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SUMMER TRAINING PROJECT

ON

FUNDAMENTAL ANALYSIS AND ITS APPLICATION

AT

INDIABULLS

Submitted in partial fulfillment of the requirement for the degree of

MASTERS OF BUSINESS ADMINISTRATION

OF

Punjab Technical Unive!i"#Jalan$ha

%SESSION &'(')&'((*

SUBMITTED BY+ PROJECT AD,ISOR

Rahul Pa"hania



Cha-"e)

N./

CONTENT PAGE

NO/



DECLARATION 3

ACKNOWLEDGMENT 4

ABSTRACT 5

1 INTRODUCTION 6

2 COMPANY PROFILE 14

2.1 PRODUCTS AND SERVICES OFFERED BY INDIABULLS 16

2.2 INDIABULLS EQUITY ANALYSIS 17

2.3 SWOT ANALYSIS OF INDIABULLS 34

2.4 ANALYSIS OF TE SURVEY 36

3 RESEARC METODOLOGY 4!

3.1 SCOPE 42

3.2 LIMITATIO NS 42

4 WORK DONE DURING TRAINING PERIOD 435 DATA ANALYSIS " INTERPRETATION 45

6 FUNDAMENTAL ANALYSIS 56

6.1 ECONOMIC ANALYSIS 63

6.2 INDUSTRY ANALYSIS 67

6.3 INFOSYS TECNOLOGIES LTD. 7#

6.3.1 CAS FLOW STATEMENT $3

6.3.2 BALANCE SEET $46.3.3 RATIO ANALYSIS $5

6.3.4 ISTORICAL DATA $6

7 RECOMMENDATIONS AND CONCLUSION #4

7.1 REFERENCES #7

7.2 ANNE%URE #$

LIST OF TABLES



T&'()*+.

P&,-/0(&, P&) *+.

T&'() 1 How did you come to know about your stock broking firm? 46

T&'() 2 W&- &**0&( &( */+) 47

T&'() 3 W&- +0, 8,)),)*/) &9)*0) +, *9)-)*- 4$

T&'() 4 You are more interested in? 4#

T&'() 5 How do you trade? 5!

T&'() 6 On what basis do you buy a scrip? 51

T&'() 7 What is the value of your portfolio? 52

T&'() $ re you satisfied with the services of the current broker firm? 53

T&'() #!f some other broker firm promises you to provide better

services will you shift to that firm?

54

LIST OF FIGURES



F. *+. P&,-/0(&, P&)*+.

F. *+. 1 How did you come to know about your stock broking firm? 46

F. *+. 2 W&- &**0&( &( */+) 47

F. *+. 3 W&- +0, 8,)),)*/) &9)*0) +, *9)-)*- 4$

F. *+. 4 You are more interested in? 4#

F. *+. 5 How do you trade? 5!

F. *+. 6 On what basis do you buy a scrip? 51

F. *+. 7 What is the value of your portfolio? 52

F. *+. $ re you satisfied with the services of the current broker firm? 53

F. *+. #!f some other broker firm promises you to provide better

services will you shift to that firm?

54

F. *+. 1! O//08&-+* + *9)-+, 34

F. *+. 11 M&,:)- &,) + )&/ ',+:),&) , 35

F. *+.12 I*/+) + *9)-+, 0,9)); 36

F. *+. 13 V&(0) + 8+,-+(+ *9)-+, 0,9)); 37

DECLARATION



I< RAUL PATANIA< & -0;)*- + M.B.A.< QUEST INFOSYS GROUP OF I*--0-)

+ M&*&))*- &*; T)/*+(+< M+&(< ),)' ;)/(&,) -&- -) 8,+=)/- ,)8+,-

)*--(); >F0*;&)*-&( A*&( &*; - A88(/&-+*? +,*&( @+,: &*; ,)0(- +

+@* )+,-.

T & *+- '))* 0'--); * 8&,- +, 0(( -+@&,; &* +-), ;),)) +, ;8(+&.

$%ahul &athania'

()*))



ACKNOWLEDGEMENT

&reservation, inspiration and motivation have always played a key role in the success of any

venture) !n the present world of competition and success, training is like a bridge between

theoretical and practical working- willingly ! prepared this particular &ro.ect) /irst of all !

would like to thank the supreme power, the almighty god, who is the one who has always

guided me to work on the right path of my life) ! would like to thank Mr. Goldy Aggarwal

for granting me permission to under take the training in their esteemed organi0ation)

! epress my sincere thanks to others faculty members of M.B.A) department, for the

valuable suggestion and making this pro.ect a real successful)

! also thanks to Mr. Rahul Gupa $Bra!"h #a!ag$r'and Mr. %ag&' S'!gh $R$la'o!()h'p

#a!ag$r' for his timetotime guidance and support in completing the pro.ect) ! also thank

the other staff of INDIABULLS who devoted their valuable time by helping me to complete

my pro.ect)

4ast but not least, my sincere thanks to my parents and friends directly or indirectly

who helped me to bring this pro.ect into the final shape)

Rahul *aha!'a



ABSTRACT

6hare market fluctuates even &rime (inister 6nee0es) 7his implies that there is not such hard

and fact rule which can be applied to remain always in profit) *ut if these indicators are

known to investors then it will certainly help to reduce the risk) /undamental analysis helps

in reducing risk by giving a right to the performance of the shares) 7he pro.ect undertakes

detailed discussions on fundamental analysis ) survey was conducted to know rationale and

psychology of the investors) &ro.ect also gives me an insight how transactions are eecuted at

!ndia *ulls)



CAPTERI

INTRODUCTION



INTRODUCTION

7he pro.ect covers fundamental analysis of certain scrip:s that accounts for ma.or share

in *6;3< 6;=6;>) 7he shares that have been included cover almost each and every

sector of the !ndian ;conomy) 7he shares have been selected on the basis of the market

capitali0ation and *eta $unsystematic risk' as on 21st (arch, 2<<8) 7he shares from a

particular sector which has more market capitali0ation and less *eta have been taken

and certain indicators have been applied to these shares)

STOC0 MAR0ET IN INDIA

7he emergence of stock market can be traced back to 183<) !n *ombay, business

passed in the shares of banks like the commercial bank, the chartered mercantile bank,

the chartered bank, the oriental bank and the old bank of *ombay and shares of cotton

presses) !n alcutta, ;nglishman reported the @uotations of "A, #A, +A loans of ;ast

!ndia ompany as well as the shares of the bank of *engal in 183+) 7his list was a

further broadened in 1839 when the alcutta newspaper printed the @uotations of banks

like union bank and gra bank) !t also @uoted the prices of business ventures like the

*engal bonded warehouse, the Bocking ompany and the stoam tug company)

*etween 18"< and 18#<, only half a do0en brokers eisted for the limited business) *ut

during the share mania of 18+<+#, the number of brokers increased considerably) *y

18+<, the number of brokers was about +< and during the eciting period of the

merican ivil war, their number increased to about 2<< to 2#<) the end of merican

ivil war brought disillusionment and many failures and the brokers decreased in

number and prosperity) !t was in those troublesome times between 18+8 and 185# that

brokers organi0ed an informal association and finally as recited in the !ndenture

constituting the Crticles of ssociation of the ;changeD) On or about ninth day of

Euly one thousand and eight hundred and seventyfive, a few native brokers doing

brokerage business in shares and stocks resolved upon forming in *ombay an

association for protecting the character, status and interest of native share and stock

brokers and providing a hall or building for the use of the members of such association)

s a meeting held in the broker: Hall on the # th day of /ebruary, 1885, it was resolved

to eecute a formal deal of association and to constitute the first managing committee

and to appoint the first trustees) ccordingly, the rticles of ssociation of the



;change and the 6tock ;change was formally established in *ombay on 3rd day of

Becember, 1885) 7he ssociation is now known as C7he 6tock ;changeD)

7he entrance fee for new member was %e)1 and there were 318 members on the list,

when the echange was constituted) 7he numbers of members increased to 333 in 189+,

3+2 in 191+and "58 in 192< and the entrance fee was raised to %s)# in 1855, %s)1<<< in

189+, %s)2#<< in 191+ and %s) "8,<<< in 192<) t present there are 23 recogni0ed stock

echanges with about +<<< stock brokers) Organi0ation structure of stock echange

varies)

1" stock echanges are organi0ed as public limited companies, + as companies limited

by guarantee and 3 are nonprofit voluntary organi0ation) Of the total of 23, only 9

stock echanges have been permanent recognition) Others have to seek recognition on

annual basis)

7hese echange do not work of its own, rather, these are run by some persons and with

the help of some persons and institution) ll these are own as functionaries on stock

echange) 7hese are

1) 6tockbrokers

2) subbroker

3) market makers

") &ortfolio consultants etc)

1)' So"+,ro+$r)

6tock brokers are the members of stock echanges) 7hese are the persons who buy,

sell or deal in securities) certificate of registration from 6;*! is mandatory to act as a

broker) 6;*! can impose certain conditions while granting the certificate of

registrations) !t is obligatory for the person to abide by the rules, regulations and the

buylaw) 6tock brokers are commission broker, floor broker, arbitrageur etc)

Betail of registered brokers

7otal no) of

registered

brokers as on

31)<3)2<<"

ddition

during the

year 2<<"<#

ancellationF6urrender

of memberships

7otal no) of

registered

brokers as on

31)<3)2<<#

9+85 13# 3<3 9#19



2)' 6ubbroker

subbroker acts as agent of stock broker) He is not a member of a

stock echange) He assists the investors in buying, selling or dealing in securities

through stockbroker) 7he broker and subbroker should enter into an agreement in

which obligations of both should be specified) 6ubbroker must be registered 6;*! for

a dealing in securities) /or getting registered with 6;*!, he must fulfill certain rules

and regulation)

3)' (arket (akers

(arket maker is a designated specialist in the specified securities)

7hey make both bid and offer at the same time) market maker has to abide by bye

laws, rules regulations of the concerned stock echange) He is eempt from the margin

re@uirements) s per the listing re@uirements, a company where the paidup capital is

%s) 3 crore but not more than %s) # crore and having a commercial operation for less

than 2 years should appoint a market maker at the time of issue of securities)

")' &ortfolio consultants

combination of securities such as stocks, bonds and money

market instruments is called as portfolio) Whereas the portfolio consultants are the

persons or firms or companies who advise or direct or undertake the management or

administration of securities or funds on behalf of their clients)

!ndian 6tock ;change

!ndia 6tock ;changes are a structured marketplace for the proper conduct of

trading in company stocks and other securities) 7here are 23 recogni0ed stock

echanges in !ndia, including the Over the ounter ;change of !ndia for providing

trading access to small and new companies) 7he main services of the !ndia 6tock

;changes all over the country are to provide nationwide services to investors and to

facilitate the issue and redemption of securities and other financial instruments)

7he introduction of the concept of the stock echanges in !ndia came with the breaking

of the merican ivil War and the idea materiali0ed first in 185" with the foundation

of the *ombay 6tock ;change at the Balal 6treet in (umbai)



urrently, in all the !ndia 6tock ;changes the trading system is computeri0ed for more

efficient and transparent trading) 7here has been a significant boom in the degree of

development and volume of trading in the stock echanges )

7he two most important echange houses of the !ndian stock market are the *ombay

6tock ;change and the =ational 6tock ;change) (any of the regional



R$"og!'-$d So"+ E"ha!g$) '! I!d'a

Na#$ Addr$))

7H; *O(*Y 67OG ;>H=;&hiro0e Eee.eebhoy 7owers,Balal 6treet,(umbai "<< <<1)

7he hmedabad 6tock ;changessociation 4td,)

(anek howk,hmedabad 38< <<1

*=4O%; 67OG ;>H=;47B,)

I(I *lock, /irst /loor,Jnity *uilding,E)) %oad,*angalore #+< <<2)

*HJ*=;6HW% 67OG;>H=; 66=), 47B,)

215,*udhra.a *uilding,Eharpada uttack %oad,*hubaneswar, Orissa 5#1

<<+)

6tock echanges have obtained the membership of these two stock echanges in

!ndia) 7he inde of the *ombay 6tock ;change, *6; 6ense is a value

weighted inde composed of 3< companies)

nother significant feature of the !ndia 6tock ;changes is the regulatory

agency, 6ecurities and ;change *oard of !ndia or 6;*! which supervises the

activities of stock markets, regulates the functioning of stock echanges andintermediaries and registers /oreign !nvestors trading in !ndian scrips)



7H; J4J77 67OG;>H=; 66O!7!O= 47B,)

5, 4yons %ange ,alcutta 5<< <<1)

OH!= 67OG ;>H=; 47B),Keekshanam %oad&)*) 3#29,;rnakulam,

ochi +82 <3#)

7H; B;4H! 67OG ;>H=;66=) 47B),

3"F"*,saf li %oad, =ew Belhi 11< <<2)

7H; JH7! 67OG;>H=; 47B,)

6araf *uilding nnee )7)%oad,uwahati 581 <<1)

7H; HYB;%*B 67OG;>H=; 47B,)

*ank 6treet,Hyderabad #<< <<1)

E!&J% 67OG ;>H=; 47B,)

%a.asthan hamber*hawan,()!) %oad,Eaipur 3<2 <<3)

G=% 67OG ;>H=;47B)

"th /loor,%ambhavan omple,Godialbail,(angalore #5# <<3)

7H; 4JBH!= 67OG

;>H=; 66=) 47B)

4a.pat %ai (arket,

lock 7ower,4udhiana 1"1 <<8)

(B%6 67OG ;>H=;47B)

I;change *uildingI,&ost *o =o)183,11, 6econd 4ine *each,hennai +<< <<1

(BHY &%B;6H 67OG;>H=; 47B)

+5, *ada 6arafa,!ndore "#2 <<2)

7H; (BH 67OG;>H=; 47B)

*ihar !ndustries ssn)&remises,6inha 4ibrary %oad,&atna 8<< <<1)

&J=; 67OG ;>H=; 47B)

1155,*udhwar &eth,*ank of (aharashtra *ldg),2nd /loor,*a.irao %oad,&une "11 <<2)

6J%6H7% GJ7H 67OG;>H=; 47B),

",6waminarayan urukul*ldg),



Bhebarbhai %oad,%a.kot 38< <<2)

7H; J77% &%B;6H 67OG

;>H=; 66=) 47B)

&adam 7owers,1"F113,ivil 4ines,

Ganpur 2<8 <<1

KBOB% 67OG ;>H=;47B)

1<1, &aradise omple,7ilak 7oad,6aya.i un.,Kadodara 39< <<#)

O!(*7O%; 67OG ;>H=;hamber 7ower,8F532,vvinashi %oad,oimbatore +"1 <18)

(;;%J7 67OG ;>H=; 47B)

Gingsway *uilding,3"#, *ombay *a0ar,(eerut antonment 2#<<<1)

O7 ;>H=; O/ !=B!)(aker 7owers L/L uffe&arade,*ombay "<< <<#)

7H; =7!O=4 67OG;>H=; O/ !=B! 47B)

(ahindra 7owers,Wing, %*, Worli,(umbai 18

7H; !=7;%O=;7;B 67OG;>H=; O/ !=B! $!6;'



CAPTERII

COMPANY PROFILE



ABOUT INDIABULLS

!ndiabulls is !ndiaIs leading retail financial services company with 13# locations spread

across 9# cities) While our si0e and strong balance sheet allow us to provide you with varied

products and services at very attractive prices, our over 5#< lient %elationship (anagers arededicated to serving your uni@ue needs) !ndiabulls is lead by a highly regarded management

team that has invested crores of rupees into a world class !nfrastructure that provides our

clients with realtime service 2"f5 access to all information and products) Our flagship

!ndiabulls &rofessional =etwork offers realtime prices, detailed data and news, intelligent

analytics, and electronic trading capabilities, right at your fingertips) 7his powerful

technology is complemented by our knowledgeable and customer focused %elationship

(anagers) We are creating a world of 6mart !nvestor) !ndiabulls offers a full range of

financial services and products ranging from ;@uities to !nsurance to enhance your wealth

and hence, achieve your financial goals) !ndiabullsI lient %elationship (anagers are

available to you to help with your financial planning and investment needs) 7o provide the

highest possible @uality of service, !ndiabulls provides full access to all our products and

services through multichannels) !ndiabulls offers a full range of financial services and

products ranging from ;@uities to !nsurance to enhance your wealth and hence achieve your

financial goals) Our !ndiabulls &rofessional =etwork offers realtime prices, detailed data and

news, intelligent analytics, and electronic trading capabilities, right at your fingertips) 7his



powerful technology is complemented by our knowledgeable and customer focused

%elationship (anagers) !ndiabullsI %elationship (anagers are available to you to help with

your financial planning and investment needs) 7o provide the highest possible @uality of

service, !ndiabulls provides fun access to all products and services through multichannels)



PRODUCTS AND SER,ICES OFFERED BY INDIABULLS

;@uities Berivatives omprehensive services for independent investors,

active traders =on%esident !ndians)

!ndiabulls ;@uity nalysis &remium research on "<1M companies updated

daily)

Bepository 6ervices Kalue added services for seamless delivery

!nsurance 7ake care of your life while you take care +

business)

E1UITY AND DERI,ATI,ESOur %etail ;@uity *usiness caters to the needs of individual !ndian and =onresident !ndian

$=%!' investors) !ndiabulls offers broker assisted trade eecution, automated online investing

and access to a!l !&OIs)

7hrough various types of brokerage accounts, !ndiabulls offers the purchase and sale of

securities which includes ;@uity, Berivatives and ommodities !nstruments listed on

=ational 6tock ;change of !ndia 4td $=6;!4', 7he 6tock ;change, (umbai $*6;' and

=B;>)!ndiabulls 6ignature ccount omprehensive services including research and investing

guidance for independent investors)

&ower !ndiabulls !ndiabulls is dedicated to empower ctive 7raders through personal

service and advanced trading technology)

=on%esident !ndian $=%!' !nvestor 6ervices With an etensive range of investment

products, you will discover an unwavering commitment to helping you



INDIABULLS E1UITY ANALYSAS

*uilding and maintaining your ideal portfolio demands ob.ective, dependable information)

!ndiabulls ;@uity nalysis helps satisfy that need by rating stocks based on carefully

selected, factbased measures) nd because weIre not focused on investment banking, we

donIt have the same conflicts of interest as traditional brokerage firms) 7his ob.ectivity is

only one important difference in our ratings) to ; ratings are applied to over "<1 !ndian

head@uartered stocks using a wide variety of investment criteria from four broad categories)

7he !ndiabulls ;@uity nalysis model attempts to gauge investor epectations, since stock

prices tend to move in the same direction as changes in investor epectations)

6tocks with low and potentially !mproving investor epectations tend to receive or* ratings

6tocks with high and potentially falling investor epectations tend to receive B or ;

ratings

Over the net 12 months, rated stocks have a return outlook of strongly outperforming the

market while ;rated stocks have a return outlook of strongly underperforming the market)

DEPOSITORY SER,ICES

!ndiabulls is a depository participant with the =ational 6ecurities Bepository 4imited and

entral Bepository 6ervices $!ndia' 4imited for trading and settlement of demateriali0ed

shares) !ndiabulls performs clearing services for all securities transactions through its

accounts) We offer depository services to create a seamless transaction platform eecute

trades through !ndiabulls 6ecurities and settle these transactions through the !ndiabulls

Bepository 6ervices) !ndiabulls Bepository 6ervices is part of our value added services for

our clients that create multiple interfaces with the client and provide for a solution that takes

care of all your needs)



I!d'a ,ull) produ")

I!d'a,ull) /'!a!"'al )$r0'"$) Ld.

!ndiabulls /inancial 6ervices 4td is listed on the =ational 6tock ;change, *ombay 6tock

;change and 4uembourg 6tock ;change) 7he market capitali0ation of !ndiabulls is

around J6B 3,33< million $3<th 6eptember 2<<5') onsolidated net worth of the group is

around J6B 9#< million $3<th 6eptember 2<<5') !ndiabulls and its group companies have

attracted more than J6B 8<< million of e@uity capital in /oreign Birect !nvestment $/B!'

since (arch 2<<<) 6ome of the large shareholders of !ndiabulls are the largest financial

institutions of the world such as /idelity /unds, oldman 6achs, (errill 4ynch, (organ

6tanley and /arallon apital)

*usiness of the company has grown in leaps and bounds since its inception) %evenue of the

company grew at a % of 1#9A from /Y<3 to /Y<5) Buring the same period, profits of

theNcompanyNgrewNatNaN%NofN18"A)

!ndiabulls became the first company to bring /B! in !ndian %eal ;state through a EK with

/arallon apital (anagement 44, a respected J6 based investment firm) !ndiabulls has

demonstrated deep understanding and commitment to !ndian %eal ;state market by winning

competitive bids for landmark properties in (umbai and Belhi)

Co!)u#$r F'!a!"$

!ndiabulls being a retail focused organi0ation fulfills the credit need of a large percentage of

population in !ndia) 7he key aspect of !ndiabulls business model is to provide an etremely

uni@ue customer eperience) 7he blend of power of the !nternet with personali0ed services

allows !ndiabulls to epand its geographical coverage and capture a greater share in the

highly competitive retail market) We offer consumer loans, home loans, personal loans,

securities brokerage, and other financial products and services to retail customers from across

+"< !ndiabulls offices in 125 leading cities of the country)



Morgag$ Loa!)

!ndiabulls has commenced lending of (ortgage 4oans to prospective customers under the

flagship of !ndiabulls Housing /inance 4td) Here we enable homeseekers to access finance

to buy their homes) We also provide plot loans, 4oan against %esidential, ommercial and

%ental &roperty, thereby enabling the borrower to leverage the property owned to fund any

legitimate needs be it *usiness ;pansion, hildIs ;ducation, hildIs (arriage or for Holiday

broad)



R$al E)a$

!ndiabulls %eal ;state 4imited $!%;4' with pro.ects covering a total land area in ecess of

1<<<< acres is one of the largest listed real estate companies in !ndia and a leading national

player across multiple realty and infrastructure sectors) !%;4 pro.ects include Highend

Office and ommercial 6paces, &remium %esidential Bevelopments, !ntegrated 7ownships,

4uury %esorts and 6pecial ;conomic ones) !%;4 is partners with internationally renowned

consultants and construction companies for its developments at various stages of eecution)

I!d'a,ull) *ow$r S$r0'"$) L'#'$d 1IB*SL2

/ounded in 6eptember 2<<5, !ndiabulls &ower 6ervices 4imited $!*&64' is part of !ndiabulls

roup) !*&64 has been founded as a subsidiary of !ndiabulls %eal ;state 4imited $!*%;4')

!ndiabulls has ventured into the power business to take advantage of the opportunity

presented by the huge gap in Bemand and 6upply of power in !ndia) With ;lectricity ct



2<<3 easing the regulatory environment and with 6tate Jtilities becoming financially healthy

over the last couple of years, private participation in the &ower 6ector is booming, providing

ecellent opportunities for investment and nation building)

7he =ational ;lectricity &olicy $=;&' notified in 2<<# has envisaged an ambitious target of

creation of #A spinning reserve by 2<12) 7his re@uires obliteration of energy shortage across

the country) However, even after one year of =;& notification, the statistics diverge

significantly from what is envisaged) !nstead of reduction in peak and energy shortages, they

have increased significantly) !n fact for the period between pril 2<<+ and (ay 2<<+ energy

shortage and peak shortage in the country were 1<)5A and 13)1A respectively)

I!d'a,ull) Whol$)al$ S$r0'"$) Ld 1IBWSL2

/ounded in mid 2<<5, !ndiabulls Wholesale 6ervices 4imited $!*W64' is a part of !ndiabulls

roup, one of the top 2# business houses in !ndia with a combined market capitali0ation of

over J6P 5)# billion across different businesses) !*W64 has been founded as a subsidiary of

!ndiabulls %eal ;state 4imited $!*%;4') 7he company has been formed to take advantage of

the massive organi0ed retail opportunity that is available in !ndia, 6ome key facts about the

!ndian retail industryQ

1) %etail is !ndia:s largest industry, accounting for over 1< per cent of the country:s

B& and around eight per cent of the employment)

2) 7he market si0e of !ndian retail industry is about J6 P312 billion to grow to J6 P "2#

billion by 2<1<)

3) Organised retailing comprises only 2)8 per cent F J6 P 9 billion of the total retailing

market)

") 7he organised retail sector is epected to grow to a J6 P 5< billion market by 2<1<)



!*W64 managed by highly @ualified professionals having years of eperience in organised

retail and related industries is very well positioned to be the top player in the !ndian retail

industry, some of the factors that contribute to achieving this goal areQ

1) 6trong &an!ndia presence planned with big bo retail stores, cash and carry

operations, with hypermarkets and specialty stores to follow)

2) /irst phase of # wholesale cash carry stores to be launched in early 2<<8)

3) n investment of %s) 1,#<< crores $J6 P 32# million apro' will fuel the first phase of

the retail foray for !*W64)

") &artnerships with top !nternational *rands, %etailers and !nvestors will offer access to

world class goods in !ndia)

#) /ull fledged destination retailing which includes multiplees, gamingF fitness, food

court facilities etc



GROWT3 4AC3IE5MENTS

GROWT3 OF INDIABULLS



!ndiabulls real estate&vt ltd

!ndia bullsinsurance

dvisory &vt ltd

!ndia bulls credit6ervices ltd

!ndiabulls securities&vt ltd

Indiabulls financial services ltd



!ndiabulls has emerged as one of the leading and fastest growing financial company in less

than two year, since its initial public offering in 6eptember 2<<") !t has a market

capitali0ation of around J6B 8<< million and consolidated net worth of around J6B #<<

million)

E2"en!ive -.$uc" an3eEnhance$ cu!".4e e2-eiencePe!.nali5e$ !evice "h.u3h ela"i.n!hi- 4ana3eUn$e!"an$! l.cal 4a6e" $#na4ic!E2-an$in3 3e.3a-hical an$ .nline -e!ence

What Indiabulls OffersWhat Indiabulls OffersWhat Customers ExpectWhat Customers Expect

7i$e an3e .8 !evice! un$e .ne ..8 7i$e an3e .8 !evice! un$e .ne ..8

&9 :.u Su--." ; Ea!e .8 acce!!&9 :.u Su--." ; Ea!e .8 acce!!

Pe!.nali5e$ A""en"i.nPe!.nali5e$ A""en"i.n

(<=9>> ?'=9@

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Increasing Number of CustomersIncreasing Number of Customers



2000-01 • !ndiabulls /inancial 6ervices 4td) established !ndia:s one of the first

trading platforms with the development of an in house team)

2<<1<3•

!ndiabulls epands its service offerings to include ;@uity, /O,Wholesale Bebt, (utual fund, !&O distribution and ;@uity %esearch)

2<<3<"

• !ndiabulls ventured into !nsurance distribution and commodities trading)

• ompany focused on brand building and franchise model)

2<<"<#

• !ndiabulls came out with its initial public offer $!&O' in 6eptember 2<<")

• !ndiabulls started its consumer finance business

•

!ndiabulls entered the !ndian %eal ;state market and became the firstcompany to bring /B! in !ndian %eal ;state)

• !ndiabulls won bids for landmark properties in (umbai)

2<<#<+

• !ndiabulls has ac@uired over 11# acres of land in 6onepat for residential

home site development)

•

(errill 4ynch and oldman sac, one of the renowned investment banks inthe world have increased their shareholding in !ndiabulls)

• !ndiabulls is a market leader in securities brokerage industry, With around

31A share in online trading,

• /arallon apital and its affiliates, the world:s largest hedge fund

committed %s) 2<<< million for !ndiabulls subsidiaries Ki0) !ndiabulls

redit 6ervices 4td) and !ndiabulls Housing /inance 4td)

• 6teel 7ycoon (r) 4= (ittal promoted 4=( !ndia !nternet venture 4td)

ac@uired 8)2A stake in !ndiabulls redit 6ervices 4td)


http://slidepdf.com/reader/full/127336102-indiabulls-coppany 31/101GEOGRA*3ICAL AREA CO5ERAGE

2<<+<5

• !ndiabulls entered in a #<F#< .oint venture with B4/, Genneth *uilders

Bevelopers $G*B') G*B has ac@uired 3#)8 acres of land from Belhi

Bevelopment uthority through a competitive bidding process for %s

"#< crore to develop residential apartments)

• !ndiabulls /inancial 6ervices 4td) is included in the prestigious (organ

6tanley apital !nternational !nde $(6!')

/arallon apital has agreed to invest %s) +,""< million in !ndiabulls /inancial6ervices 4td)



!ndiabulls starts its .ourney in y$ar 6778 with a registered office in N$w D$lh'. Year 2<<3

describe that it have only 2# branches in !ndia )*ut now it reaches "1" branches in Eune

2<<+)!t shows its continuously growth)

INCREASE IN NO. OF RMS

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'? Mach'9 Mach'> Mach '> June '< June ' June ' June

'? Mach

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'< June

' June

' June



!ndiabulls is serious about maintaining the relations with the customer and that is why they

appointed the relationship managers within their premises to offer the best and delightful

services to the customer)

S7OT ANALYSIS OF INDIABULLS

Incea!e$ -ene"a"i.n .8 cu!".4e! "h.u3h RM!

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tool that identifies the strengths, weaknesses, opportunities and threats of an organi0ation)

6pecifically, 6WO7 is a basic, straightforward model that assesses what an organi0ation can

and cannot do as well as its potential opportunities and threats) 7he method of 6WO7

analysis is to take the information from an environmental analysis and separate it into

internal $strengths and weaknesses' and eternal issues $opportunities and threats') Once this

is completed, 6WO7 analysis determines what may assist the firm in accomplishing its

ob.ectives, and what obstacles must be overcome or minimi0ed to achieve desired results)

(/ STRENGT:S

=7!O=4 &%;6;=;Q !ndiabulls has a national presence) !t has an advantage

over the local players like master capital and competent /inman because !ndiabulls can

also cater to the needs of the investors in other parts of the country)

OOBW!44Q Bue to its national presence, !ndiabulls has a very good brand image) !t

has its own identity in this particular business)

6;%K!;6 =B &%OBJ76Q 7he survey conducted revealed that the services

provided by the !ndiabulls like portfolio management services and marginal funding gives

it a huge advantage over other players competing in the city)

!ndiabulls has got a very wonderful and powerful software)



&/ 7EA0NESSES

OJ=7 O&;=!= H%;6Q 7odayIs scenario is very competitive) ll other

competitors are taking very nominal charges for the account opening but the account

opening charges are @uite high as compared to its competitors) 6o, its it ma.or weakness) *%OG;%;Q 7he brokerage charges are a little bit high than the competitors) 6o it

is facing a stiff competition from its competitors)

?/ OPPORTUNITY

HJ; J=7&&;B (%G;7Q !nspite of its national presence, there is @uite huge

untapped market) 6o they can epand its business)

*=G!= 6;7O%Q !ndiabulls has entered into banking sector) 7hey are into

personal loans)

9/ T:REATS

6;*! J!B;4!=;6Q !f 6;*! give certain guidelines, which can adversely affect the

!ndiabulls, it can prove to be ma.or threat)

O(&;7!7O%6Q 7he competitors like Gotak 6ecurities are the ma.or threat to

!ndiabulls at the =ational level) *ut in handigarh other local players like ompetent

/inman is the ma.or threat to its business)



ANALYSIS OF T:E SUR,EY

SAMPLE SIE+ >'

survey was conducted to know the rationale and psyche of the investors in the handigarh

city in various broker firms) 7his survey was conducted for 5 days and data was collected)

7he @uestionnaire was designed in such a way that we can easily come to know about how

investors invest in the security and how other broker firms lack behind !ndia *ulls and how

they are ahead of !ndia *ulls) 7he suggestions will be given to !ndia *ulls on the basis of the

survey conducted and also the plus points of !ndia *ulls will be told to them so that they can

concentrate on those points and can grasp more market share in handigarh city and nearby

places)

7he survey was conducted all over handigarh and survey consist if +<A serviceman, 2<A

others like retired persons, small retailers and rest 2<A were businessman) ! asked the

eecutives that only service class people invest) 7hey told that generally businessmen donIt

come to their places) 7hey place their orders from their place only and they come very rare)

OCCUPATION OF T:E IN,ESTORS

SERVICEMAN

BUSINESSMAN

OTERS

F.1!

=et, they were asked about the brokerage they pay to their brokers)

6ome were paying according to the norms fied by the brokerage firm and some had

negotiated according to the volume and their negotiation skills) *ut the investors surveyed of

HB/ online were paying as mentioned in their brochure)

investors surveyed of HB/ online were paying as it is as mentioned in their brochure)

7he most of the investors were approached by the respective eecutives and rests were

recommended by their friends) 7hey told me that eecutives on the recommendation of the

investor give a call to the potential investors and they approach in this way to the investors)



7he survey conducted consisted of "< investors covering main brokerage firms operating in

the city) 7his includes !ndia *ulls 6ecurities !td $2<A' ompetent /inman $2<A', HB/ on

line $1<A', (aster apital $2<A', Gotak 6ecurities $2<A', and =et Worth $1<A'

/ig)11

7he net aspect on which the survey was conducted was to know which income group

generally invest in the share market) 7o solve this problem the whole group was divided into

the income group of less than 1 lakh, 11)# lakh, 1)#2)# lakh and more than 2)# lakh)

Only 1<A of the investors surveyed were having their family an income of less than 1 lakh

and they invest in share market) 7he value of their portfolio was around %est 2<,<<<

2<A of the investors surveyed were having their family annual income between 11)# lakh)

On an average, the market value of their portfolio on an average varies in between %s "<,<<<

%s +<,<<<) 7hey are bothered about ups and downs in the market but are little less bothered

as compared to the income group of less than %s 1 lakh) 7hey invest in small caps and mid

cap companies like =!&&O=, !/! etc)

2<A of the investors surveyed belong to the income group having family annual income

between 1)# lakh2)# lakh) On an average the market value of the portfolio varies between %s

+<,<<<%s 1,2<,<<<) 7hey invest in mid caps and sometimes in some big companies like

!nfosys etc)

%est #<A of the investors belong to the income group having family annual income of more

than # lakh) 7he average market value of the portfolio varies in between %s 1,2<,<<< %s



2,#<,<<<) 7hey invest in those companies which have high reputation in the market and gives

good returns)

7he investors were asked whether they invest from their regular earnings or income from

other sources? 7hey said we invest when we get some earnings from other sources like some

money from 41 and bank interests etc)

1<A less than 1 lakh2<A 11)# lakh2<A 1)#2)# lakh#<A more than 2)#lakh

/ig)12ll the investors $surveyed' have !nitial &ublic Offerings $!&O' and secondary markets as

their preference avenues for the investment) 7hey are interested in !ntraday settlement and

short term investment) Kery few are interested in long term investment)

7he ma.or difference lies in the services provided by the brokerage firm) 7he product

delivered is same but services provided by one firm distinguish it from other company) Here,

!ndia *ulls is having the advantage because it is providing /inancial 6tatements, dvisory

6ervices, (argin /unding and &ortfolio (anagement 6ervices) *ut some of the brokerage

firms are lacking behind in some of the services like HB/ is not providing any advisory

services and (argin /unding) ompetent /inman is not providing (argin /unding and

&ortfolio management services)



Ruestionnaire was designed in such a way that investors were asked to rank the services

being provided to them as 1,2,3," etc) (a.ority of the investors rank advisory services and

margin funding as their priority) Kery few investors invest on basis of fundamental analysis

and on the recommendation of the friend) 7hey generally invest on the basis of the news and

on the recommendation of the broker)

7he investors surveyed have portfolio varying from as low as %s 1<,<<< to as high of %s 1#,

<<,<<<) 3<A of investors were having their portfolio of less than %s #<,<<<) 2<A of the

customers are having their portfolio ranging from %s#<, OOO%s 1, <<,<<<) 3<A of the

investors were having their portfolio in between the range of %s 1, <<,<<< %s 2, #<,<<<) 2<A

of the investors were having their portfolio of more than %s 2,#<,<<<)

ll the investors know that there are some other broker firms operating in the city) 7he main

advantage for !ndia *ulls is that all the investors know that it is Operating in the city) 5<A of

the customers are ready to shift to other broker firms if they will be provided with better

services)

3<A 4ess than #<,<<<2<A#<,<<<1,<<,<<<2<A1,<<,<<<2,#<,<<<2<Amore than 2,#<,<<<

/ig)13



C3A*TER 9

DATA BASE AND RESEARC3 MET3ODOLOG:



DATA BASE AND RESEARC: MET:ODOLOGY

OBJECTI,E OF T:E PROJECT

7he pro.ect is undertaken with the following ob.ectivesQ

1) 7o know how online trading takes place)

2) 7o know the rationale and psychology of the investors, how they invest and what are

7he ravenues for the investment)

3) 7o conduct fundamental analysis in !ndian 6tock (arket)

MET:ODOLOGY

Buring the training period the operations of online trading was known from the %elationship

(anager) /or the purpse of second ob.ective i)e) investor:s analysis @uestionnaire were got

filled from #< investors) 7he brief summary is shown in table belowQ

6(&4; 6!; #<

6(&4; (;7HOB onvenience sampling

&O&J47!O= WO%G!= 466, *J6!=;66

466 %;7!%;B &;%6O=6

F+, -) 80,8+) + /+*;0/-* 0*;&)*-&( &*&( -) ;&-& ,)(&-); -+ /+8&*)<

*;0-, &*; )/+*+ @),) /+(()/-); +, 4 )&, -&,-* ,+ 2!!4!5 -+ 2!!7!$.

V&,+0 *&*/&( &*; -&--/&( -)/*0) (:) CAPM< ,&-+ &*&(< C& F(+@

&*&(< 8),/)*-&) &*&(.

MET:OD OF COLLECTING DATA AND T:EIR SOURCES

1) uidance from &ro.ect guide and ompany guide)

2) %eferring to previous pro.ects done)

3) Biscussions with other 6!& trainees doing training in the same area)") /rom websites of respective companies)



SCOPE

7his pro.ect gives me ample scope to know the share market and know the psychology of the

investors residing in handigarh and nearby places) *ut the scope was limited to certain

shares only and also some of the techni@ues were used) 7he pro.ect has allowed me to learn

the various aspects of the share market and various tools which can be applied to know the

different aspects of buying and selling)

LIMITATIONS

1) Only certain indicators were applied to certain shares which not hard and fast rules

which can be applied while is buying the shares)

2) !nvestors of only handigarh and nearby places were covered)

3) s a trainee, limitation of analy0ing and interpreting the data)

") 7ime constraint was the main hurdle in conducting survey and taking out the ratios)

#) &eople donIt respond in a very good manner and they donIt give time for filling up the

@uestionnaires)

+) Only dividend discount model and &( model has been applied for valuation of the

shares)



C3A*TER I5

WORK DONE DURING TRAINING *ERIOD



7OR0 DONE DURING TRAINING PERIOD

D0,* -) -,&** 8),+; +((+@* 8,+/);0,) +, +*(*) -,&** @& ()&,*-

LOGON+

/irst of all, the re@uirement for trading is to log on !ndiabulls has its software &ower !ndia

*ull $&!*' which makes the trading possible)7here are two types of transactions

1' *uy

2' 6ell

BUY TRANSACTION

Chec6 "he bu#in3 li4i"

!n the buying transaction, the system will check the buying limit of the buyer after checkingthe balance) !f there is sufficient balance in the account only then the &!* will proceed further

otherwise it will display that the client has insufficient balance to eecute the balance)

Place4en" .8 .$e

fter checking the limit, the customer places the order in accordance with limit

available in his account) !f still customer places order above the limit the reason for re.ection

will be displayed immediately)

O$e acce-"e$

7he order if accepted it will be transmitted to the echange for the eecution) On

eecution of the transaction the confirmation message is displayed on the screen if the price

strikes) *ut if the price doesnIt strikes it will remain pending) !f the customer feels to modify

the price, it can modify anytime before the striking of the desired price) !f the order is

confirmed, it is flashed on the screen) On eecution the confirmation may be sent to the

customer mobile or email or contract note may be sent to the customer by hand)



SELL TRANSACTION

!n case of the sell transaction, the procedure is more or less same) /irst of all the

software will check the B& accounts for the @uantity)

; R$&$" ord$r

7he order may be re.ected if more number of shares has been entered than it has been

in the B& account) 7he reasons for the same will be flashed on the computer screen)

; A""$p ord$r

!f the order is accepted the order will be transmitted to echange for the eecution)7he investor can give the price of its own or it may sell at the market price) !f he has given

his own price the order will remain pending until and unless the price strikes)

; *$!d'!g ord$r

!f the price doesnIt strike the order will remain pending and if investor feels at any

point before the striking of the price to change the offer price he can modify or even delete

the transaction)

; Co!/'r#a'o! o/ h$ ord$r

!f the order is confirmed it is immediately flashed on the screen) On eecution the

confirmation may be sent to the customer mobile or email or contract note may be sent to the

customer by hand)



C:APTER),

DATA ANALYSIS;

INTERPRETATION



1ue!* How did you come to know about your stock broking firm?

7able 1

/ig)1

INTERPRETATION

particulars percentage

=ewspaper 8A

/riends "8A

;ecutive 28A

others 1+A

FIRMS

$

4$2$

16

N)@8&8),F,)*;

E)/0-9)

+-),



7he above data depict that most of the investors came to know about the firm from their

friendsFac@uaintances) 28A of the respondents came to know about the firm through its

eecutives which shows that the firm is efficient enough to attract customers)

1UES* What is the annual family income?

7able 2

F.2

particulars &ercentage

4ess than 3 lakh 1+A

3# lakh 3+A

#1< lakh 3<A

(ore than 1< lakh 18A

Annual Inc.4e

16C

36C3!C

1$C L) -&* 3 (&:

3A5 (&:

5A1! (&:

M+,) -&* 1! (&:



INTERPRETATION

7he above figure shows that most of the respondents have their annual earning between 3 S #

lakh which make them a good target customer:s for the stock broking firms though people

with comparatively less annual income have been doing investments)

1ue!* What is your preference avenue for investment?

7able 3


!nitial public

offerings$!&O'

2"A

7rading market 31A

(utual funds "#A

F.3

A,ENUE FOR IN,ESTMENT

24

31

45

I*-&( 80'(/ +),*IPO

T,&;* &,:)-

M0-0&( 0*;



INTERPRETATION

7he above figure depicts that most preferred avenue is (utual funds, followed by !&Os and7rading markets)



1ue!* You are more interested in?

7able "

F.4

FIELD OF INTEREST

31C

42C

27C I*-,&;&6

L+* -),

S+,- -),

INTERPRETATION

!t can be easily inferred from the above diagram that respondents are investing for longterm

as compared to other time periods) !t has also been observed that intraday transactions are

gaining popularity)


!ntraday 31A6hort term "2A

4ong term 25A



Q0) How do you trade?

7able #

&articulars &ercentage

7hrough phone 3"A

7hrough internet "2A

*y visiting broker firm

yourself

2"

F.5

TRADING

34

42

24

T,+0 8+*)

T,+0 *-),*)-

B6 91-* ',+:), ,5

6+0,1)(

INTERPRETATION

;vidently, people being technology friendly- prefer online trading) 7he above pie chart shows

that "2A of respondents prefer online trading followed by call and trade 3"A)



Q0) On what basis do you buy a scrip?

7able +


On the recommendation

of the broker

32A

/undamental analysis 11A

On the recommendation

of your friend

1#A

Yourself 15A

On the basis of news 2#A

/ig)+

BUYING OF SCRIP

32C

11C15C

17C

25C

O* -) ,)/+)*;&-.+*

+ -) ',+:),

F0*;&)*-&( &*&(6.

O* -) ,)/+)*;&-.+*

+ 6+0, ,.)*;

Y+0,)(

O* -) '&. + *)@

INTERPRETATION

!t has been observed that 32A respondents buy on the recommendation of their broker)

2#A rely on the news and 15A on their friends)



1ue!* What is the value of your portfolio?

7able 5

&articulars percentage

%s #<,<<< %s 2,<<,<<< 21A

%s 2,<<,<<< %s #,<<,<<< 38A

%s #,<<,<<< %s 1<,<<,<<< 32A

(ore than %s 1<,<<,<<< 9A

/ig)5

PORTFOLIO ,ALUES

21

3$

32

#

R 5!<!!! R 2<!!<!!!

R 2<!!<!!! R 5<!!<!!!

R 5<!!<!!! R

1!<!!<!!!M+,) -&* R 1!<!!<!!!

INTERPRETATION

!t is evident from above data and figure that 38A respondent:s portfolio value falls

between 2,<<,<<<#,<<,<<<) Whereas with 32A portfolio value of respondents are not far

behind) 7his means that respondents believe in high value portfolio)



Q0) re you satisfied with the services of the current broker firm?

7able 8

/ig)8

SER,ICE OF BRO0ERS

Y)

72

N+

2$

Y)

N+

INTERPRETATION

52A of respondents are satisfied with services of current broker firm)


Yes 52A

=o 28A



Q0) !f some other broker firm promises you to provide better services will you shift to

that firm?

7able 9

&articula

r

percentage

Yes 2+A

=o +#A

anIt say 11A

/ig)9

S:IFT TO OT:ER FIRMS

25

64

11

Y)

N+

C&*G- &

INTERPRETATION

(a.ority of respondents are not ready to shift which depicts that they are satisfied with

the services of broker)



CAPTERVI

FUNDAMENTAL ANALYSIS



7ha" i! Fun$a4en"al Anal#!i!

/undamental analysis is the eamination of the underlying forces that affect the well being of

the economy, industry groups, and companies) s with most analysis, the goal is to derive a

forecast and profit from future price movements) t the company level, fundamental analysis

may involve eamination of financial data, management, business concept and competition)

t the industry level, there might be an eamination of supply and demand forces for the

products offered) /or the national economy, fundamental analysis might focus on economic

data Tto assess the present and future growth of the economy) 7o forecast future stock prices,

fundamental analysis combines economic, industry, and company analysis to derive a stockIs

current fair value and forecast future value) !f fair value is not e@ual to the current stock price,

fundamental analysts believe that the stock is either over or under valued and the market price will ultimately gravitate towards fair value) /undamentalists do not heed the advice of

the random walkers and believe that markets are weakform efficient) *y believing that prices

do not accurately reflect all available information, fundamental analysts look to capitali0e on

perceived price discrepancies)

Geneal S"e-! ". Fun$a4en"al Evalua"i.n

;ven though there is no one clearcut method, a breakdown is presented below in the order an

investor might proceed) 7his method employs a topdown approach that starts with the

overall economy and then works down from industry groups to specific companies) s part

of the analysis process, it is important to remember that all information is relative) !ndustry

groups are compared against other industry groups and companies against other companies)

Jsually, companies are compared with others in the same group) /or eample, a telecom

operator $Keri0on' would be compared to another telecom operator $6* orp', not to an oilcompany $hevron 7eaco')

Ec.n.4ic F.eca!"

/irst and foremost in a topdown approach would be an overall evaluation of the general

economy) 7he economy is like the tide and the various industry groups and individual

companies are like boats) When the economy epands, most industry groups and companies

benefit and grow) When the economy declines, most sectors and companies usually suffer)

(any economists link economic epansion and contraction to the level of interest rates)



!nterest rates are seen as a leading indicator for the stock market as well) *elow is a chart of

the 6& #<< and the yield on the 1<year note over the last 3< years) lthough not eact, a

correlation between stock prices and interest rates can be seen) Once a scenario for the overall

economy has been developed, an investor can break down the economy into its various

industry groups)

G.u- Selec"i.n

!f the prognosis is for an epanding economy, then certain groups are likely to benefit more

than others) n investor can narrow the field to those groups that are best suited to benefit

from the current or future economic environment) !f most companies are epected to benefit

from an epansion, then risk in e@uities would be relatively low and an aggressive growth

oriented strategy might be advisable) growth strategy might involve the purchase of

technology, biotech, semiconductor and cyclical stocks) !f the economy is forecast tocontract, an investor may opt for a more conservative strategy and seek out stable income



oriented companies) defensive strategy might involve the purchase of consumer staples,

utilities and energyrelated stocks)

7o assess a industry groupIs potential, an investor would want to consider the overall growth

rate, market si0e, and importance to the economy) While the individual company is still

important, its industry group is likely to eert .ust as much, or more, influence on the stock

price) When stocks move, they usually move as groups- there are very few lone guns out

there) (any times it is more important to be in the right industry than in the right stockU 7he

chart below shows that relative performance of # sectors over a 5month time frame) s the

chart illustrates, being in the right sector can make all the difference)

Na. 7i"hin "he G.u-

Once the industry group is chosen, an investor would need to narrow the list of companies

before proceeding to a more detailed analysis) !nvestors are usually interested in finding the

leaders and the innovators within a group) 7he first task is to identify the current business and

competitive environment within a group as well as the future trends) How do the companies

rank according to market share, product position and competitive advantage? Who is the

current leader and how will changes within the sector affect the current balance of power?

What are the barriers to entry? 6uccess depends on an edge, be it marketing, technology,

market share or innovation) comparative analysis of the competition within a sector will

help identify those companies with an edge, and those most likely to keep it)



C.4-an# Anal#!i!

With a shortlist of companies, an investor might analy0e the resources and capabilities within

each company to identify those companies that are capable of creating and maintaining a

competitive advantage) 7he analysis could focus on selecting companies with a sensible

business plan, solid management and sound financials)

Bu!ine!! Plan

7he business plan, model or concept forms the bedrock upon which all else is built) !f the

plan, model or concepts stink, there is little hope for the business) /or a new business, the

@uestions may be theseQ Boes its business make sense? !s it feasible? !s there a market? an a

profit be made? /or an established business, the @uestions may beQ !s the companyIs directionclearly defined? !s the company a leader in the market? an the company maintain

leadership?

Mana3e4en"

!n order to eecute a business plan, a company re@uires top@uality management) !nvestors

might look at management to assess their capabilities, strengths and weaknesses) ;ven the

bestlaid plans in the most dynamic industries can go to waste with bad management $(B

in semiconductors') lternatively, even strong management can make for etraordinary

success in a mature industry $lcoa in aluminum') 6ome of the @uestions to ask might

includeQ How talented is the management team? Bo they have a track record? How long have

they worked together? an management deliver on its promises? !f management is a

problem, it is sometimes best to move on

Financial Anal#!i!

7he final step to this analysis process would be to take apart the financial statements and

come up with a means of valuation) *elow is a list of potential inputs into a financial

analysis)



ccounts &ayableccounts %eceivablecid %atiomorti0ationssets urrentssets /ied*ook Kalue*rand*usiness ycle*usiness !dea*usiness (odel*usiness &lanapital ;pensesash /lowash on hand

urrent %atioustomer %elationshipsBays &ayableBays %eceivableBebtBebt 6tructureBebtQ;@uity %atioBepreciationBerivativesHedgingBiscounted ash /lowBividend

Bividend over ;arnings;*!7B;conomic rowth;@uity;@uity %isk &remium;penses

ood Willross &rofit (arginrowth!ndustry!nterest over !nternational!nvestment4iabilities urrent4iabilities 4ongterm(anagement(arket rowth(arket 6hare

=et &rofit (argin&ageview rowth&ageviews

&atents&riceF*ook Kalue&riceF;arnings&;&riceF6ales&roduct&roduct &lacement%egulations% B%evenues6ector

6tock Options6trategy6ubscriber rowth6ubscribers6upplier %elationships7aes7rademarksWeighted verage ost of apital

7he list can seem @uite long and intimidating) However, after a while, an investor will learn

what works best and develop a set of preferred analysis techni@ues)

7here are many different valuation metrics and much depends on the industry and stage of

the economic cycle) complete financial model can be built to forecast future revenues,

epenses and profits or an investor can rely on the forecast of other analysts and apply

various multiples to arrive at a valuation) 6ome of the more popular ratios are found by

dividing the stock price by a key value driver)



Ra'o

&riceF*ook Kalue&riceF;arnings&riceF;arningsFrowth&riceF6ales&riceF6ubscribers&riceF4ines&riceF&age views&riceF&romises

Co#pa!y Typ$

Oil%etail

=etworking*2*!6& or cable company7elecomWeb site *iotech

7his methodology assumes that a company will sell at a specific multiple of its earnings,

revenues or growth) n investor may rank companies based on these valuation ratios) 7hose

at the high end may be considered overvalued, while those at the low end may constitute

relatively good value)

Pu""in3 i" All T.3e"he

fter all is said and done, an investor will be left with a handful of companies that stand out

from the pack) Over the course of the analysis process, an understanding will develop of

which companies stand out as potential leaders and innovators) !n addition, other companies

would be considered laggards and unpredictable) 7he final step of the fundamental analysis

process is to synthesi0e all data, analysis and understanding into actual picks)



EECONOMIC ANALYSIS

ANALYTICAL FRAME7OR0 FOR COMMON STOC0

+ &*&(. 7he primary motive for buying a stock is to sell it subse@uently at a higher price)

!n many cases, dividends will be epected also) Bividends and price changes are the principal

ingredientV in what investors regard as return or yield)

!f an investor had impeccable information and insight about dividends and stock prices over

subse@uent periods, he would be well on his way to great riches) *ut the real world of

investing is full of political, economic, social, and other forces that we do not understand

sufficiently to permit us to predict anything with absolute certainty) /orces intermi and flow

at crosscurrents) =othing is static)

/or the security analyst, what primary influences will determine the dividends to be paid on a

stock in the future and what the stock price will be in the future are the ultimate @uestions to

be answered) logical systematic approach to estimating future dividends and stock price is

indispensable)

7he framework we will be using is the economicindustrycompany approach, or the ;!

framework) 7his approach is sometimes referred to as a LtopdownL method

ECONOMIC AND INDUSTRY ANALYSIS

Ging observed that, on the average, over half the variation in a stockIs price could be

attributed to a market influence that affects all stockmarket indees, such as the Bow Eones

!ndustrial verage or the 6& #<< 6tock !nde)U *ut stocks are also sub.ect to an industry

influence, over and above the influence common to all stocks) Ging noted that this industry

influence eplained, on the average, about 13 percent of the variation in a stockIs price) !n

sum, about twothirds of the variation in the prices of stocks observed in GingIs study was

the result of market and industry influences or factors) Ging actually eamined only about

sity companies, so it is dangerous to etrapolate from this small sampleFto a generali0ation

about all stocks) However, although the amount of variation in a stockIs price attributable to

the market may be more or less than the percentage observed by Ging, the impact of a

common market influence is obviously something to contend with)



7he significance of these conclusions seems to be that in order to estimate stock price

changes, an analyst must spend more than a little time probing the forces operating in the

overall economy, as well as influences peculiar to industries he is concerned with) failure

to eamine overall economic and industry influences is a naive error, that of assuming that

individual companies follow their own private paths in a vacuum)

!t is important to predict the course of the national economy because economic activity

affects corporate profits, investor attitudes and epectations, and ultimately security prices)

n outlook of sagging economic growth can lead to lower corporate profits, a prospect that

can engender investor pessimism and lower security prices) 6ome industries might be

epected to hold up better, and stock prices of companies in these industries may not decline

as much as securities in general) 7he key for the analyst is that overall economic activity

manifests itself in the behavior of stocks in generalor the stock market, if you will) 7his

linkage between economic activity and the stock market is critical)

*efore an investor commits funds in the market, he must decide if the time is right to

invest in securities at all- and if so, he must then decide which type of security to purchase

under the circumstances)2 7hus, he must decide whether to purchase common stocks, options,

preferred stocks, bonds, or some combination thereof) We will eplore the relevance of broad

economic variables such as national income and defense ependitures to the investor or

analyst considering the purchase of common stocks) I! the process, we will place ma.or

emphasis on the techni@ues most fre@uently employed by business economists as they go

about their business of shortterm economic forecasting) 7hese are important for the security

analyst or investor to know because he will be utili0ing much of the output of the economistsI

efforts as a basis for his own opinion about the impending economic environment) I! this

respect, the analyst can better evaluate economic forecasts if he has at least some knowledge

of alternative economic forecasting toolsnot only the techni@ues but also their advantages

and shortcomings) 7he techni@ues we will eamine and evaluate include the use of surveys,

key economic indicators, diffusion indees, econometric model building, and the

opportunistic model building) /irst, let us discuss the relationship of economic forecasting to

the stockinvestment decision more fully)3



FORECASTING TEC:NI1UES

Sh.")Te4 ve!u! L.n3)Te4 Ec.n.4ic F.eca!"!

/irst, let us define some terms in the manner in which a business forecaster uses them) When

he speaks of a short-term forecast, he is generally referring to one covering a period of up to

three years, although fre@uently T1e means a much shorter period, such as a @uarter or several

@uarters) n intermediate forecast refers to a three to fiveyear period ahead) nd finally, a

long-term forecast refers to a period more than five years, and fre@uently ten or more years,

in advance)

We noted in an earlier chapter that one of the differences between investment and

speculation is the time hori0on of the individual in @uestion) 7hat is, the speculator is

interested in very shortterm holds of securities in order to reali0e @uick capital gains) On the

other hand, the investor is interested in situations that will yield ade@uate returns in both

dividends and capital gains for their risk class over a period of several years) However, we

also observed earlier that even in the true investment situation, the investor or analyst must

constantly review each security:s performance both in an absolute sense and in a relative

senserelative to the market) /urthermore, he must regularly observe the state of the stock

market, the money and capital markets, and the economy in general in order to ascertain if

basic economic conditions have changed sufficiently to warrant his changing his investment

strategy) 7his is another reason for viewing the macroeconomic picturenamely, to detect the

relatively most attractive industries at a given moment) 7hus, even for the pure investor with

a long time hori0on, we see that this long period is broken into several shortterm periods) !n

other words, his initial longterm forecast can be broken down into a series of shortterm

forecasts that are constantly reviewed and revised) 7herefore we will focus on a oneyear

hori0on throughout our analysis)

!n this chapter we will discuss only shortterm forecasting techni@ues, reali0ing that

when these various shortterm forecasts are put side by side, they constitute a check for

consistency with an independently arrivedat longterm forecast)



.

INDUSTRY ANALYSIS

!nvesting is a business of relative changes) When the econ) omic outlook is assessed,

along with the direction of changes in the overall market for stocks, the analyst must reali0ethat even though industry groups andFor individual companies may find it difficult to Lbuck

the trend,L they do not necessarily respond to the same degree) /or eample, it is widely

assumed that heavygoods industries fare worse in economic recessions than do consumer

goods industries) Heavygoods industries include automobiles $and related industries such as

rubber, steel, and glass' and machinery) onsumergoods and service industries include

utilities $telephone, power', food, and banks) %ecessions or epansions in economic activity

may translate into falling or rising stock markets with different relative price changes among

industry groups)

/or the analyst, industry analysis demands insight into $1' the key sectors or

subdivisions of overall economic activity that influence particular industries, and $2' the

relative strength or weakness of particular industry or other groupings under specific sets of

assumptions about economic activity) 7he analyst with an economic forecast that he has

developed from scratch, or a set of figures that he has developed from forecasts prepared by

others, is now ready to apply this information to an appropriate industry) *efore

demonstrating this, however, let us look at some definitions of an industry) WebsterIs

Bictionary defines an industry as La department or branch of a craft, art, business, or

manufacture)L nd more specificallyQ

aX group of productive or profitmaking enterprises or organi0ations that have a similar

technological structure of production and that produce or supply technically substit1Qltable

goods, services, or sources of income)U

IWebsterIs 7hird =ew !nternational Bictionary $6pringfield, (ass)Q (erriam, 19++', pp)

11###+)

lthough at first glance these definitions seem neat and clearcut, they are not) /irst, it

may seem desirable to break industries down by their products- however, defining a product

is no easy chore)



INDUSTRY CLASSIFICATION BY PRODUCT

re glass containers in the same industry as metal containers? !s steel in the same

industry as aluminum? !s a fastfood chain in the same industry as a chain of restaurants?

!n one sense, a container is a container, and the substance from the product to appear in a

separate industry for an industry analysis- however, the) firms producing these different

products might be very dissimilar in the other products that they produce)2 *etween the steel

and aluminum industries, the economics, technology, and refinements are so substantially

different that analy0ing them as separate industries is advisable) 6ubstantial differences also

eist between the mode of operation in a limitedmenu, fastfood, takeout type of restaurant

and that of a limitedmenu, sitdown type or a legitimate fullmenu restaurant)

*y now it should be clear that pinpointing an industry is not easy, and the investigator

needs to have a clear goal in mind sc that he can properly classify firms into industries for

his specific purpose) /or eample, if the goal were to reach an estimate of sales for the

industry, the analyst might want to consider similar products and products that could be

substituted for the item in @uestion $glass containers for metal, or aluminum containers for

steel') *ut if he were calculating comparative costs of the industry, he might consider onlythose firms with similar manufacturing processes, for only such a comparison would be

meaningful) /or instance, the analyst might Iompare the costs of one candy producer with

those of another candy producer but not with those of a toy manufacturer)

!ndustry classification by product does not present a terribly acute problem for the astute

analyst when he is classifying firms with basically one product or a homogeneous group of

products) 7he problem worsens considerably, however, when he deals with a firm that has a

diversified product line) Jnfortunately, today the latter case is the rule rather than the

eception) Our illustration later in this chapter will serve to highlight this problem)



SIC CLASSIFICATION

!n order to provide an organi0ed reporting framework for the vast amount of data

collected by the federal government, the 6tandard !ndustrial lassification $6!' was

developed) 7he following passage from the 6! (anual describes the system) 7he 6! is thestatistical classification standard underlying all establishment based federal economic

statistics classified by industry) 7he 6! is used to promote the comparability of

establishment data describing various facets of the J)6) economy) 7he classification covers

the entire field of economic activities and defines industries in accordance with the

composition and structure of the economy) !t is revised periodically to reflect the economyIs

changing industrial organi0ation

griculture, forestry, and fishing(iningonstruction(anufacturing7ransportation, communications, electric,gas, and6anitary servicesWholesale tradedurable goods %etailtrade/inance, insurance, and real estate6ervices

&ublic administration =o classifiableestablishments

(EO% H%OJ&6

<1<9

1<1"

1#15

2<39

"<"9

#<#1

#2#9

+<+5



INDUSTRIAL DI,ISION

7he ma.or groups detailed in the table and identified by twodigit codes are further

subdivided into threedigit industry groups and, finally, into fourdigit industries) /oreample, under industrial division , retail trade, ma.or group #5 is home furniture,

furnishings, and e@uipment stores, industry group #51 is home furniture and /urnishings

stores- this consists of industry numbers #512, furniture stores- #513, floor covering stores-

#51", drapery, curtain, and upholstery stores- and #519, miscellaneous home furnishings

stores)

Jsing 6! codes, industry information, such as the number of firms classified in the industry,

number of employees, value of shipments, and capital ependitures, can be found and

analy0ed) 7his information is useful in detecting changing industrial patterns and

developments over time, such as epansion or contraction of the industry) lthough the

census provides valuable information to the industry analyst, it is not without its drawbacks)

/or eample, the methodology employed in classifying firms into the various categories is

not consistent over the entire spectrum of the J)6) economy



T:E ECONOMY AND T:E INDUSTRY ANALYSIS

!n the preceding chapter we saw how various techni@ues of economic forecasting could

be brought to bear upon the investment decision) 6pecially we observed how variousapproaches could be used to forecast components of gross national product and we noted that

for the investment decision it was often as significant to predict the direction of any change

in these sectors as it was to predict their actual level) n eample or two will highlight this

concept)

When the =& is growing, unemployment is relatively low $" to # percent', and the

general economic climate is optimistic- an economic forecast based upon any of the

approaches already discussed would probably show high and increasing levels of

ependitures on consumer durables, inventory, and plant and e@uipment *ecause business is

buoyant and it is generally epected that this will continue, businessmen accumulate

inventory in anticipation of still higher sales levels, and they also increase their capacity

through plant and e@uipment ependitures) t the same time, on the consumerIs side of the

market, individual households are eperiencing high levels of personal discretionary income

$income available for luuries', and they are free to spend some of this money on such things

as residential housing, automobiles, and other consumer durables) !ndeed, if prior economic

periods had been far less booming than those .ust described, ependitures on various

durables, having been postponed, could now become eaggerated)

!t would be desirable at such a time to buy securities of firms in industries most likely to

benefit from these purchasing patterns) s you will recall in the opportunisticmodelbuilding

approach, the forecaster would arrive at specific estimates of the broad categories we have

.ust mentioned) !t is easy to see how such an economic forecast can be helpful, not only in

selecting industries that will benefit in a period of general economic prosperity but also in

selecting those that will benefit in periods when only certain sectors of the economy are

epanding) (uch academic research has substantiated the importance of sound industry

analysis to successful investment analysis) ;amples of the latter type would be defense

industries in a period when the federal government is boosting the economy through large

nationaldefense ependitures, and also those industries that will be hurt least during a period

of economic downswingsuch as those producing food, something that is always necessary)

nother way of gauging the economyIs performance with special regard to specific



industry classifications is to eamine regularly the statistics contained in the monthly

Federal Reserve Bulletin. *y eamining the behavior of the various series over time, the

analyst can gain insights into important economic developments in many industries and

important industry sub sectors) n increase in manufacturing could necessitate additional

capital spending to add overall manufacturing capacity) !f additional capacity comes online,

price competition could become more prevalent if an occurrence, such as an economic

downturn, results in decreased demand for manufactured products) 7hese are but two of the

possible implications of the noted increase in capacity utili0ation) (any more undoubtedly

eist lthough such tentative conclusions can be derived from even such a superficial

analysis, such observations should be incorporated into the analystIs overall data base of

information)



INDUSTRY S:ARE PRICES

RELATI,E TO INDUSTRY EARNINGS

Having evaluated the various characteristics of past sales and earnings, industry permanence,

government attitude, labor conditions, and industry competitive conditions, the analyst must

ultimately reach a considered investment decision) However, even if all indications are that

the industry has very favorable future prospects, this does not necessarily imply that funds

should be committed to it immediately) decision to purchase is not made based only on the

current status and future prospects, but also on the current prices of securities in the industry,

their risk, and the returns they promise)

t this point we will refer to only the price consideration) !f the price is very high

relative to future earnings growth, these securities might not be a wise investment)

onversely, if future prospects are dim but prices are low relative to a fairly level future

pattern of earnings, the stocks in this industry might well be an attractive investment)

/re@uently, when an industry develops because of technology or some other such reason,

investors become over0ealous in their desire to purchase securities of firms in this new

industry) 7hus, these share prices are bid to very high levels, with the conse@uence that the

&!; ratio soars) 6o it can be seen that the Lmarket psychologyL can be a crucial factor in both

raising prices to eorbitant levels and depressing prices to unreasonable levels, depending on

how the market evaluates the industryIs future prospects)



EHTERNAL SOURCES OF INFORMATION

FOR INDUSTRY ANALYSIS

Fe$eal G.ven4en"

7he federal government publishes a wide variety of data that can be useful during the

industry phase of the analysis) !t is well worth the time to thumb through the ensus of

(anufacturers, /ederal %eserve *ulletins, and 6urvey of urrent *usiness in order to

appreciate more fully the wealth of information, helpful in the economic as well as industry

analysis, available in these government sources) (any private services use these government

furnished data in their own securityanalysis efforts)

Inve!"4en" Sevice!

(any investment services are available to furnish the investor or analyst with valuable

industry and corporate information) 7he ones we highlight in this section are perhaps the best

known)

S"an$a$ ; P..!

6tandard &oorIs regularly covers a number of different industries in two waysQ a basic

analysis and a current update of the basic analysis) 7he basic analysis provides an indepth

report on all facets of the industry and the firms comprising the industry) revised basic

analysis is published approimately every year) 7he current update, entitled urrent nalysis

and Outlook, is published roughly every @uarter)

6tandard &oorIs also publishes the 6ecurity &rice !nde %ecord, containing indees of

the 6&Is groupings, which are helpful when performing an industry analysis)

TRADE PUBLICATIONS

Kirtually every ma.or J)6) industry has at least one trade association, which in its

publications reports much data pertaining to the industry it represents) 7he analyst can locate

these sources, as well as references to various industries in other publications, by checking

the *usiness &eriodicals !nde and the 6cience and 7echnology !nde, as well as secondary

sources already mentioned in this chapter)



FINANCIAL POSITION+ The BALANCE S:EET

7he level, trend, and stability of earnings are powerful forces in the determination of

security prices) 7his flow of earnings is depicted on the income statement) 7he stock of

assets and the claims to those assets that provide the fuel for those earnings are revealed on

the balance sheet) 7he balance sheet shows, at a given point in time, the assets, liabilities, and

ownersI e@uity in a company) !t is the analystIs primary source of information on the financial

strength of a companyQ

ssets include properties and rights to properties, both tangible $such as buildings' andintangible $such as patents and goodwill') 4iabilities are debts that are payable on demand or

over specified future periods) 7hey are evidenced by simple invoices or rather lengthy legal

documents, such as mortgages) 7he e@uity of stockholders represents the ecess of assets

over liabilities at the balancesheet date)

(odern accounting principles dictate the basis for assigning values to assets)

4iability values are set by contracts) When assets are reduced by liabilities, the Lbook

valueL of stockholdersI e@uity can be determined) 7his book value invariably differs fromcurrent value in the marketplace because market value is dependent upon the earning power

of assets and not their cost or value in the accounts)

/or the most part, the accounting concept of conservatism re@uires that assets be carried

at original or historical cost when they are first ac@uired) Buring subse@uent time periods,

they may be valued at cost or market, whichever is lower)

!ncomeD statement and reportedearnings problems can stem from the rate at which

assets are written off against related revenues, a matter we discussed under inventory and

depreciation accounting) !n addition, the framework of historical cost does not make

reference to the changing purchasing power of the dollar) When inflation occurs, historical

dollar accounting can be unrealistic and deficient)

/irst, the income statement fails to epress all items in dollars of the same purchasing

power) /or eample, revenues closely represent current dollars- where /!/O inventory

costing would represent LoldL dollars) =eedless to say, over time interperiod comparability is

destroyed)

6econd, assets and stockholdersI e@uity reflect an admiture of items shown in dollars of



different purchasing power) /or eample, /!/O inventory procedure might tend to show

inventories in nearcurrent dollars, but fied assets may te worth many times their carrying

value) 7hese distortions in asset groups are V lady reflected in the stockholdersI e@uity

section of the balance sheet) 7he erosion of the purchasing power of the dollar affects

measurements using the balance sheet and influences LrealL earning power)

(ost accounting statements deal with rather arbitrary cutoff points in time) + 7hus,

accounting statements cannot be considered complete without parenthetical references and

notes that not only clarify the data in the body of the statements but also introduce new

information not conveniently admissible within the statements proper)

Ruite often, valuation bases for assets are shown net to the item caption or in footnotes)

&arenthetical references should be eamined to note where assets have been pledged and the

related liability secured)

/ootnotes to the balance sheet often show many of the following items of importance to

the analy0e

1) ontingent liabilities for taes, dividends and pending lawsuits)

2) &articulars on options outstanding, leases, loans, and other financing arrangements)

3) hanges in accounting principles and techni@ues, including bases of valuation, and

the dollar effect on income)

") /acts of importance occurring between the balancesheet data and date of 6!QQQ3mission

of statements that might have a material effect on the statements) ;1amples include

refinancing, proposed mergers, and changes in capitali0ation

7he analyst will find a wealth of information in these parenthetical references );O)Q footnotes

that can shed light on the company under analysis)



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at multiple locations in the Jnited 6tates and ;urope) We invest in infrastructure and people

to continue growing our business.

In$u!"# Lea$e!hi-

Our history is marked by a series of firsts) We were the first !ndian company to list on a J6

stock echange and the first !ndian company to do a &OW4 in Eapan) !n Becember 2<<+, we

became the first !ndian company to be added to the =6BR1<< inde and became the

only !ndian company to be part of any of the ma.or global indices) (ore recently, !nfosys

was named among the I7op 1< ompanies for 4eadersI by /ortune maga0ine) We won the

prestigious lobal (ost dmired Gnowledge ;nterprises $(G;' award for the fourth year

in succession

:i!".#

;stablished in 1981, !nfosys is a =6BR listed global consulting and !7 services company

with more than 9<,<<< employees) /rom a capital of J6P 2#<, they have grown to become a

J6P " billion company with a market capitali0ation of over J6P 2< billion)

!n our .ourney of over 2# years, we have cataly0ed some of the ma.or changes that have led

to !ndiaIs emergence as the global destination for software services talent) We pioneered the

lobal Belivery (odel and became the first !7 company from !ndia to be listed on

=6BR) Our employee stock options program created some of !ndiaIs first salaried

millionaires)

%ead more about the defining moments in !nfosysI history)

Mile!".ne!677<

!nfosys crosses revenues of J6P P ")18 billion) ;mployees grow to over 9<,<<<M

%eports R" revenue of J6P 1,1"2 million

677=

!nfosys crosses revenues of J6P 3 billion) ;mployees grow to over 5<,<<<M

Gris opalakrishnan, OO, takes over as ;O) =andan () =ilekani is appointed o

hairman of the *oard of Birectors

Opens new subsidiary in 4atin merica

http://www.infosys.com/about/awards/fortune-top10.asp

http://www.infosys.com/about/awards/global-make-award.asp

http://www.infosys.com/about/awards/fortune-top10.asp

http://www.infosys.com/about/awards/global-make-award.asp



%eports R2 revenue of over J6P 1billion

677>

!nfosys celebrates 2# years) %evenues cross J6P 2 billion) ;mployees grow to

#<,<<<M

=) %) =arayana (urthy retires from the services of the company on turning +<) 7he

*oard of Birectors appoints him as an dditional Birector) He continues as hairmanand hief (entor of !nfosys

677?

%ecords the largest international e@uity offering of J6P 1 billion from !ndia

6elected to the lobal (G; Hall of /ame

677@

%evenues reach J6P 1 billion !nfosys onsulting !nc) is launched

6779

;stablishes subsidiaries in hina and ustralia

;pands operations in &une and hina, and sets up a Bevelopment enter in

7hiruvananthapuram

6776

7ouches revenues of J6P #<< million

=andan () =ilekani takes over as ;O from =)%) =arayana (urthy, who is

appointed hairman and hief (entor

Opens offices in 7he =etherlands, 6ingapore and 6wit0erland

6ponsors secondary B6 offering

!nfosys and the Wharton 6chool of the Jniversity of &ennsylvania set up 7he

Wharton !nfosys *usiness 7ransformation wards $W!*7'

4aunches &rogeon, offering business process outsourcing services

Ep$r'$!"$

One year mareting e!ecutive "ith #ai $utomobile, %amunanagar, &aryana

7ouches revenues of J6P "<< million) Opens offices in J; and rgentina, and aBevelopment enter in Eapan

=) %) =arayana (urthy is rated among 7ime (aga0ineF==Is 2# most influential

businessmen in the world

!nfosys is rated as the *est ;mployer by *usiness WorldFHewitt

6777

7ouches revenues of J6P 2<< million



Opens offices in /rance and Hong Gong, a global development center in anada and

JG, and three development centers in the J6

%elaunches *anks 2<<<, the universal banking solution from !nfosys, as /inacleZ

8

7ouches revenues of J6P 1<< million) 4isted on =6BR

!nfosys becomes the 21st company in the world to achieve a (( 4evel #

certification

Opens offices in ermany, 6weden, *elgium, ustralia, and two development centers

in the J6

!nfosys *usiness onsulting 6ervices is launched

8<

6tarts enterprise solutions $ packaged applications' practice

8=

Opens an office in 7oronto, anada

!nfosys is assessed at (( 4evel "

8>

7he !nfosys /oundation is established

8?

Opens first ;uropean office in the JG and lobal Bevelopment enters at 7oronto

and (angalore) 6ets up e*usiness practice

8@

(oves corporate head@uarters to ;lectronics ity, *angalore) Opens a Bevelopment

enter at /remont

89

!ntroduces ;mployee 6tock Options $;6O&' program

c@uires !6O 9<<1F7ick!7 certification

oes public

8<=

Opens first international office in *oston, J6

8<9

%elocates corporate head@uarters to *angalore

8<8

!nfosys is established by =) %) =arayana (urthy and si engineers in &une, !ndia,

with an initial capital of J6P 2#< 6igns up its first client, Bata *asics orporation, in =ew Y+,:

http://www.infosys.com/IT-services/packaged-application-services/default.asp

http://www.infosys.com/IT-services/packaged-application-services/default.asp





CAS: FLO7 STATEMENT

/or the year ended (arch 31,

'! Rs. [rare

6chedule 2<<9 2<<8

6H /4OW6 /%O( O&;%7!= 7!K!7!;6

=et profit before ta and eceptional items #,1<< ",129

d.ustments to reconcile net profit before ta to cash provided by operating

activities

$&rofit' F loss on sale of fied assets

Bepreciation#"+ "+9

!nterest and dividend income $+#"' $298'

&rofit on sale of li@uid mutual funds $11'

&rovision for investments 2

;ffect of echange differences on translation of foreign currency

cash and cash e@uivalents $18' "

hanges in current assets and liabilities

6undry debtors $8<1' $55"'

4oans and advances 1+ $18+' $18<'

urrent liabilities and provisions 15 312 3"5

!ncome taes paid 18 $"83' $"21'

=;7 6H ;=;%7;B *Y O&;%7!= 7!K!7!;6 3,81+ 3,2+5

6H /4OW6 /%O( !=K;67! 7!K!7!;6

&urchase of fied assets and change in capital workinprogress19

<,35<' <,""3'

&ayment for !ntellectual &roperty %ights $refer 'ote 23)2)21' 1"

!nvestment in subsidiaries $refer 'ote 2(.2.1)* $125' $+3#'

!nvestments in securities $refer 'ote 2(.2.1)* 2< +9#

!nterest and dividend received 22 #19 252

ash flow from investing activities before eceptional items $958' <,<95'

&roceeds on sale of longterm investments $net of taes' $refer 'ote 2(.2.22* +

=;7 6H J6;B != !=K;67!= 7!K!7!;6 $958' <,<91'

6H /4OW6 /%O( /!==!= 7!K!7!;6

&roceeds from issuance of share capital on eercise of stock options #8 1,21+

Bividends paid during the period $51"' $1,3"3'

Bividend ta paid during the period $121' $189'

=;7 6H J6;B != /!==!= 7!K!7!;6 $555' $31+'

;ffect of echange differences on translation of foreign currencycash and cash e@uivalents 18 $"'

=;7 !=%;6; F $B;%;6;' != 6H =B 6H ;RJ!K4;=76 2,<59 1,8#+

6H =B 6H ;RJ!K4;=76 7 7H; *;!==!= O/ 7H; &;%!OB #,+1< 3,5#"

6H =B 6H ;RJ!K4;=76 7 7H; ;=B O/ 7H; &;%!OB 21 5,+89 #,+1<

6!=!/!=7 OJ=7!= &O4!!;6 =B =O7;6 O= OJ=76 23



BALANCE S:EET

S/);0() 2!!# 2!!$

SORCES ( FU(DS

SAREOLDERS FUNDS

S&,) /&8-&( 1 2$6 2$6

R)1),6)1 &*; 10,8(01 2 13<2!4 1!<$76

13<4#! 11<162

L c// TT . O(FUNDS

F(%ED ASSETS 3

O,*&( /+1- 4<5!$ 3<$$#

(..)11H A//050(&-); ;)8,)/&-+* 1<$37 1<73#

)- '++: 9&(0) 2<671 2<15!

Add: C&8-&( @+,:*8,+,)11 1<26! #57

3<#31 3<1!7

DIVESTMENTS 4 #64 $3#

DEFERRED TA% ASSETS 5 ## 7#

CURRENT ASSETS< LOANS AND ADVANCES

S0*;,6 ;)'-+,1 6 3<!#3 2<2#2

C&1 &*; '&*: '&(&*/)1 7 6<42# 5<47!

L+&*1 &*; &;9&*/)1 $ 2<7!5 1<1##

12<227 $<#61LESS: CURRENT LIABILITIES AND PROVISIONS

C0,,)*- (&'(-)1 # 1<4$3 1<162

P,+91+*1 1! 2<24$ 662

NET CURRENT ASSETS $<4#6 7<137

13<4#! 11<162

SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS 23



RATIO ANALYSIS

2<<9 2<<8 2<<5

%atios /inancial performance

;pon revenue 1 total revenue $A' 98)+< 98)"< 98)18

Bomestic revenue 1 total revenue $A' 1)"< 1)+< 1)82

6oftware development epenses 1 total revenue $A' #+)52 ##)3# #")13

ross profit 1 total revenue $A' "3)28 "")+# "#)85

6elling and marketing epenses 1 total revenue $A' ")+5 #)"5 #)#3

eneral and administration epenses 1 total revenue $A' +)9< 5)<# 5)23

6Q ehpenses F total revenue $A' 11)#5 12)#2 12)5+

ggregate employee costs 1 total revenue $A' "9)89 "8)<2 "5)29

Operating profit 1 total revenue $A' 31)52 32)13 33)12

Bepreciation 1 total revenue $A' 3)"9 3)#5 ")#3

Operating profit after depreciation and interest 1 total revenue $A' 28)23 28)#+ 28)#8

Other income 1 total revenue $A' ")3+ 2)8# 1)#9

&rovision for investments 1 total revenue <)<2

&rofit before ta and eceptional items 1 total revenue $A' 32)#9 31)"< 3<)15

7a 1 total revenue $A' ")<3 2)+8 3)3+

;ffective ta rate 7a 1 &*7 $A' 12)3# 8)#3 11)12

;rrective ta rate ecluding ta reversals 7a 1 &*7 $A' 1")53 11)## 11)58&7 before eceptional items 1 total revenue $A' 28)#5 28)52 2+)82

&7 after eceptional items 1 total revenue $A' 28)#5 28)55 2+)82

&7 after eceptional items and ecluding ta reversal 1 total revenue $A' 25)59 25)82 2+)+2

%atios *alance sheet

Bebte@Jity ratio

urrent ratio 3)28 ")91 2)53

Bays 6ales Outstanding $B6O' 52 +" +1

ash and e@Jivalents 1 total assets $A' I #5)<< #<)2+ +")51

ash and e@uivalents 1 total revenue $A' $!' "9)1" "2)++ "9)""

apital ependiture 1 total revenue $A' 8)5+ 1<)95 11)+1

Operating cash lows 1 total revenue $A' 2")39 2")8# 2#)#8

Bepreciation 1 average gross block $A' 13)<< 13)9# 1+)3<

7echnology investment 1 total revenue $A' 2)#5 3)3+ 3)+9

%atios %eturn

&7 before eceptional items 1 average net worth $A' 3+)2+ "1)83 39)89

%O; $&*l7 F average capital employed' $A' "1)38 "#)53 "")89

%eturn on average invested capital $A' $!' 51)12 88)81 93)9+

apital output ratio 1)25 1)"+ 1)"9

!nvested capital output ratio I 2)5+ 3)29 3)5"

Kalue added 1 total revenue $A' 8#)95 8<)51 8<)59

;nterprisevalue 1 total revenue (x) ")5+ 8)3" 8)+1

Bividend 1 ad.usted public orrer price $A' OE 1,58# 1,#"9 1,<11

(arket price1 ad.usted public orrer price $A' 1,9",<<8 2,51,985 2,<<,8#2

%atios rowth

Overseas revenue $A' 19)28 "#)95 31) 59

7otal revenue $A' 19)<1 "#)+# 31)+<

Operating profit $A' 15)"5 "1)3# 28)#+

=et profit $before eceptional items' $A' 18)3# #+)<1 3<)23

=et profit $before eceptional items and ecluding ta reversal' $A' 19)<9 #1)98 29)2+

=et profit $after eceptional items' $A' 18)1+ #+)2# 25)1#

*asic ;&6 $before eceptional items' $A' 1#)3+ #2)9# 28)<2

*asic ;&6 $before eceptional items and ta reversal' $A' 1+)<5 "9)<1 25)<9

*asic ;&6 $after eceptional items' $A' 1#)18 #3)2< 2"98%atios &er share

*asic ;&6 $before eceptional items' ?%s)' 58)2" +5)82 "")33

*asic ;&6 $before eceptional items and ta reversal' $%s)' 5+)12 +#)#8 "")<1

*asic ;&6 $after eceptional items' $%s)' 58)2" +5)93 "")33

*asic cash ;&6 $before eceptional items' $%s)' 85)8< 5+)2" #1)83

*asic cash ;&6 $after eceptional items' $%s)' 85)8< 5+)3# #1)83

&rice 1 earning, end of year 2 18)"< 29)5+ 33)+2

&rice 1 cash earnings, end of year 2 1+)"< 2+)"8 28)5+

&; 1 ;&6 growth L' 1)2< <)#+ 1)2<

*ook value $%s)' 23#)8" 19#)"1 12#)1#

&rice 1 book value, end of year +)11 1<)33 11)91

Bividend per share J 13)2# 11)#< 5)#<

Bividend $A' ! 2+# 23< 1#<

Bividend payout $A' $3' 19)83 19)8# 19)3+

(arket capitali0ation 1 tolal revenue, end of year $' #)2+ 8)55 9)1<



:ISTORICAL DATA

O-ea"in3 -.8i" "."al evenue%K*

33.12

32.13

31.72

&'')&''@



Ne" -.8i" "."al evenue

26.62

27.$227.7#

&'' )&''@

Re"un .n avea3e ca-i"al e4-l.#e$%K*

44.$#

45.73

41.3$

&'')&''@



Ca!h an$ euivalen" "."al a!!e"!%K*

64.71

5!.26

57

&'')&''@

Ca-i"al .u"-u" a"i.

1.4#

4.46

1.27

&'')&''@



,alue a$$e$ "."al evenue%K*

80.79 80.71

85.97

2007-

2009

Ba!ic eanin3!

44.33

67.$2

7$.24

&'')&''@



Divi$en$ -e !hae

7.5

11.5

13.25

&'')&''@

Pice eanin3 =en$ .8 #ea

33.62

2#.76

1$.4

&'')&''@



INCOME

5!# $$2

1#!126!4

3623

4761

6$6!

#!2$

1314#

1564$

YEAR (@@@)&''@

OPERATING PROFIT

2!2 347765

1!3$1272

15$4

2325

2#$#

4225

4#63

YEAR (@@@)&''@



P.8i" a8"e "a2

1332$6

623$!$

#5$1243

1$5#

2421

3777

447!

YEAR (@@@)&''@

Ma6e" ca-i"ali5a"i.n

#673

5#33$

26#26 24654 26$4732#!#

61!73

$2154

1153!7

$2362

YEAR (@@@)&''@



Ba!ic EPS

2.5#5.41

11.7$15.27

1$.!#23.43

34.63

44.34

67.$2

7$.24

YEAR (@@@)&''@

B..6 ,alue

1!.$6 15.7526.26

3#.2#53.#$ 61.!3

#6.$7

125.15

1#5.41

235.$4

YEAR (@@@)&''@



C:APTER),II

RECOMMENDATIONS

;

CONCLUSION



RECOMMENDATIONS

Th$ /ollow'!g #u) ,$ a+$! ,y h$ I!d'a,ull) 1C3ANDIGAR3

BRANC32 o '#pro0$ ') ,u)'!$))

!n the competitive scenario, the brokerage must be made competitive)

7he account opening charges must be reduced to make it more competitive)

7here must be proper advertising in the local newspapers of handigarh, so that

untapped market can be tapped)

6ome newspapers and maga0ines must be kept in the middle of the office so that

if some clients or potential investors come to office, they can read some of them

to know about the market)

!t is recommended investors should make a fundamental analysis of the

companies scrip in which he wants to invest)

6ome analysis is not provided by broker)

6hould have the market knowledge before investing) 7he firm should target investors who are risk takers)



CONCLUSION

Acc.$in3 8un$a4en"al anal#!i!+

!t synthesi0es all data, analysis and undertaking into actual picks)

!nvestors can themselves categories stocks within their relevant industry group)

ompanies can be identified that are capable of creating maintaining a

competitive advantage)

=o doubt fundamental analysis is etraordinary time consuming.

Acc.$in3 ". 8un$a4en"al anal#!i! .8 INFOSYS+

/rom the last 1<years the income of the company is on continuous rise at the

average rate)

6ame trend of rise in profit book value of the firm is also seen)

7he shareholder has witnessed a continuous increase in their ;&6 which comes

out to be a big factor for attracting new investors)

7he market capital of the company increased tremendously in the year 2<<< from

9+53crore to #9338 but then it witnessed a sudden down fall in the " subse@uent

years) gain there occurred a rising trend from year 2<<# to 2<<5 but then fell

from 11#3<5 to 823+2 in year 2<<8<5)

Acc.$in3 "he $a"a anal#!i! .8 "he -.jec"+

!nvestors prefer buying short term scrip

(ost of the investors income ranges from 2<<<<<#<<<<<

!ndiabulls has satisfied most of its customers)



7he trading mostly takes place on internet which is the fastest way of trading)

REFERENCES

1) Bonalde) /ischer and %onald E) Eordan , [6;J%!7Y =4Y6!6 =B

&O%7/O4!O (=;(;=7: +

7H

ddition, ) &earson ;ducation !ndia,

(umbai)

2) www,!nfosys)com

3) www)indiabulls)com

") www)wikipedia)com

#) www)nse)com

+) www)bse)com

http://www.wikipedia.com/

http://www.nse.com/

http://www.bse.com/

http://www.wikipedia.com/

http://www.nse.com/

http://www.bse.com/



ANNEHURE

ANNEHURE

7his @uestionnaire is meant for study purpose only'

Na#$.

Addr$))

....

Ag$.

G$!d$r......

O""upa'o!..

Rues1' 7hrough which brokerage firm you are dealing?



Rues 2' What is the brokerage you are paying?

!ntraday )))))))))))))))))))))))))))) )

Belivery )

Rues 3' How do you come to know about the firm?

a' =ewspaper b' /riends c' ;ecutive d' others $please specify' ))))))))))))))))))))))))))))))))))))

Rues "' What is the annual family income?

a' 4ess than l lakh b' 11)#!akh c' 1)#2)#!akh d' (ore than 2)#1akh

Rues #' What is your preference avenue for investment?

a' !nitial &ublic Offerings $!&O' b' 7rading (arket c' (utual /unds

Rues +' You are more interested in?

a' !ntraday b' 6hort term c' 4ongterm

Rues 5' What are the services you are availing from the broker /irm?

Y;6 =O

$a' /inancial statements

$b' dvisory services

$c' (argin funding

$d' &ortfolio management services

Rues 8' &lease rank the services according to your preference?

$e' /inancial 6tatements

$f' dvisory 6ervices

$g' (argin /unding )

$h' &ortfolio (gt) 6ervices )

Rues 9' How do you trade?

$a' 7hrough phone

$b' 7hrough internet yourself



Rues 1<' On what basis do you buy a scrip?

$a' On the recommendation of the broker

$b' /undamental analysis

$c' On the recommendation of your friend

$d' Yourself

$e' On the basis of news

Rues 11' what is the value of your portfolio?

$a' %s #<,<<< %s 2,<<,<<<

$b' %s 2,<<,<<< %s #,<<,<<<

$c' %s #,<<,<<< %s 1<,<<,<<<

$d' (ore than %s 1<,<<,<<<

Rues 12' Bo you know about other broker firms operating in the city?

a' Yes b' =o

!f yes, please specify )))))))))))))))))))))))))))))))))))))IL )))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))

Rues 13' re you satisfied with the services of the current broker firm?

a' Yes b' =o

Rues 1"' !f some other broker firm promises you to provide better services will you shift

to that firm?

a' Yes b' =o c' anIt say

Documents

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