Professional Documents
Culture Documents
PROJECT ON
SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
In partial fulfillment of
POST GRADUATE PROGRAM IN PLANNING AND NTREPRENEURSHIP
SUBMITTED To SUBMITTED BY
Mrs. Bindu Agrawal SANJEET KUMAR SINGH
SR. LECTURER 22/PGPPE/08E/168
RBS, Delhi Sem- IV, RBS, New Delhi
ACKNOWLEDGEMENT
I am grateful to those who have helped me in compiling the
matter for this project. While I take this opportunity to
thank all of them-they are too numerous to be mentioned in
this brief preface.
I would like to acknowledge my deep sense of gratitude to
Mrs. . Bindu Agrawal (Faculty , RBS Delhi) for her
valuable help at all stage.
Lastly no words can adequately express my dept e.g.
gratitude to my all faculty members of RBS DELHI and I
also thanks my friends for their support.
TO WHOM SO EVER IT MAY
CONCERN
1. INTRODUCTIN
2. ECONOMIC ANALYSIS
3. IMPACT OF BUDGET ON TELECOME INDUSTRY
4. INDUSTRY ANALYSIS
5. INDIAN TELECOMMUNICATION INDUSTRY
8. BIBLOGRAPHY
INTRODUCTION
FUNDAMENTAL ANALYSIS
Fundamental analysis is the examination of the underlying forces that affect the
well being of the company, industry groups and companies. As with most analysis the
goal is to develop a forecast of future price movement and profit from it. At the company
level, fundamental analysis may involve examination of financial data, management ,
business concept and competition. At the industry level their might be an examination of
supply and demand forces of the products. For the national economy fundamental
analysis might focus on economic data to asses the present and future growth of the
economy.
Fundamental analysis is a method of evaluating a security by attempting to
measure its intrinsic value by examining related economy, financial and other qualitative
and quantitative factors. Fundamental analysis attempt to study every thing that can effect
the securities value including macro economic factors and individual specific factors.
Three phase of the fundamental analysis
A. Understanding of the Macro Economic environment and developments
(Economy analysis)
B. Analyzing the prospectus of the industry to which the firm belongs(Industry
analysis)
C. Assessing the projected performance of the company( Company analysis)
ECONOMIC ANALYSIS
The economy is like the tide and the various industry groups and individual
companies are like boats. When economy expands most industry groups and companies
benefits and grows. When the economy decline, most sectors and companies usually
suffer. The stock market does not operate in a vacuum it is an integral part of the whole
economy of a country, more so in a free economy that of United States and to some
extent in mixed economy like ours.
To gain an insight into the complexities of stock market. One needs to develop a
sound economic understanding and be able to interpret the impact of important economic
indicators on stock markets.
The following are some important factors which should be taken into account while
doing fundamental analysis:
• Economic Growth
• Per capita income
• Industrial Production
• Inflation
• Interest Rates
• Foreign Exchange Reserves
• Budgetary Deficit
• Domestic Savings and Investment
• Tax Rates
• Infrastructure
• Political Situation
• The Finance Minister has announced the allocation of Rs 2,400 crore from the
Universal Service Obligation Fund (USOF) to subsidize mobile, Internet and
landline operations in rural India.
• With the government planning to subsidize construction of 11,000 telecom
towers across 2.4 lakh villages, the road ahead for the rural sector seems smooth.
• These steps definitely promise greater spending on telecom infrastructure in
around 3 lakh villages which are yet to see the telecom revolution.
• According to budget estimates, for 2009-10, the government expects to collect Rs
48,335.33 crore from the telecom sector, with 3G spectrum sales contributing
75% to the total. In FY 2008-09, the government's receipts from the sector stood
at Rs 13,174.29 crore.
• The industry is also elated about the CVD exemption on the manufacture of
cellphones and accessories.
• The industry's happiness did not last long with Pranab Mukherjee announcing the
increase in Minimum Alternate Tax (MAT) from 10% to 15%, which came as a
huge blow to the sector.
• The broadcasting segment can cheer. There is a small decrease in duty for LCD
panels from 10% to 5%, which will bring down prices by a maximum of Rs 3,000
per LCD TV set. LCD TV shipments that stood at around 1.3 mn units in 2008 are
expected to grow in excess of 50% year-on-year as the preference for flat panel
televisions continues to soar amongst Indian viewers.
• However, the industry in general seems happy on the increased spends on robust
infrastructure upgrades and on rural areas, which will possibly add another
chapter to the telecom story in India.
INDUSTRY ANALYSIS
' Telecom Industry in India ' is regulated by 'Telecom Regulatory Authority of India'
(TRAI). It has earned good reputation for transparency and competence.
Two types of players exists in ' Telecom Industry India ' community –
Telecom industry in India has a big market potentiality and is a fast growing sector.
Government of India is eager to reconstitute this telecom industry by enacting effective
policies for more investments from foreign companies, which results in a very
competitive and deregulated market in the world.
Wireless
(CDMA & GSM) 101.86 165.09 261.08 376.12
COMPANY ANALYSIS
After determining the economic and industry conditions, the company itself is
analyzed to determine its financial health. This is usually done by studying the company's
financial statements. From these statements a number of useful ratios can be calculated.
The ratios fall under five main categories: profitability, price, liquidity, leverage, and
efficiency. When performing ratio analysis on a company, the ratios should be compared
to other companies within the same or similar industry to get a feel for what is considered
"normal." These are quantitative factors of company analysis; there are also some
qualitative factors which should be considered also.
• Find out as much as possible about the company and their products.
• Do they have any “core competency” or “fundamental strength” that puts them
ahead of all the other competing firms?
After you understand the company & what they do, how they relate to the
market and their customers, you will be in a much better position to decide whether
the price of the companies stock is going to go up or down.
So fundamental analysts use different tools and ratios to compare all sorts
of companies no matter what business they are in or what they do!
Financial ratios
A financial ratio is an expression of the relationship between two selected items from the
income statement or the balance sheet. Ratio analysis helps you to evaluate the weak and
strong points in your financial and managerial performance. Financial ratio analysis is
calculation and comparison of ratio which are derived from the information in a
company’s financial statements. The level and historical trends of these ratios can be
used to make inferences about a company’s financial condition its operations and
attractiveness as an investment.
1. Balance sheet ratio analysis
Current ratio
Quick ratio
2. Income statement ratio anlysis
Gross margin ratio
Net profit margin ratio
3. Management/efficiency ratios
Inventory turnover ratios
Account receivable ratio
4. Overall profitability analysis
Return on assets ratio
Return on investment ratio
5. Market test or valuation ratios
Earning per share
Bharti Airtel
• Bharti Airtel formerly known as Bharti Tele-Ventures LTD (BTVL) is India's
largest cellular service provider with more than 110 million subscribers as of Sep
2009.
• With this, Bharti is now the world's third-largest, single-country mobile operator
and sixth-largest integrated telecom operator.
• It also offers fixed line services and broadband services.
• It offers its TELECOM services under the Airtel brand and is headed by Sunil
Bharti Mittal.
• The company also provides telephone services and Internet access over DSL in 14
circles.
• It also acts as a carrier for national and international long distance communication
services.
• The company has a submarine cable landing station at Chennai, which connects
the submarine cable connecting Chennai and Singapore.
• The businesses at Bharti Airtel have always been structured into three individual
strategic business units (SBU's)
- Mobile Services,
- Airtel Telemedia Services
- & Enterprise Services.
• The mobile business provides mobile & fixed wireless services using GSM
technology across 23 telecom circles while
• The Airtel Telemedia Services business offers broadband & telephone services
in 95 cities and has recently launched a Direct-to-Home (DTH) service, Airtel
digital TV. The company provides end-to-end data and
• Enterprise services to the corporate customers through its nationwide fiber optic
backbone, last mile connectivity in fixed-line and mobile circles, VSATs, ISP and
international bandwidth access through the gateways and landing station.Globally,
Bharti Airtel is the 3rd largest in-country mobile operator by subscriber base,
behind China Mobile and China Unicom.
Bharti Airtel
24.6
Reliance
40.3 Communicationa
Vodafone Essar
Others
17.7
Slice 5
17.4
COMPANY
ANALYSIS OF BHARTI AAIRTEL BY USING DIFFERENT
RATIOS
1. Balance sheet ratio analysis
RATIOS
LIQUIDITY
RATIOS
Current Ratio 0.47 0.44 0.47 0.57 0.69
Quick Ratio 0.49 0.45 0.47 0.55 0.65
0.8
0.7
0.6
0.5
CURRENT
0.4
RATIOS
0.3
0.2
0.1
0
Mar- Mra- Mar- Mar- Mar-
05 06 07 08 09
0.7
0.6
0.5
0.4
Quick ratios
0.3
0.2
0.1
0
Mar- Mra- Mar- Mar- Mar-
05 06 07 08 09
Interpretation :- Bharti airtel’s both current and quick ratios are moving upward means
shows increasing trends. These shows company has good liquidity position .
Company is able to pay day to obligations of company.
RATIOS
Income
statement
Ratios
Gross profit
24.29 23.14 27.47 29.08 29.33
Ratio
Net profit Ratio 14.83 17.80 22.46 23.99 22.58
0.7
0.6
0.5
0.4
Quick ratios
0.3
0.2
0.1
0
Mar- Mra- Mar- Mar- Mar-
05 06 07 08 09
30
25
20
Net profit
15
ratio
10
5
0
Mar- Mra- Mar- Mar- Mar-
05 06 07 08 09
3. MANAGEMENT/EFFICIENCY RATIOS
RATIOS
Management
/efficiency
Ratios
Inventory Ratio 257.80 634.52 373.35 453.06 547.83
Account
11.38 12.57 14.31 12.28 12.78
receivable ratio
700
600
500
400 Inventory
300 turnover ratio
200
100
0
Mar- Mra- Mar- Mar- Mar-
05 06 07 08 09
16
14
12
10
8 Account
6 receivable artio
4
2
0
Mar- Mra- Mar- Mar- Mar-
05 06 07 08 09
Interpretation :- High inventory turnover ratio and high debtor turnover ration shows
the management’s efficiency in using inventory and collecting debts respectively. Bharti
airtel’s both ratios are high in 2009 as compare to previous years. Company is efficient in
using inventory properly and company able to collecting cash from debtors on time. In
this way it shows good prospectus for investors to invest in this company in future.
RATIOS
Overall
profitability
analysis
Return on asset
257.80 634.52 373.35 453.06 547.83
Ratio
Return on
0.75 0.72 0.75 1.03 1.00
investment ratio
700
600
500
400 Return on
300 assets ratio
200
100
0
Mar- Mra- Mar- Mar- Mar-
05 06 07 08 09
1.2
1
0.8
Return on
0.6 investment
0.4 ratio
0.2
0
Mar- Mra- Mar- Mar- Mar-
05 06 07 08 09
Interpretation :- High return on asset ratio shows that company’s overall profitability is
goods. Bharti airtel’s this ratios is high in 2009 as compare to previous years. So its
overall profitability is good whether its return on inventment ratio has reduced by .03
point. It may be due to inflation and global meltdown reason.
RATIOS
Market test or
valuation ratio
Earning per
6.53 10.62 21.27 32.90 40.79
share ratio
45
40
35
30
25 Earning per
20 share ratio
15
10
5
0
Mar- Mar- Mar- Mar- Mar-
05 06 07 08 09
Interpretation :- High earning per share is considered good from investor’s point of
view. Bharti airtel’s this ratio is increasing year by year. It shows that investors has good
prospectus in bharti airtel if they will purchase is share.
www.airindia.co.in
www.wikipedia.org
http://search.ebscohost.com
Business India
Economics Times