A REPORT

ON
EQUITY
RESEARCH

By
G Nanda Kishore Reddy
14BSP1876

LUMINANCE KNOWLEDGE
CENTREA REPORT

ON

EQUITY RESEARCH
By
G Nanda Kishore Reddy
14BSP1876

LUMINANCE KNOWLEDGE CENTRE

A report submitted in partial fulfilment of the requirements

of PGPM Program of

Submitted under the guidance of

Prof. Santhanam Murali
FACULTY GUIDE
Date: 24/05/2015
2 | Page

Mr Shivanand Bhandary
COMPANY GUIDE

3 | Page

AUTHORISATION
I, Mr. G Nanda Kishore Reddy of IBS Business School (Bangalore), bearing Enrolment
Number: 14BSP1876, declare that the project entitled EQUITY RESEARCH conducted at
LUMINANCE KNOWLEDGE CENTRE is a record of independent research work carried
out by me during the academic year 2014 2016 under the true and helpful guidance of my
Faculty Guide Prof. Santhanam Murali of IBS Business School (BANGALORE), and my
Company Guide Mr Shivanand Bhandary (Principal Analyst LUMINANCE
KNOWLEDGE CENTRE).
I also declare that all the details provided in the report hold true to the best of my knowledge.
This study is the result of my efforts and has not been submitted to any other University or
Institution for the award of any degree, or may other similar type.

4 | Page

ACKNOWLEDGMENT
It has all been a great experience being at Luminance Knowledge Centre (Bangalore).
Head of the Organization: I am thankful to Mr. Krishna Prasad the Head of Luminance
Knowledge Centre for giving me an internship in your organisation and a good opportunity to
learn and experience about the equity research analysis.
Company Guide: I would like to thank Mr Shivanand Bhandary (Principal Analyst
LUMINANCE KNOWLEDGE CENTRE) for his understanding and support. He made my
learning and understanding process easier. Without his approval and sincere support my
internship would never have been possible.
Faculty Guide: I would like to thank Prof. Santhanam Murali for his understanding and
support. He made my learning and understanding process easier. He also was a constant
driving force during the period. . His patience and faith in my abilities always boosted my
confidence.
Lastly, I would like to thank all the faculty of IBS Bangalore, my friends and family for their
constant support.

-G Nanda Kishore Reddy.

5 | Page

TABLE OF CONTENTS
ABSTRACT..................................................................................................... 6
LIST OF ILLUSTRATIONS.................................................................................7
INTRODUCTION.............................................................................................. 8
MAIN TEXT..................................................................................................10
RATIO SNAPSHOT:......................................................................................................... 12
INCOME STATEMENT:.................................................................................................... 14
BALANCE SHEET:.......................................................................................................... 17
CASH FLOW STATEMENT:..............................................................................................20
EQUITY RESEARCH REPORT:.........................................................................23
UK ECONOMY AND LONDON STOCK EXCHANGE:.............................................33
YEARS OF IMPORTANCE IN THE EVOLUTION OF UK ECONOMY:....................................................36
FACTORS AFFECTING THE STOCK MARKET:..............................................................................37
FUTURE GROWTH PROJECTIONS:..................................................................................38
EXPECTED REAL GDP GROWTH & INFLATION:........................................................................38
EIC ANALYSIS............................................................................................... 39
INDIAN ECONOMY:............................................................................................................ 44
INDUSTRY OVERVIEW:........................................................................................................ 45
PORTER'S 5 FORCES ANALYSIS............................................................................................ 46
SWOT ANALYSIS:............................................................................................................. 47
FINDINGS.................................................................................................... 48
REFERENCES............................................................................................... 49
EXECUTIVE SUMMARY..................................................................................50

6 | Page

ABSTRACT
The internship is in the field of Finance with equity research being the basic
domain. The main motive was to research global companies, analyse them and write research
reports that will facilitate an investment decision in the company researched. As an
understanding of the economy and the sector would be prerequisites for investment decisions,
my work logically involves studying economies and sectors. The nature of work involve an
extensive application of the various principles studied in my Corporate Finance classes and
integrate the academic learning with an understanding of markets to build a wholesome
perspective on the domain with the requisite maturity. At the end of internship, I develop the
required capability to work as an equity research analyst.
During this period I have worked on several global companies and wrote four
equity research reports also studied about the London Stock Exchange and economy of
United Kingdom. The report consists of a detailed explanation of the work and learnings
during the period.

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LIST OF ILLUSTRATIONS
FIGURE 1 PRICE MOVEMENT OF DISH SINCE JULY 2010.........................................................26
FIGURE 2 INDEX MOVEMENT OF FTSE100 SINCE 1984...........................................................34
FIGURE 3 GDP GROWTH SINCE 1960..................................................................................35
FIGURE 4 GDP CONSTITUENTS-SECTOR WISE..........................................................................36
FIGURE 5 FUTURE GROWTH PROJECTIONS...............................................................................38
FIGURE 6 PRICE MOVEMENT OF RELIANCE INDUSTRIES LTD SINCE 2010...............................41

8 | Page

INTRODUCTION
Luminance Knowledge Centre is a firm that operates for Luminance Capital.
The main activity of Luminance Knowledge Centre is providing equity/Business research
support to its principal Client. P.S. Krishna Prasad is the head of the Luminance Knowledge
Centre. Luminance capital is a firm that outsources investment professionals. Firm was
founded in 2013 by Roshan Francis Padamadan. Roshan is currently the Chairman of
Luminance Capital as well as the Fund Manager of Luminance Global Fund. Swiss-Asia
Financial Services is the Investment Manager for the Luminance Global Fund

EQUITY RESEARCH:
The purpose of an equity researcher is to provide insight and detailed analysis
into a company, entity or sector and this information is then used by investors to decide how
to allocate their funds and by Private Equity firms and investment banks to value companies
for mergers, LBOs, IPOs etc. An equity research report can include varying levels of detail,
and while there is no industry standard when it comes to format, there are common elements
to all thorough and effective equity research reports. Some of the fundamental features and
information that must be considered while writing an equity research report are:

Basic information about the firm, including the companys ticker symbol, the
primary exchange upon which its shares are traded, the primary sector and industry in which
it operates, the investment recommendation, the current stock price, market capitalization, the
target stock price, liquidity and float of the security. Investment summary including a brief
description of the company, recent developments, an earnings forecast, a valuation summary
and a recommended investment action. A brief description of the company, its products and
services, key drivers of the revenue and expenses along with the management and
governance.

A valuation analysis of the company including conventional metrics like

price/sales, price/book, price/earnings or price/cash flow. Financial analysis of the company
9 | Page

with historical performance and a forecast of the future. Potentially negative industry and
company developments that could pose a risk to the investment thesis should be addressed as
Investment risks which could be operational or financial in nature or related to regulatory
issues or legal proceedings. An overview of the industry dynamics including a competitive
analysis of the industry, a group of peer companies should be developed for the competitive
analysis.

Purpose and scope of the report:

The main purpose of this report is to present my views and understanding
from the summer internship program in the field of Equity and business research. It
summarizes the entire process of the work I have done during my internship .This report will
clearly project my views and learning in Equity Research field.
Limitations of the Report:
1. As we are working on the secondary data available on the public domain, the research
work would be limited.
2. As per the requirement of the study continuous updating of information is very much
needed; we can lack some of the information while analysing the companys performance.

Scope of the Study:

The Objective of the internship is to research global companies, analyse them
and write research reports that would facilitate an investment decision in the company
researched. As an understanding of the economy and the sector would be prerequisites for
investment decisions. At the end of internship gaining the capabilities required to work as an
equity research analyst.
Methodology:
Here we are using Research as our methodology, we have to analyse the different
companies annual reports and Performance, we have to collect and research required data
from the different sources.

10 | P a g e

MAIN TEXT
WORKS DONE:
The internship process included analysis of 7 companies and presenting four equity research
reports along with the study of United Kingdom Economy and London Stock Exchange in
detail. Company analysis was done in a sequential order which includes several steps. Finally,
we were able to project the cash flows and the intrinsic value of the share based on the
analysis which would help in understanding whether the stock is overpriced or under-priced
and make an investment decision.

I. Studying the Annual Report.

II. Breaking the financial statements.
III. Interpreting the values in an Excel sheet for further analysis.
IV. Balance sheet, Cash Flow, Income Statement, Ratio Analysis and Peer
Comparison are analysed.
V. Writing an Equity Research Report based on the data obtained and a detailed
study of the industry and Economy.

The companies analysed are

1. CISCO-CSCO
2.
3.
4.
5.
6.
7.

COCACOLA-KO
WALMART-WMT
TRIYARDS HOLDING LTD-SGX:RC5
SUNDANCE ENERGY LTD-SEA:ASX
DISH NETWORK CORPORATION-DISH
AMERICAN TOWER CORPORATION-AMT.
The process for analysing is the same for every company, so Im including the

spread sheets, equity research report and the cash flow projections of one company for better
understanding.

DISH NETWORK CORPORATION

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RATIO SNAPSHOT:

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Growth ratios (%)

Revenue growth
Gross profit growth
EBITDA growth
EBIT growth
Pre-tax growth
Net income growth

FY12
0.01
-0.12
-0.42
-0.57
-0.59
-0.59

FY13
0.05
-0.02
0.08
0.07
0.14
0.27

FY14
0.05
0.03
0.21
0.35
0.06
0.17

Margins (%)
EBITDA margin
EBIT margin
Pre-tax margin
Net margin

0.17
0.10
0.08
0.05

0.17
0.10
0.08
0.06

0.20
0.12
0.08
0.06

Liquidity ratios
Capex/ depreciation (x)
Current ratio (x)
Quick ratio (x)
Working capital/ revenue (%)
Receivable days
Inventory days
Payable days
Cash operating cycle (days)

3.11
2.31
2.06
39%
24
13
14
23

2.88
2.71
2.35
56%
25
13
17
22

0.91
3.06
2.48
58%
24
12
10
26

Returns (%)
Return on assets
Return on capital

3.66%
5.32%

3.97%
5.52%

4.27%
5.72%

Leverage and solvency ratios

Gearing (total debt/ total equity) (x)
Total debt/ tangible net worth (x)
Net debt/ capitalisation (x)
Current maturity/ total debt (%)
Total debt/ EBITDA (x)

165.96
-96.16
0.46
5%
5.35

13.67
16.96
0.37
8%
5.67

7.04
7.04
0.41
5%
4.98

Interest coverage ratios

Interest coverage (EBIT/ interest expense) (x)
Net interest cover (EBIT/ net interest expense)

-2.35
-2.88

-1.81
-2.26

-2.98
-3.32

(x)
EBITDA/ interest expense (x)
EBITDA/ net interest expense (x)
Debt service coverage ratio (x)

-4.15
-5.08
0.09

-3.22
-4.03
0.06

-4.75
-5.28
0.04

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Interest expense to OCF (%)

-0.27

-0.32

-0.25

INCOME STATEMENT:
(in USDm except per share amount)
Income Statement
Revenues
COGS (excluding depreciation & amortization)
Gross profit

FY12

FY13

FY14

13,181
9,506
3,675

13,905
10,288
3,616

14,643
10,925
3,718

Litigation expense
General & administrative expenses
Impairment of long lived assets
Operating expenses
EBITDA
Depreciation & amortization
EBIT
Interest income
Interest expense
Other income (loss), net
Pre-tax profit
Tax
Loss from discontinued operations, net of tax
Minority interest
Net income

730
722
0
1,453
2,223
964
1,258
99
-536
174
995
-332
-37
11
636.69

0
777
438
1,214
2,402
1,054
1,348
149
-745
385
1,137
-300
-47
18
807.49

0
816
0
816
2,902
1,078
1,824
62
-611
-69
1,206
-277
0
16
944.69

Per-share and share data schedule

Net income per common share - basic
Net income per common share - diluted

1.41
1.41

1.77
1.76

2.05
2.04

Dividend per share

Dividend pay-out ratio

1.00
0.71

0.00
0.00

0.00
0.00

Number of diluted shares

Number of basic shares

453
450

459
456

463
460

72.12
5.48
7.32

73.99
5.59
10.73

74.61
5.57
7.36

Growth assumptions (%)

COGS as a % of sales
General & administration expenses as a % of sales
Other operating expenses as a % of sales

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Revenue by geography
All revenue from continuing operations was derived from the United States

Revenue by business segments

DISH
% YoY change
WIRELESS
% YoY change

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13,180
1%
1
232%

13,903
5%
2
24%

14,643
5%
0
-77%

BALANCE SHEET:

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(In USDm except per share amount)

Balance sheet - Company Format
Assets
Current assets
Cash & cash equivalents
Short-term investments
Total cash + short term investments
Accounts receivable, net
Inventories
Prepaid income taxes
Derivative financial instruments
FCC auction deposits
Current assets-Discontinued operations
Deferred tax assets
Other current assets
Total current assets
Net property, plant & equipment
Restricted cash and marketable investment
securities
FCC Authorizations
Marketable and other investment securities
Noncurrent assets-Discontinued operations
Other assets
Total noncurrent assets
Total assets
Liabilities & Shareholders Equity
Current liabilities
Current debt
Trade accounts payable
Accrued programming
Litigation accrual
Accrued interest
Other accrued expenses
Deferred revenue and other
Other current liabilities-discontinued operations
Total current liabilities
Long-term debt obligations
Deferred revenue
Long-term liabilities-Discontinued operations
Deferred income taxes
Total long term liabilities
Total Liabilities
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FY12

FY13

FY14

3,574
3631.637
7,205
861
466
110.608
0
45
238
94
40
9,059
4,367
134

4,700
5,039
9,739
958
512.707
118
293
328
68
130
167
12,313
4,098
95

7,104
2,132
9,236
951
493.754
32
383
1,320
0
26
135
12,578
3,774
87

3,297
119
39
365
8,320
17,380

3,297
151
10
393
8,043
20,356

4,968
327
0
374
9,530
22,107

537
511
1,093
71
224
484
839.888
164
3,924
11,350
347
11
1,675
13,384
17,308

1,035
637
1,242
0
233
512
843
49
4,552
12,597
245
20
1,946
14,808
19,359

681
417
1,376
0
227
519
891
0
4,113
13782.313
276
0
1,883
15,941
20,054

Shareholder's equity
Class A common stock, $.01 par value,

outstanding
Additional paid-in capital
Treasury stock, at cost
Accumulated earnings (deficit)
Accumulated other comprehensive income (loss)
Non-controlling minority
Total capital, shares and earnings
Total Liabilities and shareholders equity

2,441
-1,569
-1,028
189
35
72
17,380

2,588
-1,569
-221
174
20
997
20,356

2,679
-1,569
724
175
41
2,054
22,107

Balance sheet check

Net income
Cash dividends
Cumulative effect of adoption of accounting

637
-453
0

807
0
0

945
0
0

standard
Repurchase of shares
Retained earnings balance at end of the year

0
184

0
807

0
945

1,600,000,000 shares authorized, 279,406,646 and

275,950,537 shares issued, 223,288,386 and
219,832,277 shares outstanding, respectively
Class B common stock, $.01 par value, 800,000,000
shares authorized, 238,435,208 shares issued and

1 - Retained earnings schedule

2 - Share repurchase
There was no share repurchase during the years ended December 31, 2014, 2013 and 2012

CASH FLOW STATEMENT:

(in USDm except per share amounts or otherwise
stated
18 | P a g e

FY12

FY13

FY14

Cash flow statement

Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities

2,004
3,004
4,004

2,309
3,035
1,852

2,408
984
980

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

3,004
570
3,574

1,126
3,574
4,700

2,404
4,700
7,104

Net cash provided (used) in operating activities

Less: Capex
Less: dividends
Free cash flow

2,004
3,004
452.89
-1,453

2,309
3,035
0
-726

2,408
984
0
1,424

PEER COMPARISION:

Ticker code
Peer comparison table

DISH
Dish Network

USDm
Fiscal year ending

Corporation
31st Dec 2014

Revenues
Operating income
Operating profit margin %
Net profit/ loss (+/-)
Net profit margin %
Cash & short term investments
Property & equipment
Goodwill & intangibles
Short term & long term debt
Equity (Net worth)
Tangible Net worth (TNW)
Cash from operations
Capital expenditure
Dividends
Free cash flow
Ratios
Current ratio
Debt/ Equity
Debt/ TNW
Return on equity
Return on assets

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DTY
Direct TV

CMCSA
Comcast

NFLX
Netflix

31st Dec

Corp.
31st Dec

Inc.
31st

2014

2014

Dec

14,643
1,824
12.46
945
6.45
9,236
3,774
158
14,464
2,054
1,895
2,408
984
0
1,424

33,260
5,128
15.42
2,775
8.34
4,635
6,721
4,923
20,812
4,828
4,167
6,369
3,225
0
3,144

68,775
14,904
21.67
8,592.00
12.49
4,512
30,953
44,296
48,234
53,068
8,772
16,945
7,420
2,254
9,525

2014
5,505
349
6.33
212.77
3.87
1,608
150
0
900
1,858
1,858
16
70
0
-53

3.06
7.04
7.04
0.06
0.04

1.27
4.31
4.99
0.57
0.11

0.78
0.91
5.50
0.16
0.05

1.48
0.48
0.48
0.11
0.03

P/E ratio
Book value per share
Earnings per share/ loss
Share price
Market cap (in USDbn)
No. of employees

20 | P a g e

34.20
0.16

16.10
9.5603960

18.40
12.10

145.20
30.92

2.04
69.84
32
19000

4
5.4
87.24
43.9
32150

3.20
58.76
150
1,39,000

4.32
557.68
34
2450

EQUITY RESEARCH REPORT:

Company Name:

Dish Network Corporation

Address & website:

DISH Network L.L.C., 9601 S Meridian Blvd, Englewood, CO

80112
Tel: (888) 656-2461

Sector
Communication

Industry Established
Pay TV

1995

Ticker

CEO

Next update

DISH

Joseph P.

Earnings

Clayton

Announcement(May6

Services

-May 11 2015)

Name of the auditor: KPMG LLP

Type of opinion: Unqualified.
Financial statements are current/ delinquent: Current.
Litigation risk: The Company is involved in a number of legal proceedings concerning
matters arising in connection with the conduct of business activities. Many of these are at
preliminary stages and also seek an indeterminate amount of damages. The companys
litigations are with c$cast.com Inc. , California Institute of Technology, CRFD Research Inc. ,
Custom Media Technologies LLC, Cyberfone Systems LLC, Dragon Intellectual Property
LLC, ESPN, Garnet Digital, The Hopper Litigation, Harbinger Capital Partners LLC,
Norman IP Holdings, Olympic Developments AG, Personalized Media Communications
Inc. , Pragmatus Telecom, Premier International Associates, Preservation Technologies,
Ronald A. Katz Technology Licensing, Technology Development and Licensing, TQP
Development, Tse and Voom HD Holdings. The company regularly evaluates the status of the
legal proceedings to access whether a loss is probable or to determine if accruals are
appropriate
No. of independent directors: 5 in a board of 11.

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Overview of the company- DISH Network Corp. is a holding company which operates
mainly in two business segments DISH and Wireless. The Dish branded pay TV service has
14.057 million subscribers in US as on 31st Dec 2013. They market broadband services under
the dishNET brand. The Dish network corp. 700 MHz wireless spectrum in 2008 for $712
million and with further acquisitions of DSBD North America & Terre Star Network with a
consideration of 2.86 billion made DISH a market leader in this segment. They operate on an
agenda of long-term transformation and change. The market Capitalisation of Dish
Network Corp was 15.47 billion as on 20th April 2015.DISH acquired Blockbuster on 26th
April 2011 and also achieved their best churn rate in 2012. . Their business strategy is to be
the best provider of video services in the United States by providing high-quality products,
outstanding customer service, and great value. They promote DISH branded programming
packages as providing subscribers with a better price-to-value relationship than those
available from other subscription television providers.
Share holdings: The institutional and mutual funds owners hold up to 95% of the shares.

TOP INSTITUTIONAL HOLDERS

HOLDER
SHARES
JP Morgan Chase & Company
17,921,562
Dodge & Cox Inc.
11,501,480
TOP MUTUAL FUND HOLDERS
Putnam Fds Tr-Putnam Equity Spectrum Fd
11,041,852
Dodge & Cox stock fund
6,819,649

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% OUT
8.02
5.15
4.94
3.05

Share price and market cap data in USD

CMP

52 week 52 week Shares O/S

Free float Average

High

low

(mil)

(date)

(date)

69.22

80.75

(mil)

Market Cap

volume 3m (bn)
(mil)

55.45

461.83

215.38

1,472,190

15.47118

Rating Information:
Rating Type

S&P

Moody

Fitch

s
-

SGL-1

Long Term

BB-

Ba3

BB-

Outlook

Negativ

Negativ

Stable

Short term

Moodys: DISH Acquisition Holding Corporation, is withdrew its tender offer to acquire all
of the outstanding shares of Class A Common Stock of Clearwire Corporation (Clearwire -Caa2 CFR) for $4.40 per share. This announcement followed the announcement on June 21,
2013, when DISH decided to abandon its efforts to acquire Sprint Nextel Corporation
("Sprint" - B1 CFR). This concluded the review for downgrade initiated on April 15, 2013,
when DISH announced its bid to buy Sprint for $25.5 billion. DISH DBS's rating outlook is
negative.

S&P: S&P place ratings on DISH Network Corp., including our 'BB-' corporate credit rating,
on CreditWatch with negative implications given uncertainty around the company's funding
plans and their impact on credit metrics. "The CreditWatch placement follows the conclusion
of the AWS-3 auction, in which designated entities of DISH placed winning bids of $13.3
billion.

23 | P a g e

Figure 1 Price movement of DISH since July 2010

Country risk premium (%)

Equity risk premium (%)

Beta

1.11

5.75

Dividends in 2013

52 week change (%)

16.81

Dividend yield (%)

S&P 500 index

11.58

Projected yield (%)

PEG Ratio

4.87

Stock type
Pitroski score
Parameters
Price target
summary

Slow
growth
Score

Net income
Mean

1
81.10

EPS 2014

2.04

Operating cash flow

Median

1
80.00

EPS 2015E

1.64

Return on assets
High

0
109.00

EPS 2016E

1.75

Quality of earnings
Low

1
60.00

P/E 2014

34.2

Long
debt vs.
No.
of term
brokers

21 1

P/E 2015E

39.87

assets
Price / Book
Current ratio

16

SharesSales
outstanding
Price/

2.2 0

Sales (%)

1.39

Grosscash
margin
Price/
flow

13.60

Industry

Asset turnover

3-Yr
1

historical

growth rates

Operating

income

-14.59

ROA TTM

4.5

(%)

ROE TTM

63.2

Net income (%)

-14.58

Debt/ equity

6.8

EPS (%)

-15.57

24 | P a g e

Industry/country The US has the largest and most technologically powerful economy in
the world, with a per capita GDP of $49,800. US business firms enjoy greater flexibility than
their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off
surplus workers, and to develop new products. At the same time, they face higher barriers to
enter their rivals' home markets than foreign firms face entering US markets.US has a GDP of
17.46 trillion in 2014 with investment in fixed capital being 15.9% and household
consumption of 68.7%.The major industries in the economy; being petroleum, steel, motor
vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer
goods, lumber, mining. US economy is highly diversified, world leading, high-technology
innovator and second-largest industrial output in world. The labor force of US is about 156
million. Long-term problems include stagnation of wages for lower-income families,
inadequate investment in deteriorating infrastructure, rapidly rising medical and pension costs
of an aging population, energy shortages, and sizable current account and budget deficits.
Subscription-based or pay television has resulted in a change in what type of
content is broadcast by these networks. This model has led to networks creating much more
specialized types of shows to influence viewers to subscribe. Subscription networks are most
concerned with providing content that will make people want to subscribe as well as renew
subscriptions rather than who is watching and when this viewing is taking place. First-time
ever annual industry-wide losses reflect a combination of a saturated market, an increased
focus from providers on acquiring higher-value subscribers, and some consumers opting for a
lower-cost mixture of over-the-air TV, Netflix and other over-the-top viewing options.

Moat rating: Dish Network Corp. has been working towards developing an economic moat
through providing better price-to-value relationship to the subscribers compared to other
television providers but it is yet to be achieved. Blockbuster@home and DISH anywhere are
the services provided by Dish network Corp. which are major contributors in the
development of DISH.

Negatives:
25 | P a g e

The company has been losing its subscribers because of internet delivered videos
wireless mobile videos.

The company is facing lot of litigations which may affect the companys operational
ability.

Decrease in new subscriber activations and increase in the acquisition and retention
costs.

Dependence on third parties to provide programming services.

With internet taking over, the number of subscribers have been reducing drastically

Positives:

Addition of three AWS-4 satellites to its satellite fleet and the existing leased satellites
widen their opportunity to expand.

With EchoStar being their Sole supplier of new set-up boxes they can adopt to lean
operations technique.

Operating performance

FY12

FY13

FY14

Revenues

13181.334

13904.865

14643.387

EBITDA

2222.84

2402.21

2902.39

Operating profit

1258.36

1348.18

1824.45

Net profit

636.69

807.49

944.69

DISH lost approximately 79,000 pay TV subscribers during the year ended
Dec 31st 2014, a decrease of 2.4% from 2013. The broadband subscription was the main
growth driver during 2014. The subscriber-related revenue increased by $ 730 million from
2013 which was due to the increase in Pay TV-ARPU. Depreciation and amortization

26 | P a g e

increased by 2.4% from 2013. The net income increased by $137 million which was
primarily attributable to the changes in revenue and expenses.

Liquidity: The DISH Network Corp. has a current portion of $1.5 billion aggregate principle
amount to be paid from its long term debt which is due by 2016. This portion of debt can be
paid using about 63 % of its operating cash flow. The company has total debt of $14.46
billion.

Competition

Peer comparison table - latest fiscals

TICKER

DISH

USDm
DTY

CMCSA

NFLX

Comcast

Netflix

Direct TV

Corp.

Inc.

31st Dec

31st Dec

31st Dec

Dish Network
Company

Corporation

Fiscal year ending

31st Dec 2014

2014

2014

2014

Sales

14,643

33,260

68,775

5,505

Operating profit

1,824

5,128

14,904

349

margins %

12.46

15.42

21.67

6.33

Net profit/ (loss)

945

2,775

8,592.00

212.77

Net profit margins %

6.45

8.34

12.49

3.87

9,236

4,635

4,512

1,608

158

4,923

44,296

term debt

14,464

20,812

48,234

900

Net worth

2,054

4,828

53,068

1,858

Tangible net worth

1,895

4,167

8,772

1,858

Operating profit

Cash & cash

equivalents
Goodwill &
Intangibles
Short term & long

27 | P a g e

Dividends paid

2,254

Free Cash Flow

1,424

3,144

9,525

-53

EPS

2.04

5.4

3.20

4.32

Share Price

69.84

87.24

58.76

557.68

Market Cap(Bn)

32.3

43.9

150.4

33.8

Employees

19000

32150

1,39,000

2450

Outlook: They evaluate opportunities for strategic investments or acquisitions that may
complement the current services and products, enhance technical capabilities, improve or
sustain the companys competitive position, or otherwise offer growth opportunities.The
operations at DISH are stronger, leadership is deeper, outlook is as positive as it ever has
been, said Clayton the CEO of DISH. They were able to launch the Hopper, dishNet and
Sling TV, navigate two spectrum auctions and deliver for the customers throughout and are
looking forward for a further growth in the coming years.

Analysts view: As of April 24, 2015, the consensus forecast amongst 7 polled investment
analysts covering DISH Network Corp. advises investors to hold equity in the company.

28 | P a g e

UK ECONOMY AND LONDON STOCK

EXCHANGE:
This included studying the historical performance of FTSE100 (the index of
top 100 companies listed in LSE), downfalls of FTSE100 and its reasons. The fundamental
and Technical factors that affect the market performance.

London Stock Exchange was founded in the 17th century. It operates in the
Main Market, Secondary market and specialised markets. Main market operates in the
Premium, Standard and High Growth Segments. Secondary Market includes Alternative
Investment Market (AIM) whereas the specialised markets are the Professional Securities and
Specialist Fund Markets. The premium market required to meet the UKs super-equivalent
rules which are higher than the EU minimum requirements whereas the standard market
comply with EU minimum requirement, the high growth segment needs to follow the EU
minimum requirement and the HGS rule book issued by the London Stock Exchange. The
securities available for trading in LSE are Bonds, Covered
warrants, Exchange-Traded products, Exchange-Traded funds,
Global Depository Receipts, Common stock and structured
products. LSE also operates on electronic platforms like Stock
Exchange electronic Trading Service (SETS), Stock exchange
electronic Trading Service Quotes and Crosses (SETSQX) and
SEAQ (for non-electronically executable quotation services). London Stock Exchange
provides a service that is designed to give a detailed view of a companys past financial
performance and future prospects. It is the ideal reference point for buying, selling, reviewing
existing holding, conducting research and analysis which is updated once in a day. The
company profile includes Contact information, price data, last ten news headlines, last ten
trades, Historical price chart and Five year volume history.

29 | P a g e

Figure 2 Index movement of FTSE100 since 1984

The Financial Times and London Stock Exchange together formed a joint
venture called FTSE which is considered as a reference index of UK. Several indices in
London includes FTSE100, FTSE250, FTSE350, FTSE All-share, FTSE Techmark etc. The
market capitalisation of the London Stock Exchange on 28th Feb 2014 was US$ 4.74 trillion
with 2424 countries listed in the LSE. The largest IPO on the exchange was in May 2011 by
Glencor International Plc, it raised US$ 10 billion at admission which is also one of the
largest IPOs in the world. The study of LSE was related to the happenings in UK during the
1st world war, 2nd world war, Big bang reforms in 1986, Dotcom Bubble and Telecom Crash.
It also included the reasons for market fall in 2003 and 2008, and the necessary steps taken to
steady the markets.

The UK economy is the 3rd largest in Europe after Germany and France with a
GDP per capita of US$ 37,300 in 2013. Services constitute for about 79% of the GDP. The
UK, a leading trading power and financial centre, is the third largest economy in Europe after
Germany and France. Agriculture is intensive, highly mechanized, and efficient by European
standards, producing about 60% of food needs with less than 2% of the labour force. The UK
has large coal, natural gas, and oil resources, but its oil and natural gas reserves are declining
and the UK became a net importer of energy in 2005. Services, particularly banking,
insurance, and business services, are key drivers of British GDP growth. Manufacturing,
30 | P a g e

meanwhile, has declined in importance but still accounts for about 10% of economic output.
In 2008, the global financial crisis hit the economy particularly hard, due to the importance of
its financial sector. Falling home prices, high consumer debt, and the global economic
slowdown compounded Britain's economic problems, pushing the economy into recession in
the latter half of 2008 and prompting the then BROWN (Labour) government to implement a
number of measures to stimulate the economy and stabilize the financial markets. Facing
burgeoning public deficits and debt levels, in 2010 the CAMERON-led coalition government
(between Conservatives and Liberal Democrats) initiated an austerity program, which aimed
to lower London's budget deficit from about 11% of GDP in 2010 to nearly 1% by 2015. The
CAMERON government raised the value added tax from 17.5% to 20% in 2011. It has
pledged to reduce the corporation tax rate to 20% by 2015. However, the deficit still remains
one of the highest in the G7, standing at 5.8% in 2013. The Bank of England (BoE)
implemented an asset purchase program of approximately $586 billion as of December 2014.
During times of economic crisis, the BoE coordinates interest rate moves with the European
Central Bank, but Britain remains outside the European Economic and Monetary Union. In
2012, weak consumer spending and subdued business investment weighed on the economy,
however, in 2013 GDP grew 1.8%, accelerating unexpectedly because of greater consumer
spending and a recovering housing market.

Figure 3 GDP GROWTH SINCE 1960

31 | P a g e

Figure 4 GDP Constituents-Sector wise

Years of Importance in the evolution of UK Economy:

During the 1st world war in 1914 the market prices surged due to a fear that
borrowed money to be called in and foreign banks demand loans or increase rates of interest.
Exchange was closed from end of July to New Year which reopened on 4th of January. As
many as 1000 members quit the exchange during 1914-18. In 1939 with effect of the 2nd
world war the exchange was closed for six days and trading on floor was drastically low to
avoid injuries. The market recorded an all-time high of 6930 on 31st Dec 1999 as much as
108% rise during March 1995 to March 2000. In April 2000 market falls to 6000 due to amid
fears of war on Iraq, tensions in North Korea, Corporate Scandals and Economic stagnation.
It was known as the Dotcom bubble as the maximum Tech companies were not holding a
strong base were affected even the non-tech companies also faced problems due to investors
pulling out.
The Telecom Crash during the same period was mainly the result of expensive
3G licenses which led the companies to sit on huge debt mountains. The stocks tumbled and
FTSE 100 was down to 5314 by the end of March 2000 almost a 25% fall from its peak in
1999. The terrorist attack on 11th Sep 2001 had the market falling below 4500 points. Market
reaches its lowest point of 3287 in March 2003 which is a 41.7% fall in a period of 3 years.
The market reaches the 5000 barrier in Feb 2005. Again in 2008 FTSE fell by 31% in a span
32 | P a g e

of 1 year which was the sharpest of all in the history, banks have been hit hard. HBOS and
Royal Bank of Scotland loosing 905 while Lloyds TSB and Barclays fell about 70%. Mass
selling on a global scale due to a combination of sheer panic and fear, uncertainty over the
future of world economies.

Factors affecting the stock market:

World events

Economy

Scandals

Company news

Hype

Politics

Supply & Demand

Natural Disasters

Expectations & Speculations

War & Terrorism

Inflation

Economic Strength of market & peers

Incidental Transactions

Demographics

Trends

Liquidity

Interest Rates

FUTURE GROWTH PROJECTIONS:

33 | P a g e

Figure 5 Future Growth Projections

Expected Real GDP Growth & Inflation:

YEAR

2015

2016

REAL GDP GROWTH

2.5%

2.3%

INFLATION

0.3%

1.8%

34 | P a g e

EIC ANALYSIS
Company Name: Reliance Industries Limited
Address & website:

Maker Chambers IV, 3rd Floor, Mumbai, 400021, India.

Phone: 91 22 2278 5000, Fax: 91 22 2278 5111
Website: http://www.ril.com

Sector
Energy

Industry
Oil & Gas Refining

Established
1966

Ticker

CEO

RELIANCE.NS

Mukesh Ambani

& Marketing

Name of the auditor: Deloitte Haskins & Sells LLP

Type of opinion: Unqualified
No. of independent directors: 7 in a board of 13.

Overview of the company- Reliance Industries Limited (RIL) is an Indian conglomerate

holding company headquartered in Mumbai, Maharashtra, India. The group is present in
many business sectors across India including petrochemicals, construction, communications,
energy, health care, science and technology, natural resources, retail, textiles, and logistics.
RIL is the second-largest publicly traded company in India by market capitalisation and is the
second largest company in India by revenue after the state-run Indian Oil Corporation. The
company is ranked No. 99 on the Fortune Global 500 list of the world's biggest corporations,
as of 2013. RIL contributes approximately 20% of India's total exports. The company's
petrochemicals, refining, and oil and gas-related operations form the core of its business;
other divisions of the company include cloth, retail business, telecommunications and special
economic zone (SEZ) development. Reliance enjoys global leadership in its businesses, being
the largest polyester yarn and fibre producer in the world and among the top five to ten
producers in the world in major petrochemical products. Starting as a small textile company,
Reliance has in its journey crossed several milestones to become a Fortune 500 company in
35 | P a g e

less than 3 decades. Reliance Industries Limited operates worldclass manufacturing

facilities across the country at Allahabad, Barabanki, Dahej, Dhenkanal, Hazira, Hoshiarpur,
Jamnagar, Kurkumbh, Nagothane, Nagpur, Naroda, Patalganga, Silvassa and Vadodara.

Reliance Industries Limited holds nearly 136 business/brands under

refining and Marketing, Petrochemicals, Retail, Textiles, Media and Entertainment. Reliance
has always believed in investing in India and in businesses of the future. FY 2014-15 was a
landmark year for the company. RIL has invested over $ 16 billion or over 1, 00,000 crore in
creating growth engines for the future. This is the highest ever in the history of the company
and is a testimony to their project execution capabilities. This is also the highest by any
Indian corporate in a single year and is about 0.8% of Indias GDP. RIL achieved their
highest ever consolidated net profit in 2014-15 of 23,566 crores.

Share price and market cap data in INR

CMP

52 week 52

week Shares O/S

High

low

(30- (mil)

(26-05-

03-2015)

Free float Average

(mil)

Market Cap

volume 3m (bn)
(mil)

2014)
896.9

1140

36 | P a g e

796.75

2940

1620

3.5

2643.85

Figure 6 Price movement of Reliance Industries Ltd since 2010

Country risk premium (%)

Equity risk premium (%)
52 week change (%)
S&P 500 index 52 week change
(%)
Stock type

3.30 Beta

1.00

9.05 Dividends in 2015

10.00

-21.32 Dividend yield (%)

1.11

12.12 Projected yield (%)

N/A

Large
Value

Dividend in 2014

9.50

Price / Book

1.21 3-Yr historical growth rates

Price/ Sales

0.70 Sales (%)

17.79

6.1 Industry

N/A

Price/ cash flow

ROA TTM
ROE TTM

37 | P a g e

3.46% Operating income (%)

11.23% Net income (%)

2.63
5.29

DEBT/ EQUITY

0.433 EPS (%)

5.74

Operating performance

FY13

FY14

FY15

Revenues

3,68,295

3,99,053

3,37,797

EBITDA

35,749

36,607

37,956

Operating profit

26284

27,818

29,468

Net profit

21,003

21,984

22,719

Competition

38 | P a g e

In
crores

Peer comparison table - latest fiscals

Hindusta

Particulars

Indian Oil

Reliance Industries

Corporati

Petroleu

Essar

Limited

on

Limited

31-Mar-

31-Mar-

14

14

31-Mar-14
Sales
Operating profit

31-Mar-14

3,99,043

48,83,449 26,44,066

9,86,019

27,818

65,355

48,070

1,290

6.9%

1.33%

1.81%

0.13%

21,984

70,856

39107

1,270

5.5%

1.45%

1.47%

0.12%

69,994

1,10,335

69,903

41,265

debt

85,481

8,59,715

3,27,985

2,10,043

Goodwill & intangibles

28,982

16,124

7,684

4,517

Net worth

1,97,074

6,79,130

1,94,397

24,683

Tangible net worth

3,17,961

6,63,009

1,86,713

20,166

3,093

18,501

8,317

25,000

33,793

13,214

1,722

EPS

68.05

29.18

54.08

0.88

Share price

896.9

348.85

782.45

104.3

2920.2

847

565.8

151.2

Operating profit margins

%
Net profit/ (loss)
Net profit margins %
Cash & cash equivalents
Short term & long term

Dividends paid
Employees

Market cap (bn)

Indian Economy:
India is set to become the worlds fastest-growing major economy by 2016 ahead of China,
the International Monetary Fund (IMF) said in its recent latest forecast. India is expected to
grow at 6.3 per cent in 2015, and 6.5 per cent in 2016 by when it is likely to cross China's
projected growth rate, the IMF said in the latest update of its World Economic Outlook. The
39 | P a g e

government, engineering an economic rebound with a slew of reforms, has unveiled a new
statistical method to calculate the national income with a broader framework that turned up a
pleasant surprise: GDP in the past year 2013-14 grew 6.9 per cent instead of the earlier 4.7
per cent. India has become a promising investment destination for foreign companies looking
to do business here. Mr Narendra Modi, Prime Minister of India, has launched the 'Make in
India' initiative with the aim to give the Indian economy global recognition. This initiative is
expected to increase the purchasing power of the common man, which would further boost
demand, and hence spur development, in addition to benefiting investors. The steps taken by
the government in recent times have shown positive results as India's gross domestic product
(GDP) at factor cost at constant (2004-05) prices for Q1 of 2014-15 is estimated at Rs. 14.38
trillion (US$ 231.83 billion), as against Rs. 13.61 trillion (US$ 219.42 billion) in Q1 of 201314, registering a growth rate of 5.7 per cent.
Based on the recommendations of the Foreign Investment Promotion Board, the Government
of India has approved 14 proposals of FDI amounting to Rs. 1,528.38 crore approximately.
Out of the 14 approved proposals, six of them belonged to the pharmaceutical sector which
was the highest number of approvals for any sector. Encouraged by the greater macroeconomic stability and the reformist intent and actions of the government, coupled with
improved business sentiments in the country, institutions like the IMF and the World Bank
have presented an optimistic growth outlook for India for the year 2015 and beyond. The
possible headwinds to such promising prospects, however, emanate from factors like
inadequate support from the global economy saddled with subdued demand conditions,
particularly in Europe and Japan, recent slowdown in China, and, on the domestic front, from
possible spill-overs of below normal agricultural growth and challenges relating to the
massive requirements of skill creation and infrastructural up-gradation. The encouraging
results from the Advance Estimates for 2014-15 suggest that though the global sluggishness
has partly fed into the lacklustre growth in foreign trade; yet this downward pressure has been
compensated by strong domestic demand, keeping the growth momentum going. The
International Monetary Fund (IMF) and the World Bank in a joint report have forecasted that
India will register a growth of 6.4 per cent in 2015, due to renewed confidence in the market
brought about by a series of economic reforms pursued by the government. (Source: www.ibef.org)

40 | P a g e

Industry Overview:
The oil and gas sector is one of the six core industries in India. It is of strategic
importance and plays a pivotal role in influencing decisions across other important spheres of
the economy. In 199798, the New Exploration Licensing Policy (NELP) was envisioned to
deal with the ever-growing gap between demand and supply of gas in India. As per a recent
report, the oil and gas industry in India is anticipated to be worth US$ 139,814.7 million by
2015. With Indias economic growth closely linked to energy demand, the need for oil and
gas is projected to grow further, rendering the sector a fertile ground for investment. To cater
to the increasing demand, the Government of India has adopted several policies, including
allowing 100 per cent foreign direct investment (FDI) in many segments of the sector, such as
natural gas, petroleum products, and refineries, among others.
The governments participation has made the oil and gas sector in the country
a better target of investment. Today, it attracts both domestic and foreign investment, as
attested by the presence of Reliance Industries Ltd (RIL) and Cairn India. Domestic
production accounts for more than three-quarters of the countrys total gas consumption.
State-owned ONGC dominates the upstream segment (exploration and production),
accounting for approximately 60 per cent of the countrys total oil output (FY13). IOCL
operates 11,214 km network of crude, gas and product pipelines, with a capacity of 1.6
MBPD of oil and 10 million metric standard cubic metre per day of gas. This is around 30 per
cent of the nations total pipeline network. IOCL is the largest company, operating 10 out of
22 Indian refineries, with a combined capacity of 1.3 MBPD. According to data released by
the Department of Industrial Policy and Promotion (DIPP), the petroleum and natural gas
sector attracted foreign direct investment (FDI) worth US$ 6,519.53 million between April
2000 and January 2015. By 2015-16, Indias demand for gas is set to touch 124 MTPA
against a domestic supply of 33 MTPA and higher imports of 47.2 MTPA, leaving a shortage
of 44 MTPA, as per projections by the Petroleum and Natural Gas Ministry of India.
Moreover, Business Monitor International (BMI) predicts that India will account for 12.4 per
cent of Asia-Pacific regional oil demand by 2015. (Source: www.ibef.org)

Porter's 5 Forces Analysis

1. Threat of New Entrants. There are thousands of oil and oil services companies
throughout the world, but the barriers to enter this industry are enough to scare away
41 | P a g e

all but the serious companies. Barriers can vary depending on the area of the market
in which the company is situated. For example, some types of pumping trucks needed
at well sites cost more than $1 million each. Other areas of the oil business require
highly specialized workers to operate the equipment and to make key drilling
decisions. Companies in industries such as these have higher barriers to entry than
ones that are simply offering drilling services or support services. Having ample cash
is another barrier - a company had better have deep pockets to take on the existing oil
companies.
2. Power of Suppliers. While there are plenty of oil companies in the world, much of
the oil and gas business is dominated by a small handful of powerful companies. The
large amounts of capital investment tend to weed out a lot of the suppliers of rigs,
pipeline, refining, etc. There isn't a lot of cut-throat competition between them, but
they do have significant power over smaller drilling and support companies.
3. Power of Buyers. The balance of power is shifting toward buyers. Oil is a commodity
and one company's oil or oil drilling services are not that much different from
anothers, this leads buyers to seek lower prices and better contract terms.
4. Availability of Substitutes. Substitutes for the oil industry in general include
alternative fuels such as coal, gas, solar power, wind power, hydroelectricity and even
nuclear energy. Remember, oil is used for more than just running our vehicles, it is
also used in plastics and other materials. When analysing an energy company it is
extremely important to take a close look at the specific area in which the company is
operating. Also, companies offering more obscure or specialized services such as
seismic drilling or directional drilling tools are much more likely to withstand the
threat of substitutes.
5. Competitive Rivalry. Slow industry growth rates and high exit barriers are a
particularly troublesome situation for some firms. Until quite recently, oil refineries
were a particularly good example. For a period of almost 20 years, no new refineries
were built in the U.S. Refinery capacity exceeded the product demands as a result of
conservation efforts following the oil shocks of the 1970s. At the same time, exit
barriers in the refinery business are quite high. Besides the scrap value of the
equipment, a refinery that does not operate has no value-adding capability.
42 | P a g e

SWOT Analysis:
SWOT ANALYSIS
1.India's one of the biggest players
2.Strong brand name
Strength

3.Excellent financial position

4.One of the few Indian companies to be featured in Forbes
5.Employs over 25,000 people
1.Long term debt

Weakness

2.Legal issues
3.KG D6 gas controversy
4.Accusations of being favoured by the government

Opportunity

1.Growing demand for petroleum products

2.Buyout of competition
1.Government regulations

Threats

2.High Competition
3.Environmental laws
4.Economic instability

43 | P a g e

FINDINGS

An understanding of the global economy and indices.

Real time exposure to the equity research field.
The ability to comment upon a companys performance.
A good knowledge about Equity Research.

44 | P a g e

REFERENCES

www.morningstar.com

www.yahoofinance.com
www.bloomberg.com
www.cia.gov
www.project-syndicate.org
www.investopedia.com
www.sec.gov
www.moneycontrol.com
www.gurufocus.com

EXECUTIVE SUMMARY
Name: G Nanda Kishore Reddy
IBS Campus: Bangalore
45 | P a g e

Roll No: 14BSP1876

Mobile No: 9035887737

E-mail Id: 14gnanda.kishorereddy@ibsindia.org

Name of the Organization: Luminance Knowledge Centre
Address of the Organization: S3 Office 01, 7th Floor, Embassy Icon, Infantry
Road, Bangalore 560001
Title: EQUITY RESEARCH
Objective: The internship is going to be in the field of Finance with equity research being
the basic domain. I am expected to research global companies, analyze them and write
research reports that would facilitate an investment decision in the company researched. As
an understanding of the economy and the sector would be prerequisites for investment
decisions, my work would logically involve studying economies and sectors. The nature of
work would involve an extensive application of the various principles studied by me in my
Corporate Finance classes and integrate the academic learning with an understanding of
markets to build a wholesome perspective on the domain with the requisite maturity. At the
end of internship, I develop the required capability to work as an equity research analyst

Methodology: Here we are using Research as our methodology, we have to

analyse the different companies annual reports and Performance, we have to collect and
research required data from the different sources.

46 | P a g e