Professional Documents
Culture Documents
INTRODUCTION
1
EQUITY ANALYSIS
Equity Analysis refers to the analysis of trading securities from the point
of view of their prices, returns and risks. All investments are risky and the
expected return is related to the risk. Their analysis will help in understanding
the behavior of security prices and the market and in decision making for
Origin of Markets :
The security markets emerge out of the new issues made by companies,
borrow in the form of ownership capital or debt capital for financial their
operations. They issue IOUs of promissory notes with a promise to pay the
funds at later date. All securities are in this form of IOUs except those of
ownership shares. Securities of more than one year come into the categories of
capital and stock markets. The shares of ownership category are transferable
Information Flows :
money flows, one the other. If the information flows are perfect and free, and
the markets adjust to these flows quickly and effectively, the markets are said
2
Imperfect and the \price formation will be unpredictable, haphazard and
know its impact on the market prices and forecast trades. For this purpose,
perfect, a few with inside information is free and unbiased, the markets behave
rationally and nobody can gain extra profits and normal returns are available to
The markets are also influenced by the flows of savings or money. The
micro level flows would depend on the following objectives income, capital
appreciation, hedge against inflation, liquidity and safety to investors, etc. these
are the criteria by which individual savers would enter the market for
the corporate sector and in the economy and lead to capital formation and
these investment flows. The fixed capital formation would promote growth of
out put and income by a multiplier process. This leads to the theory of savings
3
Factors external to the company like environmental factors, economic and
political development.
the public.
A host of other factors, psychological and emotional also play a role in the
market Operations.
Trading :
demand which in turn are influenced by the above factors. These forces of
supply and demand determine the volume of trading turnover and also the
prices. These two indicators for studying the market behaviour used in the
day or hour, number of days in a year in which the companys share is traded or
the number of shares traded in a day or a year. Our empirical studies show that
on the stock exchange, namely, 20-30% of the total. The liquidity is closely
share capital. It is also related to the intrinsic worth of the company and other
4
financial indicators like P/E ratio. Nearly 50% of the performance of the share
price is explained by the internal factors of the company like its earnings per
share, debt servicing, book value etc. the rest of the factors ate external to the
etc.
(3) Intermediaries.
1. Quantity raised from the new issues market and quantity traded in the
Secondary market.
2. Prices of instruments.
Instruments :
The instruments traded and their characteristics are set out in an earlier
chapter. There are equity and preference shares in the category of ownership
capital and debentures, bonds and P.S.U. Bonds, and Government securities in
category of debt capital in the hybrid variety, there are convertible debentures
5
characteristics of debt capital would eventually be ownership capital, a number
Bonds, Zero Coupon Bonds etc, are also being issued at present.
Players :
sectors undertakings which are the major borrowers, the investors and
number of Mutual Funds FFIs, NRIs, OCBs have also started as players in the
markets.
Intermediaries :
6
RESEARCH AND METHODOLOGY :
The study is conducted to analyze the internal and external factors which
effect the EPS of the company
7
OBJECTIVES OF THE STUDY
REUTERS, Cognizent and find out the EPS to future EPS of the stock
prices.
METHODOLOGY
The present study has been adopting the following methodology in both
The study carries both the primary ands secondary data. Primary data
was collected from the financial statements of the firm. Secondary datas was
collected from the newspapers, multimedia, fund managers, some mutual funds
Period of study :
8
The data collected from statements for a period of 4 years.
Data collection :
advisories.
methods.
As the study of equity analysis is very vast, It is risky taks to cover all
year.
the company may limit the analysis of the researcher to some extent.
2. We have limit to take only A group stock which maintain study growth
Development process.
9
CHAPTER - II
REVIEW OF LITERATURE
10
EQUITY ANALYSIS
two main approaches, which are used in the analysis of movement of shares.
Fundamental analysis
Technical analysis
FUNDAMENTAL ANALYSIS
It analyses the stock based on the specific goals of the investors. They
study the financial strength of the corporate growth of sales, earnings and
profitability. They also take into account the general industry and economic
condition. Fundamentalists are if the opinion that supply and demand for stocks
based on the theory that the price of share is affected by the dividends that that
analysis is aimed at estimating the future price of the share. This future price is
dependent on the future EPS of the company as well as on how the market
11
ESTIMATING FUTURE EPS :
the company. There are number of factors which determine the earnings they
are classifies as
1. ECONOMIC FACTOR
2. INDUSTRY FACTORS
3. COMPANY FACTORS
ECONOMIC FACTORS :
many ways. If the economy grows rapidly, the industry can also be expected to
a) Gross Domestic Product (GDP): GDP indicates the growth rate of the
goods and services. The growth of the economy points out the prospects for the
industrial sector and the return the investors can expect from investment in
shares.
12
c) Savings and Investment: Stock market is a channel through which the
savings and investment patterns, of the public affect the stock to a great
extent.
under government price policy, will lose the market. High rate of
rate for the broker who doing business with borrowing money.
of shares.
13
between receipts and payments may be surplus or deficit. Balance of
result in bumper crop. This would lead buoyancy in stock market. When
system is a must for the growth of the economy. Regular supply power
without any power cut would boost the production. Good infrastructure
ECONOMIC FORECASTING :
To estimate the Stock Price changes an analyst has to analyze the macro
with the economic activities affect the corporate profits attitudes and the share
14
help him to decide the right time to invest the type of security he has purchased
ECONOMICINDICATORS :
The Economic indicators are factors that indicate the present status,
profits: money supply, GNP, interest rates, unemployment rate etc., and the
1) Economic Significance
2) Statistical adequacy
3) Timing
4) Conformity
popular leading are the fiscal policy, monitory policy, Productivity, rainfall,
Interest rates and reserve funds. The changes that are occurring in the leading
indicators are identified as unemployment rate, consumer price index and flow
15
of foreign funds. These leading coincidental and lagging indicators provide an
DIFFUSION INDEX :
Economic research in U.S.A. has constructed this type of index but the
For Model building several variables are taken into consideration. The
assumptions underlying the analysis are specified. The relationship between the
model, the analyst has to think clearly all the inter relationship between the
variables. When these inter relationship are specified, he can forecast not only
INDUSTRY FACTORS :
classified on the basis of the business cycle i.e., classified according to their
reaction of different phases of the business cycle They are classified into
16
a) Growth of the Industry: Historical performance of the industry in
b) Cost Structure and Profitability: The cost structure, that is fixed and
variable cost. Affects the cost of production and profitability of the firm.
In case of oil and Natural Gas Industries and Iron and Steel Industry is
also lengthy, higher the fixed cost component, greater sales volume is
c) Nature of the Product: The Consumer and the other Industries demand
Iron Sheet and Coals are produced the demand for them depends on the
that determines the demand for particular product, its profitability and
the price of the concerned companys scripts. The supply may arise
17
competition would lead to the decline in the script of the company
should analyze the market share of the particular companys product and
the Industry and the effect differ industry to industry, tax subsidiaries
and tax holidays are provided for export oriented products. In some
importance. The number of trade unions and their operation modes have
Industry is known for its militant Trade Union. When Trade unions
18
production process have to be technically competitive, This depends on
COMPANY ANALYSIS :
companies is large, few companies like Capital IQ, Cognizent Tech, Capital IQ,
THOMSON REUTERS etc., controls the major markets share. Like-wise in all
dominance.
company losing the leadership. The rapid growth in sales would keep the
shareholders in a better position than one with the stagnant in sales. Growth in
If a firm has stable sales revenue, other things being remaining constant,
will have more stable earning. Wide variation is sales leads to variation in
19
capacity utilization, financial planning and dividend. Periodically all the
companies in an industry. The fall in the market share indicates the declining
trend of the company, even if the sales are stable in obsolute terms. Hence, the
stability of sales also should be with its market share and the competitors
market share.
Sales alone do not increase the earnings but the costs and expenses of
the company also influence the earning of the company. Further, earnings do
not always increase with the increase in sales. The companys sales might have
increased but its earnings per share (EPS) may decline due to the rise in costs.
The rate of change in earnings differ from the rate of change of sales. Sales
may increase by 10% in a company but earning per share may increase only
5%. Hence the investors should not depend only on sales, but should analyze
the earning of the company. The investor should be aware that income of the
Change in Sales
Change in Costs
Depletion of resources in the case of oil, mining, forest products, gas etc.
20
Wages, salaries and fringe benefits
MANAGEMENT :
management of the firm should efficiently plan, organize, actuate and control
attain the stated objective of the company for the good of the equity holder. The
-Leadership
-Analytical competence
-Industry
-Judgment
OPERATING EFFICIENCY :
with a low break even point earns more that the company with high break
even point. If a firm has a stable-operating ratio, the revenues also would lead 0
21
OPERATING LEVERAGE :
If the firms fixed cost is high in total cost the firm is said to have a high
heavy object with a small force. High degree of operating leverage implies,
other factors being held constant, a relatively small change in return on equity.
FINANCIAL ANALYSIS :
financial analysis of that company. The financial analysis provides better into
Balance sheet
The (B/S) is the statement of the companys sources of funds and uses of
funds at a given point of time. The B/S allows one get quick view of the
financial strength and its capabilities. The B/S provides analyst to know exact
position of the business, whether it will be able to expand and handle the
financial problems. The b/S contain of two segments Liabilities and Assets.
22
While Liabilities let us know financial obligations on the part of the company,
account of the capital structure. The net worth and the outstanding long-term
debt are known from the balance sheet. From the observation op balance sheet
an investor can avoid a company that has excessive debt component in its
capital structure. From the balance sheet, liquidity position of the company can
also be assessed with information on current asset and current liabilities. The
of found too. The income statement reports the flow of funds from business
operations that take place in between two points of time. It lists of income and
expenditure. The difference represents profit or loss for the period. It is also
called income and expenditure statement. The investor should be aware of the
23
fire is included because it can be expressed in monetary terms. The loss
incurred by the company due to the loss of reputation is not given in the
statement because it cannot measure in monetary units.
b) Valuation of inventory
manipulations, if any. The auditors report and notes to the balance sheet vital
funds. It also help and investors to understand the financial position and the
24
Trend Analysis
TECHNICAL ANALYSIS :
formulate the buying and selling strategy. With the help of several indicators
they analyze the relationship between price volume and demand supply for
overall market and the individual stock. Volume is favorable on the upswing
i.e. the number of share traded is greater than before and on the downside the
number of share traded dwindles. If it is the other way round. Trend reversals
can be expected.
ASSUMPTIONS :
2. The market discount everything the price of the security quotes the
hopes, fears, insider information received by the market players. These
factors may cause the shift in the demand and supply, changing the
direction of the market.
25
HISTORY OF TECHNICAL ANALYSIS
in 1984 in the wall Street Journal. He wrote a series of articles in the wall street
journal, A.J. Netlson, a close friend of Charles Dow formulized Dow theory for
economic forecasting. The analysis used charts of individual stocks and moving
averages in the early 1920s Later on, with the aid of calculators and
TECHNICAL TOOLS :
The first hypothesis is that, no single individual or buyer can influence the
major trend of the market. However, an individual investor can affect the daily
investor.
PRIMARY TREND :
market exhibits the increasing trend, it is called bull market. The bull markets
shows three clear cut peaks. Each peak is higher than the previous peak. The
26
bottoms are also higher than the previous bottoms. The reactions following the
peak used to halt before the previous bottoms. The phases leading to the three
peaks are revival, improvement in corporate profit and speculation. The revival
period encourage more and more investors to buy scrips their expectation
about the future being high. In the second phase, increased profits of corporate
would result in further price rise. In the third phase, prices advance due to
inflation and speculation. The reverse is true with the bear market. Here, the
first phase of fall with the abandonment of hopes. The chances of prices
moving back to the previous high level seems to be low, these would result in
the sale of shares. This lead to selling pressure. This final phase of 1996 in the
Bombay stock exchange, More than 2/3 of stock were inactive. Most of the
scrips were sold below their par values. Thus comes the bear markets. Here the
tops and bottoms are lower than the previous ones. The bull and bear phases of
When the market exhibits increasing trend, it is called bull market. The
bull market shows three clear cut peaks. Each peak is higher than the previous
peak. The bottoms are also higher than the previous bottoms.
1) The revival period encourages more and more investors to but scripts,
their expectations about the future being high.
27
3) In the third phase, price advances due to inflation and speculation when
the market exhibits decreasing trend, it is called the bear market.
The secondary trend or the intermediate trend moves against the main
trend and leads to correction. In the bull market, the secondary trend would
result in the fall of about 32-66% of earlier rise. In the bear market, the
secondary trend carries the price upward and corrects the main trend. The
secondary trend carries the price upward and corrects the main trend , the
correction would be 33% to 66% of the earlier fall. Intermediate trend correct
the over bought and oversold condition. It provides the breathing space to the
market, compared to the time taken for the primary trend, secondary trend is
MINOR TRENDS :
Minor trends or tertiary moves are called random wriggle. They are
simply the daily fluctuations, minor trend tries to correct the secondary trend
movement. It is better for the investors to concentrate on the minor trend the
chartists plots the scrips price or the market index each day to trace the
exhibits the formation of the higher tops and higher bottoms, the trend would
be termed as bullish and when the index starts exhibiting the formation of
lower-ups and lower-bottoms, the trend of the market can be said to have
28
turned bearish. Thus it is the price action that determines the trend of the
market.
formation of accumulation and distribution zone. These zones are called line
distribution phase, the indices would be moving narrowly and neither gaining
nor losing noticeable ground from the line movement. If the indices were to be
moved upwards, their line movement or the narrow range movement would be
termed as cumulation phase/ if the indices were to move downward the narrow
the end of the Bull market. Distribution phase is also possible after the
that stock is expected to prevent further fall in the price level. The fall in the
price may be halted for the time being or it may result even in price reversal in
In the resistance level, the supply of the scrip would be greater than the
demand and further rise in the price is prevented. The selling pressure is greater
29
Support and resistance usually occur whenever the turnover of large
stock touches a certain level and then drops, then it is called resistance and if
the stock reaches down to a certain level and then rises, there exists a support.
INDICATORS :
The Technical indicators are used to find out the direction of the overall
market. The overall market movements affect the individual share prices.
forecasting. The indicators are price and volume of trade. The volume of trade
VOLUME OF TRADE :
Dow gave special emphasis on volume. Volume expands along with the
bull market and narrow s down in the bear market. If the volume falls with rise
in price or vice-versa, it is a matter of concern for the investor and trend may
not persist for a longer time. Technical analyst used volume as an excellent
method of confirming the trend. The market is said to be bullish when small
volume of trade and large volume of trade follow the fall in prices and rise in
prices.
Large rise in price or large fall in price leads to large increase in volume.
Large volume with rise in price indicates bull market and the large volume with
fall in price indicates bear market. If the volume decline for five consecutive
30
days, then it will continue for another four days and same is true in the case of
increasing volume.
The breadth of the market is the terms often used to study the advances
and declines that have occurred in the stock market. Advances mean the
number of shares whose prices have increased from the previous days trading.
Declining indicate the number of shares whose prices have fallen from the
previous days trading. The net difference between the number of stocks
advanced and declined during the same period is the breadth of the market. The
SHORT SALES :
refer to selling of the shares that are not owned the bears are the short sellers
who sell now in the hope of purchasing at a lower price in the future to make
profits. The short sellers have to cover up their positions. When the demand for
a particular share increases, the outstanding short positions also increase and it
Shares are generally sold in lots of tens and hundreds. Shares sold in
smaller lots, fewer than tens and hundreds are called Odd Lots. Such buyers
31
and sellers are called Odd Lotters. Odd lot purchase to Odd lot sales
(purchase/sales) is the odd lot index. The increase in odd lot purchases result in
an increase in the index. Relatively more selling leads to fall in the Index. It is
market, the stock market is technically strong. If the Odd lotters dominate the
market, the market is considered to be technically weak. The notion behind this
is that odd lot purchase is concentrated at the top market cycle and selling at
the bottom. High odd lot purchase forecasts fall in the market price and low
purchase/sales ratio are presumed to occur towards end of the bear market.
MOVING AVERAGE :
The market indices do not rise or fall in straight line. The upward and
The word moving means that the body of data moves ahead to include
the recent observation. If it is five day moving average, on the sixth day the
body of the data moves to include sixth day observation eliminating the first
study the movement of the market as well as the individual scrip price. The
moving average indicates the underlying trend in the scrip. The moving
average indicates the underlying trend in the scrip. The period of average
determines the period of trend that is being identified. For identifying short-
32
term trend, 10 to 30 days moving average are used. In the case of medium term
trend, 50 to 125 days are adopted. 200 days moving average is used to identify
Individual stock price is compared with the stock market indices. The
moving average of the stock and the index are plotted in the same sheet and
trends are compare. If NSE or BSE index is above stocks moving average line,
the particular stock has bullish trend. The price may increase above the market
average. If the Senses or Nifty is below the stocks moving average the bearish
market can be expected for the particular stock. If the moving average of the
stock penetrates the stock market index from the above. It generates sell signal.
Unfavorable market conditions prevail for the particular scrip. If the stock line
averages are used along with the prices of the scrip. The stock price may
rising average indicates the possibility further fall and gives the sell signal.
Upward penetration of the falling average would indicate the possibility of the
OSCILLATORS :
33
Oscillators indicate the market momentum or scrip momentum.
Oscillators show the share price movement across a reference point from one
a) Over bought and over sold conditions of the scrip or the market
indicate trend reversals that have to be confirmed with the price movement or
and then only buy and sell signal can be generated. Actions have to be taken
only when the price and momentum agree with each other with the daily,
weekly and monthly closing prices, oscillators are built. For short term trading,
daily price oscillators are useful. For long term trading, monthly price
34
CHAPTER-III
INDUSTRY PROFILE & COMPANY
PROFILE
35
INDUSTRY PROFILE
STOCK BROKING OPERATIONS AN OVER VIEW
36
Brokerage clerks handle much of the day-to-day operations of brokerages,
performing a number of different jobs with a wide range of responsibilities; all
involve computing and recording data pertaining to securities transactions.
Brokerage clerks also may contact customers, take orders, and inform clients
of changes to their accounts. Some of these jobs are more clerical. Brokerage clerks,
who work in the operations departments of securities firms, on trading floors, and in
branch offices, also are called margin clerks, dividend clerks, transfer clerks, and
brokers assistants.
37
The stockbroker should provide adequate information regarding the stocks.
He should be capable of giving short term and long-term investment suggestions to
the investor and able to confirm the purchase and sale of securities quickly. He should
have adequate experience in the market to take correct decision. He should have
contact with other stock exchanges to execute the orders profitably and also offer
incidental service like arranging for financing the clients transaction.
Types of stockbrokers
The stock brokers the key players in secondary market. There are various
categories of brokers as stated below.
Floor Brokers: They are representatives of the brokers, who enter the
trading floor and execute orders for their clients of for members.
Thus a jobber does not work for commission but works for profits. A
jobber transacts in the market for quick returns. In the London Stock
Exchange even member has to act as a broker or as a jobber. In India, there
is no such rigid classification.
Arbitragers: They are brokers who buy securities in one market and sell
them in another market to take the advantages of the price differences
prevailing in different markets for same scripts.
38
Wolves: They are clever speculators. They perceive the changing trends in
the market and trade fast and make a fast duck.
Orders:
Buy and sell orders placed with members of the stock exchange by the
investor. The broker is responsible for getting the best price for his customer at the
time the order is placed.
Online Trading:
The Net is used as a medium of trading in Internet trading. Orders are
communicated to the stock exchange through website. Internet trading started in
India on 1st April 2000 with 79 members seeking permission for online trading. The
SEBI committees on Internet based securities trading services trading services has
39
allowed the net to be used as an Order Routing System (ORS) through registered
stock brokers on behalf of their clients for execution of transaction.
The user should have the user id and password to enter into the electronic
ring. He should also have a demat account and bank account. The system permits
only a registered client to log in using user ID and password. Order can be placed
using place order window of the website.
The client has to enter stock code and other parameters such as quantity and
price of the scrip on the place order window.
The client can review the order placed by clicking the review option. He can
also reset to clear the values
The client receives an order confirmation message with order number and
value of the order.
When the trade is executed, the broker asks for the transfer of funds by the
investor to his account. Stocks are credited/debited according to the buy/sell
order in the demat accounts.
Regulatory Framework
The securities and Exchange Board of India was constituted in 1998 under a
resolution of government of India. It was later made statutory body by the SEBI act
1992. According to this act, the SEBI shall constitute of a chairman and five other
members appointed by the central government with the coming into effect of the
Securities and Exchange Board of India act, 1992. Some of the power and functions
exercised by the central government, in respect of the regulation of stock exchange
were transferred to the SEBI.
40
II. Regulation the business in stock exchange and any other securities market.
VII. Performing such functions and exercising such powers under the provisions of
capital issues (control) act, 1947 and the securities to it by the central
government.
Regulations, 1992,
SEBI has been setup to ensure that the stock exchanges discharge their self-
regulatory role properly. Even since SEBI began to monitor brokers, stock broker.
Eligibility
a. Individuals
41
c. Corporations, Companies or institutions or subsidiaries of such
Corporations, Companies or institutions set up for providing financial
services.
42
COMPANY PROFILE
- Yours online personal Finance Advisor -
KARVY BACKGROUND:
43
CORE VALUES:
Karvys adherence to its core values integrity, enterprise and innovation has
earned it an enviable reputation amongst all the intermediaries and regulatory
authorities of the capital and financial markets.
Karvy capability has now been extended service global customers. The foray
into global processing services began in 1999 to cater to health care industry needs.
The first step Medical Transcription a service then required capability in
understanding a customers voice, conversion to text with timeliness and accuracy and
completion to a legally acceptable framework will now provide its service globally.
VISION:
KARVYS PHILOSOPHY:
Karvys core activities provide insights into the reasons for its consistent,
positive performance.
Assistance beyond service
Leadership through Quality
44
Innovation & Market Creation
Relationship Building
Integrity & Transparency
Human Resources
Training
Technology
Software
Mailroom
RANGE OF SERVICES:
Issue Servicing
Corporate Shareholder Servicing
Mutual Fund Investor Service
Asset Financing
Merchant Banking & Underwriting Services
Corporate Advisory Financing & Project Financing
Retail Financial Products
Karvy Depositor Services
Electronic Custodial Services
Depository Participant
Investor Services
Karvy - The OTCEI Dealer
Medical Transcription
Financial Products Marketed Through Karvy:
Initial Public Offerings
Fixed Income Products
Fixed Deposits
Debt Instruments
45
Bonds
Mutual Funds
Tax Saving Schemes
Personal Banking Products
Personal Loans & insurance
ALLIANCES:
Karvy has a strategic alliance with Jardine Fleming India Securities Limited
(JFISL) one of Asias most prestigious investment bankers to leverage on the
latters investment banking expertise. This would augment the retail distribution
reach and provide the Indian access to the best global and local insights on financial
markets. Jardine is a respected investment banker with a demonstrated track-record
of delivering value to its clients spread over 43 countries. It is ranked amongst the
worlds TOP 3 Foreign Institutional Investors (FIIs).
QUALITY POLICY:
46
To achieve and retain leadership, Karvy shall aim for complete customer
satisfaction, by combining its human and technological resources, to provide superior
quality financial services. In the process, Karvy will strive to exceed Customers
expectations.
QUALITY OBJECTIVES:
KARVYKEY PEOPLE:
47
Prasad V Potluri - Director
Dr. P.V.S. Jaganmohan Rao Company Secretary
Price Water House, Hyderabad Auditors
Bankers: UCO Bank, Bank Of Baroda, HDFC Bank, Standard Chartered Grindlays
Bank.
Registered Office: Karvy House, 46, Avenue 4, Street No.1, Banjara Hills,
Hyderabad, Andhra Pradesh, India.
Since its inception in 1982, Karvy has demonstrated a dedication coupled with
dynamism that has inspired trust for various segments corporate, government bodies
and individuals. Karvy has since been performing a pivotal role as the intermediary
the interface between these players.
With Mutual Funds emerging as a distinct asset class, Karvy has made a
strategic choice to leverage the power of latest technology to provide a cutting edge to
its services. This, today, service nearly 40% of the asset management companies
(AMCs) across an extensive network of service centers with assets under service in
excess of Rs.10,000 crores.
Karvys ability to mass customize and offer a diverse range of products for
diverse range of customers has helped mutual fund companies to uniquely position
themselves in the market place. These diverse range of services cut across multiple
delivery channels service centers, web, mobile phones, call center has brought
hone the benefits of technology to investors, distributors, and the mutual funds.
48
Going forward, it shall strive to create new products and services, which
would address the needs of the end customer. Its single-minded focus in delivering
products for customers has given the distinguished position of being the preferred
provider of financial services in the country. These services can be broadly
categorized as below:
Investor Services
Distributor Services
AMC Services
General Services or Information Services
a) INVESTOR SERVICES:
- Keeping ahead with the changing investor expectations -
Investor is a person who invests in the mutual funds in the mutual funds
concept. He placed in the bottom of the structure, but he plays a pivotal role, without
investor we cannot imagine the mutual funds. There is a wide range of investor
services provided by karvy mutual fund services to the investors and also Mutual
Fund Investors have the convenience of logging on to the web site and utilize various
account related services. To utilize these web services the investor has to first register
himself with the karvymfs.com in the investor services with the web site, the
karvymfs.com gives authorized ID and Password to the registered user, with a click of
the mouse he can gets the services, without authorized ID and Password he cannot get
the services. The major online services for investors can be categorized as below:
View their account statements online
Get a snapshot of all their investment serviced by Karvy:
Portfolio Valuation Services
NAV Broadcast Services
NAV Alert Services
Receive Account statements by email
Apart from the afore-mentioned services, any visitor from the web site has the
option to know Mutual Fund Concepts, check out the latest NAVs of his/her favorite
49
Mutual Funds, etc., obtain dividend information, get the latest load structure
information etc.
b) DISTRIBUTOR SERVICES:
- Re-defining service -
AMC SERVICES:
- Your partners in progress -
There is wide range of AMC Services provided by Karvy Mutual Fund Services
to the registered Asset Management Companys (AMCs).The AMC can now viewing
investor information and requesting various reports related to the investor, is possible
through the web site also, just by the click of the mouse. In order to use the respective
AMC services on the site, Mutual Fund AMCs must enter into agreement with Karvy
Consultants Limited, whereby users are assigned a User ID and Password at the fund
level. AMC may use this ID and Password to access all the site services. It provides
registered AMCs can check out various ONLINE and MAIL-BACK services and gets
an update on the investments of its investors.
Online Services:
1. Investor Account Statements
50
Mail-Back Services:
1. Transaction Reports
4. Slab Report
c) GENERAL/INFORMATION SERVICES:
In addition to the afore-mentioned services Karvy mfs provides general or
information services to the users. These services can be broadly classified as below:
1. Dividend History
2. Fund Information
3. Load Structures
4. Special Products
5. Karvy Network
The Mutual Fund umbrella of Karvy consists both Open-ended and Close-ended
Mutual Funds. The following are the various mutual fund AMCs for which Karvy
acts as a Registrar.
51
7) MORGAN STANLEY Growth Fund
INDUSTRY PROFILE:
INFORMATION TECHNOLOGY
Information technology, and the hardware and software associated with the
IT industry, are an integral part of nearly every major global industry.
The information technology (IT) industry has become of the most robust
industries in the world. IT, more than any other industry or economic facet, has an
increased productivity, particularly in the developed world, and therefore is a key
driver of global economic growth. Economies of scale and insatiable demand from
both consumers and enterprises characterize this rapidly growing sector.
Owing to its easy accessibility and the wide range of IT products available, the
demand for IT services has increased substantially over the years. The IT sector has
emerged as a major global source of both growth and employment.
52
THE ROLE OF IT INDUSTRY:
This would represent a growth of 50% annually. Vision 2012 has a 25-point action
plan to be implemented in three phases in a time bound manner
IT INDUSTRY OUTLOOK
Information Technology (IT) industry in India is one of the fastest growing industries.
Indian IT industry has built up valuable brand equity for itself in the global markets.
IT industry in India comprises of software industry and information technology
enabled services (ITES), which also includes business process outsourcing (BPO)
industry. India is considered as a pioneer in software development and a favorite
destination for IT-enabled services.
The origin of IT industry in India can be traced to 1974, when the mainframe
manufacturer, Burroughs, asked its India sales agent, Tata Consultancy Services
(TCS), to export programmers for installing system software for a U.S. client. The IT
industry originated under unfavorable conditions. Local markets were absent and
government policy toward private enterprise was hostile. The industry was begun by
Bombay-based conglomerates which entered the business by supplying programmers
to global IT firms located overseas.
53
During that time Indian economy was state-controlled and the state remained hostile
to the software industry through the 1970s. Import tariffs were high (135% on
hardware and 100% on software) and software was not considered an "industry", so
that exporters were ineligible for bank finance. Government policy towards IT sector
changed when Rajiv Gandhi became Prime Minister in 1984. His New Computer
Policy (NCP-1984) consisted of a package of reduced import tariffs on hardware and
software (reduced to 60%), recognition of software exports as a "deli censed
industry", i.e., henceforth eligible for bank finance and freed from license-permit raj,
permission for foreign firms to set up wholly-owned, export-dedicated units and a
project to set up a chain of software parks that would offer infrastructure at below-
market costs. These policies laid the foundation for the development of a world-class
IT industry in India.
Today, Indian IT companies such as Tata Consultancy Services (TCS), Wipro, Infosys,
HCL et al are renowned in the global market for their IT prowess. Some of the major
factors which played a key role in India's emergence as key global IT player are:
Competitive Costs
The cost of software development and other services in India is very competitive as
compared to the West.
Infrastructure Scenario
Indian IT industry has also gained immensely from the availability of a robust
54
infrastructure (telecom, power and roads) in the country.
In the last few years Indian IT industry has seen tremendous growth. Destinations
such as Bangalore, Hyderabad and Gurgaon have evolved into global IT hubs. Several
IT parks have come up at Bangalore, Hyderabad, Chennai, Pune, Gurgaon etc. These
parks offer Silicon Valley type infrastructure. In the light of all the factors that have
added to the strength of Indian IT industry, it seems that Indian success story is all set
to continue.
CHAPTER - IV
DATA ANALYSIS AND
INTERPRETATION
55
ANALYSIS AND INTERPRETATION
BALANCE SHEET OF COGNIZENT
Application of fund
Gross block 1,570.23 2,183.00 2,837.00 3,889.00
Less: Accumulated depreciation 803.41 1,006.00 1,275.00 1,739.00
Net block 766.82 1,177.00 1,562.00 2,150.00
Capital work-in-progress 203.48 318.00 571.00 957.00
56
Deferred credit 0.00 0.00 0.00 0.00
Fixed deposit 0.00 0.00 0.00 0.00
Current liabilities 501.03 461.00 642.00 881.00
Provisions 1,242.59 885.00 1,575.00 943.00
Total CL & provisions 1,743.62 1,346.00 2,217.00 1,824.00
Net current assets 1,255.75 2,418.00 3,888.00 7,216.00
Miscellaneous expenditure 0.00 0.00 0.00 0.00
Total assets 3,253.43 5,242.00 6,897.00 11,162.00
Contingent liabilities 659.69 1,568.00 1,434.00 1,945.00
Book value (Rs) 488.21 194.15 249.89 195.14
FINANCIAL ANALYSIS OF COGNIZENT
PROFIT & LOSS A/C
2013 2014 2015 2016
Income
Sales Turnover 4,760.89 6,860.00 9,028.00 13,149.00
Excise duty 0.00 0.00 0.00 0.00
Net Slaes 4,760.89 6,860.00 9,028.00 13,149.00
Other income 127.39 172.00 227.00 381.00
Stock adjustment 0.00 0.00 0.00 0.00
Total income 4,888.28 7,032.00 9,255.00 13,530.00
Expenditure
Raw material 0.00 0.00 0.00 0.00
Power & fuel cost 28.72 40.00 62.00 88.00
Employee cost 2,362.64 3,177.00 4,257.00 6,293.00
Other manufacturing expenses 256.19 527.00 717.00 1,163.00
Selling & administrative 496.26 721.48 967.49 1,299.53
expenses
Miscellaneous expenses 42.35 68.52 105.51 64.47
Pre-operative exp capitalized 0.00 0.00 0.00 0.00
Total expensses 3,186.16 5,534.00 6,109.00 8,908.00
57
Total value addition 3,186.16 4,534.00 6,109.00 8,908.00
Preference dividend 0.00 0.00 0.00 0.00
Equity dividend 862.46 310.00 1,238.00 653.00
Corporate dividend 110.50 42.00 174.00 102.00
Per share data annualized
Share in issue (lakhs) 666.40 2,700.00 2,760.00 5,720.00
Earning per share (Rs) 170.01 68.96 81.41 64.35
Equity dividend 2,590.00 230.00 900.00 230.00
Book value 488.21 194.15 249.88 195.14
58
Current Ratio 1.72 2.79 2.75 4.9
Debt Equity Ratio - - - -
Interpretation :
The firm EPS will be 170 in 2013, 68.96 in 2014, 81.41 in 2015, and 64.35
in 2016. The firm EPS will be decreasing year by year. It will not good for
any company.
The firm profitability position will be the net profit margins are 26.12 in
2013, 27.76 in 2014, 26.82 in 2015, 28.77 in 2016. So they have no
constant growth in net profit margins.
The Gross Profit margins are very high in total sales those are
5.74,36.40,34.84, 35.14 respectively from 2013 to 2016.
The ROCE will be 48.13 in 2013, 52.50 in 2014, 45.09 in 2015, and 45.99
in 2016. So that the Return on Capital Employed will be constant.
59
BALANCE SHEET OF' UNITED HEALTH GROUP
Source of fund
Total share holder 63.25 63.85 64.89 133.44
Equity share capital 63.25 63.85 64.89 133.44
Preference share capital 0.00 0.00 0.00 0.00
Reserves 2,517.51 3,153.17 4,268.75 5,648.07
Revaluation reserves 0.00 0.00 0.00 0.00
Networth 2,580.76 3,217.02 4,333.64 5,781.51
Secured loans 7.30 9.87 12.57 13.79
Unsecured loans 0.00 0.00 0.00 0.00
Total debt 7.30 9.87 12.57 13.79
Total liabilities 2,588.06 3,226.89 4,346.21 5,795.30
Application of fund
Gross block 838.80 937.70 1,153.16 1,280.40
Less: Accumulated depreciation 589.40 685.41 803.74 930.45
Net block 249.40 252.29 349.42 349.95
Capital work-in-progress 22.17 64.68 76.84 290.05
60
Current liabilities 205.48 276.19 462.87 629.15
Provisions 159.05 188.77 271.56 420.45
Total CL & provisions 364.53 464.96 734.43 1,049.60
Net current assets 2,241.74 2,831.44 3,764.21 4,954.15
Miscellaneous expenditure 0.00 0.00 0.00 0.00
Total assets 2,588.06 3,226.89 4,346.21 5,795.30
Contingent liabilities 216.15 1,345.09 1,236.65 2,262.31
Book value (Rs) 81.61 100.77 133.57 86.65
Expenditure
Raw material 0.00 0.00 0.00 0.00
Power & fuel cost 13.43 18.68 86.98 34.68
Employee cost 1,337.92 1,997.71 2,700.75 3,706.04
Other manufacturing expenses 47.53 64.25 67.70 86.71
Selling & administrative 388.70 438.78 577.73 787.36
expenses
Miscellaneous expenses 93.06 75.52 69.90 84.56
Pre-operative exp capitalized 0.00 0.00 0.00 0.00
Total expenses 1,880.64 2,594.94 3,443.06 4,699.35
61
Preference dividend 0.00 0.00 0.00 0.00
Equity dividend 126.72 159.63 228.33 232.54
Corporate dividend 16.24 20.86 32.02 37.55
Per share data annualized
Share in issue (lakhs) 3,162.50 3,192.50 3,244.50 6,672.00
Earning per share (Rs) 17.06 22.85 37.22 20.77
Equity dividend 200.00 150.00 350.00 175.00
Book value 81.61 100.77 133.57 86.65
62
Book value Per Share 81.61 100.77 133.57 86.55
Interpretation :
The firm EPS will be 17.06 in 2013, 22.85 in 2014, 37.22 in 2015, and
20.77 in 2016. The firm EPS will be increased in first three years and
decreased in last one year.
The firm profitability position will be the net profit margins are
21.87,21.66,26.75, 22.85 respectively from 2013 to 2016. So they no
constant growth in net profit margins.
The Gross Profit margins are 30.47 in 2013, 28.03 in 2014, 33.91 in 2015,
and 27.47 in 2016. So they have no constant growth in G.P margins.
63
BALANCE SHEET OF THOMSON REUTERS
Balance Sheet
2013 2014 2015 2016
Source of fund
Total share holder 36.44 48.01 48.93 97.86
Equity share capital 36.44 48.01 48.93 97.86
Preference share capital 0.00 0.00 0.00 0.00
Reserves 10.64 3,273.05 5,560.40 7,961.93
Revaluation reserves 0.00 0.00 0.00 0.00
Networth 47.08 3,321.05 5,609.33 8,058.99
Secured loans 0.00 111.01 26.52 41.76
Unsecured loans 375.00 9.73 8.93 8.98
Total debt 375.00 120.74 35.50 50.74
Total liabilities 422.08 3,441.79 5,644.83 8,109.73
Application of fund
Gross block 226.50 1,041.09 1,695.13 2,315.36
Less: Accumulated depreciation 0.95 132.93 525.35 854.75
Net block 225.55 908.16 1,169.78 1,460.61
Capital work-in-progress 0.00 120.28 280.00 757.85
64
Provisions 4.93 527.58 540.54 905.05
Total CL & provisions 233.13 1,311.01 1,785.92 2,661.90
Net current assets -220.86 1,008.93 2,231.53 2,639.23
Miscellaneous expenditure 0.00 0.00 0.00 0.00
Total assets 422.08 3,441.79 5,644.83 8,109.73
Contingent liabilities 0.00 152.38 335.06 2,253.51
Book value (Rs) 12.92 69.17 114.64 82.35
Expenditure
Raw material 0.00 0.00 160.33 21.50
Power & fuel cost 0.00 44.59 66.85 93.89
Employee cost 0.00 1,863.86 5,108.84 7,059.94
Other manufacturing expenses 0.00 3,049.89 1,541.47 2,198.17
Selling & administrative 0.01 578.32 866.90 1,090.19
expenses
Miscellaneous expenses 0.02 353.87 217.29 172.52
Pre-operative exp capitalized 0.00 0.00 0.00 0.00
Total expensses 0.03 5,890.53 7,961.68 10,636.21
65
Equity dividend 4.38 552.13 660.56 1,125.39
Corporate dividend 0.56 74.46 92.64 169.48
Per share data annualized
Share in issue (lakhs) 364.40 4,801 4,893.00 9,786.00
Earning per share (Rs) 4.01 36.60 53.63 36.66
Equity dividend 12.00 1,150.00 1,350.00 1,300.000
Book value 12.92 69.17 114.64 82.35
66
Book value Per Share 12.92 69.17 114.64 82.35
Interpretation:
The firm EPS will be 4.01 in 2013, 36.60 in 2014, 53.63 in 2015, and 36.66
in 2016. So they have no constant growth in firm EPS.
The firm Gross Profit margins are 27.89 in 2014, 29.65 in 2015, 30.21 in
2016. So the company gross profit margins are increasing year by year in
total net sales .
The ROCE of the firm are 1.46 in 2013, 109.87 in 2014, 67.77 in 2015, and
60.67 in 2016. So the Return on Capital Employed will be fluctuated.
The P/E ratio of the firm will be 19.56,17.86,31.64 respectively from 2014
to 2016. Therefore the firm P/E ratio will be very low in first two years and
in present it will be high to compare with Industry P/E ratio.
67
BALANCE SHEET OF CAPITAL IQ
Application of fund
Gross block 1,161.71 1,333.68 1,763.49 2,364.52
Less: Accumulated depreciation 597.39 678.66 855.53 1,246.27
Net block 564.32 655.02 907.96 1,118.25
Capital work-in-progress 94.83 139.71 250.24 612.36
68
Fixed deposit 0.00 0.00 0.00 0.00
Current liabilities 591.19 817.88 491.67 559.81
Provisions 76.36 860.31 1,217.91 2,236.07
Total CL & provisions 667.55 1,678.19 1,709.58 2,795.88
Net current assets 1,300.09 357.52 936.82 1,280.80
Miscellaneous expenditure 0.00 0.00 0.00 0.00
Total assets 3,399.96 3,608.28 4,954.53 6,470.61
Contingent liabilities 187.57 524.34 788.59 631.88
Book value (Rs) 143.20 150.70 69.54 45.03
Expenditure
Raw material 734.17 832.66 1,119.85 1,350.69
Power & fuel cost 28.84 35.91 46.63 86.46
Employee cost 634.19 2,088.64 3,011.16 4,271.52
Other manufacturing expenses 296.73 360.39 479.26 847.16
Selling & administrative expenses 1,251.33 640.40 601.24 997.23
Miscellaneous expenses 108.49 90.39 130.12 215.61
Pre-operative exp capitalized 15.60 14.00 0.00 0.00
Total expensses 3,038.15 4,034.39 5,388.26 7,768.67
69
Preference dividend 0.00 0.00 0.00 0.00
Equity dividend 23.26 675.00 351.79 712.88
Corporate dividend 2.98 86.48 49.34 99.98
Per share data annualized
Share in issue (lakhs) 2,325.50 2,327.50 7,035.50 14,257.50
Earning per share (Rs) 34.84 35.59 20.55 13.47
Equity dividend 50.00 1,450.00 250.00 250.00
Book value 143.20 150.70 69.54 45.03
70
Current Ratio 2.97 1.60 1.32 1.46
Debt Equity Ratio 0.02 0.02 0.02 0.01
Interpretation :
The firm EPS per share will be 34.84 in 2013, 35.59 in 2014, 20.55 in 2015,
and 13.47 in 2016. So the firm EPS will have been decreasing year by year
and it is not good for any company.
The firm profitability position will be the net profit margins are 20.13,
17.63, 20.54, 19.68 respectively from 2013 to 2016. So they have no
constant growth in net profit margins.
The gross profit margins are 26.53 in 2013, 23.78 in 2014, 26.69 in 2015,
and 25.64 in 2016.
The firm P/E ratio of the firm will be at 7.29, 9.42, 27.24, 38.71
respectively from 2013 to 2016. So the firm P/E ratio will be very low in
first three years and after it has been showed high to compare with Industry
P/E ratio.
71
TREND ANALYSIS :
Graph is plotted taking the month on the X-axis and the average volume and
average Closing price per month on the Y-axis, the graph is plotted for the
following Companies.
72
2382.00 19.2.2016 2376.10 3,85,831
73
SHARE PRICE OF UNITED HEALTH GROUP
(From 19.5.2015 to 19.4.2016)
Traded
Price Data Open Price Close Price
Quantity
19.5.2015 355.00 333.13 1,04,82,518
74
TREND ANALYSIS OF UNITED HEALTH GROUP
Interpretation:
The stock performance shows the above table is the first six months has
been fluctuate, After four months the stock has been shown increasing trend
and lost three months of the year it has been decreasing trend. Therefore in last
three months the stock was showing under performed. So it indicate buying
75
SHARE PRICE OF THOMSON REUTERS LTD
(from 19.5.2015 to 19.4.2016)
76
TREND ANALYSIS OF T C S
Interpretation:
The stock has been volatile in first three months and after it shown
Increasing trend upto 19-2-07 and last two months it has been showing
decreasing trend.
77
SHARE PRICE OF CAPITAL IQ
Traded
Price Date Open Price Close Price
Quantity
19.5.2015 520.00 487.70 16,60,219
78
TREND ANALYSIS OF CAPITAL IQ
Interpretation:
The stock has been showing completely volatile in this year and this
79
CHAPTER-V
80
FINDINGS :
The firms EPS are 64.35 in Cognizent, 20.77 in Capital IQ, 36.66 in
Cognizent, and 13.47 in Capital IQ, Comparison of all companies EPS
Cognizent was well Performed
This analysis shows the profitability ratios of the four companies net profit
margins are 28.77 in Cognizent, 22.85 in Capital IQ , 25.15 in THOMSON
REUTERS and 19.68 in Capital IQ.
The Gross Profit are 35.14% in Cognizent, 22.85% in Capital IQ, 30.21% in
THOMSON REUTERS and 25.64% in Capital IQ, with this Cognizent was
developing financially year by year.
The operating profit ration of four companies 35.15, 27.47, 30.23 and 25.67
respectively. The comparison of all companies Cognizent operating profit
will be high.
The ROCE of four companies are 37.99 in Cognizent, 31.18 in Capital IQ,
60.61 in THOMSON REUTERS and 41.01 in Capital IQ.
The P/E ratios of Capital IQ & Cognizent was low i.e. , 22.62% and 30.41%
with comparison of remaining companies are Capital IQ 38.72% and
31.64% in THOMSON REUTERS.
81
SUGGESTIONS :
Earning Per Share of the four companies are well performed but some cases
there was low EPS because of low net profit, if sales increased then
automatically profits are increased.
The above finding P/E ratio of COGNIZENT and CAPITAL IQ was less
then the Industry P/E ratio [30.74%]. So those two companies are earned
more profits and remaining companies can follow the future market values
automatically get more profits.
82
CONCLUSION
more return and minimize the risk. From the above analysis it can be concluded
that the investor can be benefited more if he invest in Capital IQ and the next
83
BIBLOGRAPHY
- V.A.Avadani
- Punithavathy Pandian
- www.indiaeconomystat.com
84