A STUDY ON THE EQUITY RESEARCH IN BANKING SECTORProject submitted to the Madurai Kamaraj University in partial fulfillment of the requirements for the award of the Degree of Masterof Business Administrati on Submitted By N. DINAKARAN (Reg. No. B029008) Under the Guidance ofDr. V. CHINNIAH DEPARTMENT OF MANGEMENT STUDIES MADURAI KAMARAJ UNIVERSITY MADURAI – 625 021. JANUARY 2012 Dr. V. CHINNIAH, M.Com., M.B.A., M.Phil., B.L., Ph.D.,
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A STUDY ON THE EQUITY RESEARCH IN
BANKING SECTOR
Project submitted to the Madurai Kamaraj University in partialfulfillment of the requirements for the award of the Degree of Master
of Business Administration
Submitted By
N. DINAKARAN(Reg. No. B029008)
Under the Guidance of
Dr. V. CHINNIAH
DEPARTMENT OF MANGEMENT STUDIES
MADURAI KAMARAJ UNIVERSITY
MADURAI – 625 021.
JANUARY 2012
Dr. V. CHINNIAH, M.Com., M.B.A., M.Phil., B.L., Ph.D.,
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Professor,Department of Management Studies,Madurai Kamaraj University,Madurai 625 021
CERTIFICATE
This is to certify that the project entitled “A STUDY ON THE
WORKING CAPITAL MANAGEMENT AT MEENAKSHI MISSION
HOSPITAL & RESEARCH CENTRE” submitted by Mr. N.
DINAKARAN, I year MBA is a record of research work carried out by him
for the degree of Master of Bussiness Administration, under my guidance. The
subject of the dissertation is her original work and it has not previously formed
the basis for the award of any degree, diploma, associateship, and any other
similar titles of any university or institution. The project represents entirely an
independent work on the part of the candidate.
Place: Madurai-21 (Dr.V.CHINNIAH)
Date:
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N. DINAKARAN,Department of Management Studies,Madurai Kamaraj University,Madurai – 625 021.
DECLARATION
I hereby declare that the project is entitled “A STUDY ON THE
WORKING CAPITAL MANAGEMENT AT MEENAKSHI MISSION
HOSPITAL & RESEARCH CENTRE” for the degree of Master of Bussiness
Administration, is my original work and done under the supervision of
Dr. V. CHINNIAH, M.Com., M.B.A., M.Phil., B.L., Ph.D., Professor,
Department of Management Studies, Madurai Kamaraj University, Madurai and
that it has not previously formed the basis for the award of any degree, diploma
or other similar titles of any university or institution.
Station : Madurai-21 (N.DINAKARAN)
Date:
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ACKNOWLEDGEMENT
First I would like to thank God and my beloved parents
and the members of my family, for their blessings and prayers in making this
dissertation a success.
I owe a deep of sense of gratitude to my esteemed guide Dr.
V. Chinniah, M.Com., M.B.A., M.Phil., B.L., Ph.D., Professor, Department of
Management Studies, Madurai Kamaraj University, Madurai. His help in
correcting the drafts and clarifying the doubts are greatly appreciated with deep
sense of gratitude.
I wish to express my sincere thanks to Dr.C. Chandran, M.B.A., Ph.D.,
Professor and Head of the Department of Management Studies, Madurai
Kamaraj University for his encouragement and support and also for permitting
me to do research work in the Department of Management Studies.
I am very thankful to Dr. N. Sethuraman – Founder Chairman, Dr. V.
N. Rajasekaran – Medical Director and Dr. N. Krishnamoorthy – AcademicDirector of MMHRC for permitting me to undergo summer project in their
organization.
I am also thankful to all the staffs of the Finance
department of MMHRC for helping me to complete summer project in their
organization.
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I wish to express my thanks to my classmates & my friends who have co-
operated with me to complete this project.
TABLE OF CONTENTS
Acknowledgement
Page No
List of Tables
List of Graphs
CHAPTER
1. Introduction and Design of the Study
1.1 Introduction
1.2 Scope of the Study
1.3 Objectives of the Study
1.4 Methodology
1.5 Limitation of the Study
1.6 Chapter Scheme
1 -11
II. Background of the study area
2.1Introduction
2.2 History of the Organisation
2.3 Objective of MMHRC
2.4 S.R.Trust
2.5 Quality Policy
12 – 30
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2.6Location and Layout
2.7Organisation Principles
2.8 Future Plans
2.9 Departments In MMHRC
2.10 Recognition Awards and Acceleration
2.11 Social Activities
2.12 SummaryIII. The Analysis and Interpretation
3.1 Introduction
3.2 Gross Working Capital to Total Assets Ratio
3.3 Net Working Capital to Current liability Ratio
3.4 Gross Working Capital to Sales
3.5 Working Capital Turnover Ratio
3.6 Gross Profit Ratio
3.7 Net Profit Ratio
3.8 Current Ratio
3.9 Quick Ratio
3.10 Absolute Liquid Ratio
3.11 Debtors Turnover Ratio
3.12 Average Collection Period
3.13 Creditors Turnover Ratio
3.14 Cash as Percentage of Current Assets
3.15 Statement Of Changes In Working Capital
31 – 87
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3.16 Regression Analysis
3.17 summary
IV. Summary of Findings, Suggestions and Conclusion
4.1 Findings
4.2 Suggestions
4.3 Conclusion
88 – 92
Bibliography
Appendix
Chapter-I
INTRODUCTION & DESIGN OF THE STUDY
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1.1 Introduction
1.2 Concept of working capital
1.3 Need for working capital
1.3 Introduction to the variable
1.4 Scope of the study
1.5 Objectives of the study
1.6 Methodology of the study
1.7 Period of the study
1.8 Sources of data
1.9 Tools used
1.10 Limitations of the study.
CHAPTER I - INTRODUCTION
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INTRODUCTION
India is a developing country. Nowadays many people
are interested to invest in financial markets especially on equities to get high
returns, and to save tax in honest way. Equities are playing a major role in
contribution of capital to the business from the beginning. Since the
introduction of shares concept, large numbers of investors are showing interest
to invest in stock market.
In an industry plagued with skepticism and a stock market
increasingly difficult to predict and contend with, if one looks hard enough there
may still be a genuine aid for the Day Trader and Short Term Investor. The
price of a security represents a consensus. It is the price at which one person
agrees to buy and another agrees to sell. The price at which an investor is
willing to buy or sell depends primarily on his expectations.
If he expects the security's price to rise, he will buy it; if
the investor expects the price to fall, he will sell it. These simple statements are
the cause of a major challenge in forecasting security prices, because they refer
to human expectations. As we all know firsthand, humans expectations are
neither easily quantifiable nor predictable.
If prices are based on investor expectations, then
knowing what a security should sell for (i.e., fundamental analysis) becomes
less important than knowing what other investors expect it to sell for. That's not
to say that knowing what a security should sell for isn't important--it is. But there
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is usually a fairly strong consensus of a stock's future earnings that the average
investor cannot disprove
Fundamental analysis and technical analysis can co-exist
in peace and complement each other. Since all the investors in the stock
market want to make the maximum profits possible, they just cannot afford to
ignore either fundamental or technical analysis.
FUNDAMENTAL ANALYSIS
Fundamental analysis is a method of forecasting the future price
movements of a financial instrument based on economic, political,
environmental and other relevant factors and statistics that will affect the basic
supply and demand of whatever underlies the financial instrument. It is the
study of economic, industry and company conditions in an effort to
determine the value of a company’s stock. Fundamental analysis
typically focuses on key statistics in company’s financial statements to
determine if the stock price is correctly valued. The term simply refers to theanalysis of the economic well-being of a financial entity as opposed to only its
price movements. Fundamental analysis is the cornerstone of investing. The
basic philosophy underlying the fundamental analysis is that if an investor
invests re.1 in buying a share of a company, how much expected returns
from this investment he has. The fundamental analysis is to appraise the intrinsic
value of a security. It insists that no one should purchase or sell a share on the basis of tips and rumors. The fundamental approach calls upon the investors to
make his buy or sell decision on the basis of a detailed analysis of the
information about the company, about the industry, and the economy. It is also
known as “top-down approach”. This approach attempts to study the economic
scenario, industry position and the company expectations and is also known
as
“economic-industry- company approach (EIC approach)”
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Thus the EIC approach involves three steps:
1. Economic analysis
2. Industry analysis
3. Company analysis
1.ECONOMIC ANALYSIS
The level of economic activity has an impact on investment in many ways.
If the economy grows rapidly, the industry can also be expected to show rapid
growth and vice versa. When the level of economic activity is low, stock prices
are low, and when the level of economic activity is high, stock prices are high
reflecting the prosperous outlook for sales and profits of the firms. The analysis
of macro economic environment is essential to understand the behavior of the
stock prices.
The commonly analyzed macro economic factors are as follows:
Gross Domestic Product (GDP): GDP indicates the rate of growth of theeconomy. It represents the aggregate value of the goods and services produced
in the economy. It consists of personal consumption expenditure, gross private
domestic investment and government expenditure on goods and services and net
exports of goods and services. The growth rate of economy points out the
prospects for the industrial sector and the return investors can expect from
investment in shares. The higher growth rate is more favorable to the stock market.
Savings and investment: It is obvious that growth requires investment which in
turn requires substantial amount of domestic savings. Stock market is a
channel through which the savings are made available to the corporate bodies.
Savings are distributed over various assets like equity shares, deposits, mutual
funds, real estate and bullion. The savings and investment patterns of the public
affect the stock to a great extent.
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Inflation:
Along with the growth of GDP, if the inflation rate also increases, then the
real growth would be very little. The effects of inflation on capital
markets are numerous. An increase in the expected rate of inflation is expected
to cause a nominal rise in interest rates. Also, it increases uncertainty of future
business and investment decisions. As inflation increases, it results in
extra costs to businesses, thereby squeezing their profit margins and leading
to real declines in profitability.
Interest rates:
The interest rate affects the cost of financing to the firms. A decrease in interest
rate implies lower cost of finance for firms and more profitability. More money
is available at a lower interest rate for the brokers who are doing
business with borrowed money. Availability of cheap funds encourages
speculation and rise in the price of shares.
Tax structure:
Every year in March, the business community eagerly awaits theGovernment’s announcement regarding the tax policy. Concessions and
incentives given to a certain industry encourage investment in that particular
industry. Tax relief’s given to savings encourage savings. The type of tax
exemption has impact on the profitability of the industries.
Infrastructure facilities:
Infrastructure facilities are essential for the growth of industrial andagricultural sector. A wide network of communication system is a must for the
growth of the economy. Regular supply of power without any power cut would
Boost the production. Banking and financial sectors also should be sound
enough to provide adequate support to the industry. Good infrastructure facilities
affect the stock market favorably.2.
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INDUSTRY ANALYSIS
An industry is a group of firms that have similar technological structure of
production and produce similar products and Industry analysis is a type of
business research that focuses on the status of an industry or an
industrial sector (a broad industry classification, like "manufacturing").
Irrespective of specific economic situations, some industries might be expected
to perform better, and share prices in these industries may not decline as much as
in other industries. This identification of economic and industry specific factors
influencing share prices will help investors to identify the shares that fit
individual expectations
Industry Life Cycle:
The industry life cycle theory is generally attributed to Julius Grodensky. The
life cycle of the industry is separated into four well defined stages.
Pioneering stage:
The prospective demand for the product is promising in this stage and the
technology of the product is low. The demand for the product attracts many
producers to produce the particular product. There would be severe competition
and only fittest companies survive this stage. The producers try to develop brand
name, differentiate the product and create a product image. In this situation, it is
difficult to select companies for investment because the survival rate isunknown.
Rapid growth stage:
This stage starts with the appearance of surviving firms from the pioneering
stage. The companies that have withstood the competition grow strongly in
market share and financial performance. The technology of the production
would have improved resulting in low cost of production and good quality
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products. The companies have stable growth rate in this stage and they declare
dividend to the shareholders. It is advisable to invest in the shares of these
companies.
Maturity and stabilization stage:
The growth rate tends to moderate and the rate of growth would be more or
less equal to the industrial growth rate or the gross domestic product
growth rate. Symptoms of obsolescence may appear in the
technology. To keep going, technological innovations in the production
process and products should be introduced. The investors have to closely
monitor the events that take place in the maturity stage of the industry.
Decline stage:
Demand for the particular product and the earnings of the companies in
the industry decline. It is better to avoid investing in the shares of the low growth
industry even in the boom period. Investment in the shares of these types of companies leads to erosion of capital.
Growth of the industry:
The historical performance of the industry in terms of growth and profitability
should be analyzed. The past variability in return and growth in reaction to
macro economic factors provide an insight into the future.
Nature of competition:
Nature of competition is an essential factor that determines the demand for the
particular product, its profitability and the price of the concerned
company scrips. The companies' ability to withstand the local as
well as the multinational competition counts much. If too many firms are
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present in the organized sector, the competition would be severe. The
competition would lead to a decline in the price of the product. The investor
before investing in the scrip of a company should analyze the market share of
the particular company's product and should compare it with the top five
companies.
SWOT analysis:
SWOT analysis represents the strength, weakness, opportunity and threat for an
industry. Every investor should carry out a SWOT analysis for the chosen
industry. Take for instance, increase in demand for the industry’s product
becomes its strength, presence of numerous players in the market, i.e.
competition becomes the threat to a particular company. The progress in R & D
in that industry is an opportunity and entry of multinationals in the industry is a
threat. In this way the factors are to be arranged and analyzed.
COMPANY ANALYSISIn the company analysis the investor assimilates the several bits of information
related to the company and evaluates the present and future values of the stock.
The risk and return associated with the purchase of the stock is analyzed to take
better investment decisions. The present and future values are affected by a
number of factors.
Competitive edge of the company:
Major industries in India are composed of hundreds of individual
companies. Though the number of companies is large, only few companies
control the major market share. The competitiveness of the company can be
studied with the help of the following;
Market share:
The market share of the annual sales helps to determine a company’s
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relative competitive position within the industry. If the market share is high, the
company would be able to meet the competition successfully. The companies in
the market should be compared with like product groups otherwise, the
results will be misleading.
Growth of sales:
The rapid growth in sales would keep the shareholder in a better position than
one with stagnant growth rate. Investors generally prefer size and growth in
sales because the larger size companies may be able to withstand the
business cycle rather than the company of smaller size.
Stability of sales:
If a firm has stable sales revenue, it will have more stable earnings. The fall in
the market share indicates the declining trend of company, even if the sales are
stable. Hence the stability of sales should be compared with its market share and
the competitor’s market share
Earnings of the company:
Sales alone do not increase the earnings but the costs and expenses of thecompany also influence the earnings. Further, earnings do not always increase
with increase in sales. The company’s sales might have increased but its
earnings per share may decline due to rise in costs. Hence, the investor should
not only depend on the sales, but should analyze the earnings of the company.
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Financial analysis:
The best source of financial information about a company is
its own financial statements. This is a primary source of information for
evaluating the investment prospects in the particular company’s stock. Financial
statement analysis is the study of a company’s financial statement from various
viewpoints. The statement gives the historical and current information about the
company’s operations. Historical financial statement helps to predict the
future and the current information aids to analyze the present status of the
company. The two main statements used in the analysis are Balance sheet and
Profit and Loss Account. The balance sheet is one of the financial statements
that companies prepare every year for their shareholders. It is like a financial
snapshot, the company's financial situation at a moment in time. It is prepared at
the year end, listing the company's current assets and liabilities. It helps to study
the capital structure of the company. It is better for the investor to avoid a
company with excessive debt component in its capital structure.
From the balance sheet, liquidity position of the company canalso be assessed with the information on current assets and current liabilities.
Ratio analysis:
Ratio is a relationship between two figures expressed mathematically. Financial
ratios provide numerical relationship between two relevant financial data.
Financial ratios are calculated from the balance sheet and profit and loss account.
The relationship can be either expressed as a percent or as a quotient. Ratiossummarize the data for easy understanding, comparison and interpretations.
Ratios for investment purposes can be classified into profitability ratios, turnover
ratios, and leverage ratios. Profitability ratios are the most popular ratios since
investors prefer to measure the present profit performance and use this
information to forecast the future strength of the company. The most often used
profitability ratios are return on assets, price earnings multiplier, price to book
value, price to cash flow, and price to sales, dividend yield, return on equity,
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present value of cash flows, and profit margins.
a) Return on Assets (ROA)
ROA is computed as the product of the net profit margin and the total asset
turnover ratios.
ROA = (Net Profit/Total income) x (Total income/Total Assets)
This ratio indicates the firm's strategic success.
Companies can have one of two strategies:
cost leadership, or product differentiation. ROA
should be rising or keeping pace with the company's competitors if the company
is successfully pursuing either of these strategies, but how ROA rises depend
on the company's strategy. ROA should rise with a successful cost leadership
strategy because the company’s increasing operating efficiency. An example is
an increasing, total asset, turnover ratio as the company expands into new
markets, increasing its market share. The company may achieve leadership by
using its assets more efficiently. With a successful product differentiation
strategy, ROA will rise because of a rising profit margin.b) Return on Investment (ROI)
ROI is the return on capital invested in business, i.e., if an investment Rs 1 crore
in men, machines, land and material is made to generate Rs. 25 lakhs of net
profit, then the ROI is 25%. The computation of return on investment is as
follows:
Return on Investment (ROI) = (Net profit/Equity investments) x 100As this ratio reveals how well the resources of a firm are being used, higher the
ratio, better are the results. The return on shareholder’s investment should be
compared with the return of other similar firms in the same industry. The inert-
firm comparison of this ratio determines whether the investments in the
firm are attractive or not as the investors would like to invest only where
the return is higher.
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c) Return on Equity
Return on equity measures how much an equity shareholder's investment is
actually earning. The return on equity tells the investor how much the invested
rupee is earning from the company. The higher the number, the better is
the performance of the company and suggests the usefulness of the projects
the company has invested in.
The computation of return on equity is as follows:
Return on equity = (Net profit to owners/value of the specific owner's
Contribution to the business) x 100
The ratio is more meaningful to the equity shareholders who are invested to
know profits earned by the company and those profits which can be made
available to pay dividend to them.
d) Earnings per Share (EPS)
This ratio determines what the company is earning for every share. For many
investors, earnings are the most important tool. EPS is calculated by dividing
the earnings (net profit) by the total number of equity shares.The computation of EPS is as follows:
Earnings per share = Net profit/Number of shares outstanding
The EPS is a good measure of profitability and when compared with EPS of
similar other companies, it gives a view of the comparative earnings or
earnings power of a firm. EPS calculated for a number of years indicates
whether or not earning power of the company has increased.e) Dividend per Share (DPS)
The extent of payment of dividend to the shareholders is measured in the
form of dividend per share. The dividend per share gives the amount of cash
flow from the company to the owners and is calculated as follows:
Dividend per share = T otal dividend payment / Number of shares
outstanding
The payment of dividend can have several interpretations to the
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shareholder. The distribution of dividend could be thought of as the
distribution of excess profits/abnormal profits by the company. On the other
hand, it could also be negatively interpreted as lack of investment opportunities.
In all, dividend payout gives the extent of inflows to the shareholders from the
company.
f) Dividend Payout Ratio
From the profits of each company a cash flow called dividend is distributed
among its shareholders. This is the continuous stream of cash flow to the owners
of shares, apart from the price differentials (capital gains) in the market. The
return to the shareholders, in the form of dividend, out of the company's profit
is measured through the payout ratio. The payout ratio is computed as follows:
Payout Ratio = (Dividend per share / Earnings per share) * 100
The percentage of payout ratio can also be used to compute the percentage of
retained earnings. The profits available for distribution are either paid as
dividends or retained internally for business growth opportunities. Hence,
when dividends are not declared, the entire profit is ploughed back into the business for its future investments.
g) Dividend Yield
Dividend yield is computed by relating the dividend per share to the market
price of the share. The market place provides opportunities for the investor to
buy the company's share at any point of time. The price at which the share
has been bought from the market is the actual cost of the investment to theshareholder. The market price is to be taken as the cum-dividend price. Dividend
yield relates the actual cost to the cash flows received from the company. The
computation of dividend yield is as follows
Dividend yield = (Dividend per share / Market price per share) * 100
High dividend yield ratios are usually interpreted as undervalued companies
in the market. The market price is a measure of future discounted values, while
the dividend per share is the present return from the investment. Hence, a
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high dividend yield implies that the share has been under priced in the market.
On the other hand a low dividend yield need not be interpreted as overvaluation
of shares. A company that does not pay out dividends will not have a dividend
yield and the real measure of the market price will be in terms of earnings per
share and not through the dividend internally for business growth opportunities.
Hence, when dividends are not declared, the entire profit is ploughed back into
the business for its future investments.
h) Price/Earnings Ratio (P/E)
The P/E multiplier or the price earnings ratio relates the current market price
of the share to the earnings per share. This is computed as follows:
Price/earnings ratio = Current market price / Earnings per share
This ratio is calculated to make an estimate of appreciation in the value of a
share of a company and is widely used by investors to decide whether or not to
buy shares in a particular company. Many investors prefer to buy the
company's shares at a low P/E ratio since the general interpretation is that the
market is undervaluing the share and there will be a correction in the market price sooner or later. A very high P/E ratio on the other hand implies that the
company's shares are overvalued and the investor can benefit by selling the
shares at this high market price.
i) Debt-to-Equity Ratio
Debt- Equity ratio is used to measure the claims of outsiders and the owners
against the firm’s assets.Debt-to-equity ratio = Outsiders Funds / Shareholders Funds
The debt-equity ratio is calculated to measure the extent to which debt financing
has been used in a business. It indicates the proportionate claims of
owners and the outsiders against the firm’s assets. The purpose is to get an idea
of the cushion available to outsiders on the liquidation of the firm.
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NEED OF THE STUDY
To start any business capital plays major role.
Capital can be acquired in two ways by issuing shares or by taking debt from
financial institutions or borrowing money from financial institutions. The
owners of the company have to pay regular interest and principal
amount at the end.
Stock is ownership in a company, with each
share of stock representing a tiny piece of ownership. The more shares you own,
the more of the company you own. The more shares you own, the more
dividends you earn when the company makes a profit. In the financial world,
ownership is called “Equity”.
Advantages of selling stock:
•A company can raise more capital than it could borrow.
•A company does not have to make periodic interest payments to creditors.
•A company does not have to make principal paymentsStock/shares play a major role in acquiring
capital to the business in return investors are paid dividends to the shares they
own. The more shares you own the more dividends you receive. role of equity
analysis is to provide information to the market. An efficient market
relies on information: a lack of information creates inefficiencies that result in
stocks being misrepresented (over or under valued). This is valuable because itfills information gaps so that each individual investor does not need to analyze
every stock thereby making the markets more efficient.
OBJECTIVES OF THE STUDY
The objective of this project is to deeply
analyze our Indian Automobile Industry for investment purpose by monitoring
the growth rate and performance on the basis of historical data.
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The main objectives of the Project study are:
• Detailed analysis of Automobile industry which is gearing towards
international standards
• Analyze the impact of qualitative factors on industry’s and
company’s prospects
• Comparative analysis of three tough competitors TATA Motors,
Maruti Suzuki and Mahindra and Mahindra through fundamental analysis.
• Suggesting as to which company’s shares would be best for an investor to
invest.
SCOPE OF THE STUDY
The scope of the study is identified after and during the study is conducted.
The project is based on tools like fundamental analysis and ratio analysis.
Further, the study is based on information of last five years.
• The analysis is made by taking into consideration five companies i.e. TATAMotor s, Maruti Suzuki and Mahindra and Mahindra.
• The scope of the study is limited for a period of five years.
• The scope is limited to only the fundamental analysis of the chosen stocks.
Sources and methods of collecting data:
To meet the objective of the project, a lot of data was required to be collected
from varied sources. For the technical analysis, the data was required in respect
of Interest Income, Advances, Various rates, Share Prices, etc. For this, the data
was obtained from Balance Sheets, Quarterly results, Websites, News Papers,
etc. A list of same is provided in the references.
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METHODOLOGY
Research design or research methodology is the procedure of collecting,
analyzing and interpreting the data to diagnose the problem and react to the
opportunity in such a way where the costs can be minimized and the desired
level of accuracy can be achieved to arrive at a particular conclusion. The
methodology used in the study for the completion of the project and
the fulfillment of the project objectives.
The sample of the stocks for the purpose of collecting secondary
data has been selected on the basis of Random Sampling. The stocks are
chosen in an unbiased manner and each stock is chosen independent of the other
stocks chosen. The stocks are chosen from the automobile sector. The sample
size for the number of stocks is taken as 3 for fundamental analysis of stocks
as fundamental analysis is very exhaustive and requires detailed study.
LIMITATIONS
• This study has been conducted purely to understand Equity analysis for
investors.
• The study is restricted to three companies based on Fundamental analysis.• The study is limited to the companies having equities.
• Detailed study of the topic was not possible due to limited size of the project.
• There was a constraint with regard to time allocation for the research study i.e.
for a period of 45 days.
• Suggestions and conclusions are based on the limited data of five years.
Equity Analysis
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Chapter-II
BACKGROUND OF THE STUDY AREA
Equity Analysis
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HDFC securities Ltd, a trusted financial services intermediary is a
subsidiary of India's respected private sector bank- (HDFC Bank)
Suggestions and conclusions are based on the limited data of five years
A leading stock broking company having completed 10 years in operation,
serves a diverse customer base of retail and institutional investors.
Discerning investors experience a robust platform to trade in
Equities, derivatives, currency futures and mutual funds through both NSE &BSE and other investment options like IPO's, bonds, corporate fixed deposits
,insurance etc.
Investors are also provided with niche - Equity Investment advise
and execution platform with superior technology aid and unbiased research
across sector,
Our web portal is designed to meet the requirements of
everyone from a beginner to a savvy and well-informed trader with highest
service standards, convenience and hassle-free trading tools.
The Web portal aims to provide a one stop window for all
financial needs with seamlessness and customer centric services
WEBPORTAL
Based on Web 2.0 technology.
SPEED
Equity Analysis
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State-of-the art technology enabling seamless trading experience on
both the exchanges BSE and NSE.
CONVENIENCE
• Clients could adopt to trade with us either online, or on the phone, or
relationship managers from the convenience of their home or office.
• The 4-in-1 Advantage account enables clients to seamlessly move funds
and securities across your bank, demat and trading account.
• Clients get to enjoy limits across exchanges to trade
• No need to issue cheques or delivery instructions.
• Place IPO / NCD applications via few clicks using the trading account or
by the phone. No standing in queues or filling application forms.
• ASBA application facility.
• Customer care centre to address all queries and grievances.
REACH
HDFC securities has a strong unified call centre catering to clients across India
and overseas aiding clients who wish to have their orders placed by a tele-agent.
7 Regional language call centre facility is available for clients.
Over 128 exclusive branches across India also service clients locally by
dedicated relationship managers.
TRANSPARENCY
With our trusted pedigree, a client can be assured of best services in a
transparent manner and is in total control of their funds and stocks.
EXPERTISE
With a decade of experience and a rating of A1+1, HDFC securities has a
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admired lineage of providing financial services to customers in a transparent
and trusted manner. We have a dedicated,motivated and experienced team of
professionals to provide you top class service.
TIMELY AND RELEVANT INFORMATION
We realize the importance of making information available to clients as it
happens. Empowered with the latest news, developments and unbiased research,
enables a client to take informed decisions.
YOUR INTEREST
For HDFC securities, client's interest comes first. We endeavor to provide high
quality investment services, in a simple, direct and cost-effective manner to help
you achieve your financial goals.
OUR OFFERINGS' ONE STOP SHOP, FOR ALL YOUR INVESTMENT
NEEDS
• Equity and Derivatives
• IPO
• Mutual Fund
• Fixed Deposits
• Non Convertible Debentures
• General Insurance
• Life Insurance
• Bonds
• Currency Derivatives
• PMS
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Automobile industry
The Automobile industry in India is one of the
largest in the world and one of the fastest growing globally. India's passenger
car and commercial vehicle manufacturing industry is the seventh largest in the
world, with an annual production of more than 3.7 million units in 2010.
According to recent reports, India is set to overtake Brazil to become the sixth
largest passenger vehicle producer in the world, growing 16-18 per cent to sell
around three million units in the course of 2011-12. In 2009, India emerged as
Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, andThailand.
As of 2010, India is home to 40 million passenger vehicles.
More than 3.7 million automotive vehicles were produced in India in 2010 (an
increase of 33.9%), making the country the second fastest growing automobile
market in the world. According to the Society of Indian Automobile
Manufacturers, annual vehicle sales are projected to increase to 5 million by
2015 and more than 9 million by 2020. By 2050, the country is expected to top
the world in car volumes with approximately 611 million vehicles on the
nation's roads. The majority of India's car manufacturing industry is based
around three clusters in the south, west and north. The southern cluster near
Chennai is the biggest with 35% of the revenue share. The western hub near
Maharashtrais
33% of the market. The northern cluster is primarily
Haryana with 32%. Chennai, is also referred to as the "Detroit of India” with the
India operations of Ford, Hyundai, Renault and Nissan headquartered in the city
and BMW having an assembly plant on the outskirts. Chennai accounts for 60%
of the country's automotive exports. Gorgon and Manesar in Haryana form the
northern cluster where the country's largest car manufacturer, MarutiSuzuki, is
Three Wheelers 66,795 76,881 143,896 141,225 148,074
Two Wheelers 366,407 513,169 619,644 819,713 1,004,174
Total 629,544 806,222 1,011,529 1,238,333 1,530,660
Product and service segmentation
The automotive industry of India is categorised into
passenger cars, two wheelers, commercial vehicles and three wheelers, with two
wheelers dominating the market. More than 75% of the vehicles sold are two
wheelers. Nearly 59% of these two wheelers sold were motorcycles and about
12% were scooters. Mopeds occupy a small portion in the two wheeler market
however; electric two wheelers are yet to penetrate.
The passenger vehicles are further categorised into passenger
cars, utility vehicles and multi-purpose vehicles. All sedan, hatchback, stationwagon and sports cars fall under passenger cars. Tata Nano, is the world's
cheapest passenger car , manufactured by Tata Motors - a leading automaker of
India. Multi-purpose vehicles or people-carriers are similar in shape to a van
and are taller than a sedan, hatchback or a station wagon, and are designed for
Honda is a motorcycle and scooter manufacturer based in India. Hero Honda started in 1984as a joint venture between Hero Cycles of India and Honda of Japan. The company is thelargest two wheeler manufacturer in India. The 2006 Forbes 200 Most Respected companies
list has Hero Honda Motors ranked at 108.
In 2010, When Honda decided to move out of the joint venture, Hero Group bought the shares held by Honda. Subsequently, in August 2011 the company was renamedHero MotoCorp with a new corporate identity.
•
Company profile
Hero” is the brand name used by the Munjal brothers for their flagshipcompany Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited At Dharuhera India.Munjal family and Honda group both own 26% stake in the Company. In 2010, it wasreported that Honda planned to sell its stake in the venture to the Munjal family.
During the 1980s, the company introduced motorcycles that were popular inIndia for their fuel economy and low cost. A popular advertising campaign based on theslogan 'Fill it - Shut it - Forget it' that emphasised the motorcycle's fuel efficiency helped thecompany grow at a double-digit pace since inception. The technology in the bikes of HeroHonda for almost 26 years (1984–2010) has come from the Japanese counterpart Honda [9]
Hero MotoCorp has three manufacturing facilities based at Dharuhera,Gurgaon in Haryana and at Haridwar in Uttarakhand. These plants together are capable of churning out 3 million bikes per year.[10] Hero MotoCorp has a large sales and servicenetwork with over 3,000 dealerships and service points across India. Hero Honda has acustomer loyalty program since 2000,[11] called the Hero Honda Passport Program.
The company has a stated aim of achieving revenues of $10 billion andvolumes of 10 million two-wheelers by 2016-17. This in conjunction with new countrieswhere they can now market their two-wheelers following the disengagement from Honda,Hero MotoCorp hopes to achieve 10 per cent of their revenues from international markets,and they expected to launch sales in Nigeria by end-2011 or early-2012. In addition, to copewith the new demand over the coming half decade, the company was going to build their fourth factory in South India and their fifth factory in Western India. There is no confirmationwhere the factories would be built. [12]
History
Hero MotoCorp was started in 1984 as Hero Honda Motors Ltd.[3]
• 1956 -- Formation of Hero Cycles in Ludhiana(majestic auto limited)• 1975 -- Hero Cycles becomes largest bicycle manufacturer in India.
• 1983 -- Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signedShareholders Agreement signed• 1984 -- Hero Honda Motors Ltd. incorporated• 1985 -- Hero Honda motorcycle CD 100 launched.• 1989 -- Hero Honda motorcycle Sleek launched.
• 1991 -- Hero Honda motorcycle CD 100 SS launched.• 1994 -- Hero Honda motorcycle Splendor launched.• 1997 -- Hero Honda motorcycle Street launched.• 1999 -- Hero Honda motorcycle CBZ launched.• 2001 -- Hero Honda motorcycle Passion and Hero Honda Joy launched.• 2002 -- Hero Honda motorcycle Dawn and Hero Honda motorcycle Ambitionlaunched.• 2003 -- Hero Honda motorcycle CD Dawn, Hero Honda motorcycle Splendor, HeroHonda motorcycle Passion Plus and Hero Honda motorcycle Karizma launched.• 2004 -- Hero Honda motorcycle Ambition 135 and Hero Honda motorcycle CBZ*launched.• 2005 -- Hero Honda motorcycle Super Splendor, Hero Honda motorcycle CD Deluxe,Hero Honda motorcycle Glamour, Hero Honda motorcycle Achiever and Hero HondaScooter Pleasure.• 2007 -- New Models of Hero Honda motorcycle Splendor NXG, New Models of HeroHonda motorcycle CD Deluxe, New Models of Hero Honda motorcycle Passion Plus andHero Honda motorcycle Hunk launched.• 2008 -- New Models of Hero Honda motorcycles Pleasure, CBZ Xtreme, Glamour,Glamour Fi and Hero Honda motorcycle Passion Pro launched.• 2009 -- New Models of Hero Honda motorcycle Karizma:Karizma - ZMR and limitededition of Hero Honda motorcycle Hunk launched• 2010 -- New Models of Hero Honda motorcycle Splendor Pro and New Hero Hondamotorcycle Hunk and New Hero Honda Motorcycle Super Splendor launched.• 2011 -- New Models of Hero Honda motorcycles Glamour, Glamour FI, CBZXtreme, Karizma launched.
New licensing arrangement signed between Hero and Honda.
• August 2011 -- Hero and Honda part company, thus forming Hero MotoCorpand Honda moving out of the Hero Honda joint venture.
• November 2011 -- Hero launched its first ever Off Road Bike Named Hero"Impulse".
Termination of Honda joint venture
Main article: Hero Honda split
In December 2010, the Board of Directors of the Hero Honda Group have decided toterminate the joint venture between Hero Group of India and Honda of Japan in a phasedmanner. The Hero Group would buy out the 26% stake of the Honda in JV Hero Honda.[13] Under the joint venture Hero Group could not export to international markets (exceptSri Lanka) and the termination would mean that Hero Group can now export. Since the
beginning, the Hero Group relied on their Japanese partner Honda for the technology in
their bikes. So there are concerns that the Hero Group might not be able to sustain the performance of the Joint Venture alone.[14]
The new brand identity and logo, Hero MotoCorp, was developed by the London firm
Wolff Olins.[15] The logo was revealed on 9 August 2011 in London, the day before thethird test match between England and India.[15]
Hero MotoCorp can now export to Latin America, Africa and West Asia. [15] Hero is freeto use any vendors for its components instead of just Honda-approved vendors. [15]
Company performance
During the fiscal year 2008-09, the company sold 3.7 million bikes, a growth of 12%over last year. In the same year, the company had a market share of 57% in the Indian
market.[16] Hero Honda sells more two wheelers than the second, third and fourth placedtwo-wheeler companies put together.[9] Hero Honda's bike Hero Honda Splendor sellsmore than one million units per year.[17]
Recognition
Logo of Hero Honda, as the company was known till Aug. 2011
The Brand Trust Report published by Trust Research Advisory has ranked Hero Honda inthe 13th position among the brands in India.
Motorcycle models
See also: Category:Hero Honda motorcycles
• Sleek • Achiever
• Ambition 133, Ambition 135• CBZ, CBZ Star, CBZ Xtreme• CD 100, CD 100 SS, CD Dawn, CD Deluxe, CD Deluxe (Self Start)• Glamour, Glamour F.I• Hunk • Karizma , Karizma R, Karizma ZMR FI• Passion, Passion+, Passion Pro• Pleasure• Splendor , Splendor+, Splendor+ (Limited Edition), Super Splendor, Splendor
It is reported Hero Honda has five joint ventures or associate companies,Munjal Showa, AG Industries , Sunbeam Auto, Rockman Industries and Satyam Auto
Components, that supply a majority of its components.
Company
Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largestmanufacturer of two - wheelers, based in India.In 2001, the company achieved the coveted position of being the largest two-wheeler manufacturing company in India and also, the 'World No.1' two-wheeler company in terms of unit volume sales in a calendar year. HeroMotoCorp Ltd. continues to maintain this position till date.
Vision
The story of Hero Honda began with a simple vision - the vision of a mobileand an empowered India, powered by its bikes. Hero MotoCorp Ltd., company'snew identity, reflects its commitment towards providing world class mobilitysolutions with renewed focus on expanding company's footprint in the globalarena.
Mission
Hero MotoCorp's mission is to become a global enterprise fulfilling itscustomers' needs and aspirations for mobility, setting benchmarks intechnology, styling and quality so that it converts its customers into its brandadvocates. The company will provide an engaging environment for its people to
perform to their true potential. It will continue its focus on value creation andenduring relationships with its partners.
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Strategy
Hero MotoCorp's key strategies are to build a robust product portfolio acrosscategories, explore growth opportunities globally, continuously improve itsoperational efficiency, aggressively expand its reach to customers, continue toinvest in brand building activities and ensure customer and shareholder delight.
MANUFACTURING Hero MotoCorp two wheelers are manufactured across three globally
benchmarked manufacturing facilities. Two of these are based at Gurgaon andDharuhera which are located in the state of Haryana in northern India. The thirdand the latest manufacturing plant is based at Haridwar, in the hill state of Uttrakhand.
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This article is about the company. For the entire conglomerate, see Mahindra Group. For
[18] True to their word, Mahindra & Mahindra launched the Mahindra Xylo in
January 2009, and as of June 2009, the Xylo has sold over 15000 units.[19]
Also in early 2008, Mahindra commenced its first overseas CKD operations with
the launch of the Mahindra Scorpio in Egypt,[20] in partnership with the Bavarian
Auto Group. This was soon followed by assembly facilities in Brazil. Vehicles
assembled at the plant in Bramont, Manaus, include Scorpio Pik Ups in single and
double cab pick-up body styles as well as SUVs.[21]
Mahindra planned to sell the diesel SUVs and pickup trucks starting in late 2010
in North America[22] through an independent distributor, Global Vehicles USA,
based in Alpharetta, Georgia.[23] Mahindra announced it will import pickup trucks
from India in knockdown kit (CKD) form to circumvent the Chicken tax.[24] CKDs
are complete vehicles that will be assembled in the U.S. from kits of parts shipped
in crates.[24] On 18 October 2010, however, it was reported that Mahindra had
indefinitely delayed the launch of vehicles into the North American market, citing
legal issues between it and Global Vehicles after Mahindra retracted its contract
with Global Vehicles earlier in 2010, due to a decision to sell the vehicles directly
to consumers instead of through Global Vehicles.[25] However, a November 2010
report quoted John Perez, the CEO of Global Vehicles USA, as estimating that he
expects Mahindra’s small diesel pickups to go on sale in the U.S. by spring 2011,
although legal complications remain, and Perez, while hopeful, admits thatarbitration could take more than a year.[26] Later reports suggest that the delays
may be due to an Manindra scrapping the original model of the truck and
replacing it with an upgraded one before selling them to Americans[27]
Mahindra & Mahindra has a controlling stake in Mahindra Reva Electric
Vehicles. In 2011, it also gained a controlling stake in South Korea's SsangYong
Net income 2,288.6 crore (US$434.83million) (2010-11) [2]
Employees 6,903[3]
Parent Suzuki Motor Corporation
Website www.marutisuzuki.com
Maruti Suzuki India Limited ( NSE: MARUTI, BSE: 532500) is a subsidiary
company of Japanese automobile and motorcycle manufacturer Suzuki. The
company offers a complete range of cars from entry level Maruti 800 and Alto, to
hatchback Ritz, A-Star , Swift, Wagon-R , Estillo and sedans DZire, SX4, in the 'C'
segment Maruti Eeco and Sports Utility vehicle Grand Vitara.[4]
It was the first company in India to mass-produce and sell more than a millioncars. It is largely credited for having brought in an automobile revolution to India.
It is the market leader in India, and on 17 September 2007, Maruti Udyog
Limited was renamed as Maruti Suzuki India Limited. The company's
management in 1997, when it became predominantly government controlled for a
while, and the conflict between the United Front Government and Suzuki may
have been the cause of unrest among employees. A major row broke out in
September 2000 when employees of Maruti Udyog Ltd (MUL) went on an
indefinite strike, demanding among other things, revision of the incentive scheme
offered and implementation of a pension scheme.[citation needed]
Employees struck work for six hours in October 2000, irked over the suspension
of nine employees, going on a six-hour tools-down strike at its Gurgaon plant,
demanding revision of the incentive-linked pay and threatened to fast to death if
the suspended employees were not reinstated. About this time, the NDA
government, following a disinvestments policy, proposed to sell part of its stake
in Maruti Suzuki in a public offering. The Staff union opposed this sell-off plan
on the grounds that the company will lose a major business advantage of being
subsidised by the Government.[citation needed]
The standoff with the management continued to December with a proposal by the
management to end the two-month long agitation rejected with a demand for
reinstatement of 92 dismissed workers, with four MUL employees going on a
fast-unto-death. In December the company's shareholders met in New Delhi in an
AGM that lasted 30 minutes. At the same time around 1500 plant workers from
the MUL's Gurgaon facility were agitating outside the company's corporate officedemanding commencement of production linked incentives, a better pension
scheme and other benefits. The management has refused to pass on the benefits
citing increased competition and lower margins.[13]