Sequrity Analysis

1.
EXECUTIVE SUMMARY
EQUITY ANALYSIS is the systematic study of the performance of companies in stock

market with help of fundamental analysis and technical analysis. Equity analysis consists
of fundamental analysis & technical analysis. While decision in investment of shares
should be base on actual movement of shares price measured more in money &
percentage term & nothing else.
In equity analysis, calculations are based on FACTS & not on HOPE. The subject of
equity analysis is an attempt to determine future share price movement with the help of
RATIO ANALYSIS, STUDY OF GRAPH. Equity analysis does not discuss how to buy
& sell shares, but does discuss the methods, which enables the investor to arriving at
buying & selling decision.
The Technical Approach to investment is essentially a reflection of the idea that prices
moves in a trend that are determined by the changing attitude of investors toward a
variety of economic, monetary, political and psychological forces. The art of technical
analysis, for it is an art, is to identify a trend reversal at a relatively early stage and ride
on that trend until the weight of the evidence shows or proves the trend has reversed.
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INTRODUCTION TO BSE AND NSE
Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich
heritage. Popularly known as “BSE”, it was established as “ The Native Share & Stock
Brokers Association ” in 1875. It is the first stock exchange in country to obtain
permanent recognition in 1956 from the Government of India under the Securities
Contracts (Regulation) Act, 1956. The Exchange’s pivotal and pre-eminent role in the
development of the Indian capital market is widely recognized and its index, SENSEX, is
tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a
demutualised and corporative entity incorporated under the provisions of the Companies
Act, 1956, pursuant to the BSE (Corporatisation and Demutualization) Scheme, 2005
notified by the Securities and Exchange Board of India (SEBI).
With demutualization, the trading rights and ownership rights have been de linked
effectively addressing concerns regarding perceived and real conflicts of interest. The
Exchange is professionally managed under the overall direction of the Board of
Directors. The Board comprises eminent professionals. Representatives of Trading
Members and the Managing Director of the Exchange. The Board is inclusive and is
designed to benefit from the participation of market intermediaries.
The Exchange has a nation-wide reach with a presence in 417 cities and towns of India.
The systems and processes of the Exchange are designed to safeguard market integrity
and enhance transparency in operations. During the year 2004-2005, the trading volumes
on the Exchange showed robust growth.
The Exchange provides an efficient and transparent market for trading in equity, debt
instruments and derivatives. The BSE On Line Trading System (BOLT) is a proprietary
system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing
and settlement functions of the Exchange are ISO 9001:2000 certified.
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SENSEX – THE BAROMETER OF INDIAN CAPITAL MARKETS
For the premier Stock Exchange that pioneered the stock broking activity in Indian, 128
years of experience seems to be a proud milestone. A lot has changed since 1875 when
318 persons became members of what today is called “The Stock Exchange, Mumbai” by
paying a princely amount of Re1. Till the decade of eighties, there was no scale to
measure the ups and downs in the Indian stock market. The Stock Exchange, Mumbai
(BSE) in 1986 came out with a stock index that subsequently became the barometer of
the Indian stock market.
First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing a
sample of large, liquid and representative companies. The base year of SENSEX is 1978-
79 and the base value is 100. The index is widely reported in both domestic and
international markets through print as well as electronic media. The entry and exit of any
specific stock depends on the market capitalization of the top 30 companies in the market
and are from different sectors.
NATIONAL STOCK EXCHANGE

The National Stock Exchange (NSE) is India’s leading stock exchange covering various
cities and towns across the country. NSE was set up by leading institutions to provide a
modern, fully automated screen-based trading system with national reach. The Exchange
has brought about unparalleled transparency, speed & efficiency, safety and market
integrity. It has set up facilities and procedures.
NSE has played a catalytic role in reforming the Indian securities market in terms of
microstructure, market practices and trading volumes. The market today uses state-of-art
information technology to provide an efficient and transparent trading, clearing and
settlement mechanism, and has witnessed several innovations in products & services viz.
demutualization of stock exchange governance, screen based trading, Professionalisation
of trading members, fine-tuned risk management systems, emergence of clearing
corporations to assume counter party risks, market of debt and derivative instruments and
intensive use of information technology. IDBI & other financial institution with paid
equity capital of Rs 25 cores set up NSE. It started operation in Wholesale debt market in
June 1994 & in equity, in Nov 1994.
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2. COMPANY PROFILE
KBB INVESTMENTS
KBB INVESTMENTS is a financial services enterprise that brings investors an array

of financial products, all under one roof. This is investor’s one stop financial shop.
ANGEL BROKING LTD
KBB
INVESTMENTS
Stock Broking Distribution Portfolio

Services Management.
Equities, Distribution house Managing portfolios

commodities, forex for financial of medium and big
trading services. products. investors.
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KBB INVESTMENTS are channel partners of Angel Broking Ltd., one of the major
broking houses and lead sponsors of CNBC TV 18 investor camp, to offer investors
Equity, Futures & Commodities trading platform. KBB INVESTMENTS are associates
of all Mutual Fund Houses. KBB INVESTMENTS help investors choose a Mutual fund
based on study of the Fund performance. KBB INVESTMENTS are agency to major
Insurance companies to bring to investors Life Insurance, General Insurance, ULIP and
other insurance products.
However KBB INVESTMENTS are not here just to sell investment products. It is
foremost effort to educate investors of the concept and functionality of every financial
product. KBB INVESTMENTS bring to light the associated risk & returns, benefits &
drawbacks. KBB INVESTMENTS remain transparent of hidden costs and also related
Income Tax implications.
As the relationship with investors matures, KBB INVESTMENTS endeavor to know

investors more, their financial obligations, current cash flow and understand their future
expected financial needs. Upon this, using Fund Flow Calculator KBB INVESTMENTS
craft investor’s financials and suggest them investment avenues best suited to their needs.
EFPM is a unique service KBB INVESTMENTS offer. KBB INVESTMENTS take pride
to manage investors Equity and Futures portfolio with investors having no worries of the
bulls and bears of the stock markets. Based on KBB INVESTMENT’S tireless research
and advice of experts KBB INVESTMENTS pool investor’s money in potential stocks to
exploit the higher returns of the stock Market.
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WHY KBB INVESTMENTS:-
 Strong industry focus leading to innovative and informed

Experienced
management strategic services.
 Long term relationships with both strategic and financial
buyer community.
 Deep understanding of Indian market and clients.
 Strong momentum-significant increase in market share in

Fast growing
Franchise last 2 years.
 Increase in number of franchise and clients.
 Transparent and speedy transaction.
 Dedicated focus on medium clients.

Comprehensive
fin. services.  Comprehensive range of financial products and services.
sseservices
 Working with leading broking firms(Angel Broking Ltd).

Strategic partners
 Tie up with many mutual fund and financial services
provider.
KBB INVESTMENT is committed to be investor’s friend in their financial growth &

prosperity. KBB INVESTMENTS look forward to have a long-term business association
offering investors a complete transparency in their conduct.
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3. OBJECTIVES
It was good opportunity to familiarize myself with the stock market i.e. the capital market
& its co-relation with economical environment through “EQUITY RESEARCH”. The
analysis of equity gives me the opportunity to understand thoroughly this behavioral
patterns of different equity & overall capital market.
The main objectives of the project research is as follows.
1. To study the equity analysis and obtain the knowledge of equity market
2. To study the present behaviors & predicting the future behavior of equity in stock
market.
3. Obtain the knowledge about how to select the companies for investment.
4. To analyze the performance of a company through Balance Sheet & Technical
graph of their shares.
RATIONALE
The present market scenario is not good as compare to situation prior to six months. Now
it is showing some resistance from investors as well as financial institutions. But some
of the research firms showed that Share Market will be the fastest growing in India as
compare to global markets.
From last two years share market was in boom. Now it is possible for the investors to
trade from their own place. As compare to last two years where there was a growth in the
number of share brokers and market analysts, which is stabilizing now. Media is playing
an important role in these regards. As inflation is on rise, rate of return of different
government securities and bank fixed deposits are not varying accordingly giving
negative rate of return. Now the common man is also thinking of some investment in
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share market. Too many investors invest their money for the short span, the intention is
speculative
4. RESEARCH METHODLOGY
Formation of need for project work
When I got introduced to the primary information on stock market I was attracted by
make easy money nature of the market. But after acknowledging the risk involved and
the volatility of the market I stepped do ground. The only way out for this was the
thorough study of the stock market and analysis of various investment options.
Literature survey
The first step forward was the Literature survey as much as possible. I went through
various books and magazines related to investment analysis. I could collect a lot of data
and theory from academic books, government reports, magazines, newspaper, etc.
Developing working hypothesis
Working hypothesis is a tentative assumption made in order to draw out and test it’s
logical and empirical consequences. They provide focal point for research. They also
affect the manner in which test must be conducted in analysis of data and directly the
quality of data which is required to be analyzed.
I developed working hypothesis in following ways:
 Discussion with colleagues and experts on stock market and it’s functioning.
 Examination of data and records
 Review of similar studies and their results
 Through personal observations and investigation
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Collection of data
Primary source includes:-

1) Discussion with branch manager
2) Discussion with experts
3) Questionnaires for investors
4) Live trading in the market
Secondary source includes:-

1) Various books related to stock market
2) Books related to Financial Management
3) Web sites were used as the vital information source
Analysis of data
The data collected from primary and secondary resources was well organized and made
ready for analysis. Analysis of the data was made through the application of various
statistical and analytical methods. The interrelationship between various parts of the data
was found out. The necessary interpretation was drawn out of it. In this way using
different statistical methods, the data collected was being analyzed and important and
relevant information was being extracted from it.
After analysis and thereof interpretation triggered off new questions which in turn gave
new horizons to the project work.
KBB INVESTMENTS felt need of evaluating the price patterns of leading scripts mainly
from the different sector companies and also interested in determining the trends along
with price performance in near future. This equity analysis will facilitate to investor for
profitable investment.
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5. EQUITY ANALYSIS
5. a. FUNDAMENTAL ANALYSIS
A investor, while buying stock, has the primary purpose of gain. If he invests for a short
period of time, it is speculative but when he holds it for a fairly long period of time,
the anticipation is that he would receive some return on his investment. The
fundamental analysis is a method of finding out the future price of a stock, which
an investor wishes to buy. The method for forecasting the future behaviors of
investment and the rate of return on them is clear through an analysis of the broad
economic forces, industry analysis, the company analysis and ratio analysis.
A. Influence of the economy on the company.
These are the following factor: -
1. Economic Growth
2. Populations
3. Monsoons and Agriculture Production
4. Natural resources and availability of raw material
5. Industrial Productions
6. Inflation
7. Interest rate
8. Foreign exchange reserve
9. Balance of payment position
10. Budget deficits
11. Public debt and foreign debt
12. Domestic saving and capital output rate
13. Employments
14. Taxation policies
15. Infrastructure facilities
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16. Government policies
17. Political Stability
18. International developments
19. Capital formations
20. Saving pattern
21. Economic indicators
22. Foreign direct investments
23. Rupee-Dollar Fluctuation
24. Stock News
B. Industrial Analysis.
The industry analysis should take into account the following factors that influence
the performance of the company, whose share prices are to be analyzed.
Product Line.
It is also necessary to know the industries with a high growth potential like
computers, electronics, chemicals, diamonds, textiles etc. and whether the
industry is in the priority sector of the key industry group of capital goods or
consumers goods group.
Raw Material and Inputs.

Under these head, we have to look in to industries depending on imports of scare
raw materials, competition from other companies and industries and the barriers
to entry of new company, protection from foreign competition, import and export
restriction etc.
Capacity Installed and Utilized.
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The demand for industrial product in the economy is estimated by the planning
commission and the Government, and the units are given licensed capacity on the
basis of these estimates.
Industry Characteristics.
It included whether the industry is cyclical, fluctuating of stable. It is also
important whether industry produce seasonal product or FMCG. It also includes
demand of product, freight charges, cost of production, advertisement cost, skill
of operation, profitability.
Demand and Market.

It includes demand of the product in the market and price of raw material and
other input cost like freight, electricity, season, monsoon, etc. if the nature of
product is such as drugs, fertilizer or other consumer goods, whose price and
distribution control by Government.
Government Policy with regard to Industry

Government Policy is announced in the industrial policy resolution and
subsequent announcement from time to time by the Government. The Policy
strategy as laid down in the five years plans according to planning commission
and expected demand in the economy.
Management.
If the promoters and the management are efficient and capable of steering the
company through the difficult days such management likes TATA & BIRLA, who
have reputation, buildup their companies on the strong foundation. The
management has to be assessed in the terms of their capabilities, popularity,
honesty and integrity.
5. b. TECHNICAL ANALYSIS
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The methods used to analyze securities and make investment decisions fall into two very
broad categories: Fundamental Analysis and Technical Analysis. Fundamental analysis
involves analyzing the characteristics of a company in order to estimate its value.
Technical analysis takes a completely different approach; it doesn’t care one bit about the
“value” of a company or a commodity. Technicians (some time called chartists) are only
interested in the price movement in the market.
Despite all the fancy and exotic tools it employs, technical analysis relies on just studies
of supply and demand in a market in an attempt to determine what direction, or trend,
will continue in the future. In other words, technical analysis attempts to understand the
emotions in the market by studying the market it self, as opposed to its components. If
you understand the benefits and limitation of technical analysis it can give you a new set
of tools or skills than will enable you to be a better trader or investor.
DEFINITION
Technical analysis is a method of evaluating the securities by analyzing the statistics

generated by the market activity, such as past price and volume. In technical analysis,
analysts use charts and other tools to identify patterns that can suggest future activity.
Just as there are many investment styles on fundamental side, there is also much different
type of technical traders. Some rely on chart patterns. In any case, technical analysts
exclusive use of historical price and volume data, is what separates them from their
fundamental counterparts. Unlike fundamental analysts, technical analysts don’t care
whether a stock is undervalued or overvalued the only thing that matter is a security’s
past trading data and what information this data can provide about where the security
might move in the future
Assumptions:
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1. The Market Discounts Everything
A major criticism of technical analysis is that it only considers price movement, ignoring
the fundamental factors of the company. However, technical analysis assumes that, at any
given time, a stocks price reflects everything that has or could affect the company-
including fundamental factors. Technical analysts believe that the company’s
fundamentals, along with broader economic factors and market psychology, are all priced
into the stock, removing the need to actually consider these factors separately.
This only leaves the analysis of price movement, which technical theory views as a
product of supply and demand for a particular stock in the market.
2. Price Moves In Trends
In technical analysis, price movements are believed to follow trends. This means that
after a trend has been established, the future price movement is more likely to be in the
same direction as the trend that to be against it. Most technical trading strategies are
based on this assumption.
3. History Tends To Repeat Itself
Another important idea in technical analysis is that history tends to repeat itself, mainly
in terms of price movement. The repetitive nature of price movement is attributed to
market psychology; in other words, market participants tend to provide a consistent
reaction to similar market stimuli over time. Technical analysis uses chats patterns to
analyze market movements and understand trends. Although many of these charts have
been use for more than 100 years they are still believed to be relevant because they
illustrate patterns in price movements that often repeat themselves.
Line charts
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A style of charts that is created by connecting a series of data points together with a line.
This is the most basic type of charts used in finance and connecting a series of past prices
together with a line generally creates it.
Bar chart
A style of chart used by some technical analysts, on whom as illustrated below, the top of
the vertical line indicates the highest price a security traded at during the day, and the
bottom represents the lowest price. The closing price is displayed on the right side of the
bar, and the opening price is shown on the left side of the bar. A single bar like the one
below represents one day of trading.
These are the most popular type of chart used in technical analysis. The visual
representation of price activity over a given period of time is used to spot trends and
patterns.
Candlestick
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A price chart that displays the high, low, open and close for a security each day over a
specified period of time.
There are many trading strategies based upon patterns in candlestick charting.
Technical analysis:
The use of trend
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One of the most important concepts in technical analysis is that of trend. The meaning in
finance isn’t all that different from the general definition of the term- a trend is really
nothing more than the general direction in which a security or market is headed.
The Importance of Trend
It is important to be able to understand and identify trends so that you can trade with
them rather than trade against them. Two important sayings in technical analysis are “ the
trend is your friend” and “ don’t buck the trend” Illustrating how important trend analysis
is for technical trade.
Types of Trend
There are three types of trend:
 Up Trends
 Downtrends
 Sideways/ Horizontal Trends
As the names imply, when each successive peak and trough is higher, is referred to as an
upward trend. If the peaks and troughs are getting lower. It is a downtrend. When there is
little movement up or down in the peaks and troughs, it’s a sideways or horizontal trend.
If you want to get really technical, you might even say that a sideways trend is actually
not a trend on its own, but a lack of a well-defined trend in either direction. In any case,
the market can really only trend in these three ways: up, down or nowhere.
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Uptrend
Describes the price movement of a financial asset when the overall direction is upward. A
formal uptrend is when each successive peak and trough is higher than the ones found
earlier in the trend.
Notice how each successive peak and trough is located above the previous ones. For
example, the peak at trend is higher than the peak at uptrend. The uptrend will be deemed
broken if the next low on the chart falls below trend.
Downtrend
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Describes the price movement of a financial asset when the overall direction is
downtrend. A formal downtrend occurs when each successive peak and trough is lower
than the ones found earlier in the trend.
Notice how each successive peak and trough is lower than the previous one. For example,
the low trend is lower than the low at Point. The downtrend will be deemed broken once
the price closes above the high at high direction trend.
Downtrend is the opposite of uptrend.
Head and Shoulders Pattern
A technical analysis term used to describe a chart formation in which a stocks price:
1 Rises to a peak and subsequently declines.
2. Then, the price rises above the former peak and again declines
3. And finally, rises again, but not to the second peak, and declines once
more.
The First and Third peaks are shoulders, and second peak forms the head.
The “Head -and –Shoulders” pattern is believed to be one of the most reliable trend
reversal patterns.
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Moving Average- MA
An indicator frequently used in technical analysis showing the average value of a

security’s price over a set of period. Moving averages are generally used to measure
momentum and define areas of possible support and resistance.
The moving average line of price of the stock under consideration helps a investor in
following ways to take buy or sell decisions:
 When the actual market price line cuts the moving average line of price from
below it the right time to buy.
 When the actual market price line cuts the moving average line of price from
above it the right time to sell.
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Dow Theory
Dow Theory asserts that major market trends are composed of three phases:
1) An Accumulation Phase: The accumulation phase is a period when investors "in
the know" are actively buying (selling) stock against the general opinion of the
market. During this phase, the stock price does not change much because these
investors are in the minority absorbing (releasing) stock that the market at large is
supplying (demanding).
2) A Public Participation Phase: Eventually, the market catches on to these astute
investors and a rapid price change occurs. This occurs when trend followers and
other technically oriented investors participate.
3) A Distribution Phase: Second phase continues until rampant speculation occurs.
At this point, the astute investors begin to distribute their holdings to the market.
Elloitt Wave theory
The wave principle posits that collective investor psychology (or crowd psychology)
moves from optimism to pessimism and back again. These swings create patterns, as
evidenced in the price movements of a market at every degree of trend.
Practically all developments which result from (human) socialeconomic processes follow
a law that causes them to repeat themselves in similar and constantly recurring serials of
waves or impulses of definite number and pattern. R. N. Elliott, in Nature’s Law: The
Secret of the Universe Elliott's model says that market prices alternate between five
waves and three waves at all degrees of trend, as the illustration shows. As these waves
develop, the larger price patterns unfold in a self-similar fractal geometry. Within the
dominant trend, waves 1, 3, and 5 are "motive" waves, and each motive wave itself
subdivides in five waves. Waves 2 and 4 are "corrective" waves, and subdivide in three
waves. In a bear market the dominant trend is downward, so the pattern is reversed—five
waves down and three up. Motive waves always move with the trend, while corrective
waves move opposite it.
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6. a. INDUSTRY ANALYSIS – IT SECTOR
The Indian IT services market has witnessed strong growth over the past few years, on
the back of increased offshore outsourcing initiatives from global corporations. More and
more global corporations are trying to improve their cost efficiency and, thus,
outsourcing their technology requirements to low-cost countries like India. In fact, it is
the offshore component that has been seeing impressive traction, driven by increasing
acceptance of the ‘global delivery model’. While the rupee’s appreciation against the US
dollar and rising wages have taken some toll on the companies’ profitability, the fact that
demand now seems to be shifting from low-end services to high-end ones, like IT
consulting, package implementation and systems integration, seems to augur well for the
larger and more technology intensive players in the sector
BUDGET 2008-09 MEASURES RELATED TO IT SECTOR
 The budget has allocated Rs 1,680 crore to the Department of Information

Technology in 2008-09 as against Rs 1,500 crore in 2007-08 and has announced
three new schemes namely:
1. Two schemes for establishing 100,000 broadband internet-enabled Common
Service Centres in rural areas and State Wide Area Networks (SWAN) with
Central assistance. This is already under implementation. Rs 7,500 crore is
allocated for common service centre and Rs 750 crore for SWAN.
2. New scheme with budgetary allocation of Rs 275 bn launched for State Data
Centres.
 Customised software has been brought under the service tax net and will attract
12% service tax
 Excise duty has been increased on packaged software from 8% to 12% to bring it
at par with customised software.
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BUDGET IMPACT
 IT/ITES sector will benefit largely because of increase spending on education,

which will result in large talent pool of professionals. This spending on education
will also help in reducing the supply side constraints that is currently faced by the
leading companies in hiring quality professionals
 The service tax on customised software is a negative for technology companies

but it will be passed on to the clients.
COMPANY IMPACT
 While the Tier-I IT companies will not be severely impacted as they can easily
move to SEZ, it is the mid tier IT companies which will feel the heat.
 Companies like NIIT Technologies and MindTree Consulting will be adversely

impacted from April 2009 onwards when the tax benefits end. These companies
will find it difficult to migrate to SEZ, as it would entail huge cash outflow.
 Companies like NIIT, Educomp Solutions and Everonn Systems, which are
functioning in the e-learning area will benefit due to the increased thrust on
education to raise the talent pool in the country.
 Tulip IT services will benefit due to implementation of SWAN projects
KEY POSITIVES
 Moving up the value chain: Indian software companies are consistently

broadening their portfolio of offerings and moving fast up the value chain. Given
that traditional services, such as application development and maintenance
(ADM), are getting commoditised, it is imperative for these companies to move
higher up the value chain into areas like consulting, package implementation and
systems integration. Not only will this help Indian companies get higher billing
rates from their clients, it will also give them an opportunity to work closely with
the top managements of client companies.
 Moving up the value chain: Indian software companies are consistently

broadening their portfolio of offerings and moving fast up the value chain. Given
that traditional services, such as application development and maintenance
(ADM), are getting commoditised, it is imperative for these companies to move
higher up the value chain into areas like consulting, package implementation and
systems integration. Not only will this help Indian companies get higher billing
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rates from their clients, it will also give them an opportunity to work closely with
the top managements of client companies.
KEY NEGATIVES
 High reliance on the US markets: The US market's share in India's software and
services exports is fairly high, at around 60% to 65%. Even though it has come
down a little during the last year but such a large degree of dependence on a
single geographical location spells high risk for the Indian software sector. Over
that, the backlash in the US against outsourcing of jobs to low-cost countries like
India has raised some medium-term concerns for Indian software companies.
 Decreasing competitive advantages: Increasing competition from global

technology majors has not only threatened the Indian IT industry's cost leadership,
Indian software companies have also been made to face intense competition for
talent. All these pressures mean flat billing rates and higher employee costs going
forward. This is likely to affect margins and, consequently, the profitability of
Indian companies. The BPO service providers have achieved maturity in practices
like relationship management and knowledge management. They need to
diversify to employee engagement, process improvement, recruitment, migration
planning and workforce management. If this is not done, the IT companies could
find maintaining the current client satisfaction level as challenging.
 High rates of attrition: High attrition, especially in the middle and senior
positions, continue to damage the performance of Indian software companies to a
certain extent. The average industry rate is around 18% which when compared to
other industries is on the higher side. The companies, in a bid to overcome high
attrition rates, are recruiting science graduates and training them, which means
higher training cost and loss of billable hours. Apart from competition for talent
from MNC technology majors, internal factors like job dissatisfaction and higher
aspirations (in case of BPO companies) have led to such high attrition rates in the
Indian software sector.
INFOSYS
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Infosys Technologies Ltd (Infosys) was incorporated on July 2, 1981, as a private ltd
company. It became public limited company. To became public limited company on June
1992 and subsequently the name was also changed to Infosys Technologies Ltd. It was
the first Indian company to be listed on American Stock Exchange. The company is one
of India’s leading information technologies (IT) services companies. Enterprise Services,
Product R&D services and Consulting Services. The company is having its Headquarters
in Banglore and has 17 offshore development facilities like Aerospace & Defense,
Automotive, and Banking & Capital Markets. Communication Services, Energy,
Insurance, Healthcare, Media, Transportation Services etc., Infosys Technologies came
out with an IPO in Feb. 1993 at a premium of Rs 95 for a face value of Rs 10 per share.
Since then, it has issued three bonus issues (each in the ratio of 1:1) and split its face
value of Rs 5 each. In Feb 2000, the ADRs were split in the ratio of 2:1. In 2004-05 the
company has signed up 136 new clients and had a total client base of 438 at the end of
the year. The company’s product-FINACLE, is an integrated core banking solution that is
centralized, muliti-currency and multi-language-enabled, functionally rich, and addresses
both retail and corporate banking requirements. During 2002, GOI has raised the
investment limit in an Indian Company for FII from 49% to the maximum level approved
by FDI and the maximum limit for the software industry as approved by FDI is 100% at
present, the company is in the plan of increasing the limit of such investment to 100%. In
2006 The Company has completed the construction of an employee training facility in
Mysore, India to further enhance our employee training capabilities. The Mysore Training
complex wills accommodate 4,500 trainees at a time.
Balance Sheet
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Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05
SOURCES OF FUNDS
Owner's Fund
Equity Share Capital 286.00 286.00 138.00 135.29
Share Application Money 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00
Reserves & Surplus 13,204.00 10,876.00 6,759.00 5,106.44
Loan Funds
Secured Loans 0.00 0.00 0.00 0.00
Unsecured Loans 0.00 0.00 0.00 0.00
Total 13,490.00 11,162.00 6,897.00 5,241.73
USES OF FUNDS
Fixed Assets
Gross Block 4,508.00 3,889.00 2,837.00 2,182.72
Less : Revaluation Reserve 0.00 0.00 0.00 0.00
Less : Accumulated Depreciation 1,837.00 1,739.00 1,275.00 1,005.82
Net Block 2,671.00 2,150.00 1,562.00 1,176.90
Capital Work-in-progress 1,260.00 957.00 571.00 317.52
Investments 964.00 839.00 876.00 1,328.70
Net Current Assets

Current Assets, Loans & Advances 12,326.00 9,040.00 6,105.00 3,764.65
Less : Current Liabilities & Provisions 3,731.00 1,824.00 2,217.00 1,346.04
Total Net Current Assets 8,595.00 7,216.00 3,888.00 2,418.61
Miscellaneous expenses not written 0.00 0.00 0.00 0.00
Total 13,490.00 11,162.00 6,897.00 5,241.73
Note :
Book Value of Unquoted Investments 964.00 839.00 876.00 1,328.70
Market Value of Quoted Investments 0.00 0.00 0.00 0.00
Contingent liabilities 603.00 670.00 523.00 289.87
Number of Equity shares outstanding (in Lacs) 5,719.96 5,712.10 2,755.55 2,705.71
Key Ratios
26
Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05
PER SHARE RATIOS
Adjusted E P S (Rs.) 78.06 65.42 90.65 68.38

Dividend Per Share 33.25 11.50 45.00 11.50
Net Profit Margin (%) 27.37 28.05 26.17 27.28
LEVERAGE RATIOS
Long Term Debt / Equity 0.00 0.00 0.00 0.00

Total Debt/Equity 0.00 0.00 0.00 0.00
Owners fund as % of total Source 100.00 100.00 100.00 100.00
Fixed Assets Turnover Ratio 3.47 3.38 3.18 3.20
LIQUIDITY RATIOS
Current Ratio 3.30 4.96 2.75 2.80

Current Ratio (Inc. ST Loans) 3.30 4.96 2.75 2.80
Quick Ratio 3.28 4.91 2.73 2.77
Inventory Turnover Ratio 0.00 0.00 0.00 0.00
PAYOUT RATIOS
Dividend payout Ratio (Net Profit) 49.77 19.85 58.32 18.48

Earning Retention Ratio 50.17 79.91 43.48 80.98
Interpretations:
 Current ratio is high. Hence, it shows huge blockage of funds in current assets,
 Leverage ratios shows that company has no debt capital. The total capital is
contributed by shareholders. This makes it safe to invest.
 Dividend payout ratio is fairly good.
Infosys vis-à-vis IT majors.
27
Mar ' 08
INFOSYS TCS WIPRO
Reported EPS (Rs.) 78.06 46.07 20.96
Dividend Per Share 33.25 14.00 6.00
Net Profit Margin (%) 27.37 24.11 17.19
Reported Return On Net Worth (%) 33.13 41.34 26.51
Return On long Term Funds (%) 37.77 42.96 23.32
Long Term Debt / Equity 0 0.01 0.33
Current Ratio 3.3 1.99 2.54
Dividend payout Ratio (Net Profit) 49.77 35.55 33.47
Earning Retention Ratio 50.17 62.47 66.53
Interpretations:
1. EPS and DPS is highest for Infosys.

2. Infosys is a fully owned company.
3. The current ratio is comparatively high.
Price Fluctuations of Infosys Tech
28
29
Graph No.1
Technical analysis of Infosys Technology ltd.
From the chart of Infosys Technology Ltd we can say that script is having bearish trend
as it is breaking new lows, it may further go down.
Fundamental: -
30
1. There is a fluctuation in equity dividend. There is no fixed policy regarding
payment of dividend.
2. Rupee Dollar Fluctuation- As most of software companies in India having their
clients in the abroad, mostly in USA. Therefore, their earning are in dollars. But
currently dollar is getting strong as compare to rupee, so company can get more
rupee in return of dollars which they get from their clients. So company is
currently looking in good position in dollar – rupee fluatuation.
3. In India, salary of software professional will be increasing, and it will marginally
affect profit of companies and because of that, EPS will be come down.
4. Infosys technology Ltd. On July 2007 has announced that it has signed a multi-
million dollar outsourcing contract with Royal Philips Electronics. The deal with
Philips reinforces the company’s leadership position in transformation based BPO
services. The company’s BPO has significant growth over 70% in revenues and an
increase in client base of over one-third in FY 2007.
5. Gross Profit Ratio of the Company is stable from last five years. It is a good sign
of consistency and smooth working of the company.
6. The Net Profit Ratio is constant for last four years. It means company has good
Future.
7. But due to current slowdown in world economy and mainly America, it will affect
the business of Infosys and as a whole to IT and ITES industry.
6. b. INDUSTRY ANALYSIS – ENGINEERING SECTOR
31
World-class infrastructure has emerged as one of the most important necessities for
unleashing high and sustained growth and alleviation of poverty in any economy. And
with poor infrastructure to support other growth initiatives, the Indian economy continues
to be a laggard when compared to its developing peers. From a policy perspective,
however, there has been a growing consensus that a private-public partnership is required
to remove difficulties concerning the development of infrastructure in the country. The
realisation finally seems to be setting in. This makes the future of the Indian engineering
sector extremely bright. Apart from highway development and construction and
modernisation of airports, the potential for the sector lies in the oil and gas space, where
high global demand has led to increased action in exploration and production activities. .
However, scale and execution capabilities remain the mantras for success.
BUDGET 2008-09 MEASURES RELATED TO ENGINEERING SECTOR

 Rajiv Gandhi Grameen Vidyutikaran Yojana to be continued during the Eleventh
Plan period with a capital subsidy of Rs 280 bn; allocation of Rs 55 bn for FY09.
 Rs 8 bn to be provided for Accelerated Power Development and Reforms Project
(APDRP) in FY09.
 Proposal to set up a national fund for transmission and distribution (T&D) reform
in the power sector.
 Exemption from 4% additional duty of customs has been withdrawn on power
generation projects (other than mega power projects), transmission, sub
transmission and distribution projects, and specified goods for high voltage
transmission projects.
 Custom duty on project imports reduced from 7.5% to 5%
 Initiatives like skill development programme and setting up of industrial training
institutes to be taken
 Defense allocation to be increased by 10%
 Excise duty being exempted on end-use basis, on refrigeration equipment
(consisting of compressor, condenser units, evaporator, etc) above 2 TR (tonne
refrigeration) utilising power of 50 KW and above.
32
 Parent company allowed to set-off the dividend received from its subsidiary
company against dividend distributed by the parent company; provided that the
dividend received has suffered DDT and the parent company is not a subsidiary of
another company. cale and execution capabilities remain the mantras for success
BUDGET IMPACT
 Aggressiveness in allotting UMPPs to prospective bidders expected to be helpful

for engineering companies providing equipments and EPC services for power
plants.
 Setting up of a national fund for T&D reforms to aid growth prospects of

equipment suppliers and T&D project developers.
 Removal of exemption from additional customs duty on power generation,

transmission and distribution projects to increase cost for companies importing
such projects, which shall consequently be beneficial for domestic project
developers. However, on the other hand, reduction in custom duty on project
imports to nullify the impact.
 Initiatives like skill development programme and setting up of industrial training

institutes to reduce talent crunch for engineering companies, which are reporting
high levels of attrition
 Increase in defense allocation to aid prospect of companies providing defense

equipments and technologies.
COMPANY IMPACT
 Allocation of UMPPs to support growth if equipment and service providers like

BHEL, L&T and Siemens.
33
 Greater focus on the T&D front to be beneficial for ABB, Siemens, Crompton
Greaves, Emco, Bharat Bijlee. Also, companies providing T&D project services
like Jyoti Structures and Kalpataru Transmission to benefit.
 Removal of exemption from additional customs duty on power generation,

transmission and distribution projects to benefit domestic companies like BHEL,
L&T, Siemens and Reliance Energy.
 Skill development initiatives to pare pressure of attrition from companies like

L&T and BHEL.
 Increase in defense allocation to aid prospects of Tata Power, L&T and Bharat
Electronics.
KEY POSITIVES
 Power play: Since power utilities are one of the biggest consumers (generation,
transmission and distribution) for engineering companies, reforms introduced in
the power sector like privatisation of SEBs will help in strengthening the order
book size. Huge addition in power generation capacity, in order to meet the
demand supply gap will be a big positive for the sector.
 Infrastructure development: The government is focusing on development of

infrastructure like housing, airports, roads and ports. This will be big positive for
engineering and construction companies.
 Industrial ‘act’: Industrial divisions of engineering companies are likely to

benefit from the increased focus on automation and capacity addition plans drawn
by the India Inc.
KEY NEGATIVES
34
 Captive competition: Duty free import of T&D equipments by captive power
generation units, if allowed by government, can have some impact on margins of
the T&D majors because of competition.
 People problem: Engineering companies, across the board, are facing troubled
times retaining key employees. This is due to increased levels of competition for
talent from MNCs, who have deep pockets and thus better paying capabilities. As
a result of increasing levels of attrition, some companies are facing execution
issues.
L & T Ltd.
35
Larsen & Toubro Limited (L&T) is a technology-driven engineering and construction
organization, and one of the largest companies in India's private sector. It has additional
interests in manufacturing, services and Information Technology. A strong, customer-
focused approach and the constant quest for top-class quality have enabled the Company
to attain and sustain leadership in its major lines of business across seven decades.
L&T has an international presence, with a global spread of offices. A thrust on
international business over the last few years has seen overseas earnings growing to 18
per cent of total revenue. With factories and offices located around the country, further
supplemented by a wide marketing and distribution network, L&T's image and equity
extends to virtually every district of India.
L&T believes that progress must necessarily be achieved in harmony with the
environment. A commitment to community welfare and environmental protection
constitute an integral part of the corporate vision.
History
The evolution of L&T into the country's largest engineering and construction
organizations is among the more remarkable success stories in Indian industry. The
company was founded in Bombay (Mumbai) in 1938 by two Danish engineers, Henning
Holck-Larsen and Soren Kristian Toubro - both of whom were strongly committed to
developing India's engineering talent and enabling it to meet the demands of industry.
Beginning with the import of machinery from Europe, L&T rapidly took on engineering
and construction assignments of increasing sophistication. Today, the company sets
engineering benchmarks in terms of scale and complexity.
Balance Sheet
36
Mar ' Mar '
Mar ' 08 Mar ' 07 06 05
SOURCES OF FUNDS
Owner's Fund
Equity Share Capital 58.47 56.65 27.48 25.98
Loan Funds
Secured Loans 308.53 245.40 465.79 793.72
Unsecured Loans 3,275.46 1,832.35 987.78 1,065.34
Total 13,113.17 7,818.25 6,064.37 5,197.29
USES OF FUNDS
Fixed Assets
Gross Block 4,188.91 2,876.30 2,300.68 2,106.55
Less : Accumulated Depreciation 1,242.47 1,122.83 982.22 1,089.54
Net Block 2,920.54 1,725.54 1,289.09 986.11
Capital Work-in-progress 699.00 471.22 286.06 65.82
Investments 6,922.26 3,104.44 1,919.52 960.70
Net Current Assets

Total 13,113.17 7,818.25 6,064.37 5,197.29
Note :
Book Value of Unquoted Investments 6,642.82 2,917.11 1,893.92 926.16
Market Value of Quoted Investments 1,403.92 1,289.46 999.29 537.94
Contingent liabilities 405.35 270.22 305.59 625.10
Key Ratios
37
Mar ' Mar ' Mar ' Mar '
08 07 06 05
PER SHARE RATIOS
Adjusted E P S (Rs.) 69.13 49.36 59.80 44.01

PROFITABILITY RATIOS
Operating Margin (%) 12.98 11.52 8.63 7.66

Gross Profit Margin (%) 12.19 10.61 7.91 7.00
LEVERAGE RATIOS

LIQUIDITY RATIOS
Current Ratio 1.18 1.26 1.36 1.54

Quick Ratio 0.86 0.93 1.03 1.12
PAYOUT RATIOS

Dividend payout Ratio (Cash Profit) 23.96 26.97 30.79 37.95
Cash Earnings Retention Ratio 74.40 72.95 62.89 38.33
Interpertations
 Earning retention ratio is consistently rising which indicates company’s expansion
plans and other investments.
 Current ratio is less than standard 2:1. There is increase in current liabilities.
L & T vis-à-vis other Engg. Majors
38
Mar ' 08
L & T Ltd. BHEL Bharat Ele. Ltd.
Reported EPS (Rs.) 74.35 58.41 103.34
Dividend Per Share 17 15.25 20.70
Long Term Debt / Equity 0.27 0.01 0.00
Dividend payout Ratio (Net Profit) 26.29 30.54 23.43
Earning Retention Ratio 71.72 70.07 74.45
Interpretations:
 Current ratio is low

 Net profit is also comparatively low
L & T is a private sector company while BHEL and BEL are PSUs. Even then the performance of L &
T is impressive.
Price Fluctuations of shares of Larson & Toubro Ltd.
39
40
Graph No.4
Technical Analysis: The chart of Larson & Toubro shows a good support at 2100 levels
from which the stock price reversed and is moving north wards. Also the stock is
breaking new resistances and hopes to grow at faster rate.
Fundamental: -
1. Larsen & Toubro Ltd (L&T) has announced that the Company has secured two
more Design and Build contracts from Delhi Metro Railway Corporation
(DMRC) for the construction of the underground station at Saket (Delhi) and a
tunnel as part of its Phase II Project.
2. Larsen & Toubro Ltd has announced that the Company has bagged an order for
Rs. 980 corers for the supply and installation of Blast Furnace from Tata Steel
for its project in Kalinganagar, Orissa.
3. Larsen & Toubro Ltd (L&T) going to set up IT special economic zone with
Arun Excello at Vallancheri, Tamilnadu.
4. The company currently has order book worth Rs. 41600 corers.
41
6. c. INDUSTY ANALYSIS – TELECOM SECTOR
The telecommunication industry is growing at a break neck speed with leading players
lapping up mobile subscribers by millions month on month. The country’s telecom
market is the 4th largest in the world in terms of wireless subscribers and 5th largest in
terms of total telecom subscribers (Source: Bharti Airtel presentation). After growing its
wireless (GSM and CDMA) subscriber base to over 200 m by the end of December 2007,
the country is expected to take the number to 500 m telecom subscribers by the end of
March 2010. This growth is likely to be aided by the availability of cheaper handsets,
focus of regulatory measures to take telephony to rural markets, lower tariffs and general
buoyancy in the economy.
BUDGET 2008-09 MEASURES RELATED TO TELECOM SECTOR
 Roll out of national rural employment guarantee scheme to all 596 districts in
India with a provision of Rs 160 bn.
 Specified inputs and raw materials for manufacture of specified electronics/ IT
hardware items have been exempted from excise duty.
 Additional duty of 1% to be levied on imported mobile phones towards national
calamity contingency reserve.
 Countervailing duty on wireless data modem cards with exempted by way of

excise duty exemption. These goods are already exempt from customs duty.
However, 4% additional duty of customs will be attracted.
 Internet telecommunication service brought under the service tax net.

 Customs duty on convergence products to be reduced from 10% to 5%.
another company.
42
BUDGET IMPACT
 Roll out of national rural employment guarantee scheme to all 596 districts in
India to aid faster penetration of mobiles.
 Exemption from excise duty for specified inputs and raw materials for
manufacture of specified electronics/ IT hardware to lower the network cost for
telecom service providers.
 Additional duty on imported mobile phones to make handsets expensive, thus

prohibiting a faster acceptance.
 Reduction in customs duty on convergence products to help establish parity

between devices used in the information/communication sector and the
entertainment sector.
another company.
COMPANY IMPACT
 Wider rollout of national rural employment guarantee scheme to aid faster

penetration of mobiles and consequently faster growth of Bharti Airtel, Reliance
Communications and Vodafone in these areas.
 Lower network equipment costs to benefit mobile service players like Bharti
Airtel, Vodafone, Idea and Reliance Communications.
 Additional duty on imported mobile phones to restrict volume (subscriber) growth

for mobile services companies, though not in a major way.
 Reduction in customs duty on convergence products to help companies like Bharti

Airtel and reliance Communications in lowering their costs for DTH expansion.
43
KEY POSITIVES
 Connecting India: The telecom sector has been one of the fastest growing sectors
in the Indian economy in the last 4 years. This has been witnessed due to strong
competition that has brought down tariffs as well as simplification of policy
environment that has promoted healthy competition among various players. Due
to this reason, telecom density in the country has risen to nearly 20% at the end of
January 2008, from 3.5% in January 2001.
 It's ringing mobile: The Indian mobile sector has been growing rapidly and has
emerged as the fastest growing market in the whole world. Currently of a size of
over 200 m subscribers (GSM plus CDMA), this sector is expected to reach a size
of nearly 500 m subscribers by the year 2010. The increasing monthly addition to
the subscriber base (currently at around 7 to 8 m) is indicative of the same.
 Broadband push: The government is expected to increase its thrust on the use of
Internet. This will come about as PC penetration increases. We expect to see some
positive measures being initiated to increase broadband usage in the country.
KEY NEGATIVES
 Spectrum woes: The telecom sector continues to expand at a rapid pace adding
coverage and increasing teledensity as more and more people get connected.
However, as subscriber base continues to swell and the need for wireless data
transfers over mobile grows, the operators are likely to face increased shortage of
spectrum availability (as they are facing now). This problem is especially acute in
urban areas, which have got higher teledensity.
 Highly taxed sector: The COAI has indicated that the telecom sector, especially
the cellular services segment, continues to pay very high duties and levies.
Currently, the sector is paying duties and levies under various heads including
annual license fees, spectrum charges and access deficit charge. In addition to the
44
above, significant levies are also imposed on the industry on account of sales tax,
service tax and import duties on handsets and other telecom hardware.
Bharti Airtel
Bharti Airtel:-Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises.
The Bharti Group, has a diverse business portfolio and has created global brands in the
telecommunication sector. Bharti has recently forayed into retail business as Bharti Retail
Pvt. Ltd. under a MoU with Wal-Mart for the cash & carry business. It has successfully
launched an international venture with EL Rothschild Group to export fresh agri products
exclusively to markets in Europe and USA and has launched Bharti AXA Life Insurance
Company Ltd under a joint venture with AXA, world leader in financial protection and
wealth management. Airtel comes to you from Bharti Airtel Limited, India’s largest
integrated and the first private telecom services provider with a footprint in all the 23
telecom circles. Bharti Airtel since its inception has been at the forefront of technology
and has steered the course of the telecom sector in the country with its world class
products and services. The businesses at Bharti Airtel have been structured into three
individual strategic business units (SBU’s) - Mobile Services, Airtel Telemedia Services
& Enterprise Services. The mobile business provides mobile & fixed wireless services
using GSM technology across 23 telecom circles while the Airtel Telemedia Services
business offers broadband & telephone services in 94 cities. The Enterprise services
provide end-to-end telecom solutions to corporate customers and national & international
long distance services to carriers. All these services are provided under the Airtel brand
45
Business division:-
Mobile Services:-
Bharti Airtel offers GSM mobile services in all the 23-telecom circles of India and
is the largest mobile service provider in the country, based on the number of
customers
Airtel Telemedia Services:-

The group offers high speed broadband internet with a
best in class network. With Landline services in 94 cities we help you stay in touch
with your friends & family and the world.
Enterprise Services(Corporates):-
The group focuses on delivering
telecommunications services as an integrated offering including mobile, broadband
& telephone, national and international long distance and data connectivity services
to corporate, small and medium scale enterprises
Enterprise Services(Carrier Services):-

The Company compliments its mobile and
broadband & telephone services with national and international long distance
services. It has over 35,016 route kilometers of optic fibre on its national long
distance network. For international connectivity to east, it has a submarine cable
landing station at. For international connectivity to the west, the Company is a
member of the South East Asia-Middle East-Western Europe – 4 (SEA-ME-WE-4)
consortium along with 15 other global telecom operators.
46
Balance Sheet
Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05
SOURCES OF FUNDS
Owner's Fund
Equity Share Capital 1,897.91 1,895.93 1,893.88 1,853.37
Loan Funds
Secured Loans 52.42 266.45 2,863.37 3,959.88
Unsecured Loans 6,517.92 5,044.36 1,932.92 1,034.41
Total 26,809.70 16,751.95 12,139.72 9,525.76
USES OF FUNDS
Fixed Assets
Gross Block 28,115.65 26,509.93 17,951.74 13,240.63
Net Block 19,028.52 19,303.51 13,004.75 9,762.86
Capital Work-in-progress 2,751.08 2,375.82 2,341.25 994.46
Investments 10,952.85 705.82 719.70 931.90
Net Current Assets

Total Net Current Assets -5,922.95 -5,635.86 -3,933.92 -2,221.80
Total 26,809.70 16,751.95 12,139.72 9,525.77
Note :
Book Value of Unquoted Investments 9,379.62 580.43 476.52 460.83
Market Value of Quoted Investments 1,574.29 125.85 243.99 472.71
Contingent liabilities 7,140.59 7,615.04 4,740.34 3,017.26
47
Key Ratios
08 07 06 05
PER SHARE RATIOS
Adjusted E P S (Rs.) 34.08 21.20 10.60 6.29


LEVERAGE RATIOS

LIQUIDITY RATIOS
Current Ratio 0.58 0.48 0.45 0.52

Quick Ratio 0.55 0.47 0.44 0.48
PAYOUT RATIOS

Interpretations
 Dividend paid by the company is zero and the EPS is on constant increase.
 Current ratio is less than standard 2:1. There is increase in current liabilities.
 The company has reduced it’s debts over a period of time which is making it safe
to invest.
48
Bharti Airtel vis-à-vis other players
Mar ' 08
BHARTI AIRTEL IDEA Cell. RCOMM
Reported EPS (Rs.) 32.9 3.96 12.53
Dividend Per Share 0 0.00 0.75
Long Term Debt / Equity 0.3 1.54 0.48
Dividend payout Ratio (Net Profit) 0 0.00 7.00
Earning Retention Ratio 100 100.00 91.36
Interpretations:
 EPS is highest for Airtel.

 Net profit is highest.
 Earning retention ratio is 100, which indicate internal investments and expansions
and diversifications plans.
49
Price fluctuations of Airtel:-
50
Technical analysis:-
The stock has corrected in july and is now looking strong. The graph
has shown that the stock is making new highs and is expected to grow further.
Fundamental Analysis:-
1. The sales of the company has shown a good growth in last four quarters.
2. The total expenditure is being reducing from last four quarters which shows the
initiatives of cost cutting in the company.
3. Net profit as well as EPS of company is increasing and well over the industry
standards.
4. Company is bidding for 3G services in India which will increase its revenue to a
great extend.
5. Company has also signed a deal with Apple to bring iPhones in India.
6. Bharti Airtel partners with 15 global telecom majors to build Europe India
Gateway (EIG), a cable system from India to United Kingdom which will give
company a strategic advantage.
51
6. d. INDUSTRY ANALYSIS – ENERGY SECTOR
Energy security occupies a high priority on the government agenda. In order to accelerate
hydrocarbon discoveries, increased emphasis has been laid on E&P through several
rounds of NELP. They have yielded benefits in the form of huge gas discoveries in the
KG basin and oil discoveries in Rajasthan. If the ongoing NELP VII is any indication, we
expect the government to continue with its policies favoring exploration activities. The
midstream segment will be a direct beneficiary of increased volumes. Thus, prospects of
the upstream and midstream oil and gas sector look bright. The downstream segment
however, continues to suffer on account of government regulations. Till a sustained
reduction in the crude oil prices is observed, the prospects of the oil marketing companies
largely hinge on adhoc government policies
BUDGET 2008-09 MEASURES RELATED TO ENERGY SECTOR
 Foreign investment of US$ 3.5 to 8 bn expected for exploration of new blocks

under NELP VII.
 Customs duty exemption withdrawn on naphtha used in the manufacture of
polymers. It will be taxed @ 5 %. Naphtha imported for the production of
fertilisers will remain exempt.
 Ad valorem excise duty on unbranded petrol and unbranded diesel replaced by an
equivalent specific duty of Rs.1.35 per litre. There will be only a specific duty of
Rs 14.35 per litre on unbranded petrol and Rs 4.60 per litre on unbranded diesel.
 Central Sales Tax reduced from 3% to 2% from April 1, 2008.
 Dividend tax paid by parent company allowed to be set off against the same paid
by its subsidiary
52
BUDGET IMPACT
 Polymer industry will be negatively impacted, as costlier Naphtha will push its
cost structure upwards.
 Polymer in turn is used in a host of downstream sectors such as plastics and

paints, which will face margin pressures.
 Oil downstream segment will continue to suffer under recoveries from petroleum
products as the budget does not address either product prices or the excise duties.
COMPANY IMPACT
 The polymer segment of RIL and GAIL will be adversely impacted, as the raw
material costs will go up. Given that the petrochemical segments had a bad
3QFY07, this development comes at a bad time.
 No respite for PSU oil marketing companies-IOC, HPCL, BPCL.
 The announcement on dividend tax will benefit IOC, HPCL and BPCL as they
have refineries as subsidiaries.
 GAIL will benefit from the reduction in CST as natural gas falls under inter state
trade.
KEY POSITIVES
 Exploratory success: India has seen a spate of successful oil and gas discoveries
over the past 4-5 years. This could be attributed to favourable government policies
for the E&P segment. With the success of NELP, exploration acreage is increasing
at a fast clip. However, a vast majority of the exploration acreage remains
explored or poorly explored, which promises good potential for discoveries in the
future. While India is likely to remain dependent on imports for oil;
commercialization of natural gas reserves will reduce the imbalance in the
demand supply scenario for the same.
53
 Robust demand growth: Demand for petroleum products is dependent on the
level of economic activity in an economy. With the Indian economy expected to
register decent growth going forward, the demand for petroleum products is likely
to be on the higher side. Moreover, the per capita consumption of oil products in
India is one of the lowest in the world, leaving a lot of scope for demand growth.
KEY NEGATIVES
 Regulatory hindrances: APM (administered pricing mechanism) was dismantled

in 2002, with a view to move towards market-determined prices of petroleum
products. However, the subsequent steep rise in the crude oil prices had forced
government to regulate the prices once again. Thus, profitability of downstream
companies continues to reel under severe pressure.
 Subsidy burden: Upstream players (ONGC, GAIL and OIL) continue to share
33% of the gross under-recoveries on the sale of sensitive petroleum products.
This has constrained the growth in their profitability to a large degree. Moreover,
both the upstream as well as downstream segments continue to suffer from lack of
visibility due to the ad-hoc subsidy sharing mechanism.
 Lower tariff protection: India has a surplus refining capacity, which is likely to
further increase over the next few years due to various brownfield and greenfield
projects undertaken both by public sector as well as private sector enterprises.
54
ONGC
Pioneering Efforts:-
ONGC is the only fully–integrated petroleum company in India, operating along the
entire hydrocarbon value chain:
 Holds largest share of hydrocarbon acreages in India.
 Contributes over 78 per cent of Indian’s oil and gas production.
 About one tenth of Indian refining capacity.
 Created a record of sorts by turning Mangalore Refinery and Petrochemicals

Limited around from being a stretcher case for referral to BIFR to the BSE Top
30, within a year.
 Interests in LNG and product transportation business.
Strategic Vision:- 2001-2010
To focus on core business of E&P, ONGC has set strategic objectives of:
 Doubling reserves (i.e. accreting 6 billion tonnes of O+OEG).
 Improving average recovery from 28 per cent to 40 per cent.
 Tie-up 20 MMTPA of equity Hydrocarbon from abroad.
The focus of management will be to monetise the assets as well as to assetise the money.
55
Global Ranking:-
ONGC is the only Company from India in the Fortune Magazine’s list of the World’s
Most Admired Companies 2007. ONGC is 9th position in the Industry of Mining, crude
oil production.
• ONGC ranks 239th position in the prestigious Forbes Global 2000 and
Numero Uno ranking amongst Indian Companies.
• ONGC ranks 369th position in Fortune Global 500 list for the year 2006
based on Revenues.
• ONGC retains Numero Uno position from India in terms of Profits with
overall global ranking of 121st.
• ONGC ranks 21st among the top 50 publicly traded Companies in Oil & Gas
Industry, based on the year-end (2007) market Capitalization by PFC Energy.
56
Balance Sheet
SOURCES OF FUNDS
Owner's Fund
Equity Share Capital 2,138.89 2,138.89 1,425.93 1,425.93
Loan Funds
Secured Loans 0.00 0.00 0.00 0.00
Unsecured Loans 12,482.71 15,109.07 12,722.61 9,916.22
Total 83,100.11 77,033.00 66,682.28 56,761.64
USES OF FUNDS
Fixed Assets
Gross Block 57,463.78 52,038.07 47,882.35 42,983.85
Net Block 10,518.01 8,839.11 7,842.20 5,836.53
Capital Work-in-progress 41,154.63 37,794.16 33,373.92 28,838.35
Investments 5,899.50 5,702.05 4,888.57 4,036.67
Net Current Assets

Total 83,100.11 77,032.98 66,682.28 56,761.64
Note :
Book Value of Unquoted Investments 0.00 2,945.57 2,132.10 1,280.19
Market Value of Quoted Investments 0.00 9,979.81 13,365.52 11,876.20
Contingent liabilities 26,006.73 34,157.17 32,907.71 26,593.45
57
Key Ratios
08 07 06 05
PER SHARE RATIOS
Adjusted E P S (Rs.) 76.28 78.69 97.80 90.65


LEVERAGE RATIOS

LIQUIDITY RATIOS
Current Ratio 1.99 1.41 1.42 1.46

Quick Ratio 1.86 1.28 1.28 1.33
PAYOUT RATIOS

Interpretations
 Net profit is near about constant for last couple of years.
 Dividend payout ratio is also constant.
 Current ratio is close to standard 2:1.
58
ONGC vis-a-avis RIL
Mar ' 08
ONGC RIL
Reported EPS (Rs.) 78.09 133.86
Dividend Per Share 32 13.00
Net Profit Margin (%) 25.75 14.45
Reported Return On Net Worth (%) 23.87 24.66
Return On long Term Funds (%) 30.43 17.18
Long Term Debt / Equity 0.17 0.35
Current Ratio 1.99 1.34
Dividend payout Ratio (Net Profit) 47.94 9.80
Earning Retention Ratio 50.92 86.01
Interpretations:
 Dividend Per Share is more than RIL.

 Current ratio is as per standard requirement.
 Return on Net Worth and Return on long Term Funds is more than RIL.
Price fluctuations of ONGC:-
59
60
Technical Analysis:-
The company is showing good support at around Rs800/share
which it didn’t crossover twice. This gives us impression that now it will have a bull run
and which is shown by the graph. Also the new target of the company is been given to Rs
1300 in next two months.
Fundamental Analysis:-
1. Company has shown a substantial growth in net sales as well as decrease in the
expenditure which is a very rare.
2. The EPS of the company has increased to a great extend as compared to the last
three quarters which is a very good sign for the company.
3. Company declared dividend of Rs 14/share which is 140% and highest given by a
government based company.
4. Company posted a net profit of Rs. 156.429 billion, the Highest by any Indian
company.
5. Company contributed over Rs. 286 billion to the exchequer.
61
6. Company is government based and hence has to adhere to the government
policies and cannot take it’s own major decision.
7. Oil fluctuation in international markets affects the company a lot because the oil
prices in India are not directly linked to international prices.
8. Government gives oil bonds as subsidies to these company, which are having
maturity lot further, hence affecting liquidity of the company.
62
7. RESEARCH STUDY OF INVESTORS.
1. Where do you invest your money?

In the Reliance money, I have asked 200 people where you like invests your
money.
Investment types No. of respondents Percentage
Stock market 40 20
Bank F.D 60 30
Real estate 80 40
Mutual funds 20 10
Total 200 100
Table. 1
Graph 6
Interpretation:
From the above table & pie chart, it represent that people invest only 20 % of money in
Stock market & 10% in Mutual Funds. 40% of people generally interested in Real estate
and Bank F.D 30%. Because the chances of risk and losses are minimum than Stock
Market & Mutual Funds. Even the returns are more in Stock Market & Mutual Funds, but
due safety people prefer Real estate and Bank F.D.
63
2. How will you decide a company for investment?
Selection of company for No. of Respondents Percentage
investment
Own Decision 30 15
Broker Advice 84 42
Speculation 46 23
Research Reports 40 20
200 100
Table 2
Graph 7
Interpretation: From the above table & pie chart it represents that 42% of people take
Advice of Broker while investment in stocks, and 23% of people invest on the basis of
speculation, and 20% on basis of Research Reports by Technical analyst and 15% invest
on there own decision. But many experts feel that if people invest money in stock market
by Research Report then chances of profit is high and losses are minimum because
Research Report give good suggestion and already they have calculated risk in stocks so
it will be beneficial while investment. If investment on the basis of speculation the
chances of losses are high and profits minimum. If you do not have, any knowledge of
stock market so should ask to your Broker who will advice you in better way because
these people have good knowledge than us.
3. What kind of trading you do?
Types of Trading No. of Respondent Percentage
64
Intra day 86 43
Short term 44 22
Medium Trading 22 11
Long term Trading 48 24
200 100
Table 3
Graph 8
Interpretation: From the above Graph & Pie chart it represent that 43% people do
intraday in which the profit and risk both are the high but many research suggest that
it is always better to investment of money in long term than short term or medium
term or intraday (i.e. speculations). If we invest money on long-term basis then
returns are good & the risk is minimum. Therefore, it is always good invest money
for long-term basis
4. What are the factors do you consider while selection of company?
Factor consider for No. of Respondents Percentage

selection of company
Fundamental Analysis 86 43
65
Technical Analysis 44 22
Both 20 10
Speculation 50 25
200 100
Table 4
Graph 9
Interpretation: From the above Graph & Pie chart it represent that 43% of people
take the help of fundamental and 22% of people take the help of technical analysis by
which the risk can be calculated and profit can be maximize. However, even that 25%
of people invest on the basis of speculation, which is risky. 10% are people invest
money by both (i.e. fundamentally and technical) by which prediction can be good. If
people invest money on the basis of analysis then the risk can be minimize and profit
can be maximize.
5. Where will you most prefer to invest your money?
Most prefer companies No. of Respondents Percentage

Large cap 105 52.5
Mid cap 40 20
66
Small cap 55 27.5
200 100
Table 5
Graph 10
Interpretation: From the above Graph & table, we can say that 50% percent of people
like to invest money in Blue Chips companies because the volumes of trading and good
results are more. Therefore, the profit is more. Mid cap and small, give minimum profit
than blue chips or large cap.
6. Which Companies shares will you buy?
Like to invest in sectors No. of Respondent Percentage

Auto 110 55%
Banking 60 30%
67
Engineering 30 15%
200 100
Table 6
No. of Respondent
15%
Auto
Banking
Engineering
55%
30%
Graph 11
Interpretation: From the above Graph & chart, we can say that 55% of people prefer
Auto Sector for investment because these companies are strong by fundamentally and it
have large market than others. After that, 30% of people prefer banking sector it has large
market capitalization and after that, 15% of people like to invest in Engineering
companies.
8. CONCLUSION
Fundamental analysis holds that no investment decision should be without

processing and analyzing all relevant information. It strength lies in the fact the
information analyzed is real as opposed to hunches or assumptions. On the other hand,
while fundamental analysis deals with tangible fact, it does not tend to ignore the fact that
human beings do not always act rationally. Market prices do sometimes deviate from
68
fundamentals. Prices rise or fall due to insider trading, speculation, rumor, and a host of
other factors. This is true to an extent, but strength of fundamental analysis is that an
investment decision is arrived at after analyzing information and making logical
assumptions and deductions. Furthermore, fundamental analysis ensures that one does not
recklessly buy or sell shares- especially buy.
Fundamental analysis can be valuable, but it should be approached with caution.

If you are reading research written by a sell-side analyst, it is important to be familiar
with the analyst behind the report. We all have personal biases, and every analyst has
some sort of bias. There is nothing wrong with this, and the research can still be of great
value. One should also be aware of all the latest events and developments which directly
or indirectly affect the prices of the stock in the stock market.
9. LIMITATIONS OF STUDY
 To understand the overall working of share market, the period of 60 days is not
enough.
 Moreover, very few investor and agents have a detail knowledge of the study.
 A study is conducted in Nasik only, which restrict the scope of the market study.
69
 The data provided by the investors and the agents can’t be held true as 100%
correct.
 The study was conducted to understand with respect to fundamental and technical
analysis, which is a part of the equity share market.
10. Bibliography
Books:
 Investment Analysis & Portfolio Management- Prasanna Chandra.
 Investment management- A.V. Avadhani
News Papers:
 Economic Times
 Times of India.
70
Magazines:
 Capital Market
 Dalal Street
Websites:
 www.kotaksecurities.com
 www.wikipedia.com
 www.moneycontrol.com
 www.equitymaster.com
 www.bseindia.com
 www.incrediblecharts.com
71

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1.

EQUITY ANALYSIS is the systematic study of the performance of companies in stock

NATIONAL STOCK EXCHANGE

KBB INVESTMENTS is a financial services enterprise that brings investors an array

ANGEL BROKING LTD

Stock Broking Distribution Portfolio

Equities, Distribution house Managing portfolios

As the relationship with investors matures, KBB INVESTMENTS endeavor to know

 Strong industry focus leading to innovative and informed

 Strong momentum-significant increase in market share in

 Dedicated focus on medium clients.

 Working with leading broking firms(Angel Broking Ltd).

KBB INVESTMENT is committed to be investor’s friend in their financial growth &

The main objectives of the project research is as follows.

Formation of need for project work

Developing working hypothesis

Primary source includes:-

Secondary source includes:-

A. Influence of the economy on the company.

These are the following factor: -

Raw Material and Inputs.

Capacity Installed and Utilized.

Demand and Market.

Government Policy with regard to Industry

Technical analysis is a method of evaluating the securities by analyzing the statistics

2. Price Moves In Trends

3. History Tends To Repeat Itself

The Importance of Trend

There are three types of trend:

Head and Shoulders Pattern

An indicator frequently used in technical analysis showing the average value of a

Elloitt Wave theory

BUDGET 2008-09 MEASURES RELATED TO IT SECTOR

 The budget has allocated Rs 1,680 crore to the Department of Information

 IT/ITES sector will benefit largely because of increase spending on education,

 The service tax on customised software is a negative for technology companies

 Companies like NIIT Technologies and MindTree Consulting will be adversely

 Tulip IT services will benefit due to implementation of SWAN projects

 Moving up the value chain: Indian software companies are consistently

 Moving up the value chain: Indian software companies are consistently

 Decreasing competitive advantages: Increasing competition from global

Investments 964.00 839.00 876.00 1,328.70

Net Current Assets

Adjusted E P S (Rs.) 78.06 65.42 90.65 68.38

Net Profit Margin (%) 27.37 28.05 26.17 27.28

Long Term Debt / Equity 0.00 0.00 0.00 0.00

Current Ratio 3.30 4.96 2.75 2.80

Dividend payout Ratio (Net Profit) 49.77 19.85 58.32 18.48

Infosys vis-à-vis IT majors.

1. EPS and DPS is highest for Infosys.

Price Fluctuations of Infosys Tech

Technical analysis of Infosys Technology ltd.

6. b. INDUSTRY ANALYSIS – ENGINEERING SECTOR

BUDGET 2008-09 MEASURES RELATED TO ENGINEERING SECTOR

 Aggressiveness in allotting UMPPs to prospective bidders expected to be helpful

 Setting up of a national fund for T&D reforms to aid growth prospects of

 Removal of exemption from additional customs duty on power generation,

 Initiatives like skill development programme and setting up of industrial training

 Increase in defense allocation to aid prospect of companies providing defense

 Allocation of UMPPs to support growth if equipment and service providers like

 Removal of exemption from additional customs duty on power generation,

 Skill development initiatives to pare pressure of attrition from companies like

 Infrastructure development: The government is focusing on development of