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Fundamental analysis of pharma sector Fundamental analysis of pharma sector Document Transcript

  • A Research Project on Fundamental Analysis of PHARMA SECTOR SRM UNIVERSITY For the partial fulfilment of the requirements for the degree of MASTER OF BUSINESS ADMINISTRATION BY RAJESH NARAYANAN 3511210125 Under the GUIDENCE of Mr. R. Seetharaman Asst. Prof. (O.G) Faculty of Engineering and Technology Kattankulathur-603203 MAY-JULY 2013
  • SRM University School of Management Kattankulathur CERTIFICATE This is to certify that the project report entitled “Fundamental Analysis of Phrarma Sector ”, Submitted by Rajesh Narayanan (Reg. No: 3511210125) in partial fulfilment for the final project in awards of Master of Business Administration of SRM University- Kattankulathur, is a bonafide research work carried out under my supervision and guidance and no part of this project has been submitted for any other degree / diploma. The assistance and help received during the course of the investigation has been fully acknowledged. Dr.(Mrs). Jayshree Suresh Mr. R. Seetharaman B.A, M.B.A., Ph.D. B.SC PDGM M.B.A Dean Asst. Professor & Project Guide Submitted to the Department of Management Studies, SRM UNIVERSITY (Kattankulathur Campus) for the examination held on __________________. Internal Examiner External Examiner
  • DECLARATION I, Rajesh Narayanan, Reg. No: 3511210125, hereby declare that the project report titled “Fundamental Analysis of Phrarma Sector ” under the supervision and the guidance of Mr. R. Seetharaman, Asst. Professor, Department of Management Studies, SRM UNIVERSITY (Kattankulathur Campus- Chennai), is the result of the original work done by me and to the best of my knowledge, a similar work has not been submitted earlier to any University or any other Institution. Place : Rajesh Narayanan Date
  • ACKNOWLEDGEMENT In the course of this project, I have received help from a number of people. I would like to take this opportunity to thank them all. I am grateful to our College Administration for giving me an opportunity to do this Project. It is my great pride and privilege to appreciate our respected Dean Dr.Jayashree Suresh and my beloved project guide Mr. R. Seetharaman, Dept. of Business Administration, S.R.M. School of Management, who have motivated and encouraged me with their tireless guidance and support for the successful completion of this project. I would also extend my heartfelt gratitude to the Manager Mr.Ashish Jaiswal of Relaince Securities– Banglore and my Industrial project guide Mr.Harsh Melhothra of Relaince Securities, for their support and valuable time spent to make this project a reality. I am also thankful to the Regional Co-Ordinator of Relaince Money– Banglore especially Malini Kashyap for his motivation and care throughout the course of this said project. Last but not the least; I would like to thank the almighty and all our faculty members, friends and family for their support and inspiration. Rajesh Narayanan
  • CONTENTS Chapter Topics Page No Chapter 1: Introduction 1.1 Introduction to Fundamental Analysis 2 1.2 Industry Profile 3 1.3 Company Profile 7 1.4 Objective of the study 9 1.5 Concept of Fundamental Analysis 9 1.6 Methodology of Fundamental Analysis 12 1.7 Research Methodology 21 1.8 Limitation of the study 21 Chapter 2: Integrated perspective of all functional areas in organization. 2.1 Human Resources and Development Department Function 22 2.2 Finance Department Function 22 2.3 Marketing Department Function 22 Chapter 3: Analysis of Data 3.1 Economic Analysis 28 3.2 Industry Analysis 40 3.3 Company Analysis 48 3.4 Ratio Analysis 59 Chapter 4: Findings & Suggestions 4.1 Findings of the project 128 4.2 Suggestions to Investors 129 Chapter5: Summary & Bibliography 5.1 Summary 131 5.2 Bibliography 132
  • LIST OF TABLES & CHARTS LIST OF TABLE NO TABLES 1. 12*5 RATIO ANALYSIS SUB-TABLES 2. RATIO ANALYSIS TABLE FOR SUN PHARAMA. 3. RATIO ANALYSIS TABLE FOR DR.REEDY’S. 4. RATIO ANALYSIS TABLE FOR LUPIN 5. RATIO ANALYSIS TABLE FOR CIPLA 6. RATIO ANLAYSIS TABLE FOR RANBAXY LIST OF CHARTS NO CHARTS 1. COLUMN CHART FOR GROSS DOMESTIC PRODUCT 2. LINE CHART FOR GDP GROWTH 3. COLUMN CHART FOR INFLATION RATE 4. LINE CHART FOR INFLATION RATE 5. COLUMN CHART FOR FDI 6. LINE CHART FOR INDIAN IMPORT 7. LINE CHART FOR INDIAN EXPORT
  • CHAPTER-1 INTRODUCTION
  • 1.1 Introduction to Fundamental Analysis What is analysis? The examination and evaluation of the relevant information to select the best course of action from among various alternatives. The methods used to analyze securities and make investment decisions fall into two very broad categories: fundamental analysis and technical analysis. Fundamental analysis involves analyzing the characteristics of a company in order to estimate its value. Technical analysis takes a completely different approach; it doesn't care one bit about the "value" of a company or a commodity. Technicians (sometimes called chartists) are only interested in the price movement in the market. What is technical analysis? Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity. What is fundamental analysis? Fundamental Analysis involves examining the economic, financial and other qualitative and quantitative factors related to a security in order to determine its intrinsic value. It attempts to study everything that can affect the security's value, including macroeconomic factors (like the overall economy and industry conditions) and individually specific factors (like the financial condition and management of companies). Fundamental analysis, which is also known as quantitative analysis, involves delving into a company’s financial statements (such as profit and loss account and balance sheet) in order to study various financial indicators (such as revenues, earnings, liabilities, expenses and assets). Such analysis is usually carried out by analysts, brokers and savvy investors. Many analysts and investors focus on a single number--net income (or earnings)--to evaluate performance. When investors attempt to forecast the market value of a firm, they frequently rely on earnings. Many institutional investors, analysts and regulators believe earnings are not as relevant as they once were. Due to nonrecurring events, disparities in measuring risk and management's ability to disguise fundamental earnings problems, other measures beyond net income can assist in predicting future firm earnings.
  • 1.2 Industry Profile: Indian Pharmaceutical Industry Introduction The Indian Pharmaceutical Industry today is in the front rank of India’s science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured from simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously. Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK. International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world. The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control. India is now among the top five pharmaceutical emerging markets. The Indian pharma industry has been growing at a compounded annual growth rate (CAGR) of more than 15 per cent over the last five years and has significant growth opportunities.
  • The Indian pharmaceutical sector is expected to grow five-fold to reach Rs 5 lakh crore (US$ 91.45 billion) by 2020, as per Dr A J V Prasad, Joint Secretary, Department of Pharmaceuticals (DoP). The industry, particularly, has been the front runner in a wide range of specialties involving complex drugs' manufacture, development, and technology. With the advantage of being a highly organized sector, the number of pharmaceutical companies are increasing their operations in India. The pharmaceutical industry in India is an extremely fragmented market with severe price competition and government price control. The industry meets around 70 per cent of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals, and injectables. Sector Structure/ Market Size The domestic pharmaceutical market is expected to register a strong double-digit growth of 13-14 per cent in 2013 on back of increasing sales of generic medicines, continued growth in chronic therapies and a greater penetration in rural markets. The cumulative drugs and pharmaceuticals sector has attracted foreign direct investments (FDI) worth US$ 10,308.75 million during April 2000 to February 2013, according to the latest data published by Department of Industrial Policy and Promotion (DIPP). Growth Drug sales to retailers in India registered a growth of 7.7 per cent in February 2013, according to a data compiled by market research firm AIOCD AWACS. This was probably due to a high base given the strong performance last year and higher substitution of branded drugs with their unbranded equivalents. Among the listed companies, ZydusCadila topped the list, recording 25.3 per cent growth in February. Other companies that managed to grow faster than the industry include Sun Pharma (14.8 per cent), JB Chemicals (13.7 per cent), IPCA Labs (13 per cent), Lupin (11.6 per cent), Glenmark (10.3 per cent) and Cipla (9 per cent). Exports The Ministry of Commerce has targeted Indian pharma sector exports at US$ 25 billion by 2014 at an annual growth rate of 25 per cent. Last year, the industry registered exports of US$ 13 billion at a growth rate of 30 per cent, as per Dr P V Appaji, Director-General, Pharmaceutical Exports Council of India (Pharmexcil). The Government has also planned a ‘Pharma India’ brand promotion action plan spanning over a three-year period to give an impetus to generic exports. “Of the export markets, Indian pharma will focus on the US market which presents significant opportunities for the next two years for generics, due to patent cliffs and recent changes in healthcare policies,” said the India Ratings report on outlook for Indian pharmaceuticals for 2013.
  • Generics Generics will continue to dominate the market while patent-protected products are likely to constitute 10 per cent of the pie till 2015, according to McKinsey report 'India Pharma 2015- Unlocking the potential of Indian Pharmaceuticals market'. Dr Reddy's Laboratories Ltd has launched Finasteride tablets, a bio-equivalent generic version of Propecia (Finasteride) tablets, in the US market. The tablets are used for treating male pattern hair loss. Diagnostics Outsourcing/ Clinical Trials Indian diagnostics and labs test services, in view of its growth potential, is expected to reach Rs 159.89 billion (US$ 2.93 billion) by 2013. The Indian market for both therapeutic and diagnostic antibodies is expected to grow exponentially in the coming years. Findings from the report by “Corporate Catalyst India” suggest that more than 60 per cent of the total antibodies market is currently dominated by diagnostic antibodies. According to new RNCOs report, “Booming Clinical Trials Market in India”, the number of clinical studies by domestic and global players has sharply risen. Besides, availability of skilled manpower and good medical infrastructure will augment the number of clinical trials from 1300 in 2009 to more than 1900 by 2013. Further, the report also indicates that, India, over the last decade, has developed significant capabilities in clinical trials, along with certain capabilities in project management and data management. The country is able to provide significant cost savings of 50-60 per cent for clinical trials. Investments Some of the investments in the sector are:  Orchid Chemicals and Pharmaceuticals has entered into a partnership with Europe- based Allecra Therapeutics to develop antibiotics to treat multi-drug resistant bacterial infections  Ranbaxy Pharmaceuticals Inc has entered into an in-licensing agreement with Alembic Pharmaceuticals to exclusively market desvenlafaxine base extended release tablets in the US. The drug is used for treatment of major depressive disorder  Biocon has entered into an agreement with Mylan for the global development and commercialisation of Biocon's generic insulin analog products (long lasting insulins), which has a global addressable market of US$ 11.5 billion  ZydusCadila has received tentative approval for Doxepin Hcl tablets from the US drug authorities. Cadila will launch the drug in 2020 after original drug maker's patent expires  Aurobindo Pharma Ltd has received US Food and Drug Administration (USFDA) approval to manufacture and market Tamsulosin Hydrochloride Capsules and Clindamycin Palmitate Hydrochloride for oral solution  Sun Pharma has received a tentative approval from the US Food and Drug Administration (USFDA) for a generic version of Januvia. Sun Pharma is expected to launch the drug in 2022
  • Government Initiatives FDI, up to 100 per cent, under the automatic route, would continue to be permitted for Greenfield investments in the Pharmaceuticals sector. 100 Per cent FDI is also permitted for Brownfield investment (i.e. investments in existing companies), under the Government approval route. According to the Union Budget 2013-14, investment allowance of 15 per cent on new plant and machinery has been allowed. The allowance is expected to increase investments in new projects while simultaneously providing tax benefit to the industry. The Department of Pharmaceuticals has prepared a 'Pharma Vision 2020' document for making India one of the leading destinations for end-to-end drug discovery and innovation and for that purpose, the department provides requisite support by way of world class infrastructure, internationally competitive scientific manpower for pharma research and development (R&D), venture fund for research in the public and private domain and such other measures. Road Ahead In order to encourage production of drugs by indigenous industries, the 12th Five Year Plan (2012-17) has recommended capacity building of private sector to meet WHO-GMP standards and other international manufacturing standards. The pharmaceutical companies such as Cipla, Ranbaxy, Dr Reddy's Labs and Lupin might soon be part of the government's ambitious 'Jan Aushadhi' project. In an attempt to commercialise the project, the Government is likely to rope in the private sector to bulk- procure generic drugs from them. There are 117 Jan Aushadhi stores across the country and the plan is to expand to at least 600 in the next two years and 3,000 by 2016. Further, India will see the largest number of merger and acquisitions (M&A) in the pharmaceutical and healthcare sector, according to consulting firm Grant Thornton. A survey conducted across 100 companies has revealed that one-fourth of the respondents were optimistic about acquisitions in the pharmaceutical sector.
  • 1.3 Company Profile: Reliance Group The Reliance Group is among India’s top three private sector business houses on all major financial parameters, with assets in excess of Rs.180,000 crore, and net worth to the tune of Rs.89,000 crore. Across different companies, the group has a customer base of over 100 million, the largest in India, and a shareholder base of over 12 million, among the largest in the world. Through its products and services, the Reliance Group touches the life of 1 in 10 Indians every single day. It has a business presence that extends to over 20000 towns and 4.5 lakhs villages in India, and 5 continents across the world. The interests of the Group range from communications (Reliance Communications) and financial services (Reliance Capital Ltd), to generation, transmission and distribution of power (Reliance Energy), infrastructure and entertainment. Reliance Capital Ltd. Reliance Capital Limited is a financial services company and part of a Reliance Anil Dhirubhai Ambani Group. It is registered with the Reserve Bank of India under section 45-IA of the Reserve Bank of India Act, 1934. as a public limited company in 1986 and is now listed on the Bombay Stock Exchange and the National Stock Exchange (India). Reliance Capital has a net worth of over 33 billion (US$570 million) and over 165,000 shareholders. On conversion of outstanding equity instruments, the net worth of the company will increase to about 41 billion (US$710 million).It is headed by Anil Ambani and is a part of the Reliance ADA Group.
  • Reliance Capital ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital has interests in:  Asset management.  Mutual funds.  Life and general insurance.  Private equity and proprietary investments.  Stock broking.  Reliance PMS.  Depository services and financial products.  Consumer finance and other activities in financial services. Reliance Mutual Fund is amongst top two Mutual Funds in India with over six million investor folios. Reliance Life Insurance and Reliance General Insurance are amongst the leading private sector insurers in India. Reliance Securities is one of India’s leading retail broking houses. Reliance Money is one of India’s leading distributors of financial products and services. Reliance Securities & Reliance Money Ltd. Reliance Securities Ltd. Reliance Securities, the broking arm of Reliance Capital is the one of the India’s leading retail broking houses in India, providing customers with access to equities, equity options and commodities futures, wealth management, wealth management services, mutual funds, IPOs and investment banking. Reliance Securities has over 7 lac retail broking accounts through its pan India presence with over 6,200 outlets. Reliance Money Ltd. The third party distribution business of Reliance Capital, branded as ‘Reliance Money’ is a comprehensive financial services and solutions provider, providing customers with access to life and general Insurance products, money transfer, currency exchange, loans and gold coins. Reliance Money Infrastructure Ltd. provides financial products and services including mutual fund money transfer and money changing services. The company also offers gold coin distribution services. It was formerly known as Reliance Money Limited. The company is based in Mumbai, India. Reliance Money Infrastructure Ltd. operates as a subsidiary of Reliance Capital Limited
  • 1.4 OBJECTIVE OF STUDY  The main objective of project is to do fundamental analysis of a pharmaceutical of companies.  Secondly to study the present scenario of a pharmaceutical industry.  Analyze the information collected on sales, profit, earning per share, market price etc.  To do Ratio Analysis for the selected companies and make necessary comments on it so as to provide complete idea and core ideology of the company. So that investors can easily get idea about the fundamental analysis of pharmaceutical companies.  To carry out financial and non-financial analysis of Pharma Sector as a whole for the selected period 1.5 Concept of Fundamental Analysis Two Approaches of Fundamental Analysis While carrying out fundamental analysis, investors can use either of the following approaches: 1 .Top-down approach: In this approach, an analyst investigates both international and national economic indicators, such as GDP growth rates, energy prices, inflation and interest rates. The search for the best security then trickles down to the analysis of total sales, price levels and foreign competition in a sector in order to identify the best business in the sector. 2. Bottom-up approach: In this approach, an analyst starts the search with specific businesses, irrespective of their industry/region. How does fundamental analysis works? Fundamental analysis is carried out with the aim of predicting the future performance of a company. It is based on the theory that the market price of a security tends to move towards its 'real value' or 'intrinsic value.' Thus, the intrinsic value of a security being higher than the security’s market value represents a time to buy. If the value of the security is lower than its market price, investors should sell it. The steps involved in fundamental analysis are: 1. Macroeconomic analysis, which involves considering currencies, commodities and indices. (Economy Analysis) 2. Industry sector analysis, which involves the analysis of companies that are a part of the sector. (Industry Analysis) 3. Situational analysis of a company. (Company Analysis) 4. Financial analysis of the company. 5. Valuation.
  • The valuation of any security is done through the discounted cash flow (DCF) model, which takes into consideration: 1. Dividends received by investors 2. Earnings or cash flows of a company 3. Debt, which is calculated by using the debt to equity ratio and the current ratio (current assets/current liabilities) Fundamental Analysis Tools These are the most popular tools of fundamental analysis.  Earnings per Share – EPS  Price to Earnings Ratio – P/E  Projected Earnings Growth – PEG  Price to Sales – P/S  Price to Book – P/B  Dividend Payout Ratio  Dividend Yield  Book Value  Return on Equity  Ratio analysis Financial ratios are tools for interpreting financial statements to provide a basis for valuing securities and appraising financial and management performance. A good financial analyst will build in financial ratio calculations extensively in a financial modelling exercise to enable robust analysis. Financial ratios allow a financial analyst to:  Standardize information from financial statements across multiple financial years to allow comparison of a firm’s performance over time in a financial model.  Standardize information from financial statements from different companies to allow apples to apples comparison between firms of differing size in a financial model.  Measure key relationships by relating inputs (costs) with outputs (benefits) and facilitates comparison of these relationships over time and across firms in a financial model.
  • In general, there are 4 kinds of financial ratios that a financial analyst will use most frequently, these are:  Performance ratios  Working capital ratios  Liquidity ratios  Solvency ratios These 4 financial ratios allow a good financial analyst to quickly and efficiently address the following questions or concerns:  Performance ratios What return is the company making on its capital investment? What are its profit margins?  Working capital ratios How quickly are debts paid? How many times is inventory turned?  Liquidity ratios Can the company continue to pay its liabilities and debts?  Solvency ratios (Longer term) What is the level of debt in relation to other assets and to equity? Is the level of interest payable out of profits? WHY ONLY FUNDAMENTAL ANALYSIS Long-term Trends Fundamental analysis is good for long-term investments based on long-term trends, very long-term. The ability to identify and predict long-term economic, demographic, technological or consumer trends can benefit patient investors who pick the right industry groups or companies. Value Spotting Sound fundamental analysis will help identify companies that represent a good value. Some of the most legendary investors think long-term and value. Graham and Dodd, Warren Buffett and John Neff are seen as the champions of value investing. Fundamental analysis can help uncover companies with valuable assets, a strong balance sheet, stable earnings, and staying power.
  • Business insights One of the most obvious, but less tangible, rewards of fundamental analysis is the development of a thorough understanding of the business. After such pains taking research and analysis, an investor will be familiar with the key revenue and profit drivers behind a company. Earnings and earnings expectations can be potent drivers of equity prices. Even some technicians will agree to that. A good understanding can help investors avoid companies that are prone to shortfalls and identify those that continue to deliver. In addition to understanding the business, fundamental analysis allows investors to develop an understanding of the key value drivers and companies within an industry. A stock's price is heavily influenced by its industry group. By studying these groups, investors can better position themselves to identify opportunities that are high- risk (tech), low-risk (utilities), growth oriented (computer), value driven (oil), non-cyclical (consumer staples), cyclical (transportation) or income-oriented (high yield). 1.6 Methodology of FUNDAMENTAL ANALYSIS Economic Analysis The economic analysis aims at determining if the economic climate is conclusive and is capable of encouraging the growth of business sector, especially the capital market. When the economy expands, most industry groups and companies are expected to benefit and grow. When the economy declines, most sectors and companies usually face survival problems. Hence, to predict share prices, an investor has to spend time exploring the forces operating in overall economy. Exploring the global economy is essential in an international investment setting. The selection of country for investment has to focus itself to examination of a national economic scenario. It is important to predict the direction of the national economy because economic activity affects corporate profits, not necessarily through tax policies but also through foreign policies and administrative procedures. Tools for Economy Analysis The most used tools for performing economic analysis are:  Gross Domestic Product (GDP)  Monetary policy and Liquidity  Inflation Interest rates  International influences  Fiscal policy  Influences on long term expectations  Influences on short term expectations 1) Gross Domestic product GDP is one measure of economic activity. This is the total amount of goods and services produced in a country in a year. It is calculated by adding the market values of all the final goods and services produced in a year.
  • It is a gross measurement because it includes the total amount of goods and services produced, of which some merely replace goods that have depreciated or have worn out. It is domestic production because it includes only goods and services produced within the country. 2) Inflation Inflation can be defined as a trend of rising prices caused by demand exceeding supply. Over time, even a small annual increase in prices of say 1 % will tend to influence the purchasing power of the nation. In others word, if prices rise steadily, after a number of years, consumers will be able to buy only fewer goods and services assuming income level does not change with inflation. 3) Interest rate Interest rate is the price of credit. It is the percentage fee received or paid by individual or organization when they lend and borrow money. In general, increases in interest rate, whether caused by inflation, government policy, rising risk premium, or other factors, will lead to reduced borrowing and economic slowdown. 4) International influences Rapid growth in overseas market can create surges in demand for exports, leading to growth in export sensitive industries and overall GDP. In contrast, the erection of trade barriers, quotas, currency restrictions can hinder the free flow of currency, goods, and services, and harm the export sector of an economy. 5) Fiscal policy The fiscal policy of the government involves the collection and spending of revenue. In particular, fiscal policy refers to the efforts by the government to stimulate the economic directly, through spending. Industry Analysis An industry analysis helps inform business managers about the viability of their current strategy and on where to focus a business among its competitors in an industry. The analysis examines factors such as competition and the external business environment, substitute products, management preferences, buyers and suppliers. Industry analysis involves reviewing the economic, political and market factors that influence the way the industry develops. Major factors can include the power wielded by suppliers and buyers, the condition of competitors. And the likelihood of new market entrants. Data needs for industry analysis Industry analysis requires a variety of quantitative and qualitative data. Though one single source for all the data needs might not found, industry associates, business
  • publications and the department of economic analysis perform a comprehensive industry analysis. A suggestive list of data categories that are utilized for performing industry analysis is listed below.  Product lines  Product growth  Complementary product  Economics of scale  Suppliers  u  Substitute products  Buyers and their behaviour  Product pattern (cyclical, seasonal)  Cost structure Tools for industry analysis  Cross-sectional industry  Industry performance over time  Differences in industry risk  Prediction about market behaviour  Competitors over the industry life cycle
  • COMPANY ANALYSIS Analysis of the company consists of measuring its performance and ascertaining the cause of this performance. When some companies have done well irrespective of economic or industry failure, this implies that there are certain unique characteristics for this particular company that had made it a success. The identification of these characteristics, whether quantitative or qualitative, is referred to as company analysis. Quantitative indicators of company analysis are the financial indicators and operational efficiency indicators. Financial indicators are the profitability indicators and financial position indicators analyzed through the income and balance sheet statements, respectively, of the company. Operational indicators are capacity utilization and cost versus sales efficiency of the company, which includes the marketing edge of the company. Besides the quantitative factors, qualitative factors of a company also influence investment decision process of an institutional investor. The focus of the qualitative data, as revealed in the annual report- as in the director’s speech. Rather than on quantitative data. Tools for company analysis Company analysis involves choice of investment opportunities within a specific industry that comprises of several individual companies. The choice of an investible company broadly depends on the expectations about its future performance in general. Here, the business cycle that a company is undergoing is a very useful tool to assess the future performance from the company. Company analysis ought to examine the levels of competition, demand, and other forces that affect the company’s ability to be profitable. Of these factors, understanding the competitive environment is most important. A business faces five forces of competition (porter’s model) namely, seller’s competition, buyer’s competition, competition from new entrants, exit competition. Competitive forces include the power of those who sell the business, those who buy the business; those who buy from the business, how easily new businesses can enter the industry, how costly it is to exit, and finally, the competition from those who already in the industry. How well a company deals with each of these forces will determine whether the company earns above or below average profit. Each of these forces is discussed below. 1. Porter model Porter's Five Forces is a framework for industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979. It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven down to zero. Three of Porter's five forces refer to competition from external sources. The remainder are internal threats.
  • Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally, requires a business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in excess of the industry average. Porter's five forces include - three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers. This five forces analysis is just one part of the complete Porter strategic models. The other elements are the value chain and the generic strategies (a) The threat of the entry of new competitors Profitable markets that yield high returns will attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry. Unless the entry of new firms can be blocked by incumbents, the abnormal profit rate will fall towards zero (perfect competition).
  •  The existence of barriers to entry (patents, rights, etc.) The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new firms can enter and non-performing firms can exit easily.  Economies of product differences  Brand equity  Switching costs or sunk costs  Capital requirements  Access to distribution  Customer loyalty to established brands  Absolute cost  Industry profitability; the more profitable the industry the more attractive it will be to new competitors (b) The threat of substitute products or services The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives:  Buyer propensity to substitute  Relative price performance of substitute  Buyer switching costs  Perceived level of product differentiation  Number of substitute products available in the market  Ease of substitution. Information-based products are more prone to substitution, as online product can easily replace material product.  Substandard product  Quality depreciation (c) The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes.  Buyer concentration to firm concentration ratio  Degree of dependency upon existing channels of distribution  Bargaining leverage, particularly in industries with high fixed costs  Buyer volume  Buyer switching costs relative to firm switching costs  Buyer information availability  Ability to backward integrate  Availability of existing substitute products  Buyer price sensitivity  Differential advantage (uniqueness) of industry products  RFM Analysis
  • (d) The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes. Suppliers may refuse to work with the firm, or, e.g., charge excessively high prices for unique resources.  Supplier switching costs relative to firm switching costs  Degree of differentiation of inputs  Impact of inputs on cost or differentiation  Presence of substitute inputs  Strength of distribution channel  Supplier concentration to firm concentration ratio  Employee solidarity (e.g. labor unions)  Supplier competition - ability to forward vertically integrate and cut out the BUYER (e) The intensity of competitive rivalry For most industries, the intensity of competitive rivalry is the major determinant of the competitiveness of the industry.  Sustainable competitive advantage through innovation  Competition between online and offline companies; click-and-mortar -v- slags on a bridge  Level of advertising expense  Powerful competitive strategy  The visibility of proprietary items on the Web used by a company which can intensify competitive pressures on their rivals. 2. The financial statements of the company: Records that outline the financial activities of a business, an individual or any other entity. Financial statements are meant to present the financial information of the entity in question as clearly and concisely as possible for both the entity and for readers. Financial statements for businesses usually include: income statements, balance sheet, statements of retained earnings and cash flows, as well as other possible statements 3. Ratio analysis: A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis. There are many ratios that can be calculated from the financial statements pertaining to a company's performance, activity,
  • financing and liquidity. Some common ratios include the price-earnings ratio, debt- equity ratio, earnings per share, asset turnover and working capital. 4. ROA: Return on assets, which, offering a different take on management's effectiveness reveals how much profit a company earns for every dollar of its assets. Assets include things like cash in the bank, accounts receivable, property, equipment, inventory and furniture. ROA is calculated like this: Annual Net Income ------------------------------------ Total Assets 5. ROI: Return on Investment is one of several commonly used approaches for evaluating the financial consequences of business investments, decisions, or actions. ROI analysis compares the magnitude and timing of investment gains directly with the magnitude and timing of investment costs. A high ROI means that investment gains compare favorably to investment costs. 6. ROE: Of all the fundamental ratios that investors look at, one of the most important is return on equity. It's a basic test of how effectively a company's management uses investors' money - ROE shows whether management is growing the company's value at an acceptable rate. ROE is calculated as: GAINS - INVESTMENT COSTS ------------------------------------------- Total Assets Annual Net Income ----------------------------------- Average Shareholders' Equity
  • 7. EPS: The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability. Calculated as: 8. DPS: The the sum of declared dividends for every ordinary share issued. Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued. DPS can be calculated by using the following formula: D-S DPS= ---------- S D - Sum of dividends over a period (usually 1 year) SD - Special, one time dividends S - Shares outstanding for the period Net Income-Dividends on Preferred Stock ---------------------------------------------------- Average Outstanding shares
  • 9. P/O RATIO: The amount of earnings paid out in dividends to shareholders. Investors can use the payout ratio to determine what companies are doing with their earnings Calculated Dividends per share Pay Out Ratio= --------------------------- Earnings per Share 1.5 Research methodology Research methodology is a way to systematically solve the research problem. The research methodology using for find out the solution of the research problem is analytical research methodology and some extend descriptive research methodology  Secondary Data The sources of secondary data for solve the problems are:-  Company Annual Report  Internet-websites 1.6 LIMITATION OF THE STUDY  As the data available to me has been taken from the secondary sources (like internet). It is not sure that collected data are accurate and complete.  The data which are very useful for the fundamental analysis are lacking in this Project or contract that are still in negotiation or any kind of deal which is in-process. Here that is ignored.  Due to lack of experience and knowledge of the pharmaceutical industry it can’t be said that the projection has been made totally correct and accurate.  Today’s stock market is totally running on the investor’s perception so the conclusion derived on the basis if fundamental analysis would not viable in long run.
  • CHAPTER- 2 INTEGRATED PERSPECTIVE OF ALL FUNCTIONAL AREAS IN ORGANIZATION
  • 2. INTEGRATED PERSPECTIVE OF ALL FUNCTIONAL AREAS IN ORGANIZATION There are three main functional areas prevails in Reliance Securities. They are :  Human Resources and Development department.  Finance department.  Marketing department.  2.1 HR DEPARTMENT Function Human Resources Department is involved in arranging staff training activities and supporting the continuous professional development of all staffs. The main function is to recruit the right employees at the right time for right job. Experienced peoples cope up with HR’s and train the new employees about the organization’s culture and mainly about the reliance securities products. Mostly they prefer students with MBA in the Specialization Marketing and Finance. They train them to acts as a sales force to reach their products in the market and to maintain the accounts of the organization. They also prefer HR students but limited candidates only. They train the employees to stain the organization’s goal. HR person handles job satisfaction among employees and also satisfies their needs. They periodically measure their employee performance and train them accordingly. 2.2 FINANCE DEPARTMENT Function Finance Department will be expected to monitor and support aims and objectives linked to keeping costs low to improve profitability of the organization. Finance staff record all the money earned and spent so that the senior managers always know how much profit (or loss) is being made by each product or each part of the business and how much money is currently held by the business. This enables critical decisions to be made rapidly and accurately because they are based on accurate information. There are management accountants, financial accountants to manage the cash flow in the organization they maintain the records of the expenses daily and report the senior manager on the monthly basis through mail. 2.3 MARKETING DEPARTMENT Function Marketing department mainly focus on sales and distribution of the Reliance Securities Products. They satisfy the needs of customers. This department follows the marketing mix i.e. four P’s. The organization sets target to every employee to sale their products. Marketing involves promoting their products in the market. It concentrates also the competitors and their products. They mainly concentrate to create uniqueness of their products among competitors. The Main functions of Marketing Department are Carrying out market research to obtain feedback on potential and existing products and/or services.
  • Analyzing market research responses and advising senior managers of the results and implications. It also includes Promoting products and services through a variety of advertising and promotional methods, e.g. press, TV, online, direct mail, sponsorship and trade shows or exhibitions. Obtaining and updating a profile of existing customers to target advertising and promotions appropriately. Producing and distributing publicity materials, such as catalogues or Brochures, Designing, updating and promoting the company website.
  • CHAPTER-3 DATA ANALYSIS
  • The process of evaluating data using analytical and logical reasoning to examine each component of the data provided. This form of analysis is just one of the many steps that must be completed when conducting a research experiment. Data from various sources is gathered, reviewed, and then analyzed to form some sort of finding or conclusion. There are a variety of specific data analysis method, some of which include data mining, text analytics, business intelligence, and data visualizations Data can be of several types  Quantitative data is a number  Qualitative data is a pass/fail or the presence of a characteristic Quantitative data is data measured or identified on a numerical scale. Numerical data can be analyzed using statistical methods, and results can be displayed using tables, charts, histograms and graphs. The term qualitative data is used to describe certain types of information. This is almost the converse of quantitative data, in which items are more precisely described as data in terms of quantity and in which numerical values are used. However, data originally obtained as qualitative information about individual items may give rise to quantitative data if they are summarized by means of counts. Qualitative data described items in terms of some quality or categorization that may be 'informal' or may use relatively ill-defined characteristics such as warmth and flavor. However, qualitative data can include well-defined aspects such as gender, nationality or commodity type.
  • ECONOMY ANALYSIS
  • 3.1 ECONOMIC ANALYSIS Analysis of Indian Economy The Indian economy after reporting fairly robust growth of over 9 per cent during 2005-08, moderated to a growth of 6.7 percent in 2008-09 because of the global financial crisis. Because there was fiscal and monetary space, timely stimulus allowed the economy to recover fairly quickly to a growth of 8.4 per cent in 2009-10 and 2010-11. Since then, however, the fragile global economic recovery and a number of domestic factors have led to a slowdown once again. The slowdown in the Indian economy that began in the second quarter of 2011-12, when the growth rate declined to 6.7 percent from a level of 8.0 per cent in the first quarter, continued in subsequent quarters. Growth has been in the range of 5.3-5.5 percent in the last three quarters (Q4 of 2011-12 to Q2 of 2012-13). The slowdown is not just confined to India. There has been a general slowdown in the global economy which has been passing through a rather prolonged phase of uncertainty. The recovery from the global crisis of 2008-09 in the advanced economies has been uneven, with a decisive resolution yet to emerge to the sovereign debt problem in the Euro zone. Having achieved a GDP growth of 5.1 percent in 2010, the rate of growth in the global economy declined to 3.8 per cent in 2011 and is expected to decline further to 3.3 per cent in 2012, as per the World Economic Outlook released by the IMF in October 2012. The rate of growth of advanced economies declined from 3.0 per cent in 2010 to 1.6 percent in 2011 and is expected to decline further to 1.3 percent in 2012. Even the emerging economies have slowed down during this period, partly as a result of the slowdown in their export markets. China’s growth declined from 10.4 percent in 2010 to 9.2 per cent in 2011 and is expected to be 7.8 per cent in 2012. Brazil’s growth dipped from 7.5 per cent in 2010 to 2.7 per cent in 2011 and is expected to be 1.5 percent in 2012. The growth rate of the Indian economy (measured in terms of GDP at factor cost at 2004-05 prices) was 5.4 per cent in the first half (H1) of year 2012-13 as against 7.3 per cent in the corresponding time period of the previous year. The growth for the full year of 2011-12 was 6.5 per cent vis-à-vis the growth rate of 8.4 per cent achieved in each of the previous two years i.e. 2009-10 and 2010-11. The slowdown has been all pervasive and almost all the sectors have been affected. The growth rate has been 2.1 percent for agriculture and allied sectors, 3.2percent for industry sector and 7.0 percent for the services sector in the first half of 2012-13. The growth rates were 3.4 per cent, 4.7 per cent and 9.5 percent, for agriculture, industry and services, respectively in H1 of 2011-12. The growth of GDP in the first and second quarters of 2012-13 was 5.5 percent and 5.3 per cent respectively
  • SWOT Analysis of Indian Economy India is the ninth largest economy in the world in terms of GDP. The Indian Economy due to its peculiar trends has been a subject of interest for the world. After independence, the Indian economy was more like a socialist economy: democratic, large public sectors and heavy regulations on private sectors. Around the 1990s the economy reached a point of stagnation. Then, in 1991, India saw the largest economic reforms pioneered by Dr Manmohan Singh, the then finance minister. These changes improve the rate of economic growth and social development. Economists predict that the Indian economy will be the third largest by 2025, after the USA and China. Strength: The strength of the Indian economy lies in its robust nature, which is evident from its constant growth even during times of recession (2008-09). The banking and credit system has been able to survive the downturn due to heavy regulations imposed by the RBI. This brought more transparency to the system. Another important factor that forms the spine of the Indian economy is agriculture, because it employs nearly 50% of the total population. Although agriculture shares only 18.5% of GDP, it makes India self-reliant in terms of food supply. Today, India is a leading producer of a number of agricultural products that give a boost to the export value. The youth of India, which makes a large part of the population is an advantage as it constitutes a huge work force. Weaknesses: Primary weakness of the Indian economy is its excessive dependence on agriculture. Since agriculture is monsoon dependent trade, production can vary by large margins and cause turbulence in the economy. India also lags behind in social development. A large part of the population is still living below the poverty line. Another weakness is the literacy rate. Although we have achieved high progress rates in terms of GDP, more than a third of the population remains illiterate, thus, easily exploitable. Opportunities: India has ample opportunities for growth. The agriculture sector and SMEs need to be encouraged and assisted as they have high potential. Indian government should focus on defining and properly implementing the policies for rural development, as most of the population resides in rural India. Also, there is a scope for large-scale infrastructure development and a need to properly carry out the MNREGA, JNNURM and other schemes, so that the benefits penetrate to the lower level of the population. Tourism is a thriving industry in India and we need to harness its potential. It will help raise our foreign reserves and create employment opportunities.
  • Threats: Terrorism and corruption are the greatest threats that India faces. It is because both hamper the growth of people and trade, which is a must for overall economic growth. The rising inflation, hording and black-marketing, also pose a threat to economic development. Economic growth, mainly the exports, has seen a downward trend due to the worldwide economic downturn and has become a cause of concern. The Indian government needs to redefine its policies and bring more stringent reforms to steer out of this turbulence. India’s Economic Survey 2013 A government study is optimistic that the pace of India’s economic growth – now at its slowest in a decade –will speed up. But while it expects gross domestic product to expand up to 6.7% next year, it warned that inflation and a high current account deficit are major concerns. The document, prepared by India’s finance ministry, looks back at the economic performance of the country over the past year, reviews the government’s recent policy initiatives, and gives recommendations for the coming year. Under the leadership of Chief Economic Advisor Raghuram Rajan, the report provides clues on the priorities of the finance ministry a day before Finance Minister P. Chidambaram presents the annual budget. The study is released on a yearly basis, a day before the budget is presented. Here are a few highlights from this year’s economic survey: In the year starting April 1, the study expects India’s gross domestic product do expand between 6.1% and 6.7% – higher than the 5% growth rate estimated for this year. The study cites the positive impact of a partial recovery in the global economy and recent government policies, including steps to open up foreign investment in sectors like retail and aviation and to deregulate the price of subsidized fuel. But challenges remain. Key obstacles to growth, the survey notes, are poor infrastructure, low growth in agriculture and industrial activities, and the gap between energy supply and demand. The study says India is on track to meet its fiscal deficit target of 5.3% of GDP this fiscal year, and to narrow it down to 4.8% of GDP next year. The gap between revenue and expenditure surged to 5.8% last year, largely because of slowing economic growth and high subsidy payments on fuel, food and fertilizers. The government has this year curtailed expenditure, and with the increase in diesel prices, expects to bring down the budget gap steadily to 3% of GDP by March 2017 The Indian government expects inflation to ease. The study expects the monthly inflation rate to be between 6.2%-6.6% by the end of March from a year earlier, from 6.62% in January. A lower inflation rate may encourage the Reserve Bank of India to reduce key interest rates. The survey described fighting inflation as a “priority,” calling for an increase in food production and for better infrastructure to reduce agricultural waste.
  • The study recommended curbing imports, mainly of gold, in a bid to reduce India’s current account deficit, which stood at 4.2% of GDP last year and is projected to be at similar levels this year. Steps to raise diesel prices and increase import duties on goods like gold will help bring down the current account deficit next year, the study said. The study expected agricultural production to decline. The study said allowing more foreign direct investment in retail could help the country’s agricultural sectors through the introduction of new technology and improved infrastructure. The study expects food grain production to slip 3.5% to 250.1 million tons this year from a year earlier. Although the study revealed that agriculture accounted for only 14.1% of GDP in 2011-12, the sector employs over half of the nation’s population. The study had a special focus on job creation, saying it expects over half of the people joining the labour force from 2011 to 2030 to be in the 30-49 year age group. It said a priority was to create jobs in manufacturing and services, rather than in construction. The study said a priority should be to reduce waste in social spending through projects like direct-cash transfers to the poor. India’s spending on social welfare increased from 5.9% of GDP in the year that ended March 31, 2008 to an estimated 7.1% of GDP in the current year. Gross Domestic Product (GDP) The Gross Domestic Product (GDP) in India was worth 1841.70 billion US dollars in 2012. The GDP value of India represents 2.97 percent of the world economy. GDP in India is reported by the World Bank Group. India GDP averaged 485.65 USD Billion from 1970 until 2012, reaching an all time high of 1872.90 USD Billion in December of 2011 and a record low of 63.50 USD Billion in December of 1970. The gross domestic product (GDP) measures of national income and output for a given country's economy. The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time.
  • India's Q4 GDP at 4.8%; FY 2013 GDP is worst in a decade India's GDP or economic growth rates for the 4th quarter ending March 31, 2013 has come in line with estimates at a hugely disappointing 4.8 per cent. The whole year GDP for FY 2013 at 5 per cent is the worst seen in almost a decade and is way below the 9 per cent recorded a few years back. Poor growth rates in electricity and mining were largely responsible for tepid GDP growth rates. Stock markets failed to recover after the GDP data was announced with the Sensex down 220 points and the Indian rupee trading at a 1-year low of Rs 55.51 to the dollar. The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, released the provisional estimates of national income for the financial year 2012-13 and the quarterly estimates of Gross Domestic Product (GDP) for the fourth quarter (January-March) of 2012-13. According to the figures released by the CSO, farm sector output for the 4th quarter has seen a growth of 1.4 per cent quarter on quarter, while manufacturing has seen a growth rate of 2.6 per cent. The growth rates in various sectors were as follows: ‘agriculture, forestry and fishing' (1.4 percent), ‘mining and quarrying' (-3.1 percent), ‘manufacturing' (2.6 percent), ‘electricity, gas and water supply' (2.8 percent) ‘construction' (4.4 percent), 'trade, hotels, transport and communication' (6.2 percent), 'financing, insurance, real estate and business services' (9.1 percent), and 'community, social and personal services' (4.0 percent). For the full year 2012-2013, the key indicators of construction sector, namely, cement and consumption of finished steel registered growth of 5.6 percent and 3.3 percent, respectively in 2012-13 as against 6.1 percent and 3.9 percent, respectively during April-December 2012. Consequently, the growth of the sector is revised downward to 4.3 percent as against 5.9 percent in the Advance Estimates.
  • India GDP Growth Rate The Gross Domestic Product (GDP) in India expanded 1.30 percent in the fourth quarter of 2012 over the previous quarter. GDP Growth Rate in India is reported by the OECD. India GDP Growth Rate averaged 1.63 Percent from 1996 until 2012, reaching an all time high of 5.80 Percent in December of 2003 and a record low of -1.70 Percent in March of 2009. In India, the growth rate in GDP measures the change in the seasonally adjusted value of the goods and services produced by the Indian economy during the quarter. India is the world’s tenth largest economy and the second most populous. The most important and the fastest growing sector of Indian economy are services. Trade, hotels, transport and communication; financing, insurance, real estate and business services and community, social and personal services account for more than 60 percent of GDP. Agriculture, forestry and fishing constitute around 12 percent of the output, but employs more than 50 percent of the labor force. Manufacturing accounts for 15 percent of GDP, construction for another 8 percent and mining, quarrying, electricity, gas and water supply for the remaining 5 percent.
  • Inflation India Inflation Rate The inflation rate in India was recorded at 4.70 percent in May of 2013. Inflation Rate in India is reported by the Ministry of Commerce and Industry. India Inflation Rate averaged 7.73 Percent from 1969 until 2013, reaching an all time high of 34.68 Percent in September of 1974 and a record low of -11.31 Percent in May of 1976. In India, the wholesale price index (WPI) is the main measure of inflation. The WPI measures the price of a representative basket of wholesale goods. In India, wholesale price index is divided into three groups: Primary Articles (20.1 percent of total weight), Fuel and Power (14.9 percent) and Manufactured Products (65 percent). Food Articles from the Primary Articles Group account for 14.3 percent of the total weight. The most important components of the Manufactured Products Group are Chemicals and Chemical products (12 percent of the total weight); Basic Metals, Alloys and Metal Products (10.8 percent); Machinery and Machine Tools (8.9 percent); Textiles (7.3 percent) and Transport, Equipment and Parts (5.2 percent).
  • India's Inflation Slows to 4.7% in May India's annual rate of inflation, based on the Wholesale Price Index, stood at 4.70 percent (provisional) for the month of May as compared to 4.9 percent in the previous month, the lowest level in more than three years. The index for 'Fuel and Power' declined by 1.3 percent despite higher price of electricity (+13 percent) as the price of other items such as coal (-10 percent), aviation turbine fuel (-6 percent) and petrol (-5 percent) declined. The index for ‘Food Articles’ group rose by 1.5 percent due to higher price of poultry chicken and ragi (+5 percent each), fruits and vegetables (+4 percent), fish-marine (+3 percent) and rice (+2 percent). However, the price of tea (-5 percent) and coffee and maize (- 2 percent each) declined. The prices of 'Manufactured Goods' rose 0.3 percent and the index for ‘Beverages, Tobacco and Tobacco Products’ group increased by 0.4 percent due to higher price of soft drinks and carbonated water, bidi and beer (+1 percent each). The index for ‘Transport, Equipment and Parts’ group declined 0.2 percent due to lower price of bicycles (-3 percent) and motor vehicles (-1 percent). The price index of ‘Basic Metals, Alloys and Metal Products’ declined 0.3 percent due to lower price of silver (-5 percent), gold and gold ornaments (-3 percent) and aluminium (-2 percent).
  • India Foreign Direct Investment Foreign Direct Investment in India increased to 2596 USD Million in April of 2013 from 1344 USD Million in March of 2013. Foreign Direct Investment in India is reported by the Reserve Bank of India. India Foreign Direct Investment averaged 913.12 USD Million from 1995 until 2013, reaching an all time high of 5670.00 USD Million in February of 2008 and a record low of 58.00 USD Million in April of 2003. 'Indian economy is capable of absorbing US$ 50 billion in foreign direct investment (FDI) per year', said Mr P Chidambaram, the Finance Minister, India. FDI is an economic segment that enjoys intense focus and attention from policy makers of the highest rank in the administration. The Government relaxed FDI regime in sectors including multi-brand retail, single-brand retail, commodity exchanges, power exchanges, broadcasting, non-banking financial institutions (NBFCs) and asset reconstruction companies (ARCs) in 2012. There were several big-bang reforms and the Government allowed 51 per cent FDI in multi- brand retail and 49 per cent in the aviation sector. FDI cap was also raised from 49 per cent to 74 per cent in broadcasting and ARCs, with an aim to bring foreign expertise in the segments. Foreign investment has also been allowed in power exchanges while foreign institutional investors (FIIs) have been allowed to invest up to 23 per cent in commodity exchanges without seeking prior approval from the Government. Thus, reforms and policies at such a massive level indicate that Indian FDI landscape offers a plethora of opportunities to foreign investors as the economy is booming and vibrant as compared to its global peers. Furthermore, favourable demographics and growth opportunities keep India an 'attractive' destination for merger and acquisition (M&A) activities across diverse sectors including consumer goods and pharmaceuticals, according to global consultancy Ernst & Young.
  • India Imports Imports in India decreased to 2166 INR Billion in June of 2013 from 2456.19 INR Billion in May of 2013. Imports in India are reported by the Directorate General of Commerce. India Imports averaged 364.23 INR Billion from 1978 until 2013, reaching an all time high of 2475.94 INR Billion in January of 2013 and a record low of 4.98 INR Billion in April of 1978. India is heavily dependent on coal and foreign oil imports for its energy needs. Other imported products include: machinery, gems, fertilizers and chemicals. India’s main import partners are China (12 percent of total imports), United Arab Emirates, Switzerland, Saudi Arabia, United States, Iraq and Kuwait.
  • India Exports Exports in India increased to 1430 INR Billion in June of 2013 from 1348.08 INR Billion in May of 2013. Exports in India are reported by the Directorate General of Commerce. India Exports averaged 243.74 INR Billion from 1978 until 2013, reaching an all time high of 1678.36 INR Billion in March of 2013 and a record low of 3.75 INR Billion in May of 1978. India’s main exports are engineering goods (19 percent of total exports), gems and jewelry (15 percent), chemicals (13 percent), agricultural products (9 percent) and textiles (9 percent). India is also one of Asia’s largest refined product exporters with petroleum accounting for around 18 percent of total exports. India’s main export partners are United Arab Emirates (12 percent of total exports) and United States (11 percent). Others include: China, Singapore, Hong Kong and Netherlands.
  • INDUSTRIAL ANALYSIS
  • 3.2 INDUSTRY ANALYSIS INDIAN PHARMACEUTICAL INDUSTRY REVIEW History The history of Indian pharmaceutical market in 1970's was almost non-existent. Today, India has gained immense importance and carved a niche for itself in the pharmaceutical domain. In fact, it has emerged as a big mart for the pharmaceutical industry. In today's world, Indian pharmaceutical industry ranks 4th in terms of volume and 13th in terms of value. For example it might be anything like formulations, bulk drugs, generics, Novel Drug Delivery Systems, New Chemical Entities, or Biotechnology, etc. Indian companies are dominating in the marketplace which was traditionally manned by MNC's. In 1930, in Calcutta the first pharmaceutical company called Bengal Chemicals and Pharmaceutical Works, which still is today as one of 5 government-owned drug manufacturers was started. Brief introduction The Indian Pharmaceutical Industry today is in the front rank of India’s science- based industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously. Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK. International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world. The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control. The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectables. There are about 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). These units produce the complete range of pharmaceutical formulations i.e., medicines ready for consumption by patients and
  • about 350 bulk drugs i.e, chemicals having therapeutic value and used for production of pharmaceutical formulations. Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally self-reliant, the pharmaceutical industry in India has low costs of production, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market. Market capitalization The Indian Pharmaceutical industry consists of more than 20,000 registered units which are highly fragmented. It has been expanding in a tremendous manner in the last two decades and includes 250 pharmaceutical companies which control 70% of the market. Size of the industry The Indian Pharma Industry has around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. 250 large units and about 8000 Small Scale Units, form the core of the pharmaceutical industry in India. The units produced have the complete range of medicines which are ready for consumption by patients. Current Scenario: India's pharmaceutical market grew at 15.7 per cent during December 2011. Globally, India ranks third in terms of manufacturing pharma products by volume. According to McKinsey, the Pharmaceutical Market is ranked 14th in the world. By 2015 it is expected to reach top 10 in the world beating Brazil, Mexico, South Korea and Turkey. More importantly, the incremental market growth of US$ 14billion over the next decade is likely to be the third largest among all markets. The US and China are expected to add US$ 200bn and US$ 23bn respectively. McKinsey & Company’s report, “India Pharma 2020: Propelling access and acceptance, realizing true potential,” predicted that the Indian pharmaceuticals market will grow to US$55 billion in 2020; and if aggressive growth strategies are implemented, it has further potential to reach US$70 billion by 2020. While, Market Research firm Cygnus’ report forecasts that the Indian bulk drug industry will expand at an annual growth rate of 21 percent to reach $16.91 billion by 2014. The report also noted that India ranks third in terms of volume among the top 15 drug manufacturing countries.
  • Further, McKinsey reports Healthcare grew from 4 per cent of average household income in 1995 to 7 per cent in 2005 and is expected to grow to 13 per cent by 2025. Top leading Companies  GlaxoSmithKline (GSK), India  Novartis India Limited  Wyeth India Limited  AVENTIS PHARMA INDIA  PFIZER INDIA LIMITED  AstraZeneca  India Ltd  JOHNSON & JOHNSON (ETHNOR DIVISION)  Cipla Limited  Ranbaxy India Limited  Dr.Reddy Laboratories  Nicholas Piramal India Limited  SUN PHARMA LIMITED  UCB Pharma Ltd  E Merck India Ltd  ELI Lilly and Company (India)  Aurobindo Pharma Ltd  Aventis Pharma Ltd  Cadila Pharmaceuticals Ltd  Cipla Ltd  Dabur Pharma Ltd  Dr. Reddy's Laboratories Ltd  Elder Pharmaceuticals Ltd  Glenmark Pharmaceuticals Ltd Demand: The demand for pharmaceutical products in India is significant and is driven by many factors like low drug penetration, rising middle-class & disposable income, increased government & private spending on healthcare infrastructure, increasing medical insurance penetration, changing demographic pattern and rise in chronic lifestyle-related diseases; adoption of product patents, and aggressive market penetration driven by the relatively smaller companies. According to CARE research demand triggers for the growth are:  Between 2010 and 2015 patent drugs worth US$171 are estimated to go off-patent leading to a huge surge in generic products.  High margin pharma export business is expected to grow at a higher rate than domestic market given increased in outsourcing activities.  Increased M&A activities is set to consolidate the market which widens geographic reach, strengthens distribution network and venture into new therapeutic segments.  Indian companies files the highest number of ANDA’s with USFDA leading to greater chances of approvals and thereby increasing export to regulated markets especially the US.
  •  There are currently approximately 175 USFDA and nearly 90 UK-MHRA approved pharma manufacturing plants in India which can supply high quality pharma products globally.  Growth from rural markets will outstrip overall pharma market growth, albeit at lower margins, given lower penetration of 18-19% coupled with rising income level and awareness.  Biopharmaceuticals is another potential high growth segment for Indian pharma growing at double digit driven by the vaccines market. INDIAN PHARMACEUTICAL industry at a glance in 2012 - 2013 Indian Pharmaceutical Industry On the back of increasing sales of generic medicines, continued with the growth in chronic therapies and a greater penetration in rural markets, the Indian domestic pharmaceutical market is expected to register a strong double-digit growth of 13-14 per cent in 2013. The year 2012 closed with a growth of 12 per cent, according to data from a research firm. The Indian pharmaceuticals sector attracted foreign direct investments (FDI) worth US$ 9,776 million between April 2000 to November 2012, according to the latest data published by the Department of Industrial Policy and Promotion (DIPP). India's exports of drugs and pharmaceuticals grew by 27 per cent to Rs 60,000 crore (US$ 11.19 billion) for the year ended March 2012, according to data compiled by Pharmaceutical Exports Council of India (Pharmexcil). Indian pharmaceutical industry is projected to show double-digit growth in the near future owing to a rise in pharmaceutical outsourcing and rising investments by multinational companies. Emerging sectors, such as bio-generics and pharma packaging will also pave way for the pharmaceutical market to continue its upward trend during the FY 2012- FY 2014. Trends:  All companies, including MNCs, have increased their field force in the last one year.  Indian companies are entering into strategic tie-ups with MNCs to strengthen their product portfolio.  Companies are expanding their presence in rural markets.  Acquisitions by MNCs to gain quick foothold in the fastest growing Indian pharma market. Most of the Pharma companies have shown considerable decline in growth in the first half of 2011. The slowdown is widely visible in the Chronic and Acute categories. Anti-invective, pain and gastro together contribute 1/3rd of the total pharma market. The pharma companies have started facing challenges in domestic market due to increase in competition from unlisted MNCs in this segment. They are rapidly expanding their field force to extend their geographical reach. Companies like Cipla, Torrent and IPCA which are mainly focused on Indian market are already feeling the heat. Growth rates of companies such as Cadila, Dr. Reddy and Ranbaxy have already come down. On the other hand Lupin and Sun are showing growth due to the shift of focus towards specialty therapies, where competition is relatively low.
  • Basing on the changing macro factors and economic growth Emkay Research has expected the growth estimates of the pharma companies to decrease. It cut down the domestic growth estimates for Cadila, Cipla, Dr. Reddy, IPCA, Torrent and Unichem for FY12 and FY 13 by 2% to 5% and retained the growth estimates for Lupin, Ranbaxy, Sun, GSK and Pfitzer. Indian Pharma – Domestic Growth Expectations Company FY12 Domestic Growth Earlier growth estimates Cadila 12% 15% Cipla 10% 15% Dr. Reddy’s 10% 15% Glenmark 16% 16% IPCA 10% 17% Lupin 19% 19% Ranbaxy 12% 12% Sun Pharma 15% 18% Torrent 12% 12% Unichem 5% 9% GSK 13% 13% Pfizer 14% 14% ADVANTAGE TO INDIA:- Competent workforce: India has a pool of personnel with high managerial and technical competence as also skilled workforce. It has an educated work force and English is commonly used. Professional services are easily available. Cost-effective chemical synthesis: Its track record of development, particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules is excellent. It provides a wide variety of bulk drugs and exports sophisticated bulk drugs.
  • Legal & Financial Framework: India has a 53 year old democracy and hence has a solid legal framework and strong financial markets. There is already an established international industry and business community. Information & Technology: It has a good network of world-class educational institutions and established strengths in Information Technology. Globalization: The country is committed to a free market economy and globalization. Above all, it has a 70 million middle class market, which is continuously growing. Consolidation: For the first time in many years, the international pharmaceutical industry is finding great opportunities in India. The process of consolidation, which has become a generalized phenomenon in the world pharmaceutical industry, has started taking place in India. Government Initiatives: Government initiatives in the public health sector have recorded some noteworthy successes over time with focus on investments related to better medical infrastructure, rural health facilities etc.  100 per cent FDI is permitted for health and medical services under the automatic route.  The National Rural Health Mission (NHRM) had allocated US$ 10.15 billion for the up gradation and capacity enhancement of healthcare facilities.  Moreover, in order to meet revised cost of construction, in March 2010 the Government allocated an additional US$ 1.23 billion for six upcoming AIIMS-like institutes and up gradation of 13 existing Government Medical Colleges. As a result, FDI inflow in hospital and diagnostic centres was US$ 1.1 billion during April 2000 and November 2011, according to st Department of Industrial Policy & Promotion (DIPP) data. FDI inflow in medical and surgical appliances stood at US$ 472.6 million during the same period. And the drugs and pharmaceuticals sector has attracted FDI worth US$ 5.0 billion between April 2000 and November 2011
  • SWOT ANALYSIS OF PHARMA INDUSTRY: Strengths: 1. Low cost of production. 2. Large pool of installed capacities 3. Efficient technology s for large number of Generics. 4. Large pool of skilled technical manpower. 5. Increasing liberalization of government policies. Opportunities: 1. Aging of the world population. 2. Growing incomes. 3. Growing attention for health. 4. New diagnoses and new social diseases. 5. Spreading prophylactic approaches. 6. Saturation point of market is far away. 7. New therapy approaches. 8. New delivery systems. 9. Spreading attitude for soft medication (OTC drugs). 10. Spreading use of Generic Drugs. 11. Globalization 12. Easier international trading. 13. New markets are opening. Weakness: 1. Fragmentation of installed capacities. 2. Low technology level of Capital Goods of this section. 3. Non-availability of major intermediaries for bulk drugs. 4. Lack of experience to exploit efficiently the new patent regime. 5. Very low key R&D. 6. Low share of India in World Pharmaceutical Production (1.2% of world production but having 16.1% of world’s population). 7. Very low level of Biotechnology in India and also for New Drug Discovery Systems. 8. Lack of experience in International Trade. 9. Low level of strategic planning for future and also for technology forecasting. Threats: 1. Containment of rising health-care cost. 2. High Cost of discovering new products and fewer discoveries. 3. Stricter registration procedures. 4. High entry cost in newer markets. 5. High cost of sales and marketing. 6. Competition, particularly from generic products. 7. More potential new drugs and more efficient therapies. 8. Switching over form process patent to product patent.
  • COMPANHY ANALYSIS
  • 3.3 COMPANY ANALYSIS 1. SUNPHARMA Sun Pharmaceutical Industries Limited Type Public Founded 1983 Headquarters Mumbai, Maharashtra, India Industry Pharmaceuticals Revenue $1.4 Billion (2012) Net income $216 Million (2012) Employees 11,200 (2012) Introduction:- Sun Pharma was established by Mr. Dilip Shanghvi in 1983 in Kolkata with 5 products to treat psychiatry ailments. Cardiology products were introduced in 1987 followed by gastroenterology products in 1989. Today it is the largest chronic prescription company in India and a market leader in psychiatry, neurology, cardiology, orthopaedics, ophthalmology, gastroenterology and nephrology. Some of the top brands of the company include pantocid, susten, aztor, gemer, repace, glucored, strocit, clopilet and cardivas. Over 57% of Sun Pharma sales are from markets outside India, primarily in the US. Manufacturing is across 23 locations, including the US, Canada, Brazil, Mexico and Israel. In the US, the company markets over 200 generics, with another 150 awaiting approval from the USFDA. Sun Pharma was listed on the stock exchange in 1994 in an issue oversubscribed 55 times. The founding family continues to hold a majority stake in the company. Today Sun Pharma is the third largest and the most profitable pharmaceutical company in India as well as the largest pharmaceutical company by market capitalisation on the Indian exchanges.The Indian pharmaceutical industry has become the third largest producer in the world in terms of volumes and is poised to grow into an industry of $ 20 billion in 2015 from the current turnover of $ 12 billion. In terms of value India still stands at number 14 in the world. Recent Achievements of the Company 2008  Sun Pharmaceutical Industries Ltd on January 30, 2008 announced that it has commercially launched generic Pantoprazole Sodium Delayed Release (DR) Tablets, 40 mg, which is AB-rated to Wyeth's Protonix DRTablets. Sun's product is being sold in the United States by its marketing partner Caraco Pharmaceutical Laboratories.  In November 2008, we along with our subsidiaries, acquired 100% ownership of Chattem Chemicals, Inc., a narcotic raw material importer and manufacturer of controlled substances with a approved facility in Tennessee. This will offer vertical integration for our controlled substance dosage form business in the US.
  • 2010  Sun Pharmaceutical Industries (Sun) has completed the acquisition of a controlling stake in Taro Pharmaceutical Industries (Taro) following the Option Agreement entered into in 2007 with Taro's controlling shareholders led by Taro's Chairman Barrie Levitt.  Sun Pharmaceutical on Sept 8 won a significant victory in its three-year-old battle to acquire Taro Pharmaceuticals.  Sun Pharma - Sun Pharma announced launch of generic Exelon in US  Sun Pharma - Supreme Court of Israel Rules in Favor of Sun Pharma  Company has splits its Face value of Shares from Rs 5 to Re 1 2011  SunPharma - Merck & Co., Inc., and Sun Pharma Establish Joint Venture to Develop and Commercialize Novel Formulations and Combinations of Medicines in Emerging Markets.  SunPharma - MSD in India and Sun Pharmaceutical Industries Ltd entered Strategic Partnership to Co-market MSD's diabetes drug.  Merck & Co., Inc., and Sun Pharma Establish Joint Ventured toDevelop and Commercialize Novel Formulations and Combinations of Medicines in Emerging Markets  Sun Pharma - MSD in India and Sun Pharmaceutical Industries Ltd Enter Strategic Partnership to Co-market MSD's diabetes drug.  2012  Sun Pharma bagged USFDA approval for its AND Application for generic Zyprexa  Israel Makov appointed Chairman of Sun Pharma Board  Sun Pharma acquired URL generic business from Takeda  The Norwegian firm Telenor conduct its operations in India, promoters of Sun Pharma emerged as the new JV partner of the company.
  • 2. DR.REDDY:- Dr. Reddy’s Laboratories Ltd. Type Public Founded 1984 Headquarters Hyderabad, Andhra Pradesh, India Industry Pharmaceuticals Revenue $2.1 Billion (2012) Net income $300Million (2012) Employees 16,300 (2012) Introduction Dr. Reddy's Laboratories Ltd is a pharmaceutical company based in Hyderabad, Andhra Pradesh, India. The company was founded by Anji Reddy, who had previously worked in the publicly owned Indian Drugs and Pharmaceuticals Limited, of Hyderabad, India. Dr. Reddy's manufactures and markets a wide range of pharmaceuticals in India and overseas. The company has over 190 medications, 60 active pharmaceutical ingredients (APIs) for drug manufacture, diagnostic kits, critical care, and biotechnology products. Dr. Reddy's began as a supplier to Indian drug manufacturers, but it soon started exporting to other less-regulated markets that had the advantage of not having to spend time and money on a manufacturing plant that would gain approval from a drug licensing body such as the U.S. Food and Drug Administration (FDA). By the early 1990s, the expanded scale and profitability from these unregulated markets enabled the company to begin focusing on getting approval from drug regulators for their formulations and bulk drug manufacturing plants in more-developed economies. This allowed their movement into regulated markets such as the US and Europe Recent Achievements of the Company 2008  Dr Reddys Laboratories Ltd has acquired Jet Generici Sri, a Company engaged in the sale of generic finished dosages in Italy.  Dr Reddy's Laboratories Ltd has signed a definitive agreement to acquire BASF's pharmaceutical contract manufacturing business and related facility in Shreveport, Louisiana, USA.  Hyderabad: Dr Reddy's Laboratories Ltd unveiled Omez Insta for patients suffering from severe gastritis and those on Ryle's tube feeding in India.  Dr Reddys Laboratories Ltd has appointed Dr. Bruce L A Carter as an Additional Director on the Board of the Company.
  • 2009  Dr Reddys Laboratories Ltd has has appointed Dr. Ashok S Ganguly as an Additional Director on the Board of Directors of the Company with effect from October 23, 2009.  Dr. Reddy's launches Strea C10 and Strea A15 in India  Dr. Reddy's launches Bispec in India  Dr. Reddy's joins American Chemical Society Green Chemistry Institute Pharmaceutical Roundtable  2010  Dr Reddy's Laboratories announced the launch of Cresp. It is a darbepoetin alfa that is approved for the treatment of anemia. It is due to chronic kidney disease or chemotherapy. 2011  Dr. Reddy's announces the launch of Pantoprazole Sodium delayed-released tablets.  Dr Reddy's launches Levocetirizine tablets in US  Dr Reddy's launches generic allergy drug in US  Dr. Reddy's announces completion of the acquisition of US penicillin facility and products from GlaxoSmithKline  Dr. Reddy's announces the launch of Over-the-Counter Fexofenadine HCI tablets.  Dr. Reddy's launches pegfilgrastim in India under the brand name 'Peg-grafeel  Registered Office of the Company has been shifted To 8-2-337, Road No. 3, Banjara Hills, Hyderabad - 500034, Andhra Pradesh, India. 2012  Dr. Reddy's announces the Launch of Ziprasidone Hydrochloride Capsules.  Dr. Reddy's launches of Quetiapine Fumarate Tablets.  Dr. Reddy's announces the launch of Olanzapine tablets.  Dr. Reddy's announces the Launch of Clopidogrel Tablets, USP.  Dr. Reddy’s announces the Launch of SILDENAFIL TABLETS.
  • 3. LUPIN:- Lupin Limited. Type Public Founded 1968 Headquarters Mumbai, Maharashtra, India Industry Pharmaceuticals Revenue $1.6 Billion (2012) Employees 11,355 (2012) Introduction Lupin Limited is a transnational pharmaceutical company based in Mumbai. It is the 2nd largest Indian pharma company by market capitalization; the 14th largest generic pharmaceutical company globally and; the 5th largest generic pharmaceutical company in the US by prescription-led market share. It has the distinction of being the fastest growing generic pharmaceutical player in the two largest pharmaceutical markets of the world – the US and Japan; and is the 5th largest and the fastest growing generic pharmaceutical player in South Africa. Recent Achievements of the Company 2008  Lupin Limited has appointed Mr. R.V. Satam as Secretary & Compliance Officer of the Company w.e.f. May 01, 2008.  Lupin enters into agreement for Suprax 400 mg tablets  Lupin Launches SUPRAX ®400 mg Tablets in the US  Lupin expands its product basket in JapanKyowa receives Ten product approvals 2009  Lupin receives USFDA approval for Levetiracetam Tablets  Lupin ties up with leading Institutes for PhD Program  Lupin in Equity Partnership with Multicare Pharmaceuticals Philippines, Inc.  Lupin Expands Branded Play; Announces Acquisition of Worldwide Rights for its first NDA - AllerNaze
  • 2010  Lupin Limited has launched Ilyalgan® (sodium hyaluronate), an osteoarthritis drug, available in the form of an injectable through leading orthopaedics and physiotherapists across the country. Hyalgan40 is the original research molecule of the Italian pharma giant I 'IDIA and is the world leader in HA therapy, marketed in over 60 countries globally.  Lupin Limited's U.S subsidiary, Lupin Pharmaceuticalss Inc. (LPT) has received the final approval for the company's Abbreviated New Drug Application (ANDA) for its Imipramine Pamoate capsules, 75mg, 100 mg, 125 mg and 150 mg from the U.S. Food and Drug Administration (FDA). Commercial shipments of the product have already commenced.  Company has splits its Face value of Shares from Rs 10 to Rs 2 2011  Lupin acquires Worldwide Rights for the Goanna® Brand.  Lupin and Medicis Enter into Joint Development Agreement.  Lupin Acquires I'rom Pharmaceuticals through its Japanese Subsidiary. 2012  Lupin receives Tentative Approval for Generic Glumetza Extended-Release Tablets  LUPIN announces settlement with SANTARUS and DEPOMED for GLUMETZA Patent Litigation  Lupin launches Generic Geodon Capsules.  Lupin launches Generic SEROQUEL Tablets.
  • 4. CIPLA:- Cipla Limited Type Public Founded 1935 Headquarters Mumbai, Maharashtra, India Industry Pharmaceuticals Revenue $1.2 Billion (2012) Net income $190 Million (2012) Employees 16,000 (2012) Introduction Cipla Limited is pharmaceutical company based in Mumbai, India. Founded by nationalist Indian scientist Khwaja Abdul Hamied as The Chemical, Industrial & Pharmaceutical Laboratories in 1935, Cipla makes drugs to treat cardiovascular disease, arthritis, diabetes, weight control, depression and many other health conditions Founded prior to Indian independence by Khwaja Abdul Hamied and Yaqub on the principle that India needed to become self-sufficient in supplying medicine to its people, Cipla has emphasized self-reliance and the right of all people to health and access to medicine, regardless of their economic circumstances or where in the world they happen to live. Cipla cooperates with other enterprises in areas such as consulting, commissioning, engineering, project appraisal, quality control, know-how transfer, support, and plant supply Recent Achievements of the Company 2008  Cipla Ltd has appointed Mr. Pankaj Patel as a Director in casual vacancy with effect from March 05, 2008.  Cipla launched Roche's generic version of anti-infection drug 2009  Cipla wins Erlotinib case against Roche  Pharmaceuticals Export Promotion Council Awards  Cipla launches drug to treat Swine flu virus  Cipla wins patent fight against Gilead Sciences
  • 2010  Cipla Ltd acquired Meditab Specialities Pvt. Ltd. (Meditab) for an aggregate consideration of Rs. 133.35 crores.  Cipla Medpro has signed a deal with Biomab, a division of Chinese company Desano Pharma.  Cipla sold the marketing rights of i-Pill to Piramal Healthcare for Rs 95 crore in cash.  Cipla has tied up with the Manipal Group-promoted 'Stempeutics Research'.  Drug Maker Cipla has launched the generic Version of Pirfenidone, used to treat Idiopathic Pulmonary Fibrosis, a progressive Lung disease.India is the 2nd market to have this drug after Japan. 2011  Cipla Cancer Palliative Care Centre launched 24 hour helpline to offer counselling to ensure more people use of the free services available. 2012  Cipla India's second largest drug firm, has agreed to acquire South African Drugmaker Cipla Medpro with 51% stake amounts  Cipla bags tentative approval for HIV treatment tablets  Drug giant Cipla Ltd has announced price reduction on 3 major anti-cancer drugs including Erlotinib (ERLOCIP), Docetaxel (DOCETAX) and Capecitabine (CAPEGARD).  Cipla bags award in the Field of Export of Pharmaceuticals during the year conferred the Highest Award 'Platinum'.
  • 5. Ranbaxy Ranbaxy Laboratories Limited Type Public Founded 1961 Headquarters Gurgaon, Haryana, India Industry Pharmaceuticals Revenue $1.7 Billion (2012) Net income $310 Million (2012) Employees 10,435 (2012) Introduction Ranbaxy Laboratories Limited is an Indian multinational pharmaceutical company that was incorporated in India in 1961. The company went public in 1973 and Japanese pharmaceutical company Daiichi Sankyo acquired a controlling share in 2008. Ranbaxy exports its products to 125 countries with ground operations in 43 and manufacturing facilities in eight countries. In 2011, Ranbaxy Global Consumer Health Care received the OTC Company of the year award. Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a Japanese company Shionogi. The name Ranbaxy is a portmanteau of the names of its first owners Ranbir and Gurbax. Bhai Mohan Singh bought the company in 1952 from his cousins Ranbir and Gurbax. After Bhai Mohan Singh's son Parvinder Singh joined the company in 1967, the company saw an increase in scale. Recent Achievements of the Company 2010  Ranbaxy arm bags Rs 605 cr order in South Africa  Ranbaxy Laboratories Limited (Ranbaxy) signed the Agreements with Biovcl Lifesciences Private Limited (Biovel), Bangalore, India, providing for the acquisition of product rights and a manufacturing facility, from Biovcl.  Ranbaxy and Pfenex Announce Collaboration for the Development of a Biosimilar Therapeutic Protein.  Ranbaxy Lab - Ranbaxy Launches Antiplatelet Agent Prasugrel in India 2011  Ranbaxy Laboratories has entered into an in-licensing agreement with Gilead Sciences, Inc. for three new HIV/AIDS drugs which are currently in late-stage clinical development.
  •  Daiichi Sankyo & Ranbaxy Announce a New Social Contribution Initiative Encompassing India, Cameroon and Tanzania  Ranbaxy and The Government of Yaroslavl Region, Russia, sign MOU for cooperation in the field of Healthcare and Medical Science.  Ranbaxy Announces Launch of Atorvastatin, Generic Lipitor®, the US  Ranbaxy honored with NJBIA award for excellence in New Jersey Business Expansion 2012  Ranbaxy Launched Absoricatm (Isotretinoin) Capsules In The U.S. Healthcare Market  Ranbaxy Delivered Strong Overall Business Performance; Improvement In Base Business Sales And Margins  Ranbaxy Launched Authorized Generic Of Evoxac In The U.S. Healthcare Market  Ranbaxy received Approval To Set Up Greenfield Manufacturing Facility In Malaysia  Ranbaxy Launched Authorized Generic Of Pioglitazone In The U.S.  Daiichi Sankyo And Ranbaxy Launched Hybrid Business In Venezuela 2013  Daiichi Sankyo Company, Limited (Daiichi Sankyo) and Ranbaxy Laboratories Limited (Ranbaxy) announced their intention to integrat their business operations in Thailand, to leverage and maximize the synergies of the Hybrid Business Model, which is expected to commence business on April 1, 2013.
  • FINANCIAL ANALYSIS
  • 3.4 FINANCIAL ANALYSIS RATIO ANALYSIS:- INTRODUCTION TO THE RATIO ANANLYSIS:- The relationship of these two figure expressed mathematically is called a ratio. The ratio refers to the numerical or quantities relationship between two variables or times. A ratio is calculated by dividing one item of the relationship with the other. The ratio analysis is one of the most useful and common methods of analyzing financial statement. Ratio enables the mass of data to be summarized and simplified. Ratio analysis is an instrument for diagnosis of the financial health of an enterprise. MEANING OF RATIO:- A ratio is only a comparison of the numerator with the denominator. The tern ratio refers to the numerical or quantitative relationship between two figures and obtained by dividing the former by the latter. Ratio analysis is an important and age old technique of financial analysis. The data given in financial statements ratio are relative form of financial data and very useful techniques to cheek upon the efficiency of a firm. Some ratio indicates the trend or progress or downfall of the firm. IMPORTANCE OF RATIO: Ratio analysis of firm’s financial statement is of interest to a number of parties mainly. Shareholders, creditor, financial executives etc. shareholders are interested with earning capacity of the firm: creditors are interested in knowing the ability of firm to meet financial obligation and financial executives are concerned with evolving analytical tools that will measures and compare costs, efficiency liquidity and profitability with a view to making intelligent decisions.
  • RATIO ANALYSIS
  • Ratio Analaysis 1. Sun Pharmaceutical Industries Current Ratio 2012 2011 2010 2009 2008 Current Assets 2,951.18 1,184.10 1,149.54 1,186.94 1,468.36 Current Liabilities 607.10 449.37 388.45 696.34 845.73 Current Ratio 4.86111 2.635022 2.9593 1.704541 1.736204 Interpretation:- Company’s current ratio was 1.73 in year 2008 which implies that current assets are 1.73 times the current liabilities. The interpretation is the company with higher current ratio has better liquidity/short-term solvency. Conventionally, a current ratio of 2:1 is considered satisfactory. But in here, 2010 & 2011 are the years where company’s current ratio reached it’s highest position as compared to other years which is 2.9 and 2.6. It is much higher in year 2012 compare to all year. Abnormally high value of current ratio may indicate existence of idle or underutilized resources in the company. 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 2012 2011 2010 2009 2008 Current Ratio
  • Quick/Acid Test Ratio: 2012 2011 2010 2009 2008 Quick Assets 1444.42 991.99 941.74 1376.37 1901.17 Current Liabilities 607.10 449.37 388.45 696.34 845.73 Quick Ratio 2.379213 2.207513 2.424353 1.976578 2.247963 Interpretation:- The acid test ratio is a rigorous measure of a firm’s ability to service short term liabilities. Generally, an acid-test ratio of 1:1 is considered satisfactory as the company can easily meet all current claims. But over here there were all 5 years in which it reaches to one and more. Quick ratio of years 2009 is appropriate and satisfactory compare to other 4 years. 0 0.5 1 1.5 2 2.5 3 2012 2011 2010 2009 2008 Quick Ratio
  • Debt Equity Ratio 2012 2011 2010 2009 2008 Long Term Debt 40.3 50.53 29.49 23.6 102.52 Shareholders' fund 8,108.61 6,680.53 5,717.98 5,151.42 4,207.62 Debt Equity Ratio 0.00497 0.007564 0.005157 0.004581 0.024365 Interpretation:- The D/E ratio is an important tool of financial analysis to appraise the financial structure of a firm. A high ratio shows a large share of financing by the creditors of the firm, a low ratio implies a smaller claim of creditors. Company’s debt equity was 0.02 in year 2008 and then goes downward in 2009 then again up and at last it reached it’s lowest level in year 2012 which is 0.004 and Lower values of debt-to-equity ratio are favourable indicating less risk. 0 0.005 0.01 0.015 0.02 0.025 2012 2011 2010 2009 2008 Debt Equity Ratio
  • Earnings Per Share 2012 2011 2010 2009 2008 Earnings Per Share 18.62 13.36 43.39 61.09 48.96 Interpretation:- More the earning per share, more the interest of the shareholders and investors in the company. Company had a EPS of Rs.48.96 in year 2008 which is not as good as others but then it is increasing year by year and reached at it’s highest level in year 2009 which is Rs.61.09. After that EPS of the company is decreasing, still company has to improve. 0 10 20 30 40 50 60 70 2012 2011 2010 2009 2008 Earnings Per Share
  • Dividend per Share 2012 2011 2010 2009 2008 Dividend Per Share 4.25 3.5 13.75 13.75 10.5 Interpretation:- Investors along with a good earning per share also expect a good return from the company. We can say that company is in it’s good situation. In first 3 years company had paid more dividend to it’s shareholders and investors. And in the year 2011 & 2012 company had given the dividend is low compare to previous three years. This shows that company’s profit is less comparing to previous year and company has to improve. 0 2 4 6 8 10 12 14 16 2012 2011 2010 2009 2008 Dividend Per Share
  • GP Ratio 2012 2011 2010 2009 2008 GP Ratio 41.90 4.58 9.86 0.79 6.01 Interpretation:- The GP ratio is also called the average mark up ratio. It is calculated by comparing the gross profit of the firm with the net sales. Gross margin ratio measures profitability. Higher values indicate that more cents are earned per dollar of revenue which is favourable because more profit will be available to cover non-production costs. In 2009 GP ratio had drastically fallen, which means operating efficiency of the firm has decreased but it has recovered over the next three years and become almost stable. 0 5 10 15 20 25 30 35 40 45 2012 2011 2010 2009 2008 GP Ratio
  • NP Ratio 2012 2011 2010 2009 2008 NP Ratio 44.23 42.46 33.99 31.43 31.01 Interpretation:- The NP ratio establishes the relationship between the net profit (after tax) of the firm and the net sales. Its measures the efficiency of the management in generating additional revenue over and above the total cost of operations. Net profit ratio has increased over the years which mean that the overall profitability of the firm has grown up. 0 5 10 15 20 25 30 35 40 45 50 2012 2011 2010 2009 2008 NP Ratio
  • ROE 2012 2011 2010 2009 2008 ROE 26.07 21 17.05 24.57 24.21 Interpretation:- ROE examines profitably from the perspective of equity investors by relating profits available for the equity share holders with the book value of equity investments. The return from the point of view of equity shareholders may be calculated by comparing the net profit less preference dividend with their total contribution to the firm. Over the years ROE of the firm have declined which indicates that the funds of the owner have not been used properly by the firm, and the firm has improved and been able to earn satisfactory return for the owner. 0 5 10 15 20 25 30 2012 2011 2010 2009 2008 ROE
  • ROA 2012 2011 2010 2009 2008 ROA 78.3 64.51 276.08 248.72 203.15 Interpretation:- ROA measures a profitability of the firm in terms of assets employed in the firm. ROE is calculated by establishing the relationship between the profits and the assists employed to earn that profit. ROA shows as to how much is the profit earn by the firm per rupee of assets used. ROA of the firm is increasing from 2008-2010 and after that it got decreased, decreasing trend means that profitability is deteriorating. 0 50 100 150 200 250 300 2012 2011 2010 2009 2008 ROA
  • Dividend Payout Ratio 2012 2011 2010 2009 2008 Dividend Per Share 4.25 3.5 13.75 13.75 10.5 Earnings Per Share 18.62 13.36 43.39 61.09 48.96 Dividend Payout Ratio 0.228249 0.261976 0.316893 0.225078 0.214461 Interpretation:- Dividend payout ratio is the ratio of dividend per share divided by earnings per share. It is a measure of how much earnings a company is paying out to its shareholders as compared to how much it is retaining for reinvestment. Dividend payout ratio tells what percentage of total earnings the company is paying back to shareholders. A healthy dividend payout ratio leads to investor confidence in the company. Dividend payout ratio got reducing from year 2010 onwards. This shows that company’s profitability is reduced and company has to improve a lot. 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 2012 2011 2010 2009 2008 D/P Ratio
  • P/E Ratio 2012 2011 2010 2009 2008 P/E Ratio 31.8 34.5 43.5 18.9 26.1 Interpretation:- P/E ratio is the ratio of a company's share price to its earnings per share. It tells whether the share price of a company is fairly valued, undervalued or overvalued. The P/E ratio tells how much the market is willing to pay for a company’s earnings. P/E ratio of the company is getting low year by year which indicates that the market does not have much confidence in the future of the share. But for present condition investor can get good return with minimum investment. Since the P/E ratio of current year is not available, I will elaborate the current P/E ratio. The current P/E ratio growth is 2 %. It means currently the stock is overvalued. 0 5 10 15 20 25 30 35 40 45 50 2012 2011 2010 2009 2008 P/E Ratio
  • Price/Earnings-to-Growth Ratio (PEG) 2012 2011 2010 2009 2008 Price-to-Earnings (P/E) Ratio 31.8 34.5 43.5 18.9 26.1 Annual Earnings Per Share Growth(%) 39.371 -69.2095 -28.9736 24.775 50.554 PEG Ratio 0.8077 -0.498486 -1.501367 0.76287 0.51628 Interpretation:- The PEG ratio acts as a measure of value that takes into account future growth. Using this metric, investors can gauge whether high-growth stocks may be undervalued, even if the don't appear so with the more common P/E ratio. The above PEG trend shows that the P/E ratio will grow in future, which indicates increase in market price of the company stock. Also current P/E ratio is high, so that the earnings to the company also increases. -2 -1.5 -1 -0.5 0 0.5 1 2012 2011 2010 2009 2008 PEG Ratio
  • Ratio Analaysis 2.Dr Reddys Laboratories Current Ratio 2012 2011 2010 2009 2008 Current Assets 3,363.30 2,899.90 2,005.80 2,239.10 1,605.83 Current Liabilities 1,534.30 1,565.20 1,543.80 1,163.30 786.36 Current Ratio 2.192075 1.852734 1.299262 1.924783 2.042105 Interpretation:- Company’s current ratio was 2.04 in year 2008 which implies that current assets are 1.73 times the current liabilities. The interpretation is the company with higher current ratio has better liquidity/short-term solvency. Conventionally, a current ratio of 2:1 is considered satisfactory. But in here, 2010 & 2011 are the years where company’s current ratio reached it’s lower position as compared to other years which is 1.2 and 1.8. It is much higher in year 2012 compare to all year. 0 0.5 1 1.5 2 2.5 2012 2011 2010 2009 2008 Current Ratio
  • Quick/Acid Test Ratio: 2012 2011 2010 2009 2008 Quick Assets 2,036.60 1,836.70 1,108.40 1,504.00 964.90 Current Liabilities 1,534.30 1,565.20 1,543.80 1,163.30 786.36 Quick Ratio 1.327381 1.17346 0.717969 1.292874 1.227046 Interpretation:- The acid test ratio is a rigorous measure of a firm’s ability to service short term liabilities. Generally, an acid-test ratio of 1:1 is considered satisfactory as the company can easily meet all current claims. But over here there were all 5 years in which it reaches to one and more. Quick ratio of years 2010 is not appropriate and not satisfactory compare to other 4 years. 0 0.2 0.4 0.6 0.8 1 1.2 1.4 2012 2011 2010 2009 2008 Quick Ratio
  • Debt Equity Ratio 2012 2011 2010 2009 2008 Long Term Debt 1,533.40 1,444.80 563.20 640.30 462.31 Shareholders' fund 6,717.80 6,020.20 5,914.60 5,259.10 4,811.81 Debt Equity Ratio 0.228259 0.239992 0.095222 0.121751 0.096078 Interpretation:- The D/E ratio is an important tool of financial analysis to appraise the financial structure of a firm. A high ratio shows a large share of financing by the creditors of the firm, a low ratio implies a smaller claim of creditors. Company’s debt equity was 0.09 in year 2008 and then goes upward in 2009 then again up and at last it reached it’s highest level in year 2012 which is 0.2 and higher values of debt-to-equity ratio are not favourable indicating high risk. 0 0.05 0.1 0.15 0.2 0.25 2012 2011 2010 2009 2008 Debt Equity Ratio
  • Earnings Per Share 2012 2011 2010 2009 2008 Earnings Per Share 53.81 52.78 50.11 33.29 28.26 Interpretation:- More the earning per share, more the interest of the shareholders and investors in the company. Company had a EPS of Rs.28.96 in year 2008 which is not as good as others but then it is increasing year by year and reached at it’s highest level in year 2012 which is Rs.53.81. 0 10 20 30 40 50 60 2012 2011 2010 2009 2008 Earnings Per Share
  • Dividend per Share 2012 2011 2010 2009 2008 Dividend Per Share 13.75 11.25 11.25 6.25 3.75 Interpretation:- Investors along with a good earning per share also expect a good return from the company. We can say that company is in it’s good situation. Company’s DPS is increasing years by year and company had paid more dividend to it’s shareholders and investors. This shows that company’s profit is good comparing to previous year. 0 2 4 6 8 10 12 14 16 2012 2011 2010 2009 2008 Dividend Per Share
  • GP Ratio 2012 2011 2010 2009 2008 GP Ratio 23.34 18.72 19.70 14.11 12.58 Interpretation:- The GP ratio is also called the average mark up ratio. It is calculated by comparing the gross profit of the firm with the net sales. Gross margin ratio measures profitability. Higher values indicate that more cents are earned per dollar of revenue which is favourable because more profit will be available to cover non-production costs. In 2009 GP ratio had drastically fallen, which means operating efficiency of the firm has decreased but it has recovered over the next three years and become almost stable. 0 5 10 15 20 25 2012 2011 2010 2009 2008 GP Ratio
  • NP Ratio 2012 2011 2010 2009 2008 NP Ratio 13.51 16.84 18.48 13.20 13.57 Interpretation:- The NP ratio establishes the relationship between the net profit (after tax) of the firm and the net sales. Its measures the efficiency of the management in generating additional revenue over and above the total cost of operations. Net profit ratio has increased over the years which mean that the overall profitability of the firm has grown up. Company’s net profit ratio is not as good in year 2010 which is 17.05 but then it’s decreasing year by year till the 2012.This shows that company needs to improve it’s financial performance. 0 2 4 6 8 10 12 14 16 18 20 2012 2011 2010 2009 2008 NP Ratio
  • ROE 2012 2011 2010 2009 2008 ROE 19.22 14.20 15.87 13.46 10.55 Interpretation:- ROE examines profitably from the perspective of equity investors by relating profits available for the equity share holders with the book value of equity investments. The return from the point of view of equity shareholders may be calculated by comparing the net profit less preference dividend with their total contribution to the firm. Over the years ROE of the firm have increased which indicates that the funds of the owner have been used properly by the firm, and the firm has improved and been able to earn satisfactory return for the owner. 0 5 10 15 20 25 2012 2011 2010 2009 2008 ROE
  • ROA 2012 2011 2010 2009 2008 ROA 396.19 355.69 350.30 312.17 286.12 Interpretation:- ROA measures a profitability of the firm in terms of assets employed in the firm. ROE is calculated by establishing the relationship between the profits and the assists employed to earn that profit. ROA shows as to how much is the profit earn by the firm per rupee of assets used. ROA of the firm is increasing from 2008-2012 and thus higher values of return on assets show that business is more profitable. 0 50 100 150 200 250 300 350 400 450 2012 2011 2010 2009 2008 ROA
  • Dividend Payout Ratio 2012 2011 2010 2009 2008 Dividend Per Share 13.75 11.25 11.25 6.25 3.75 Earnings Per Share 53.81 52.78 50.11 33.29 28.26 Dividend Payout Ratio 0.255529 0.213149 0.224506 0.187744 0.132696 Interpretation:- Dividend payout ratio is the ratio of dividend per share divided by earnings per share. It is a measure of how much earnings a company is paying out to its shareholders as compared to how much it is retaining for reinvestment. Dividend payout ratio tells what percentage of total earnings the company is paying back to shareholders. A healthy dividend payout ratio leads to investor confidence in the company. Dividend payout ratio got increasing from year 2008 onwards. This shows that company’s profitability is increased and company has improved. 0 0.05 0.1 0.15 0.2 0.25 0.3 2012 2011 2010 2009 2008 D/P Ratio
  • P/E Ratio INDUSTRIAL P/E: 32.63 2013 2012 2011 2010 2009 P/E Ratio 24.5 34.1 32.1 26.5 15.2 Interpretation:- P/E ratio is the ratio of a company's share price to its earnings per share. It tells whether the share price of a company is fairly valued, undervalued or overvalued. P/E ratio of the company is getting low year by year which indicates that the market does not have much confidence in the future of the share. In the investor’s point present condition investor can get good return with minimum investment. Based on the above information the stock is undervalued when compared to company P/E ratio. 0 5 10 15 20 25 30 35 40 2013 2012 2011 2010 2009 P/E Ratio
  • Price/Earnings-to-Growth Ratio (PEG) 2013 2012 2011 2010 2009 Price-to-Earnings (P/E) Ratio 24.5 34.1 32.1 26.5 15.2 Annual Earnings Per Share Growth(%) 0.019515 0.053283 0.505257 0.17799 -0.5968 PEG Ratio 1255.445 639.979 63.53202 148.8848 -25.2739 Interpretation:- The PEG ratio acts as a measure of value that takes into account future growth. Using this metric, investors can gauge whether high-growth stocks may be undervalued, even if the don't appear so with the more common P/E ratio. The above PEG trend shows that the P/E ratio will grow in future, which indicates increase in market price of the company stock. -200 0 200 400 600 800 1000 1200 1400 2013 2012 2011 2010 2009 PEG Ratio
  • Ratio Analaysis 3.Lupin Current Ratio 2012 2011 2010 2009 2008 Current Assets 2,632.77 2,111.83 1,666.82 1,434.30 1,269.56 Current Liabilities 1,241.14 900.90 785.62 923.58 567.28 Current Ratio 2.121251 2.344134 2.121662 1.552979 2.237978 Interpretation:- The interpretation is the company with higher current ratio has better liquidity/short-term solvency. Conventionally, a current ratio of 2:1 is considered satisfactory. But in here, current ration of the company is almost consistent in al five years. 0 0.5 1 1.5 2 2.5 2012 2011 2010 2009 2008 Current Ratio
  • Quick/Acid Test Ratio: 2012 2011 2010 2009 2008 Quick Assets 1509.21 1270.72 953.12 718.42 643.71 Current Liabilities 1,241.14 900.9 785.62 923.58 567.28 Quick Ratio 1.215987 1.410501 1.213207 0.777864 1.134731 Interpretation:- The acid test ratio is a rigorous measure of a firm’s ability to service short term liabilities. Generally, an acid-test ratio of 1:1 is considered satisfactory as the company can easily meet all current claims. But over here there were all 5 years in which it reaches to one and more. Quick ratio of years 2009 is not appropriate and not satisfactory compare to other 4 years. . 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 2012 2011 2010 2009 2008 Quick Ratio
  • Debt Equity Ratio 2012 2011 2010 2009 2008 Long Term Debt 992.65 983.29 906.81 944.91 965.55 Shareholders' fund 3,734.41 3,152.66 2,530.55 1,375.30 1,317.05 Debt Equity Ratio 0.265812 0.311892 0.358345 0.687057 0.733116 Interpretation:- The D/E ratio is an important tool of financial analysis to appraise the financial structure of a firm. A high ratio shows a large share of financing by the creditors of the firm, a low ratio implies a smaller claim of creditors. Company’s debt equity was 0.7 in year 2008 and then goes downward and at last it reached it’s lowest level in year 2012 which is 0.2 and lower values of debt-to-equity ratio are favourable indicating low risk. 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 2012 2011 2010 2009 2008 Debt Equity Ratio
  • Earnings Per Share 2012 2011 2010 2009 2008 Earnings Per Share 18.01 18.51 72.96 50.35 54.02 Interpretation:- More the earning per share, more the interest of the shareholders and investors in the company. Company had a EPS of Rs.54.02 in year 2008 and then it is increasing year by year and reached at it’s highest level in year 2012 which is Rs.72.96. EPS is reduced by 2012. The company has to improve its profit in order to improve its EPS. 0 10 20 30 40 50 60 70 80 2012 2011 2010 2009 2008 Earnings Per Share
  • Dividend per Share 2012 2011 2010 2009 2008 Dividend Per Share 3.20 3.00 13.50 12.50 10 Interpretation:- Investors along with a good earnings per share also expect a good return from the company. We can say that company is in it’s good situation. Company’s DPS is increasing years by year and company had paid more dividend to it’s shareholders and investors. But last two years it got reduced so drastically. This shows a slow down in the profit of the company. 0 2 4 6 8 10 12 14 16 2012 2011 2010 2009 2008 Dividend Per Share
  • GP Ratio 2012 2011 2010 2009 2008 GP Ratio 20.01 19.75 20.58 17.18 18.83 Interpretation:- The GP ratio is also called the average mark up ratio. It is calculated by comparing the gross profit of the firm with the net sales. Gross margin ratio measures profitability. Higher values indicate that more cents are earned per dollar of revenue which is favourable because more profit will be available to cover non-production costs. In 2012 GP ratio had fallen, which means operating efficiency of the firm has decreased but it is much better than 2011. The GP ratio is improving. 15 16 17 18 19 20 21 2012 2011 2010 2009 2008 GP Ratio
  • NP Ratio 2012 2011 2010 2009 2008 NP Ratio 14.96 18.03 17.52 14.09 16.30 Interpretation:- The NP ratio establishes the relationship between the net profit (after tax) of the firm and the net sales. Its measures the efficiency of the management in generating additional revenue over and above the total cost of operations. Net profit ratio has randomly changed over the years which mean that the overall profitability of the firm is not consistent. Company’s net profit ratio is decreased in 2012 comparing previous years.This shows that company needs to improve it’s financial performance to get a consistent NP growth. 0 2 4 6 8 10 12 14 16 18 20 2012 2011 2010 2009 2008 NP Ratio
  • ROE 2012 2011 2010 2009 2008 ROE 22.94 21.51 22.49 22.04 27.58 Interpretation:- ROE examines profitably from the perspective of equity investors by relating profits available for the equity share holders with the book value of equity investments. The return from the point of view of equity shareholders may be calculated by comparing the net profit less preference dividend with their total contribution to the firm. Over the years ROE of the firm is consistent which indicates that the funds of the owner have been used properly by the firm, and the firm has improved and been able to earn satisfactory return for the owner. 0 5 10 15 20 25 30 2012 2011 2010 2009 2008 ROE
  • ROA 2012 2011 2010 2009 2008 ROA 83.61 70.66 284.51 166.06 160.46 Interpretation:- ROA measures a profitability of the firm in terms of assets employed in the firm. ROE is calculated by establishing the relationship between the profits and the assists employed to earn that profit. ROA shows as to how much is the profit earn by the firm per rupee of assets used. ROA of the firm is decreasing from 2010-2012 and thus lower values of return on assets show that business is not profitable with high risk. 0 50 100 150 200 250 300 2012 2011 2010 2009 2008 ROA
  • Dividend Payout Ratio 2012 2011 2010 2009 2008 Dividend Per Share 3.20 3.00 13.50 12.50 10 Earnings Per Share 18.01 18.51 72.96 50.35 54.02 Dividend Payout Ratio 0.177679 0.162075 0.185033 0.248262 0.185117 Interpretation:- Dividend payout ratio is the ratio of dividend per share divided by earnings per share. It is a measure of how much earnings a company is paying out to its shareholders as compared to how much it is retaining for reinvestment. Dividend payout ratio tells what percentage of total earnings the company is paying back to shareholders. A healthy dividend payout ratio leads to investor confidence in the company. Dividend payout ratio reduced over the year by year. This shows that company’s revenue and operation cost is unbalanced. The company has to improve its policy to improve its profit. 0 0.05 0.1 0.15 0.2 0.25 0.3 2012 2011 2010 2009 2008 D/P Ratio
  • P/E Ratio INDUSTRIAL P/E: 31.22 2013 2012 2011 2010 2009 P/E Ratio 22.9 30.3 23.5 23.0 14.3 Interpretation:- P/E ratio is the ratio of a company's share price to its earnings per share. It tells whether the share price of a company is fairly valued, undervalued or overvalued. The P/E ratio tells how much the market is willing to pay for a company’s earnings. P/E ratio of the company is getting low year by year which indicates that the market does not have much confidence in the future of the share. In the investor point present condition investor can get good return with minimum investment. Based on the above information the stock is undervalued when compared to company P/E ratio. 0 5 10 15 20 25 30 35 2013 2012 2011 2010 2009 P/E Ratio
  • Price/Earnings-to-Growth Ratio (PEG) 2013 2012 2011 2010 2009 Price-to-Earnings (P/E) Ratio 22.9 30.3 23.5 23.0 14.3 Annual Earnings Per Share Growth(%) -0.02701 -0.7463 0.449057 -0.06794 0.436702 PEG Ratio -847.834 -40.6003 52.33189 -338.534 32.74544 Interpretation:- The PEG ratio acts as a measure of value that takes into account future growth. Using this metric, investors can gauge whether high-growth stocks may be undervalued, even if the don't appear so with the more common P/E ratio. The above PEG trend shows that the P/E ratio growth will be low in future, which indicates decrease in market price of the company stock which leads to undervalued stock. -900 -800 -700 -600 -500 -400 -300 -200 -100 0 100 2013 2012 2011 2010 2009 PEG Ratio
  • Ratio Analaysis 4. Cipla Current Ratio 2012 2011 2010 2009 2008 Current Assets 3,103.94 3,362.97 2,958.65 2,850.86 2,347.12 Current Liabilities 1,190.78 1,150.72 1,177.11 1,177.00 980.05 Current Ratio 2.606644 2.922492 2.513486 2.422141 2.394898 Interpretation:- The interpretation is the company with higher current ratio has better liquidity/short-term solvency. Conventionally, a current ratio of 2:1 is considered satisfactory. But in here, current ration of the company is almost consistent in al five years. 0 0.5 1 1.5 2 2.5 3 2012 2011 2010 2009 2008 Current Ratio
  • Quick/Acid Test Ratio: 2012 2011 2010 2009 2008 Quick Assets 1573.13 1580.6 1613.03 1889.99 1473.03 Current Liabilities 1,190.78 1,150.72 1,177.11 1,177.00 980.05 Quick Ratio 1.321092 1.373575 1.370331 1.605769 1.503015 Interpretation:- The acid test ratio is a rigorous measure of a firm’s ability to service short term liabilities. Generally, an acid-test ratio of 1:1 is considered satisfactory as the company can easily meet all current claims. But over here there were all 5 years in which it reaches to one and more. Quick ratio of years 2009 is not appropriate and not satisfactory compare to other 4 years. 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2012 2011 2010 2009 2008 Quick Ratio
  • Debt Equity Ratio 2012 2011 2010 2009 2008 Long Term Debt 12.20 441.39 5.07 940.24 580.53 Shareholders' fund 7,550.28 6,612.95 5,914.09 4,350.75 3,755.82 Debt Equity Ratio 0.001616 0.066746 0.000857 0.21611 0.154568 Interpretation:- The D/E ratio is an important tool of financial analysis to appraise the financial structure of a firm. A high ratio shows a large share of financing by the creditors of the firm, a low ratio implies a smaller claim of creditors. Company’s debt equity was 0.15 in year 2008 and then goes upward in 2009 then again up and at last it reached it’s lowest level in year 2012 which is 0.0016 and lower values of debt-to-equity ratio are favourable indicating low risk. 0 0.05 0.1 0.15 0.2 0.25 2012 2011 2010 2009 2008 Debt Equity Ratio
  • Earnings Per Share 2012 2011 2010 2009 2008 Earnings Per Share 14 11.96 13.47 9.99 9.02 Interpretation:- More the earning per share, more the interest of the shareholders and investors in the company. Company had a EPS of Rs.9.02 in year 2008 which is not as good as others but then it is increasing year by year and reached at it’s highest level in year 2012 which is Rs.14. 0 2 4 6 8 10 12 14 16 2012 2011 2010 2009 2008 Earnings Per Share
  • Dividend per Share 2012 2011 2010 2009 2008 Dividend Per Share 2 2.80 2 2 2 Interpretation:- Investors along with a good earning per share also expect a good return from the company. We can say that company is in it’s good situation. Company’s DPS is consistent years by year and company had paid more dividend to it’s shareholders and investors only on 2011. This shows that company’s profit is good and consistent. 0 0.5 1 1.5 2 2.5 3 2012 2011 2010 2009 2008 Dividend Per Share
  • GP Ratio 2012 2011 2010 2009 2008 GP Ratio 19.15 16.65 21.68 20.88 17.16 Interpretation:- The GP ratio is also called the average mark up ratio. It is calculated by comparing the gross profit of the firm with the net sales. Gross margin ratio measures profitability. Higher values indicate that more cents are earned per dollar of revenue which is favourable because more profit will be available to cover non-production costs. In 2012 GP ratio had fallen, which means operating efficiency of the firm has decreased but it is much better than 2011. The GP ratio is almost stable. 0 5 10 15 20 25 2012 2011 2010 2009 2008 GP Ratio
  • NP Ratio 2012 2011 2010 2009 2008 NP Ratio 15.92 14.98 18.97 14.58 16.43 Interpretation:- The NP ratio establishes the relationship between the net profit (after tax) of the firm and the net sales. Its measures the efficiency of the management in generating additional revenue over and above the total cost of operations. Net profit ratio has randomly changed over the years which mean that the overall profitability of the firm is not consistent. Company’s net profit ratio is not as good in year 2010 which is 18.97 but then it’s decreasing next year but improved in 2012.This shows that company needs to improve it’s financial performance to get a consistent NP growth. 0 2 4 6 8 10 12 14 16 18 20 2012 2011 2010 2009 2008 NP Ratio
  • ROE 2012 2011 2010 2009 2008 ROE 18.74 16.22 22.16 22.39 18.17 Interpretation:- ROE examines profitably from the perspective of equity investors by relating profits available for the equity share holders with the book value of equity investments. The return from the point of view of equity shareholders may be calculated by comparing the net profit less preference dividend with their total contribution to the firm. Over the years ROE of the firm have alot of variations which indicates that the funds of the owner have not been used properly by the firm, and the firm has to improve a lot so that it can able to earn satisfactory return for the owner. 0 5 10 15 20 25 2012 2011 2010 2009 2008 ROE
  • ROA 2012 2011 2010 2009 2008 ROA 94.04 82.36 73.66 55.97 48.32 Interpretation:- ROA measures a profitability of the firm in terms of assets employed in the firm. ROE is calculated by establishing the relationship between the profits and the assists employed to earn that profit. ROA shows as to how much is the profit earn by the firm per rupee of assets used. ROA of the firm is increasing from 2008-2012 and thus higher values of return on assets show that business is more profitable. 0 10 20 30 40 50 60 70 80 90 100 2012 2011 2010 2009 2008 ROA
  • Dividend Payout Ratio 2012 2011 2010 2009 2008 Dividend Per Share 2 2.80 2 2 2 Earnings Per Share 14 11.96 13.47 9.99 9.02 Dividend Payout Ratio 0.142857 0.234114 0.148478 0.2002 0.221729 Interpretation:- Dividend payout ratio is the ratio of dividend per share divided by earnings per share. It is a measure of how much earnings a company is paying out to its shareholders as compared to how much it is retaining for reinvestment. Dividend payout ratio tells what percentage of total earnings the company is paying back to shareholders. A healthy dividend payout ratio leads to investor confidence in the company. Dividend payout ratio over the years is varying year by year. This shows that company’s revenue and operation cost is unbalanced. The company has to improve its policy. 0 0.05 0.1 0.15 0.2 0.25 2012 2011 2010 2009 2008 D/P Ratio
  • P/E Ratio INDUSTRIAL P/E: 21.81 2013 2012 2011 2010 2009 P/E Ratio 22.3 27.9 25.7 22.8 25.3 Interpretation:- P/E ratio is the ratio of a company's share price to its earnings per share. It tells whether the share price of a company is fairly valued, undervalued or overvalued. P/E ratio of the company is getting low when comparing previous year which indicates that the market does not have much confidence in the future of the share. In the investor’s point present condition investor can get good return with minimum investment. Based on the above information the stock is overvalued when compared to company P/E ratio. 0 5 10 15 20 25 30 2013 2012 2011 2010 2009 P/E Ratio
  • Price/Earnings-to-Growth Ratio (PEG) 2013 2012 2011 2010 2009 Price-to-Earnings (P/E) Ratio 22.3 27.9 25.7 22.8 25.3 Annual Earnings Per Share Growth(%) 0.170569 -0.1121 0.348348 0.107539 -0.78276 PEG Ratio 130.7389 -248.885 73.7768 212.0161 -32.3215 Interpretation:- The PEG ratio acts as a measure of value that takes into account future growth. Using this metric, investors can gauge whether high-growth stocks may be undervalued, even if the don't appear so with the more common P/E ratio. The above PEG trend shows that the P/E ratio will grow in future, which indicates increase in market price of the company stock. -300 -200 -100 0 100 200 300 2013 2012 2011 2010 2009 PEG Ratio
  • Ratio Analaysis 5. Ranbaxy Current Ratio 2012 2011 2010 2009 2008 Current Assets 6,002.50 5,412.08 2,804.98 2,790.69 2,272.92 Current Liabilities 3,227.24 5,157.68 2,491.08 3,082.89 3,840.11 Current Ratio 1.859948 1.049325 1.12601 0.905219 0.591889 Interpretation:- The interpretation is the company with higher current ratio has better liquidity/short-term solvency. Conventionally, a current ratio of 2:1 is considered satisfactory. But in here, 2008 to 2011 are the years where company’s current ratio reached it’s lower position .It is much higher in year 2012 compare to all year. 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2012 2011 2010 2009 2008 Current Ratio
  • Quick/Acid Test Ratio: 2012 2011 2010 2009 2008 Quick Assets 4270.66 3756.85 1315.07 1560.21 1074.4 Current Liabilities 3,227.24 5,157.68 2,491.08 3,082.89 3,840.11 Quick Ratio 1.323317 0.728399 0.527912 0.506087 0.279784 Interpretation:- The acid test ratio is a rigorous measure of a firm’s ability to service short term liabilities. Generally, an acid-test ratio of 1:1 is considered satisfactory as the company can easily meet all current claims. But over here there were all 5 years in which it reaches less than 1. Quick ratio of years 2012 is appropriate and satisfactory compare to other 4 years. 0 0.2 0.4 0.6 0.8 1 1.2 1.4 2012 2011 2010 2009 2008 Quick Ratio
  • Debt Equity Ratio 2012 2011 2010 2009 2008 Long Term Debt 4,763.61 4,333.53 4,260.72 3,348.38 3,725.37 Shareholders' fund 8,108.61 6,680.53 5,717.98 5,151.42 4,207.62 Debt Equity Ratio 2.478362 2.251383 0.830161 0.809844 1.002314 Interpretation:- The D/E ratio is an important tool of financial analysis to appraise the financial structure of a firm. A high ratio shows a large share of financing by the creditors of the firm, a low ratio implies a smaller claim of creditors. Company’s debt equity was 1 in year 2008 and then goes downward in 2009 then again up and at last it reached it’s highest level in year 2012 which is 2.4 and higher values of debt-to-equity ratio are not favourable indicating high risk. 0 0.5 1 1.5 2 2.5 3 2012 2011 2010 2009 2008 Debt Equity Ratio
  • Earnings Per Share 2012 2011 2010 2009 2008 Earnings Per Share -3.84 -72.32 27.28 13.61 -24.85 Interpretation:- More the earning per share, more the interest of the shareholders and investors in the company. The EPS of the company is decreasing year by year. This shows company is in loss. -80 -60 -40 -20 0 20 40 2012 2011 2010 2009 2008 Earnings Per Share
  • Dividend per Share 2012 2011 2010 2009 2008 Dividend Per Share -- 0.00 2.00 -- -- Interpretation:- Investors along with a good earnings per share also expect a good return from the company. The EPS of the company is decreasing year by year. This shows company is in loss. Company’s DPS decreased year by year and makes loss to it’s shareholders and investors. 0 0.5 1 1.5 2 2.5 2012 2011 2010 2009 2008 Dividend Per Share
  • GP Ratio 2012 2011 2010 2009 2008 GP Ratio 4.07 13.10 18.31 10.52 2.07 Interpretation:- The GP ratio is also called the average mark up ratio. It is calculated by comparing the gross profit of the firm with the net sales. Gross margin ratio measures profitability. Higher values indicate that more cents are earned per dollar of revenue which is favourable because more profit will be available to cover non-production costs. In 2008 GP ratio had drastically fallen, which means operating efficiency of the firm has decreased but it has recovered over the next three years and become almost stable. In 2012 the GP ratio had fallen down, this shows company is in loss. 0 2 4 6 8 10 12 14 16 18 20 2012 2011 2010 2009 2008 GP Ratio
  • NP Ratio 2012 2011 2010 2009 2008 NP Ratio -2.47 -39.11 19.74 11.72 -22.02 Interpretation:- The NP ratio establishes the relationship between the net profit (after tax) of the firm and the net sales. Its measures the efficiency of the management in generating additional revenue over and above the total cost of operations. Net profit ratio of the company is almost negative. This shows that company is in loss. The company needs to improve a lot to improve its financial performance. -50 -40 -30 -20 -10 0 10 20 30 2012 2011 2010 2009 2008 NP Ratio
  • ROE 2012 2011 2010 2009 2008 ROE 7.68 17.81 12.82 8.03 2.52 Interpretation:- ROE examines profitably from the perspective of equity investors by relating profits available for the equity share holders with the book value of equity investments. The return from the point of view of equity shareholders may be calculated by comparing the net profit less preference dividend with their total contribution to the firm. Over the years ROE of the firm have increased which indicates that the funds of the owner have been used properly by the firm, and the firm has improved and been able to earn satisfactory return for the owner. But in the year 2012 the ROE falls drastically which show company is in loss. 0 2 4 6 8 10 12 14 16 18 20 2012 2011 2010 2009 2008 ROE
  • ROA 2012 2011 2010 2009 2008 ROA 45.42 45.60 121.74 94.16 34.24 Interpretation:- ROA measures a profitability of the firm in terms of assets employed in the firm. ROE is calculated by establishing the relationship between the profits and the assists employed to earn that profit. ROA shows as to how much is the profit earn by the firm per rupee of assets used. ROA of the firm is inconsistent over a period of 5 years. The ROA is high on year 2010. But ROA is low in next two years. We can conclude that company is not in going good. 0 20 40 60 80 100 120 140 2012 2011 2010 2009 2008 ROA
  • Dividend Payout Ratio 2012 2011 2010 2009 2008 Dividend Per Share -- 0.00 2.00 -- -- Earnings Per Share -3.84 -72.32 27.28 13.61 -24.85 Dividend Payout Ratio 0 0 0.073314 0 0 Interpretation:- Dividend payout ratio is the ratio of dividend per share divided by earnings per share. It is a measure of how much earnings a company is paying out to its shareholders as compared to how much it is retaining for reinvestment. Dividend payout ratio tells what percentage of total earnings the company is paying back to shareholders. A healthy dividend payout ratio leads to investor confidence in the company. Dividend payout ratio is zero in almost in all year expect the year 2010. We can conclude that company is in loss and risk to invest is high. 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 2012 2011 2010 2009 2008 D/P Ratio
  • P/E Ratio 2013 2012 2011 2010 2009 P/E Ratio 0.0 0.0 22.2 38.1 0.0 Interpretation:- P/E ratio is the ratio of a company's share price to its earnings per share. It tells whether the share price of a company is fairly valued, undervalued or overvalued. P/E ratio of the company is getting low year by year which indicates that the market does not have much confidence in the future of the share. It is almost Zero which means market price of the share is very low and people are not ready to invest in it. 0 5 10 15 20 25 30 35 40 45 2012 2011 2010 2009 2008 P/E Ratio
  • Price/Earnings-to-Growth Ratio (PEG) 2013 2012 2011 2010 2009 Price-to-Earnings (P/E) Ratio 0.0 0.0 22.2 38.1 0.0 Annual Earnings Per Share Growth(%) -0.9469 -3.65103 1.004409 -1.54769 -2.5006 PEG Ratio 0 0 22.10255 -24.6173 0 Interpretation:- The PEG ratio acts as a measure of value that takes into account future growth. Using this metric, investors can gauge whether high-growth stocks may be undervalued, even if the don't appear so with the more common P/E ratio. The above PEG trend shows that the P/E ratio will not have any growth. It is almost Zero which means market price of the share is very low and people are not ready to invest in it. -30 -20 -10 0 10 20 30 2012 2011 2010 2009 2008 PEG Ratio
  • FIANANCIAL RATIO TABLE
  • 1. Sun Pharmaceutical Industries RATIOS 2012 2011 2010 2009 2008 Per Share Ratios E.P.S 18.62 13.36 43.39 61.09 48.96 D.P.S 4.25 3.5 13.75 13.75 10.5 Profitability ratios GP Ratio(%) 41.90 4.58 9.86 0.79 6.01 NP Ratio(%) 44.23 42.46 33.99 31.43 31.01 ROE 26.07 21 17.05 24.57 24.21 ROA 78.3 64.51 276.08 248.72 203.15 D/P Ratio 0.228249 0.261976 0.316893 0.225078 0.214461 P/E Ratio 31.80 34.50 43.50 18.90 26.10 PEG Ratio 0.8077 -0.498486 -1.501367 0.76287 0.51628 Liquidity & Solvency Ratios Current Ratio 4.86111 2.635022 2.9593 1.704541 1.736204 Quick Ratio 2.379213 2.207513 2.424353 1.976578 2.247963 Debt Equity Ratio 0.00497 0.007564 0.005157 0.004581 0.024365
  • 2. Dr Reddys Laboratories RATIOS 2012 2011 2010 2009 2008 Per Share Ratios E.P.S 53.81 52.78 50.11 33.29 28.26 D.P.S 13.75 11.25 11.25 6.25 3.75 Profitability ratios GP Ratio(%) 23.34 18.72 19.70 14.11 12.58 NP Ratio(%) 13.51 16.84 18.48 13.20 13.57 ROE 19.22 14.20 15.87 13.46 10.55 ROA 396.19 355.69 350.30 312.17 286.12 D/P Ratio 0.255529 0.213149 0.224506 0.187744 0.132696 P/E Ratio 24.50 34.10 32.10 26.50 15.20 PEG Ratio 1255.445 639.979 63.53202 148.8848 -25.2739 Liquidity & Solvency Ratios Current Ratio 2.192075 1.852734 1.299262 1.924783 2.042105 Quick Ratio 1.327381 1.17346 0.717969 1.292874 1.227046 Debt Equity Ratio 0.228259 0.239992 0.095222 0.121751 0.096078
  • 3. Lupin RATIOS 2012 2011 2010 2009 2008 Per Share Ratios E.P.S 18.01 18.51 72.96 50.35 54.02 D.P.S 3.20 3.00 13.50 12.50 10 Profitability ratios GP Ratio(%) 20.01 19.75 20.58 17.18 18.83 NP Ratio(%) 14.96 18.03 17.52 14.09 16.30 ROE 22.94 21.51 22.49 22.04 27.58 ROA 83.61 70.66 284.51 166.06 160.46 D/P Ratio 0.177679 0.162075 0.185033 0.248262 0.185117 P/E Ratio 22.90 30.30 23.50 23 14.30 PEG Ratio -847.834 -40.6003 52.33189 -338.534 32.74544 Liquidity & Solvency Ratios Current Ratio 2.121251 2.344134 2.121662 1.552979 2.237978 Quick Ratio 1.215987 1.410501 1.213207 0.777864 1.134731 Debt Equity Ratio 0.265812 0.311892 0.358345 0.687057 0.733116
  • 4. Cipla RATIOS 2012 2011 2010 2009 2008 Per Share Ratios E.P.S 14 11.96 13.47 9.99 9.02 D.P.S 2 2.80 2 2 2 Profitability ratios GP Ratio(%) 19.15 16.65 21.68 20.88 17.16 NP Ratio(%) 15.92 14.98 18.97 14.58 16.43 ROE 18.74 16.22 22.16 22.39 18.17 ROA 94.04 82.36 73.66 55.97 48.32 D/P Ratio 0.142857 0.234114 0.148478 0.2002 0.221729 P/E Ratio 22.30 27.90 25.70 22.80 25.30 PEG Ratio 130.7389 -248.885 73.7768 212.0161 -32.3215 Liquidity & Solvency Ratios Current Ratio 2.606644 2.922492 2.513486 2.422141 2.394898 Quick Ratio 1.321092 1.373575 1.370331 1.605769 1.503015 Debt Equity Ratio 0.001616 0.066746 0.000857 0.21611 0.154568
  • 5. Ranbaxy RATIOS 2012 2011 2010 2009 2008 Per Share Ratios E.P.S -3.84 -72.32 27.28 13.61 -24.85 D.P.S -- 0.00 2.00 -- -- Profitability ratios GP Ratio(%) 4.07 13.10 18.31 10.52 2.07 NP Ratio(%) -2.47 -39.11 19.74 11.72 -22.02 ROE 7.68 17.81 12.82 8.03 2.52 ROA 45.42 45.60 121.74 94.16 34.24 D/P Ratio 0 0 0.073314 0 0 P/E Ratio 0.0 0.0 22.20 38.10 0.0 PEG Ratio 0 0 22.10255 -24.6173 0 Liquidity & Solvency Ratios Current Ratio 1.859948 1.049325 1.12601 0.905219 0.591889 Quick Ratio 1.323317 0.728399 0.527912 0.506087 0.279784 Debt Equity Ratio 2.478362 2.251383 0.830161 0.809844 1.002314
  • CHAPTER -4 FINDINGS & SUGGESTIONS
  • FINDINGS & SUGGESTIONS OF THE PROJECT 4.1 FINDINGS 1) In the Economic Analysis we can see that the Indian Economy is in a bad condition now and current position shows that this is the not a good time to invest because GDP growth rate is low. And overall economy is not growing. But for the long term investors India is a good place to invest because of its vast size, also many of the projects are not completed, there may be a big growth in future. Future investors can invest in India market. 2) In the Industry Analysis we can see that Indian Pharam Sector is booming and currently India ranks third in terms of manufacturing pharma products by volume. Drug sales to retailers in India registered a growth of 7.7 per cent in February 2013. Net Profit growth has increased very much so investor can invest with low risk. 3) In the Company Analysis We can conclude following points based on the Ratio Analysis:  DR.REDDY and SUNPHARMA both have good earnings per share so both indicates good sign for investors while other companies have not so good condition compare to above mentioned companies.  SUNPHARMA has declared highest dividend and DR.REDDY has declared little less amount to the share holders. So both the firm are operating in very good condition and both are good to invest money from the investor’s point of view.  SUNPHARMA liquidity is very good and it is able to meet short-term obligation, DR.REDDY has also very good condition so far as liquidity is concerned. so it reflects that both firm’s position is good.  · SUNPHARMA and Cipla have minimum Debt Equity Ratio indicating less risk to share holders so both are good to invest.  SUNPHARMA’s profit is highest compare to other companies. Even DR.REDDY also have very good profit earned comparing other companies. So the both the companies having good condition as far as profit is concerned.  SUNPHARMA has earned maximum ROE. So it shows that they are in very good position.  The dividend payout ratio of DR.REDDY and SUNPHARMA are almost equal, so investors can invest these two companies.
  • SUGGESTIONS 4.2 SUGGESTIONS FOR INVESTORS  Pharmaceutical companies have lots of room to grow; so invest in theses type of industries helps the investors at long time.  High returns usually mean high risk. It is useful to think in terms of the risk premium.  Buy shares of reputed companies backed by top class management.  Do not invest in inactive shares generally it is difficult to encash them.  Before investing we should undertake a deeps study on the net sales, net profits in relations to equity capital employed & should attempt to forecast for the coming years.  From the company point of view, the company should allow the investors to take part in board of directors meeting & gives maximum dividend to the shareholders.  Do not over pay for growth.  Do not invest in unlisted shares.  The investors should become cautious while investing for very long time.  The investors should analyze the price movement.  Economic performance is greatly affected to the performance of the industries of the country, so investors should know economic performance of the country while investing.  · Before investing in any company, this is required to implement all the data & financial results & also decision himself.
  • CHAPTER -5 CONCUSION
  • 5.1 CONCLUSION This is the final and most important stage of the entire project. The main objective of my project ends with this stage. This part will indicate to the investor, creditors, and shareholders each of the company’s overall operating efficiency and performance that will help them to make the most efficient investment decision. Fundamental analysis holds that no investment decision should be without processing and analyzing all relevant information. Its strength lies in the fact that the information analyzed is real as opposed to hunches or assumptions. On the other hand, while fundamental analysis deals with tangible facts, it does not tend to ignore the fact that human beings do not always act rationally. Market prices do sometimes deviate from fundamentals. Prices rise or fall due to insider trading, speculation, rumour, and a host of other factors. Fundamental analysis is based on the analysis of the economic, industry as well as the company and in this research we can see that the economic indicators have an effect on the bank growth and assets. The above report says that our economic growth is in a bad condition now and current position shows that this is the not a good time to invest. According to the industry analysis Indian Pharam Sector is booming and currently its right time to invest. According to company analysis SUNPHARMA got highest favourable ratio and Its earning is very high and dividend paid is also very high so it indicates good sign for the company, and investors to invest. DR.REDDY is also good to invest because position of the ratios is good comparing others.
  • 5.2 Bibliography  www.google.com  www.rbi.org.in  www.moneycontrol.com  www.investopedia.com  www.nseindia.com  www.investinganswers.com  www.indiainfoline.com  www.wikipedia.org  www.sunpharma.com  www.drreddys.com  www.lupinworld.com  www.ranbaxy.com  www.tradingeconomics.com