of returns on their investments. The IT sector of INDIA is the one of the largest sector in the world, with better potential for growth and development. However, IT sector was most affected by recession as compared to the other sectors but it has also shown a more than a quick recovery. The collapse in market place witnessed unprecedented turbulence in the wake of global financial meltdown during 2008-09. A runaway inflation touching a high point of 12% early in the year, the tight monetary policies followed by the authorities for most of the year to control inflation with the consequent high interest rates and weak consumer demand, have collectively had a devastating effect on this sector. In spite of it being a tough year for all the companies across the globe and in India, TCS has given a satisfactory performance This project suggests as to how to choose a company for investment and earning better returns as well as making better of the collapsing scenarios as well. There are key indicators which reveal a lot about the company and the various parameters for comparisons which help gauge a companys performance revealing its potentiality for investment opportunities. The above mentioned parameters can be used by the investors for making successful investments and earning better returns.

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Few Suggestions for Right Stock Selection

There are three factors which an investor must consider for selecting the right stocks.

Business: An investor must look into what kind of business the company is doing, visibility of the business, its past track record, capital needs of the company for expansion etc.

Balance Sheet: The investor must focus on its key financial ratios such as earnings per share, price-earnings ratio; debt-equity ratio, dividends per share, ROI etc. and he must also check whether the company is generating cash flows.

Bargaining: This is the most important factor which shows the true worth of the company. An investor needs to choose valuation parameters which suit its business.

Investment rules

Invest for long term in equity markets Align your thought process with the business cycle of the company. Set the purpose for investment. Long term goals should be the objective of equity investment. Disciplined investment during market volatility helps attains profits. Planning, Knowledge and Discipline are very crucial for investment. It is also advisable that Patience is the best policy when it is about tapping the best investment opportunities in the stock market irrespective of any sector or any industry.

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BIBLIOGRAPHY
Text Books V. A. Avadhani Security analysis and portfolio management Dr. S. N. Maheshwari Management Accounting and Financial Control Websites www.nseindia.com www.bseindia.com www.investopedia.com www.moneycontrol.com www.nirmalbang.com www.sebi.gov.in www.indiabulls.com

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