A project report on A study on Equity Analysis at India-Infoline . Submitted in partial fulfillment of the Requirements for the award of the Degree ofMASTER OF !S"#ESS ADM"#"STRAT"O# Submitted $ Elizebeth 13BK1E00 !nder the %uidance ofDEPARTE!T "# B$%I!E%% ADI!I%TRATI"! %T PETER% E!&I!EERI!& '"((E&E &Affiliated to 'awaharlal #ehru Technological !ni(ersit$ )$derabad* )$derabad +,-. / +,-0
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
7/26/2019 Elize Beth
http://slidepdf.com/reader/full/elize-beth 1/21
A project report
on
A study on Equity Analysis
at
India-Infoline .
Submitted in partial fulfillment of the
Requirements for the award of the Degree
of
MASTER OF !S"#ESS ADM"#"STRAT"O#
Submitted $
Elizebeth
13BK1E00
!nder the %uidance of
DEPARTE!T "# B$%I!E%% ADI!I%TRATI"!
%T PETER% E!&I!EERI!& '"((E&E
&Affiliated to 'awaharlal #ehru Technological !ni(ersit$ )$derabad*
)$derabad
+,-. / +,-0
7/26/2019 Elize Beth
http://slidepdf.com/reader/full/elize-beth 2/21
1)A2TER "
"#TROD!1T"O#
7/26/2019 Elize Beth
http://slidepdf.com/reader/full/elize-beth 3/21
I!TR"D$'TI"!
"ndia is a de(eloping countr$3 #owada$s man$ people are interested to in(est in financial
mar4ets especiall$ on equities to get high returns5 and to sa(e ta6 in honest wa$3 Equities
are pla$ing a major role in contribution of capital to the business from the beginning3
Since the introduction of shares concept5 large numbers of in(estors are showing interest
to in(est in stoc4 mar4et3
"n an industr$ plagued with s4epticism and a stoc4 mar4et increasingl$ difficult to predict
and contend with5 if one loo4s hard enough there ma$ still be a genuine aid for the Da$
Trader and Short Term "n(estor3
The price of a securit$ represents a consensus3 "t is the price at which one person agrees
to bu$ and another agrees to sell3 The price at which an in(estor is willing to bu$ or sell
depends primaril$ on his e6pectations3 "f he e6pects the securit$7s price to rise5 he will
bu$ it8 if the in(estor e6pects the price to fall5 he will sell it3 These simple statements are
the cause of a major challenge in forecasting securit$ prices5 because the$ refer to human
e6pectations3 As we all 4now firsthand5 humans e6pectations are neither easil$
quantifiable nor predictable3 "f prices are based on in(estor e6pectations5 then 4nowing
what a securit$ should sell for &i3e35 fundamental anal$sis* becomes less important than
4nowing what other in(estors e6pect it to sell for3 That7s not to sa$ that 4nowing what a
securit$ should sell for isn7t important99it is3 ut there is usuall$ a fairl$ strong consensus
of a stoc47s future earnings that the a(erage in(estor cannot dispro(e
Fundamental anal$sis and technical anal$sis can co9e6ist in peace and complement each
other3 Since all the in(estors in the stoc4 mar4et want to ma4e the ma6imum profits
possible5 the$ just cannot afford to ignore either fundamental or technical anal$sis
7/26/2019 Elize Beth
http://slidepdf.com/reader/full/elize-beth 4/21
:"TERAT!RE
RE;"E<
7/26/2019 Elize Beth
http://slidepdf.com/reader/full/elize-beth 5/21
%E'$RIT) A!A()%I%
"n(estment success is prett$ much a matter of careful selection and timing of stoc4
purchases coupled with perfect matching to an indi(iduals ris4 tolerance3 "n order to carr$
out selection5 timing and matching actions an in(estor must conduct deep securit$
anal$sis3
"n(estors purchase equit$ shares with two basic objecti(es8
-3 To ma4e capital profits b$ selling shares at higher prices3
+3 To earn di(idend income3
These two factors are affected b$ a host of factors3 An in(estor has to carefull$
understand and anal$=e all these factors3 There are basicall$ two approaches to stud$
securit$ prices and (aluation i3e3 fundamental anal$sis and technical anal$sis
The (alue of common stoc4 is determined in large measure b$ the performance of the
firm that issued the stoc43 "f the compan$ is health$ and can demonstrate strength and
growth5 the (alue of the stoc4 will increase3 <hen (alues increase then prices follow and
returns on an in(estment will increase3 )owe(er5 just to 4eep the sa(($ in(estor on their
toes5 the mi6 is complicated b$ the ris4 factors in(ol(ed3 Fundamental anal$sis e6aminesall the dimensions of ris4 e6posure and the probabilities of return5 and merges them with
broader economic anal$sis and greater industr$ anal$sis to formulate the (aluation of a
stoc43
#$!DAE!TA( A!A()%I%
Fundamental anal$sis is a method of forecasting the future price mo(ements of a
financial instrument based on economic5 political5 en(ironmental and other rele(ant
factors and statistics that will affect the basic suppl$ and demand of whate(er underlies
the financial instrument3 "t is the stud$ of economic5 industr$ and compan$ conditions in
an effort to determine the (alue of a compan$>s stoc43 Fundamental anal$sis t$picall$
focuses on 4e$ statistics in compan$>s financial statements to determine if the stoc4 price
is correctl$ (alued3 The term simpl$ refers to the anal$sis of the economic well9being of a
financial entit$ as opposed to onl$ its price mo(ements3
7/26/2019 Elize Beth
http://slidepdf.com/reader/full/elize-beth 6/21
Fundamental anal$sis is the cornerstone of in(esting3 The basic philosoph$ underl$ing
the fundamental anal$sis is that if an in(estor in(ests re3- in bu$ing a share of a compan$5
how much e6pected returns from this in(estment he has3
The fundamental anal$sis is to appraise the intrinsic (alue of a securit$3 "t insists that no
one should purchase or sell a share on the basis of tips and rumors3 The fundamental
approach calls upon the in(estors to ma4e his bu$ or sell decision on the basis of a
detailed anal$sis of the information about the compan$5 about the industr$5 and the
econom$3 "t is also 4nown as ?top9down approach@3 This approach attempts to stud$ the
economic scenario5 industr$ position and the compan$ e6pectations and is also 4nown as
*e+ono,i+-industy-+o,any aoa+h /EI' aoa+h3
Thus the EI' aoa+h in(ol(es three steps
-3 Economic anal$sis
+3 "ndustr$ anal$sis
.3 1ompan$ anal$sis
-3 E'"!"I' A!A()%I%
The le(el of economic acti(it$ has an impact on in(estment in man$ wa$s3 "f the
econom$ grows rapidl$5 the industr$ can also be e6pected to show rapid growth and (ice
(ersa3 <hen the le(el of economic acti(it$ is low5 stoc4 prices are low5 and when the
The debt9equit$ ratio is calculated to measure the e6tent to which debt financing has been
used in a business3 "t indicates the proportionate claims of owners and the outsiders
against the firm>s assets3 The purpose is to get an idea of the cushion a(ailable to
outsiders on the liquidation of the firm3
7/26/2019 Elize Beth
http://slidepdf.com/reader/full/elize-beth 17/21
RE%EAR'> &AP
To start an$ business capital pla$s major role3 1apital can be acquired in two wa$s b$
issuing shares or b$ ta4ing debt from financial institutions or borrowing mone$ from
financial institutions3 The owners of the compan$ ha(e to pa$ regular interest and
principal amount at the end3
Stoc4 is ownership in a compan$5 with each share of stoc4 representing a tin$ piece of
ownership3 The more shares $ou own5 the more of the compan$ $ou own3 The more
shares $ou own5 the more di(idends $ou earn when the compan$ ma4es a profit3 "n the
financial world5 ownership is called *Equity.
Ad(antages of selling stoc4
• A compan$ can raise more capital than it could borrow3
• A compan$ does not ha(e to ma4e periodic interest pa$ments to creditors3
• A compan$ does not ha(e to ma4e principal pa$ments
Stoc4shares pla$ a major role in acquiring capital to the business in return in(estors are
paid di(idends to the shares the$ own3 The more shares $ou own the more di(idends $ou
recei(e3
The role of equit$ anal$sis is to pro(ide information to the mar4et3 An efficient mar4et
relies on information a lac4 of information creates inefficiencies that result in stoc4s
being misrepresented &o(er or under (alued*3 This is (aluable because it fills information
gaps so that each indi(idual in(estor does not need to anal$=e e(er$ stoc4 thereb$ ma4ing
the mar4ets more efficient3
7/26/2019 Elize Beth
http://slidepdf.com/reader/full/elize-beth 18/21
"B?E'TI@E% "# T>E %T$D)
The objecti(e of this project is to deepl$ anal$=e our "ndian Automobile "ndustr$ for
in(estment purpose b$ monitoring the growth rate and performance on the basis of
historical data3
The main objecti(es of the 2roject stud$ are
• Detailed anal$sis of Automobile industr$ which is gearing towards
international standards
• Anal$=e the impact of qualitati(e factors on industr$>s and compan$>s
prospects
• 1omparati(e anal$sis of three tough competitors TATA Motors5 Maruti Su=u4i
and Mahindra and Mahindra through fundamental anal$sis3
• Suggesting as to which compan$>s shares would be best for an in(estor to
in(est3
7/26/2019 Elize Beth
http://slidepdf.com/reader/full/elize-beth 19/21
>)P"T>E%I%
>yothesis 1
), The sample Equit$ of automobile industr$ ma$ not influence the whole industr$5)- The sample Equit$ of automobile industr$ will influence the whole industr$
>yothesis 6
), The ris4 and return of the Equit$ are not considered while in(estors ma4ing
decisions on their in(estment securit$5
)- The ris4 and return of the Equit$ are considered while in(estors ma4ing decisions
on their in(estment
>yothesis 3
The null h$pothesis of the stud$ assumes5
), There is no significant impact of Equit$ anal$sis while in(estor in(esting in a
securit$5
)- There is a significant impact of Equit$ anal$sis while in(estor in(esting in a
securit$53
>yothesis
), The sample Equit$ ma$ not influence the whole industr$5
)- The sample Equit$ will influence the whole industr$
7/26/2019 Elize Beth
http://slidepdf.com/reader/full/elize-beth 20/21
%'"PE "# T>E %T$D)
The scope of the stud$ is identified after and during the stud$ is conducted3 The
project is based on tools li4e fundamental anal$sis and ratio anal$sis3 Further5 the
stud$ is based on information of last fi(e $ears3
• The anal$sis is made b$ ta4ing into consideration fi(e companies i3e3 TATA
Motors5 Maruti Su=u4i and Mahindra and Mahindra3
• The scope of the stud$ is limited for a period of fi(e $ears3
• The scope is limited to onl$ the fundamental anal$sis of the chosen stoc4s3
Peiod of the study
The duration of the project is 0da$s
7/26/2019 Elize Beth
http://slidepdf.com/reader/full/elize-beth 21/21
ET>"D"("&)
Research design or research methodolog$ is the procedure of collecting5 anal$=ing and
interpreting the data to diagnose the problem and react to the opportunit$ in such a wa$ where
the costs can be minimi=ed and the desired le(el of accurac$ can be achie(ed to arri(e at a
particular conclusion3
The methodolog$ used in the stud$ for the completion of the project and the fulfillment of the
project objecti(es3
The sample of the stoc4s for the purpose of collecting secondar$ data has been selected on the
basis of Random Sampling3 The stoc4s are chosen in an unbiased manner and each stoc4 is
chosen independent of the other stoc4s chosen3 The stoc4s are chosen from the automobile
sector3
The sample si=e for the number of stoc4s is ta4en as . for fundamental anal$sis of stoc4s as
fundamental anal$sis is (er$ e6hausti(e and requires detailed stud$3