CFA Institute Research Challenge, India 2012-13: Plan of Action

Name of team leader: Avinash Singh Pundhir Roll No.: 11FN-025 Mobile No. : 8826890615 Email ID: meavinash100@gmail.com Name of team member 1: Soumyarup Chatterjee Roll No.: 11FN-106 Mobile No. : 8447805808 Email ID: soumyarupc@gmail.com Name of team member 2: Saurabh Rathi Roll No.: 11FN-091 Mobile No.: 8826890716 Email ID: rathi21489@gmail.com Name of team member 3: Aritra Bhowmik Roll No. : 11FN-023 Mobile No. : 8826890614 Email ID: Aritra.bhowmik@gmail.com Name of team member 4: Sayan Chandra Das Roll No. : 11DM-144 Mobile No. : 8826890503 Email ID: sayanchdas.11@gmail.com

Methodology:
Our research report will cover Fundamental as well Technical analysis. For doing fundamental analysis an E-I-C (Economy-Industry-Company) approach will be followed. Under Economy analysis, different macroeconomic factors like monetary policies, fiscal policies, recession, inflation, FDI, export policies etc. will be taken into account and their respective effects on the given industry. The Industry Analysis will be done with the help of Porters Five Forces model, BCG Matrix, SWOT analysis and PESTEL analysis. Competitive positioning of the given company will be done in comparison to the other companies in the same industry. For Company Analysis, the past (5-6 years) and current financial statements of the given company will be studied and based on companys revenue model, expansion plans, industry trends and averages, expert analysis, management guidance and other factors we will be doing a projection of balance sheet and earning statements for the next 5 years. After 5 years we will assume a stable terminal growth. Based on the above projected figures we will calculate future cash flows, working capital requirement and capex plans for the projected years. The valuation of the given company will be done using the FCFF (Free Cash Flow to Firm) methodology, which will take into account future Net Operating Profit after tax, depreciation, change in working capital and capital expenditure. Final valuation will be done discounting the FCFF with WACC (which will consider risk free rate, country default spread, country risk premium, mature market risk premium, and cost of debt and beta of the company). Also, based on financial statement analysis we will be doing a relative valuation of the firm with the industry and its peer companies using key financial ratios like P/E, P/BV, Price/Sales, RoE, RoCE etc. Based on the share price derived from the above valuation, we will be recommending a BUY, HOLD or SELL strategy for a medium to longer term horizon. Finally we will be looking for future outlook of the industry, and the company in particular, on the backdrop of government actions and worldwide future advancements in the sector. Based on the outlook, certain key action themes will be recommended to ensure profitability and sustainability of the company.

For doing technical analysis we will look at the charts and graphs of the given companys share prices and volumes. For this we will be analyzing the charts to find out the following: Trend type: uptrend, downtrend or horizontal trend use of moving averages to find out the trends smoothing out individual price fluctuations. Trend lengths: Major trends (last more than 1 year), intermediate trends (1 3 months) and near-term trends (lasting less than 1 month). Volume of trading using moving average convergence-divergence (MACD) indicator Patterns: head and shoulders, cup and handles etc. Support and Resistance levels.

We will be using the below charts: Line charts - to plot closing stock prices over a period of time Bar and candlestick charts - to show the high and low prices for the trading period Point and figure charts - to show significant price movements over a period of time