Fundamental analysis of pharma sector ppt
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Fundamental analysis of pharma sector ppt

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Fundamental analysis of pharma sector ppt Fundamental analysis of pharma sector ppt Presentation Transcript

  • By Rajesh Narayanan 3511210125
  • 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  Technical analysis.
  • Technical Analysis vs Fundamental 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 use charts and other tools to identify patterns that can suggest future activity.  Fundamental analysis involves analyzing the characteristics of a company in order to estimate its value.
  • 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
  • Why 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).
  • 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.
  • Reliance Group  Reliance Communications  Reliance Capital Ltd  Reliance Energy Reliance Capital Limited is a financial service company and part of a Reliance Anil Dhirubhai Ambani Group.
  • 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 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.
  • Components of Fundamental Analysis(EIC Approach)  Economy Analysis  Industrial Analysis  Company Analysis  Financial Analysis of company’s Balance Sheet is being done to find performance of the company  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)
  • Economy Analysis of India  India's Q4 GDP at 4.8%; FY 2013 GDP is worst in a decade , due to the widespread weakness in farm, mining and manufacturing output  India’s Inflation rate rose to 5.79 percent from 4.86 percent in June, mainly driven by higher food prices and more expensive imports due to a falling rupee  Foreign Direct Investment in India decreased to 1954 USD Million in May of 2013 from 2802 USD Million in April of 2013.  Reserve Bank of India decided on July 30th to leave the repo rate unchanged at 7.25 percent, to support the rupee and citing increasing risks to growth outlook.
  • Industrial Analysis – India Pharma Sector  India Pharmaceutical industry is the world's third-largest in terms of volume & 14th in terms of value.  By 2015 it is expected to reach top 10 in the world beating Brazil, Mexico, South Korea and Turkey.  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.  Indian Pharam Sector is booming ,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.
  • Company Analysis 1. Sun Pharmaceutical Industries 2. Dr Reddys Laboratories 3. Lupin 4. Cipla 5. Ranbaxy
  • Ratio Analysis of Sun Pharma 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
  • Ratio Analysis of Dr. Reddy’s Lab 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
  • Ratio Analysis of 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
  • Ratio Analysis of 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
  • Ratio Analysis of 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
  • Financial Analysis Interpretation  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 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.  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.  Do not over pay for growth.  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.
  • Findings  Indian economic growth is in a bad condition now and current position shows that this is the not a good time to invest.  Indian Pharma Sector is booming and its right choice to invest in Pharma Sector because there will be a constant balance in demand and supply of product  SUNPHARMA & DR.REDDY got highest favourable ratio ,it indicates good sign for the investors to invest. comparing others companies.
  • Thank You