This document summarizes a dissertation report on fundamental analysis of selected pharmaceutical company stocks in India from 2010-2015. The study aimed to conduct fundamental analysis and Porter's five forces analysis of the pharmaceutical industry. Economic, industry and company analysis were performed. The economic analysis found positive GDP, interest rate and inflation growth over the period. The industry analysis found that the Indian pharmaceutical sector is the 3rd largest globally, worth $20 billion in 2015 and expected to grow at 15% annually through 2020. The report discusses the objectives, phases and tools of fundamental analysis used in the study.
The document discusses investment process and approaches. It describes the 5 stages of the investment process: 1) framing an investment policy, 2) security analysis, 3) valuation, 4) portfolio construction, and 5) portfolio evaluation. It then discusses the 3 main approaches to investment: 1) fundamental analysis which examines economic, industry and company factors, 2) technical analysis which analyzes past stock price and volume trends, and 3) the efficient market hypothesis which states stock prices reflect all available information and follow random patterns.
This document analyzes value versus growth investing styles through the lens of Dick Mayo's dilemma at GMO about whether to continue focusing on value stocks. It provides an in-depth comparison of the two styles, discussing their different focuses, investment philosophies, risks, typical stock features, and strategies. The document also analyzes whether value investing is still the right strategy given changing economic conditions that have favored growth stocks in recent years. Calculations are shown evaluating specific stocks like Cisco, CVS, and RR Donnelley to determine if they are over or undervalued based on criteria like P/E ratio, P/B ratio, and expected long-term returns.
Equity Research primarily means analyzing company's financials, perform ratio analysis, forecast the financial in excel (financial modeling) and explore scenarios with an objective of making BUY/SELL stock investment recommendation.
The document discusses equity research, which is the analysis of companies and stocks to inform investment decisions. It describes the equity research process, which involves economic, industry, company, and financial statement analysis as well as financial modeling and report writing. Equity research is used for investment evaluation, in the mutual fund industry, for mergers and acquisitions deals, in financial publications, and by charitable endowments. The skills required for equity research include financial analysis, business knowledge, presentation/writing capabilities, and judgment.
fundamental and technical analysis of banking sector in indiaKarthik Ezil
The document provides an overview of the banking industry in India. It discusses the structure of the banking industry, including the roles of the Reserve Bank of India and other public and private sector banks. It also covers topics like the history and development of banking in India, types of banks, fundamental and technical analysis approaches used in the industry, and recent trends and initiatives regarding the Indian banking sector.
Fundamental analysis involves examining qualitative and quantitative factors related to a security to determine its intrinsic value. This includes analyzing macroeconomic factors like the overall economy and industry conditions, as well as company-specific factors like financial statements and management. There are two approaches to fundamental analysis: economy analysis which focuses on outputs like GDP, unemployment, and inflation; and industry analysis which evaluates demand, supply, and competitiveness. Company analysis delves into the balance sheet, financial position, products/services, and uses financial ratios to evaluate profitability, liquidity, activity, debt, market performance, and capital budgeting. Fundamental analysis provides valuable insights but should be approached cautiously given potential biases.
This document analyzes the effect of financial performance on stock prices of raw material producing companies listed on the Indonesian Stock Exchange from 2009-2013. It finds that variables like current ratio, debt to equity ratio, return on assets, and total asset turnover have a simultaneous significant effect on stock prices. However, in partial tests only total asset turnover is found to have an individually significant impact, while the other variables do not. The study uses multiple linear regression analysis on financial data from 7 sample companies to analyze the relationships between these financial metrics and stock price movements.
A study of technical analysis in different sector stocksProjects Kart
A study of technical analysis in different sectors stocks. This study helps us understand the difference between fundamental study and technical study of different sector's stocks. Fundamental analysis is one of the important techniques, which is used to study the future behavior of the stocks. It actually refers to analyses of present and future earning capacity of the stocks based on the analysis of economy, industry and company as a whole there by to determine the intrinsic values of the stocks.
In other words, fundamental analysis is mainly concerned with the determination of intrinsic value of the stocks by analyzing the fundamental factors of economy, industry and company as a whole. The intrinsic value of the stocks represents the real worth or economic value, which is used by the fundamental analysts to identify the under priced and overpriced securities in the market. It means, if the intrinsic value of the stock is more than the market value, it considered as under priced and included in the portfolio. On the other hand, if the intrinsic value of a stock is less then the market value then it is considered as overpriced and excluded from the portfolio.
Thus, fundamental analysis is mainly concerned with the determination of intrinsic value of stocks and based on that intrinsic value investment decisions are taken by the fundamental analysts.
It is another important technique, which is used to predict the future performance of the stocks. It is mainly concerned with the study of historical price movements of the stocks and on its volume of trade in the market to predict the future trend movements of the stocks. However, it does not consider any fundamental factors of the company like earnings, dividends, growth rates etc.
The document discusses investment process and approaches. It describes the 5 stages of the investment process: 1) framing an investment policy, 2) security analysis, 3) valuation, 4) portfolio construction, and 5) portfolio evaluation. It then discusses the 3 main approaches to investment: 1) fundamental analysis which examines economic, industry and company factors, 2) technical analysis which analyzes past stock price and volume trends, and 3) the efficient market hypothesis which states stock prices reflect all available information and follow random patterns.
This document analyzes value versus growth investing styles through the lens of Dick Mayo's dilemma at GMO about whether to continue focusing on value stocks. It provides an in-depth comparison of the two styles, discussing their different focuses, investment philosophies, risks, typical stock features, and strategies. The document also analyzes whether value investing is still the right strategy given changing economic conditions that have favored growth stocks in recent years. Calculations are shown evaluating specific stocks like Cisco, CVS, and RR Donnelley to determine if they are over or undervalued based on criteria like P/E ratio, P/B ratio, and expected long-term returns.
Equity Research primarily means analyzing company's financials, perform ratio analysis, forecast the financial in excel (financial modeling) and explore scenarios with an objective of making BUY/SELL stock investment recommendation.
The document discusses equity research, which is the analysis of companies and stocks to inform investment decisions. It describes the equity research process, which involves economic, industry, company, and financial statement analysis as well as financial modeling and report writing. Equity research is used for investment evaluation, in the mutual fund industry, for mergers and acquisitions deals, in financial publications, and by charitable endowments. The skills required for equity research include financial analysis, business knowledge, presentation/writing capabilities, and judgment.
fundamental and technical analysis of banking sector in indiaKarthik Ezil
The document provides an overview of the banking industry in India. It discusses the structure of the banking industry, including the roles of the Reserve Bank of India and other public and private sector banks. It also covers topics like the history and development of banking in India, types of banks, fundamental and technical analysis approaches used in the industry, and recent trends and initiatives regarding the Indian banking sector.
Fundamental analysis involves examining qualitative and quantitative factors related to a security to determine its intrinsic value. This includes analyzing macroeconomic factors like the overall economy and industry conditions, as well as company-specific factors like financial statements and management. There are two approaches to fundamental analysis: economy analysis which focuses on outputs like GDP, unemployment, and inflation; and industry analysis which evaluates demand, supply, and competitiveness. Company analysis delves into the balance sheet, financial position, products/services, and uses financial ratios to evaluate profitability, liquidity, activity, debt, market performance, and capital budgeting. Fundamental analysis provides valuable insights but should be approached cautiously given potential biases.
This document analyzes the effect of financial performance on stock prices of raw material producing companies listed on the Indonesian Stock Exchange from 2009-2013. It finds that variables like current ratio, debt to equity ratio, return on assets, and total asset turnover have a simultaneous significant effect on stock prices. However, in partial tests only total asset turnover is found to have an individually significant impact, while the other variables do not. The study uses multiple linear regression analysis on financial data from 7 sample companies to analyze the relationships between these financial metrics and stock price movements.
A study of technical analysis in different sector stocksProjects Kart
A study of technical analysis in different sectors stocks. This study helps us understand the difference between fundamental study and technical study of different sector's stocks. Fundamental analysis is one of the important techniques, which is used to study the future behavior of the stocks. It actually refers to analyses of present and future earning capacity of the stocks based on the analysis of economy, industry and company as a whole there by to determine the intrinsic values of the stocks.
In other words, fundamental analysis is mainly concerned with the determination of intrinsic value of the stocks by analyzing the fundamental factors of economy, industry and company as a whole. The intrinsic value of the stocks represents the real worth or economic value, which is used by the fundamental analysts to identify the under priced and overpriced securities in the market. It means, if the intrinsic value of the stock is more than the market value, it considered as under priced and included in the portfolio. On the other hand, if the intrinsic value of a stock is less then the market value then it is considered as overpriced and excluded from the portfolio.
Thus, fundamental analysis is mainly concerned with the determination of intrinsic value of stocks and based on that intrinsic value investment decisions are taken by the fundamental analysts.
It is another important technique, which is used to predict the future performance of the stocks. It is mainly concerned with the study of historical price movements of the stocks and on its volume of trade in the market to predict the future trend movements of the stocks. However, it does not consider any fundamental factors of the company like earnings, dividends, growth rates etc.
A project report on technical analysis at cement sector in share khanBabasab Patil
This document provides an overview of the stock market and technical analysis. It discusses key aspects of the industry such as the purpose of stock markets in allowing companies to raise capital and investors to trade shares. It also describes common activities like short selling, margin buying, and different investment strategies. Technical analysis is defined as studying past price movements to predict future trends, as opposed to fundamental analysis which examines financial statements and company performance. The document concludes with a brief company profile of Sharekhan, a retail broking firm in India.
The document discusses company analysis and stock valuation. It provides guidance on analyzing a company's competitive strategies, growth potential, management quality, and financials to estimate intrinsic value. Key steps include conducting a SWOT analysis, comparing intrinsic value to market price, and monitoring assumptions to determine when to sell. The overall aim is to identify undervalued stocks by focusing on long-term prospects and downside protection.
This document provides an overview of various analysis methods used to evaluate investments, including fundamental analysis, quantitative analysis, and technical analysis. It also discusses relevant market theories like the efficient market hypothesis. Fundamental analysis examines macroeconomic factors, industry conditions, and individual company financials. Quantitative analysis uses computers and statistics to identify patterns for investment opportunities. Technical analysis studies historical stock price movements and trading volumes to predict future price changes. The efficient market hypothesis posits that stock prices instantly reflect all available information.
This document provides an overview of security analysis, which involves analyzing tradeable financial instruments like stocks, bonds, and derivatives. It discusses the main approaches to security analysis: fundamental analysis and technical analysis. Fundamental analysis examines underlying business and economic factors, while technical analysis focuses on price trends and momentum. The document then goes into more detail about fundamental analysis and the three steps involved: economic analysis, industry analysis, and company analysis. It provides examples of key variables to consider in each type of analysis.
This document is a project report submitted by Mr. Ojas Nitin Narsale, an M.Com student at the Parle Tilak Vidyalaya Association's M.L. Dahanukar College of Commerce in Mumbai, India. The report is on the topic of ratio analysis and was completed in the 2016-2017 academic year under the guidance of Prof. Karim. The report includes an introduction, objectives, methodology, literature review on ratio analysis, calculations of key financial ratios for a company, analysis of the results, and a summary.
minor project on ratio analysis of "......"Kh Corporate
This document is a project report submitted by [NAME] to Guru Gobind Singh Indraprastha University in partial fulfillment of the requirements for a Bachelor of Business Administration degree. The report focuses on ratio analysis of a particular industry and includes chapters on the introduction, research methodology, industry overview, company profile, theoretical perspective on ratio analysis, findings and analysis, and conclusions and recommendations. The introduction provides an overview of the study and its objectives, scope, significance and limitations. The research methodology chapter outlines the statement of the research problem, data collection process, presentation tools used, and research tools.
Analysis of financial statements on ideaMohit Khurana
Idea Cellular is one of the top three mobile operators in India with nearly 200 million subscribers, making it the sixth largest mobile operator globally. It offers 2G, 3G, and 4G services across India as well as national and international long distance services. Idea aims to expand into digital services like payments, entertainment, and communications to transform from a mobile operator into an integrated digital solutions provider. It has one of the largest networks in India covering over 400,000 towns and villages. Idea has received several awards for its innovations and was recognized as the best company of 2015 for its successful initiatives in customer service, marketing, and infrastructure.
Fundamental analysis involves analyzing a company's financial statements, management, competitive advantages, and markets to determine the intrinsic value of its stock. It focuses on factors like earnings, production, management, and the overall economy for futures and forex. The key aspects of fundamental analysis include examining economic, financial, qualitative and quantitative factors of a company and its industry to predict stock price movements and evaluate business performance and management. Some tools used are earnings per share, price-earnings ratio, dividend yield, and analysis of statements like the balance sheet and income statement.
A study of technical analysis in different sectors stocksProjects Kart
1) Fundamental analysis determines a stock's intrinsic value by analyzing factors like the economy, industry, and company. It identifies underpriced and overpriced stocks based on comparing intrinsic value to market value.
2) Technical analysis predicts future stock price movements by studying historical price data and trading volumes. It analyzes charts and patterns to identify trends but does not consider fundamental company factors.
3) The study analyzes 5 stocks from the Nifty index using limited technical analysis tools to predict future stock behavior and help investors make informed buy/sell decisions. It has limitations such as only analyzing a few stocks and tools.
The document provides an overview of the telecommunications industry in India. It discusses the evolution of the industry from a state-run monopoly to a liberalized sector with private participation. Key points include:
- India has the second largest telecommunications network in the world, with over 895 million connections as of December 2015.
- The industry has grown rapidly since the 1990s after economic liberalization opened the sector to private companies.
- Telecom has become a major driver of India's economic growth and development, contributing over 2% to GDP.
This document discusses steps for company analysis including measuring earnings, forecasting earnings, and applied valuations. It outlines key internal information sources like income statements, balance sheets, and cash flow statements. It also discusses external sources like rating agency reports. Methods for measuring earnings, depreciation accounting, and notes to financial statements are described. Forecasting earnings involves analyzing asset productivity, debt financing, return on assets, and effective interest rates. Techniques for forecasting and valuation include regression analysis, trend analysis, and decision tree analysis. P/E ratio models and dividend discount models are approaches to stock valuation.
This document provides an overview of capital market research, which examines the impact of financial accounting and disclosure decisions on share prices and returns. Capital market research analyzes statistical relationships between financial information and share price movements to assess how investors react in aggregate to new information. It relies on the assumption that markets are semi-strong form efficient and quickly reflect all public information in security prices. The research is useful for understanding how alternative accounting methods and disclosures influence investment decisions.
This document contains the acknowledgements, declaration, table of contents, and introduction to technical analysis sections of a project report on technical analysis submitted by Shraddha Singh for their MBA program. The introduction provides an overview of technical analysis, including that it uses historical price and volume data to identify trends and predict future price movements. It also discusses some of the common technical analysis tools like charts, indicators, and patterns that will be covered in the report.
“Technical analysis” a study on selected stocksBozo All
The document discusses technical analysis and its use in analyzing stocks. It provides an overview of technical analysis, including that it uses historical price and volume data to identify trends and patterns in order to predict future price movements. It also notes that technical analysis assumes markets are primarily psychological rather than logical. The document then discusses various technical analysis tools and methods, such as candlestick techniques and Dow theory. It concludes by noting that economists have traditionally been skeptical of technical analysis due to theories of efficient markets.
This document outlines how to analyze a company for investment purposes. It discusses gathering basic information like market capitalization, stock price history, and earnings estimates from sources like Yahoo Finance. It also recommends analyzing the company's business overview including its industry, products, customers, and geographic presence. Finally, it suggests performing a fundamental analysis of the company's financial statements and metrics to evaluate performance trends, revenues, profits, expenses, and recent quarterly results from regulatory filings and news releases.
This document summarizes research on underpricing of initial public offerings (IPOs) in Bangladesh. It reviews various theoretical models that attempt to explain IPO underpricing, including those based on asymmetric information, litigation risks, and irrational investor behavior. The research aims to examine the extent and determinants of underpricing for IPOs on the Dhaka Stock Exchange between 1991-2007. It describes the sample selection process and data sources used, including prospectuses, stock price indexes, and financial statements of issuing firms.
This document discusses business strategy analysis for assessing a firm's performance and value. It covers:
1. Strategy analysis identifies a firm's profit drivers and risks by probing business reality qualitatively.
2. Industry analysis assesses industry profit potential using models like five forces analysis of competition.
3. Competitive strategy analysis evaluates a firm's cost leadership or differentiation strategies.
4. Corporate strategy analysis examines value from operating multiple businesses under one firm.
5. Strategy analysis guides financial analysis by linking strategies and financial metrics over time.
The document discusses valuation techniques for businesses and analysis of company financials. It provides examples of how to calculate the value of a business based on earnings, dividends, or required rate of return. It also outlines key areas to analyze for a company including products, markets, competitors, and impact of news/developments. Financial statement analysis techniques are presented for revenue, costs, balance sheet ratios, and interpreting what ratios indicate.
This document provides an abstract and introduction for a dissertation analyzing representations of individuals with facial disfigurements in newspaper articles using thematic analysis. The dissertation examines how media representations may influence public perceptions and behaviors towards those with facial disfigurements based on social learning theory. Previous research found biases towards facial disfigurements and stereotypical media portrayals. The dissertation aims to provide further understanding of these issues through a thematic analysis of newspaper articles.
This document is a dissertation report submitted by Nikhil Jhamb to Kurukshetra University in partial fulfillment of an MBA degree. The report analyzes the management information system reports of 10 pharmaceutical companies in Paonta Sahib, India. It includes an introduction to the Indian pharmaceutical industry, profiles of the 10 companies studied, a description of the research methodology used, an analysis and interpretation of data from the companies' MIS reports, findings from the study, and recommendations and conclusions. The Indian pharmaceutical industry is a $4.5 billion industry that is highly fragmented across more than 20,000 registered units and is an important industry in India.
Dissertation on behavioral finance and its impact on portfolio investment dec...Rahmatullah Pashtoon
Extreme volatility has plagued financial markets worldwide since the 2008 Global Crisis. Investor sentiment has been one of the key determinants of market movements. In this context, studying the role played by emotions like fear, greed and anticipation, in shaping up investment decisions seemed important. Behavioral Finance is an evolving field that studies how psychological factors affect decision making under uncertainty. This thesis seeks to find the influence of certain identified behavioral finance concepts (or biases), namely, Overconfidence, Representativeness, Herding, Anchoring, Cognitive Dissonance, Regret Aversion, Gamblers’
Fallacy, and Mental Accounting, on the decision making process of individual investors in the Indian Stock Market. Primary data for analysis was gathered by distributing a structured questionnaire among investors who were categorized as (i) young, and (ii) experienced. Results obtained by analyzing a sample of 74 respondents, out of which 12 admitted to having suffered a loss of at least 50% because of the crisis, revealed that the degree of exposure to the biases separated the behavioral pattern of young and experienced investors.
Gamblers’ Fallacy, Anchoring and Representative and Herding bias were seen to affect the young investors significantly more than experienced investors.
A project report on technical analysis at cement sector in share khanBabasab Patil
This document provides an overview of the stock market and technical analysis. It discusses key aspects of the industry such as the purpose of stock markets in allowing companies to raise capital and investors to trade shares. It also describes common activities like short selling, margin buying, and different investment strategies. Technical analysis is defined as studying past price movements to predict future trends, as opposed to fundamental analysis which examines financial statements and company performance. The document concludes with a brief company profile of Sharekhan, a retail broking firm in India.
The document discusses company analysis and stock valuation. It provides guidance on analyzing a company's competitive strategies, growth potential, management quality, and financials to estimate intrinsic value. Key steps include conducting a SWOT analysis, comparing intrinsic value to market price, and monitoring assumptions to determine when to sell. The overall aim is to identify undervalued stocks by focusing on long-term prospects and downside protection.
This document provides an overview of various analysis methods used to evaluate investments, including fundamental analysis, quantitative analysis, and technical analysis. It also discusses relevant market theories like the efficient market hypothesis. Fundamental analysis examines macroeconomic factors, industry conditions, and individual company financials. Quantitative analysis uses computers and statistics to identify patterns for investment opportunities. Technical analysis studies historical stock price movements and trading volumes to predict future price changes. The efficient market hypothesis posits that stock prices instantly reflect all available information.
This document provides an overview of security analysis, which involves analyzing tradeable financial instruments like stocks, bonds, and derivatives. It discusses the main approaches to security analysis: fundamental analysis and technical analysis. Fundamental analysis examines underlying business and economic factors, while technical analysis focuses on price trends and momentum. The document then goes into more detail about fundamental analysis and the three steps involved: economic analysis, industry analysis, and company analysis. It provides examples of key variables to consider in each type of analysis.
This document is a project report submitted by Mr. Ojas Nitin Narsale, an M.Com student at the Parle Tilak Vidyalaya Association's M.L. Dahanukar College of Commerce in Mumbai, India. The report is on the topic of ratio analysis and was completed in the 2016-2017 academic year under the guidance of Prof. Karim. The report includes an introduction, objectives, methodology, literature review on ratio analysis, calculations of key financial ratios for a company, analysis of the results, and a summary.
minor project on ratio analysis of "......"Kh Corporate
This document is a project report submitted by [NAME] to Guru Gobind Singh Indraprastha University in partial fulfillment of the requirements for a Bachelor of Business Administration degree. The report focuses on ratio analysis of a particular industry and includes chapters on the introduction, research methodology, industry overview, company profile, theoretical perspective on ratio analysis, findings and analysis, and conclusions and recommendations. The introduction provides an overview of the study and its objectives, scope, significance and limitations. The research methodology chapter outlines the statement of the research problem, data collection process, presentation tools used, and research tools.
Analysis of financial statements on ideaMohit Khurana
Idea Cellular is one of the top three mobile operators in India with nearly 200 million subscribers, making it the sixth largest mobile operator globally. It offers 2G, 3G, and 4G services across India as well as national and international long distance services. Idea aims to expand into digital services like payments, entertainment, and communications to transform from a mobile operator into an integrated digital solutions provider. It has one of the largest networks in India covering over 400,000 towns and villages. Idea has received several awards for its innovations and was recognized as the best company of 2015 for its successful initiatives in customer service, marketing, and infrastructure.
Fundamental analysis involves analyzing a company's financial statements, management, competitive advantages, and markets to determine the intrinsic value of its stock. It focuses on factors like earnings, production, management, and the overall economy for futures and forex. The key aspects of fundamental analysis include examining economic, financial, qualitative and quantitative factors of a company and its industry to predict stock price movements and evaluate business performance and management. Some tools used are earnings per share, price-earnings ratio, dividend yield, and analysis of statements like the balance sheet and income statement.
A study of technical analysis in different sectors stocksProjects Kart
1) Fundamental analysis determines a stock's intrinsic value by analyzing factors like the economy, industry, and company. It identifies underpriced and overpriced stocks based on comparing intrinsic value to market value.
2) Technical analysis predicts future stock price movements by studying historical price data and trading volumes. It analyzes charts and patterns to identify trends but does not consider fundamental company factors.
3) The study analyzes 5 stocks from the Nifty index using limited technical analysis tools to predict future stock behavior and help investors make informed buy/sell decisions. It has limitations such as only analyzing a few stocks and tools.
The document provides an overview of the telecommunications industry in India. It discusses the evolution of the industry from a state-run monopoly to a liberalized sector with private participation. Key points include:
- India has the second largest telecommunications network in the world, with over 895 million connections as of December 2015.
- The industry has grown rapidly since the 1990s after economic liberalization opened the sector to private companies.
- Telecom has become a major driver of India's economic growth and development, contributing over 2% to GDP.
This document discusses steps for company analysis including measuring earnings, forecasting earnings, and applied valuations. It outlines key internal information sources like income statements, balance sheets, and cash flow statements. It also discusses external sources like rating agency reports. Methods for measuring earnings, depreciation accounting, and notes to financial statements are described. Forecasting earnings involves analyzing asset productivity, debt financing, return on assets, and effective interest rates. Techniques for forecasting and valuation include regression analysis, trend analysis, and decision tree analysis. P/E ratio models and dividend discount models are approaches to stock valuation.
This document provides an overview of capital market research, which examines the impact of financial accounting and disclosure decisions on share prices and returns. Capital market research analyzes statistical relationships between financial information and share price movements to assess how investors react in aggregate to new information. It relies on the assumption that markets are semi-strong form efficient and quickly reflect all public information in security prices. The research is useful for understanding how alternative accounting methods and disclosures influence investment decisions.
This document contains the acknowledgements, declaration, table of contents, and introduction to technical analysis sections of a project report on technical analysis submitted by Shraddha Singh for their MBA program. The introduction provides an overview of technical analysis, including that it uses historical price and volume data to identify trends and predict future price movements. It also discusses some of the common technical analysis tools like charts, indicators, and patterns that will be covered in the report.
“Technical analysis” a study on selected stocksBozo All
The document discusses technical analysis and its use in analyzing stocks. It provides an overview of technical analysis, including that it uses historical price and volume data to identify trends and patterns in order to predict future price movements. It also notes that technical analysis assumes markets are primarily psychological rather than logical. The document then discusses various technical analysis tools and methods, such as candlestick techniques and Dow theory. It concludes by noting that economists have traditionally been skeptical of technical analysis due to theories of efficient markets.
This document outlines how to analyze a company for investment purposes. It discusses gathering basic information like market capitalization, stock price history, and earnings estimates from sources like Yahoo Finance. It also recommends analyzing the company's business overview including its industry, products, customers, and geographic presence. Finally, it suggests performing a fundamental analysis of the company's financial statements and metrics to evaluate performance trends, revenues, profits, expenses, and recent quarterly results from regulatory filings and news releases.
This document summarizes research on underpricing of initial public offerings (IPOs) in Bangladesh. It reviews various theoretical models that attempt to explain IPO underpricing, including those based on asymmetric information, litigation risks, and irrational investor behavior. The research aims to examine the extent and determinants of underpricing for IPOs on the Dhaka Stock Exchange between 1991-2007. It describes the sample selection process and data sources used, including prospectuses, stock price indexes, and financial statements of issuing firms.
This document discusses business strategy analysis for assessing a firm's performance and value. It covers:
1. Strategy analysis identifies a firm's profit drivers and risks by probing business reality qualitatively.
2. Industry analysis assesses industry profit potential using models like five forces analysis of competition.
3. Competitive strategy analysis evaluates a firm's cost leadership or differentiation strategies.
4. Corporate strategy analysis examines value from operating multiple businesses under one firm.
5. Strategy analysis guides financial analysis by linking strategies and financial metrics over time.
The document discusses valuation techniques for businesses and analysis of company financials. It provides examples of how to calculate the value of a business based on earnings, dividends, or required rate of return. It also outlines key areas to analyze for a company including products, markets, competitors, and impact of news/developments. Financial statement analysis techniques are presented for revenue, costs, balance sheet ratios, and interpreting what ratios indicate.
This document provides an abstract and introduction for a dissertation analyzing representations of individuals with facial disfigurements in newspaper articles using thematic analysis. The dissertation examines how media representations may influence public perceptions and behaviors towards those with facial disfigurements based on social learning theory. Previous research found biases towards facial disfigurements and stereotypical media portrayals. The dissertation aims to provide further understanding of these issues through a thematic analysis of newspaper articles.
This document is a dissertation report submitted by Nikhil Jhamb to Kurukshetra University in partial fulfillment of an MBA degree. The report analyzes the management information system reports of 10 pharmaceutical companies in Paonta Sahib, India. It includes an introduction to the Indian pharmaceutical industry, profiles of the 10 companies studied, a description of the research methodology used, an analysis and interpretation of data from the companies' MIS reports, findings from the study, and recommendations and conclusions. The Indian pharmaceutical industry is a $4.5 billion industry that is highly fragmented across more than 20,000 registered units and is an important industry in India.
Dissertation on behavioral finance and its impact on portfolio investment dec...Rahmatullah Pashtoon
Extreme volatility has plagued financial markets worldwide since the 2008 Global Crisis. Investor sentiment has been one of the key determinants of market movements. In this context, studying the role played by emotions like fear, greed and anticipation, in shaping up investment decisions seemed important. Behavioral Finance is an evolving field that studies how psychological factors affect decision making under uncertainty. This thesis seeks to find the influence of certain identified behavioral finance concepts (or biases), namely, Overconfidence, Representativeness, Herding, Anchoring, Cognitive Dissonance, Regret Aversion, Gamblers’
Fallacy, and Mental Accounting, on the decision making process of individual investors in the Indian Stock Market. Primary data for analysis was gathered by distributing a structured questionnaire among investors who were categorized as (i) young, and (ii) experienced. Results obtained by analyzing a sample of 74 respondents, out of which 12 admitted to having suffered a loss of at least 50% because of the crisis, revealed that the degree of exposure to the biases separated the behavioral pattern of young and experienced investors.
Gamblers’ Fallacy, Anchoring and Representative and Herding bias were seen to affect the young investors significantly more than experienced investors.
Normalcy of Crime as a Requirement for Intelligence Analysis:Case Study of Ni...SP. Zems Mathias, PhD.
1) The document is a dissertation defense presentation by Zems Mathias for their Doctoral degree. It examines the normalcy of crime as a requirement for intelligence analysis in Nigerian law enforcement agencies.
2) It discusses how crimes like terrorism, human trafficking, and money laundering require proactive, scientific approaches that cross jurisdictions. Understanding crime is important for intelligence gathering and analysis.
3) The study aims to analyze the relationship between criminal intelligence and law enforcement practice, internal security, and national security in Nigeria. It examines challenges to intelligence gathering and the importance of sharing information between agencies.
This document presents the layout and introduction for a dissertation report on analyzing multi-storey partially braced frames subjected to seismic and gravity loads using V-braces. The layout includes sections on introduction, literature review, structural analysis methods, earthquake analysis methods, theoretical formulation, results and discussion, conclusion, and references. The introduction discusses the importance of tall structures and braced frames, noting advantages of braced frames include increased strength, stiffness, and reduced member sizes.
This document is a report submitted by Mohit Rajput in partial fulfillment of the 9th semester evaluation of an Integrated Dual Degree program in Metallurgical and Materials Engineering at IIT Roorkee. It discusses controlling the structure of metal foam using microwave heating. Metal foams can be produced by various methods, with powder metallurgy being able to produce closed cell foams in near net shapes. This study will use powder metallurgy as the basis and apply microwave heating to better control the foam structure, as microwave heating provides advantages like faster and more uniform heating from within compared to conventional outside-in heating. The effects of foaming temperature, time and other parameters on the foam structure will be investigated
Dissertation Report On A Case Analysis On Enron Failurearpan_rkl
This document is a dissertation report submitted by Arpan Ghosh on a case study of Enron's failure. It includes an acknowledgment, declaration, and certificate sections. The table of contents outlines 6 chapters: an introduction providing background on Enron, a company profile, literature review, research methodology, results and discussions, and conclusions and suggestions. An abstract at the end summarizes that Enron collapsed unexpectedly in 2001 due to fraudulent accounting that hid debts and losses. The objectives are to understand the crises at Enron, its accounting irregularities, and regulatory and legal failures.
A dissertation report on working capital management of arss infrastructure ltdProjects Kart
This document is a project report on working capital management of ARSS Infrastructure Ltd submitted in partial fulfillment of a post-graduate diploma program. It includes an introduction to working capital management, a need for efficient working capital management, and covers topics like gross working capital, net working capital, types of working capital, and determinants of working capital. The report contains chapters on research methodology, analysis of working capital size and components, working capital financing and ratios. It concludes with recommendations to improve working capital management.
Dissertation Research Study/Report on "Preferred financing mechanism for SME’...Anam Shahid
It is a Dissertation Research study titled "Preferred financing mechanism of small and medium enterprises based in the United Arab Emirates " Written and Conducted by Anam Shahid In partial fulfillment of the requirements for the degree Bachelors of Business Administration-Entrepreneurship in the Year 2014
At Amity University Dubai,UAE
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Dissertation report on switching behavior of consumer Pinkey Rana
Dissertation report on “To study the switching behavior of consumer special reference to urban market ”which is submitted by me in partial fulfillment of the requirement for the award of degree B.Com(Hons.) .
A study on investment avenues for investor niyazniyaztvm
The document discusses investment avenues available for investors, with a focus on business people in Tiruvannamalai Town. It begins with an introduction on wealth creation and the importance of understanding investment opportunities and financial planning. It then outlines four main types of investment avenues: 1) financial securities, 2) non-secured financial securities, 3) mutual fund schemes, and 4) real assets. The document also reviews literature on past studies of investment habits and sets objectives and methodology for its own study.
This is a Behavioral Finance Lesson material which delivered by me for PhD students of Faculty of Business Administration in Karvina, Silesian University.
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FINAL MMS PROJECT - INVESTOR'S BEHAVIOR TOWARDS INVESTMENT AVENUES ( MANGESH...Mangesh Sonawane
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INVESTMENT PATTERN OF SALARIED INDIVIDUALSRanjana Singh
This document discusses the investment patterns of salaried individuals in India. It aims to understand the different investment avenues available, the level of awareness and risk tolerance among salaried individuals when investing their savings. The document contains chapters on the background and objectives of the study, a literature review of past studies, the research methodology, data collection and analysis, findings, and a conclusion with scope for future work. Tables of data collected from salaried individuals are presented on their awareness of various investment options from safe low-risk to high-risk avenues, as well as the factors considered when selecting investments.
Technical analysis is the study of price, volume, and open interest to forecast market trends by analyzing charts and indicators. It is based on the assumptions that current prices reflect all known information, prices trend over time, and history repeats. Technical analysis focuses on market effects rather than fundamental causes and can be applied quickly to any market. It helps understand market psychology and short-term movements.
EQUITY RESEARCH OF AUTOMOBILE SECTOR FOR RETAIL INVESTORAnand Kumar
This document provides an overview of equity research and the automobile industry in India. It discusses what equity research is, its purpose and scope. It also discusses fundamental and technical analysis techniques used in equity research. The document then provides an introduction to the automobile industry in India, including key statistics on production, exports, growth drivers and the major automobile hubs. It also gives an overview of 10 automobile companies that will be analyzed as part of an equity research project on the automobile sector aimed at retail investors.
This document provides an introduction to equity analysis and fundamental analysis. It discusses the scope of the project being limited to analyzing three major banks in the banking sector. The objectives are to conduct a comparative study of equity research, analyze opportunities and challenges in the equity analysis sector of banking, and make future expectations. It then defines equity and equity shares, and explains how to invest in equities and why one should invest in equities. Finally, it discusses the fundamentals of fundamental analysis, including qualitative factors like industry characteristics and quantitative factors like financial metrics.
This document provides an executive summary and introduction to a project conducting fundamental analysis of five banking companies in India over 45 days. The analysis included economic, industry, and company analysis to derive an intrinsic value for each stock and determine if it was overvalued or undervalued. Data was collected from annual reports and company websites and analyzed using techniques like CAMEL rating and intrinsic value calculation. The purpose was to forecast future stock prices and provide a basis for informed investment decisions.
Security analysis of selected stocks with referance to information technology...Riya Jaju
project report on security analysis of selected stocks of IT sector which has 3 companies -infosys,wipro,TCS .Fundamental analysis and technical analysis is done for the stocks for duration of 6 months jan 2015 to june 2015.
This document discusses fundamental analysis, which examines economic, industry, and company factors to evaluate a security's intrinsic value and determine if it is under or overpriced. It describes the three phases of fundamental analysis as evaluating the macroeconomic environment, industry prospects, and a company's projected performance. The goals are to predict market movements, identify undervalued securities, and time investments correctly based on a thorough understanding of economic trends, industry drivers, and business fundamentals. Strengths of fundamental analysis include analyzing long-term trends, spotting good value, developing business acumen, understanding key value drivers, and properly categorizing stocks within their industry groups.
This document is a project report submitted by Rajat Jain for a post graduate diploma in management. The report focuses on conducting fundamental analysis of securities to suggest equity investments. It includes declarations, acknowledgements, an introduction on fundamental analysis and objectives. It discusses analyzing the economy, industry and companies. It also covers tools for fundamental analysis and profiles India Infoline, Tata Steel, Wipro and Sun Pharma to analyze their sectors, financials and make investment interpretations. The report aims to understand company performance, suggest investment opportunities and draw conclusions on the analysis.
Fundamental analysis is a logical and systematic approach to evaluating securities by examining related economic, financial, and other qualitative and quantitative factors. It involves analyzing macroeconomic factors like GDP growth, as well as industry conditions and company-specific factors to estimate a security's intrinsic value and forecast future performance. The goal is to identify securities that are underpriced (presenting opportunities) or overpriced (presenting risks). Fundamental analysis uses various techniques including demand-supply analysis, price elasticity, balance sheets, and regression analysis to value assets and predict price movements.
This document contains a presentation on fundamental analysis given by a group of students at K.E.S’s SHROFF College of Arts & Commerce. The presentation covers various aspects of fundamental analysis including meaning, tools, qualitative factors related to companies and industries, and an introduction to financial statements. Fundamental analysis involves analyzing the financial statements and health of a business, its management and competitive advantage, as well as the markets and economy. The presentation defines key terms and ratios used in fundamental analysis such as P/E ratio, dividend yield, and discusses how to analyze industries and companies.
The document discusses fundamental analysis for evaluating stocks. It begins by defining fundamental analysis and its two main types: economic, industry, and company analysis. It then provides more details on each type of analysis. For economic analysis, it discusses important macroeconomic factors to examine like GDP, inflation, interest rates, etc. For industry analysis, it covers analyzing the industry life cycle and competitive landscape. For company analysis, it states the importance of examining the company's financial statements and resources. The overall document serves as an introduction to conducting fundamental analysis for stock evaluation.
This document provides an overview of the financial services industry in India, including various subsectors like banking, insurance, mutual funds, stock exchanges, and regulatory bodies. It discusses the role of financial intermediaries in channeling funds between investors and businesses. Some key points covered include:
- The financial services industry plays an important role in promoting investment, savings, and long-term economic growth.
- Major segments include banking, insurance, and mutual funds, which together contribute around 6% to India's GDP.
- Financial intermediaries provide services like maturity transformation and risk mitigation by pooling funds from many sources.
- Important financial institutions include commercial banks, investment banks, brokerages, insurance companies, and non-bank
FINANCIAL PERFORMANCE ANALYSIS OF BHARTI AIRTEL LIMITEDyashmin khatun
This document discusses financial statement analysis and ratio analysis. It provides background on analyzing a company's financial stability, profitability, and performance over time using various ratios and comparisons. The objectives are to analyze the financial position, liquidity, and profitability of Bharti Airtel over a five year period and identify its financial strengths and weaknesses. Limitations include a lack of structured data from the company and a limited three year study period relying on secondary data. A literature review found previous research analyzing the relationship between working capital management, cash conversion cycles, and company profitability.
Hi Friends
This is supa bouy
I am a mentor, Friend for all Management Aspirants, Any query related to anything in Management, Do write me @ supabuoy@gmail.com.
I will try to assist the best way I can.
Cheers to lyf…!!!
Supa Bouy
A framework for business analysis and valuation using financial statements.pdfLiz Adams
This document outlines a framework for analyzing businesses using their financial statements. It discusses how financial reporting plays a critical role in capital markets by providing information to investors and intermediaries. The accounting system summarizes a firm's business activities into financial statements but is also influenced by the firm's accounting strategies and choices. Effective financial statement analysis aims to gain valuable insights about a firm's current performance and future prospects by interpreting financial information in the context of its industry and strategies.
Hi Friends
This is supa bouy
I am a mentor, Friend for all Management Aspirants, Any query related to anything in Management, Do write me @ supabuoy@gmail.com.
I will try to assist the best way I can.
Cheers to lyf…!!!
Supa Bouy
FINANCIAL AND FUNDAMENTAL ANALAYSIS ON ICICI BANKAnkit Jaiswal
The document is a project report submitted by Ankit Jaiswal for the degree of BBA at Sikkim Manipal University. It includes an introduction, student declaration, examiner certification, study centre certificate, and table of contents. The project aims to conduct a financial and fundamental analysis of ICICI Bank over a period of 5 years from 2006-2010. Secondary data will be collected from sources like books, websites, and databases to analyze the economy, industry, and company. Key tools that will be used include ratios, cash flows, valuation techniques, and macroeconomic indicators. The analysis will help evaluate ICICI Bank's performance and identify opportunities and limitations.
FUNDAMENTAL ANALYSIS WITH SPECIAL REFERENCE TO PHARMACEUTICAL COMPANIES LISTE...IAEME Publication
An investment analysis is essential for the benefit of risk reduction and maximizes the gain. The investment analysis on stock market has two main approaches namely technical analysis and fundamental analysis. This study is focused on fundamental analysis of pharmaceutical companies listed in National Stock Exchange (NSE), which include selected five companies for a period of five years from 2011 to 2015. The fundamental analysis consists of three parts such as economic analysis, industry analysis and company analysis. The economic analysis consists of economic indicators which influence the security market like GDP, inflation, interest rate, foreign reserves, export and agricultural production for the study period.
Fundamental analysis examines a security's intrinsic value by studying economic and financial factors that may impact its value. It focuses on a company's financials, the economy, and industry conditions. Technical analysis evaluates investments by analyzing statistical trends in trading data like price movement and volume. Fundamental analysis involves determining a stock's intrinsic value by forecasting earnings, dividends, and choosing a discount rate. It consists of economic, industry, and company analysis. Technical analysis is based on historical price patterns and stock trends.
This document provides a comparative assessment of the stock valuation of Intel Corporation and Texas Instruments. It uses both absolute and relative valuation models, including discounted dividend, free cash flow, residual income, and market multiples models. The analysis finds that while Intel derives around 50% of its valuation from PCs, even a large decline in its PC market share would likely have only a minor impact on its overall valuation. It also determines that Texas Instruments' shares are a reasonable investment given its annual dividend, dividend growth history, and discounted cash flow valuation of around $55.9 billion compared to its recent market price of $52.6 billion.
This document provides an overview of a lecture on financial management. It discusses key concepts like the scope and goals of financial management. The lecture defines financial management as applying general management principles to financial resources. It notes the goal of financial management is to maximize shareholder wealth. The document also covers topics like the functions of a financial manager, sources of finance, and an introduction to financial markets and the efficient market hypothesis.
A STUDY ON RISK RETURN ANALYSIS OF SELECTED STOCKSShrikumar Gowda
This document summarizes a study on analyzing the risk and return of selected stocks. The objectives are to analyze risk and return, measure financial performance, and suggest potential stocks. Various tools are used to measure risk through standard deviation and beta values, and financial performance through ratios. Key findings include sectors like IT performing better than others, with TCS being more stable. The study helps investors pick stocks based on their risk appetite. Suggestions include watching the benchmark index, investing in consistently performing stocks, avoiding volatile stocks, and choosing high beta stocks depending on market conditions.
Similar to Preparation of Final Report FOR PRINT (20)
This document summarizes a study on capital returns in the automobile and banking sectors in India. It introduces concepts of capital returns, average returns, and index investing. It then provides an overview of the automobile sector in India, describing major companies like Ashok Leyland, Eicher Motors, Hindustan Motors, Tata Motors, and Isuzu Motors. It also outlines the banking sector in India, highlighting major banks like Bank of Baroda, Punjab National Bank, Syndicate Bank, Union Bank of India, and Bank of Maharashtra. The study aims to analyze and compare the performance, growth trends, and relationships with market indexes of selected automobile and banking companies.
The document summarizes the 1984 Bhopal gas tragedy in India, considered one of the worst industrial disasters. Over 40 tons of methyl isocyanate gas leaked from a Union Carbide pesticide plant in Bhopal, exposing over 500,000 people. Officially, around 4,000 people died immediately and it is estimated that 15,000-25,000 died from related illnesses. Union Carbide was found to have neglected safety systems at the plant, including alarms and scrubbers, and there was a history of prior leaks. The disaster caused immense health effects like respiratory illness and death as well as environmental pollution that continues to this day.
The document discusses team effectiveness and how building an effective team can lead to success. It defines team effectiveness as a group of people working together effectively to achieve more than individuals alone. Key aspects of effective teams include proper team design, developing team processes, and ensuring the team and organizational environment support the team. Some tips for building effective teams include avoiding favoritism, giving credit, allowing mistakes, effective communication, setting processes, managing conflicts, and not making decisions alone. When teams work effectively together in an organization, it can lead to increased success.
The document outlines several theories of human psychological development proposed by Freud, Erikson, Piaget, and Argyris. Freud proposed oral, anal, phallic, latency, and genital stages of development. Erikson described stages of infancy, early childhood, play age, school age, puberty and adolescence, and young, middle, and late adulthood. Piaget's stages included sensorimotor, pre-operational, concrete operational, and formal operational. Finally, Argyris discussed moving from immaturity to maturity. The document provides an overview of major psychological development theories.
Role of msme in indian economic developmentKushal Kumar
This document discusses the role of micro, small, and medium enterprises (MSMEs) in India's economic development. Some key points:
1) MSMEs are a major source of employment in India, providing millions of jobs and playing an important role in reducing poverty.
2) They account for about 45% of manufacturing output and 40% of exports in India. MSMEs employ over 60 million people across more than 26 million units.
3) The number of MSMEs, production, employment, exports, and investments have all steadily increased over the past few decades, demonstrating their significant contributions to India's economic growth.
1. A STUDY ON FUNDAMENTAL ANALYSIS OF SELECTED
PHARMACEUTICAL COMPANY STOCKS AT MENTES CAPITAL,
BANGALORE
Dissertation Report submitted in partial fulfilment of requirements for the
award of the degree of
MASTER OF BUSINESS ADMINISTRATION
OF
BANGALORE UNIVERSITY
Submitted By
KUSHAL KUMAR
(REG: 14P6CMD060)
Under the guidance of
Mrs. Divya U
Assistant Professor
COMMUNITYINSTITUTE OF MANAGEMENT STUDIES
BANGALORE UNIVERSITY
2014-2016
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C I M S B-SCHOOL, BANGALORE P a g e | 1
Executive Summary
Investment decision is a part of our life. Everyone takes such kind of decision at
different context. Investment decisions in equity market are to be made in a
systematic manner fundamental analysis. This study aims to analyse the
fundamental analysis of Pharmaceutical companies in India with a sample size
of three selected companies based on market capitalisation for a period of five
years from 2010-11 to 2014-15. The objectives of the study to conduct
Fundamental analysis for Pharma companies and the Porters five forces analysis
for the Pharma industry. The Economic, Industry and company analysis have
been done to achieve the objectives of the study. From the Economic analysis, it
is found that Gross Domestic Product, Interest rates and Inflation has a positive
growth rate during the period. The industry analysis found that Indian pharma
sector is the 3rd largest sector with the total market size of US$ 20 billion
during the year 2015. This sector is expected to grow 15% CAGR basis by
2020.
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Chapter 1
1. Introduction to the topic
Financial management refers to the systematic and productive use of funds in such a
manner as to attain the objectives of the organization. According to Guttmann and
Douglas, financial management means, “the activity concerned with the raising,
planning, administering and controlling of funds used in the business.” It involves the
procurement and utilisation of funds in the proper manner.
Financial management is one of the prime areas of business. Therefore, its objectives
must be consistent with the objectives of business. The overall objective of financial
management is to provide maximum return to the owners of the business on their
investment in the long- term as well as in short term.
There are two objectives of an enterprise
1) Wealth Maximisation- It's far the potential of organisation to growth in market
price of the share over time i.e. proprietor's capital.
2) Profit Maximisation- Earnings maximisation is the functionality of a business
enterprise in generating most output with minimum input. The main cause of an
economic activity is to earn profit. A business enterprise challenge operates specially
for the motive of making earnings. Earnings is a tool to measure the performance of a
business difficulty. Profit maximization is likewise the slender approach, which
consciousness on maximizing the profit of the business concern.
Stock market refers to a marketplace in which the buying and selling of company
stock, both listed securities and unlisted securities takes area. It is distinct from stock
exchange because it includes all the countrywide stock exchanges of the India for
example, we use the term, and “the stock market was down today “or” the stock
market bubble
Stock Exchanges are an organized marketplace, either agency or mutual organisation,
wherein individuals of the agency unite to acquire company stock or different
securities. The individuals may act either as sellers for his or her clients, or as
principal for their very own accounts. Stock exchanges additionally facilitates for the
issue and redemption of securities and other financial instruments together with the
4. FUNDAMENTAL ANALYSIS
C I M S B-SCHOOL, BANGALORE P a g e | 3
charge of profits and dividends. The report retaining is primary however trade is
connected to such physical location because modern-day markets are automated. The
trade on an exchange is simplest by means of contributors and Stock broker do have a
seat at the exchange.
The capital market is divided into segments:
a) Primary market b) Secondary market
1.1 Primary Market
Mostly corporations are generally started out privately by way of their promoters. But
the promoters’ capital and the borrowed capital from banks or economic
establishments might not be sufficient for strolling the enterprise over the long period.
This is whilst corporate and the government authorities looks on the primary market
to raise long term finances by way of issuing securities which includes debt or equity.
These securities can be issued at face value, at premium or at discount.
Face value: Face price is the original cost of the safety as shown inside the
certificate/instrument. Most equity shares have a face price of Rs. 10, Rs. 50,
Rs. 100 or Rs. 1000 and do no longer have a great deal bearing on the real
market price of the securities. While issuing securities, they will be offered at
a premium or discount.
Premium: while the security is obtainable at a charge better than the face value
it's far calleda top class
Discount: while the security is obtainable at a charge less than the face value
called a discount.
1.2 Secondary market:
The secondary marketplace affords liquidity to the investors in the primary market.
Today we might now not put money into any financial instrument if there has been no
medium to liquidate. The secondary markets offer an efficient platform for buying
and selling of those securities first of all presented inside the primary market.
Additionally, the investors who have carried out for stocks in an IPO may or won't get
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C I M S B-SCHOOL, BANGALORE P a g e | 4
allotment. In the event that they don ‘t then they can usually buy the stocks (from time
to time at a discount or at a premium) inside the secondary market. Trading within the
secondary
market is completed through stock alternate. The secondary market is an area wherein
the consumers and dealers meet to exchange in shares in an effective way.
The exchange performs the following functions:
Provide buying and selling platform to investors and provide liquidity
Facilitate list of securities
Registers individuals - brokers, sub brokers
Create and put in effect by way of-laws.
Control risk in securities transactions
Offers indices
Equity research more often a way of analysing business enterprise’s financials,
perform ratio evaluation, forecast the financials (financial modelling and valuations)
and explore scenarios with a goal of making purchase/promote stock funding
recommendation. Equity analyst talk their studies and evaluation of their equity
research reports.
Investors depend upon information to recognize where to put their money into,
investors want statistics to know whether they have to enter or exit a role, and
company financiers (together with bankers, non-public companies and so on.) need
statistics to value businesses and take part in proceedings. This information has to
come from someplace and as a result, there are complete divisions within economic
establishments committed to studying the important problems of firms and this
department is called Equity Research.
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C I M S B-SCHOOL, BANGALORE P a g e | 5
Fundamental Analysis
Lev and Thiagarajan (1993) described the aim of Fundamental Analysis as
“determining the value of corporate securities with the aid of a cautious examination
of key value-drivers, inclusive of earnings, competitive position, growth, risk and
return”. The primitive origin of information examined with the aid of a fundamental
analyst are the enterprise financial statements, organisation bulletins, interviews with
management of the organisation and so forth. The goal of fundamental evaluation is to
supply an intrinsic value (or an honest price) of a security that can be compared to the
market value of the security with the intention to determine whether or not the stock is
under or overrated. The fundamental analyst believes that the intrinsic price of the
security is the “accurate” rate and that any deviations among the intrinsic price and
the market price represent worthwhile buying and selling possibilities. A purchase
(sell) possibility arises while the intrinsic value of the security is above (underneath)
the market price of the security. But, if the stock markets are semi-robust form green,
Fundamental analysis will now not yield any threat-adjusted earnings. This is because
all of the gospel analysed by way of the Fundamental analyst is publicly available to
be had and need to as a consequence be already integrated in stock prices
Objectives of Fundamental Analysis
To expect the direction (trend) of national economy because economic activity
influences the company income, investor attitudes and expectation in the stock
prices.
To estimate the stock prices adjustments by way of analysing the forces
working inside the basic economy, in addition to impact ordinary to industries
and companies.
To select the proper time and proper securities for the investment.
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The Three Phases of Fundamental Analysis
1) Know-how of the Macro-Economic environment and tendencies (economic
evaluation)
2) Analysing the prospects of the industry to which the company belongs (industry
analysis)
3) Assessing the projected overall performance of the enterprise. (company analysis)
The three segment examination of fundamental Analysis is likewise referred to
as an EIC (economy- industry-company analysis) framework or a top-down
method-
Here, the financial analyst first makes forecasts for the economic system, then for
industries and in the end for companies. The industry forecasts are primarily based at
the forecasts for the economic system and in turn, the company forecasts are primarily
based on the forecasts for both the industry and the economic system. Also on this
technique, industry is in comparison in opposition to other industry and groups of
company in opposition to other company. Usually, businesses are compared with
others inside the same industry.
Therefore, the Fundamental analysis is a three phase analysis of
a) The Economy
b) The Industry and
c) The Company
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C I M S B-SCHOOL, BANGALORE P a g e | 7
Phase Nature of
Analysis
Purpose Tools and techniques
FIRST Economic
Analysis
To study the impact of
Macro Economic Factors on
Stock Market Fluctuations.
Economic indicators
GDP, Interest Rates,
Inflation,
SECOND Industry
Analysis
To assess the prospects of
various company groupings.
Industry Analysis,
Industry life cycle,
Porters Five Forces Model.
THIRD Company
Analysis
To examine the financial
and Non-financial factors of
a company to determine
whether to buy, sell or hold
the stocks of a company.
Analysis of financial
Factors Analysis of the
companies through
1) Common size
2) Comparative size
Valuation of equity shares of
selected pharma stocks to
compute its intrinsic value
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C I M S B-SCHOOL, BANGALORE P a g e | 8
Strengths of Fundamental Analysis
Long term trends
Fundamental analysis is beneficial for long term investments based on long-term
trends. The capability to pick out and expect long-term economic, demographic, and
technological or consumer trend can benefit investors and facilitates in choosing the
proper industry businesses or company.
Value spotting
Sound fundamental analysis will help to identify businesses that constitute a better
value. Many legendary investors think for long-term and price. Fundamental analysis
can assist find the companies in groups with valuable assets, balance sheet, strong
profits.
Business Acumen
One of the most obvious, however less tangible rewards of fundamental analysis is the
improvement on thorough understanding of the enterprise. After research and
analysis, an investor could be acquainted with the important thing sales and profit
drivers (forces) of a company. Profits and earnings expectancies can be effective
factors of equity prices. A thorough understanding can help an investors keep away
from companies that are vulnerable to shortfalls and identify those who hold to
deliver.
Value Drivers
Fundamental Analysis permits investors to increase an understanding of the key value
drivers in the company. A stock's price is closely encouraged by using the industry
organization. By analysing these corporations, investors can better position
themselves to identify possibilities which might be at high risk (software sector), low
risk (utilities sector), growth oriented (electronics product), value driven (oil sector),
non-cyclical (customer staples), cyclical and so on.
Knowing Who is Who
Understanding a company’s concern, investors can better categorize shares in their
relevant industry that may make a massive difference in relative valuations. The
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C I M S B-SCHOOL, BANGALORE P a g e | 9
primary cause of buying a share is to sell it eventually at a higher price. In lots of
cases, dividends are also to be predicted. For this reason, dividends and price changes
constitute the return from making an investment in stocks. Therefore, an investor
would be involved to understand the dividend to be paid on the share within the future
as additionally the future price of the share. These values can simply be estimated and
not predicted with certainty. These values are broadly speaking determined by way of
the overall performance of the company which in turn is encouraged with the aid of
the overall performance of the industry to which the company belongs and the general
economic affairs and socio-political state of affairs of the nation.
An investor who would really like to be rational and scientific in his investment
interest has to evaluate a number of information about the performance and the
anticipated destiny overall performance of businesses, industries and the economy as
a whole earlier than taking funding selection. Every proportion is thought to have an
economic worth based totally on its gift and future incomes capability. This is referred
to as its intrinsic value or essential value. The reason of fundamental analysis is to
evaluate the current and future earning capacity of a share based totally at the
economy, industry and company basics and thereby examine the intrinsic value of the
share. The investor can then examine the intrinsic value of the share with the
prevailing market price to reach at a funding choice. If the market price of the share is
underneath its intrinsic value, the investor would decide to buy the share as its miles
under-priced and vice-versa. The price of one of these share is expected to move up in
future to match with its intrinsic price.
Importance of Fundamental Analysis
1. Earnings
The important thing for all investors’ look after is earnings. Before investing in a
business scrip investor need to realize how a good deal the company is making in
income. Future earnings are a key issue because the future prospects of the business
enterprise and growth opportunities are determinants of the stock price.
Factors determining profits of the company are such as sales, expenses, assets and
11. FUNDAMENTAL ANALYSIS
C I M S B-SCHOOL, BANGALORE P a g e | 10
liabilities. A simplified view of the income is earnings per share (EPS). This is a
determination of the profits which denotes the amount of earnings for every
outstanding share.
2. Profit Margin
Amount of earnings do not show the overall story, growing earnings are good
however if the cost will increase more than revenues then the profit margin isn't
enhancing. The profit margin measures how much a business enterprise keeps in
profits out of their sales. This degree is therefore very useful for evaluating
comparable corporations, inside the same industry.
Higher earnings margin indicates that the corporation has better control over its costs
than its competitors. Profit margin is shown in percentage and 10% earnings margin
denotes that the organization has net earnings of 10% for each rupee of their revenues.
3. Return on Equity (ROE)
Return of Equity (ROE) is an economic ratio that doesn't consider the stock price.
Because it ignores the price entirely. It can essentially be notion of because the parent
ratio that always needs to be considered.
This ratio is a measure of how efficient an organisation is in producing its profits. It is
a ratio of revenue and profits to proprietors ‘funds (Net worth of the Company)
An easy instance of this is that if company A and company B, each generate net
profits of Rs 1 Million but company A has equity capital of Rs 10 Million but
company B has equity capital of Rs 100 Million. Their ROE could be 10% and 1%
respectively meaning that company A is more sound and efficient as it was able to
produce the equal amount of profits with 10 times less equity.
Company Net Profit Equity ROE
A 1mn 10mn 10%
B 1mn 100mn 1%
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C I M S B-SCHOOL, BANGALORE P a g e | 11
The reason for why this measure is so important is because it contains info such as:
Leverage (which is the debt of the company)
Revenue, profits and margins
Returning values to shareholders
Good approximation is that ROE should be 10-40% greater than its
peer.
4. Price-to-Earnings (P/E)
While taking the current market price into attention, the most popular ratio is the
price-to-earnings (P/E) ratio. Because the name endorse it is the current market price
divided by its earnings per share (EPS). It’s far a clean manner to get a quick
appearance of a stock's value.
An excessive P/E suggests that the stock is priced pretty high to its profits, and
companies with higher P/E therefore seem more high-priced. But, this degree, in
addition to other economic ratios, needs to be compared to similar companies within
the same sector or to its very own historical P/E. that is because of unique
characteristics in different sectors and changing markets situations.
This ratio does not tell the entire tale because it does not account for increase in
growth. Usually, companies with high income growth are traded at better P/E values
than groups with more mild growth rate. For that reason, if the business enterprise is
growing rapidly and is predicted to maintain its growth in the future this present day
market rate may not appear so high-priced. This is the reasoning for the lifestyles of
different investment styles; value vs. increase stocks.
Example
While some sectors generally have low P/E measures, different sectors normally have
higher ratios. For instance, utilities typically have P/E ranging from 5 to 10 whilst
technology organizations normally have a P/E ratio starting from 15 to 20 or above.
This is due to expectancies inside the market about the arena and its profits-growth
opportunities. The software sector has strong earnings and isn't predicted to grow
unexpectedly whilst generation businesses are anticipated to develop faster and have a
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tendency to need much less capital for its increase.
A good way to account for growth, the P/E ratio can be changed into the
Price/earnings to growth (PEG) ratio. A PEG ratio is calculated by means of dividing
the stocks P/E ratio via its predicted 12-month growth rate. A common rule of thumb
is that the growth rate ought to be more or less equal to the P/E ratio and as a result
the PEG ratio have to be round 1. A quite low PEG ratio shows an undervalued stock
and a PEG ratio an awful lot greater than 1 indicates an overvalued stock
The PEG ratio can be very informative determine, specifically for fast growing and
cyclical groups. In this one ratio you get an understanding of the company's earnings,
growth expectations and whether it's miles buying and selling at a reasonable charge
relative to its fundamentals.
5. Price-to-Book (P/B)
A price-to-book (P/B) ratio is used to evaluate a stocks market price to its book price.
It is able to be calculated because the current share price divided to the book price per
share, in a broader feel, it is able to also be calculated as the total market
capitalization of the company divided by using all of the shareholder’s equity.
This ratio offers positive concept of whether or not an investor is paying too high
price for the stock as it denotes what would be the residual value if the enterprise went
bankrupt these days.
A higher P/B ratio than 1 denotes that the share price is higher than what the
enterprises assed might be bought for. The distinction indicates what investor reflect
on consideration on the future growth capacity of the company.
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Pharmaceutical Sector: - An Overview
Introduction
The Indian pharmaceuticals market is the third largest in terms of volume and
thirteenth largest in terms of value, as per a report by Equity Master. Branded generics
dominate the pharmaceuticals market, constituting nearly 70 to 80 per cent of the
market. India is the largest provider of generic drugs globally with the Indian generics
accounting for 20 per cent of global exports in terms of volume. Of late, consolidation
has become an important characteristic of the Indian pharmaceutical market as the
industry is highly fragmented.
India enjoys an important position in the global pharmaceuticals sector. The country
also has a large pool of scientists and engineers who have the potential to steer the
industry ahead to an even higher level.
The UN-backed Medicines Patent Pool has signed six sub-licences with Aurobindo,
Cipla, Desano, Emcure, Hetero Labs and Laurus Labs, allowing them to make generic
anti-AIDS medicine TenofovirAlafenamide (TAF) for 112 developing countries.
The Indian pharmaceutical enterprise is anticipated to grow at 20 consistent with cent
Compound Annual growth rate (CAGR) over the next five years. The Indian pharma
industry, that's anticipated to develop over 15 per cent consistent with annum among
2015 and 2020, will outperform the global pharma enterprise, which is set to grow at
an annual rate of 5% among the same periods. Currently the market size of the
pharmaceutical industry in India stands at US$ 20 billion. As on March 2014, Indian
pharmaceutical manufacturing centres registered with the US Food and Drug
Administration (FDA) stood at 523, highest for any country outdoor America.
Domestic pharmaceutical marketplace grew at a CAGR of 12 per cent year-on-year in
February 2016, broadly in step with the average of 12.9%. Since April 2015. Indian
pharmaceutical firms are eyeing acquisition possibilities in Japan's developing
frequent market as the Japanese government objectives to increase the penetration of
usual tablets to 60 % of the market by way of 2017 from 30% in 2014, because of
ageing populace and rising health cost. India has the largest wide variety US FDA
compliant Plant. The industry is anticipated to attain US$ 55 million by 2020, out of
which US$ 30 million will be for exports. India's biotechnology industry comprising
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bio-prescribed drugs, bio-offerings, bio-agriculture, bio-industry and bioinformatics is
expected grow at a 30% a year and attain US$ 100 billion by means of 2025.
Biopharma, comprising vaccines, therapeutics and diagnostics, is the largest sub-zone
contributing nearly sixty-two according to cent of the whole revenues at Rs 12,600
crore (US$ 1.9 billion).
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Chapter 2
REVIEW OF LITERATURE AND RESEARCH DESIGN
Review of Literature: -
Khan and Zuberi (1999). Being taken into consideration as mattress-rock of Security
Analysing investment, Fundamental evaluation performs an exceptionally crucial
function to analysts. This is pinnacle-ranking and essential technique in share
investment. For this reason, this could be a reasonably strong base, on which we will
make investment choices effectively. There are approximately 90 % investors that
uses fundamental analysis.
Warrant Edward Buffett, who made maximum of cash from investment; he's an
exquisite instance of a successful people of fundamental analysis. His analysis
centered on the simplicity of the business, the consistency of its working history, the
Splendour of its long-time period possibilities, the satisfactory of control, and the
company’s ability to create price (Banchuenvijit, 2008)
The primary aim of fundamental analysis is figuring out the weaknesses of the market
at some stage in the formation of market share price, through elaborating the amount
of deviation of the market price of stocks relative to the real-intrinsic value of stocks.
Fundamental analysis studies have involved testing the capability of essential alerts to
expect both future earnings or stocks returns. In addition, it assessments for other
contextual elements along with the economic system or industry which can affect the
prediction of future earnings or stock returns (Seng, 2011)
Richardson (2006), fundamental analysis is based upon building high quality
estimates of the parameters in the valuation, which may be written in the following
three mathematically equivalent forms: the discounted dividend version, the loose
coin’s waft model, and the residual profits model. Fundamental analysis entails the
usage of present day and past economic statements in conjunction with industry and
financial facts in order to determine companies‟ intrinsic price and perceive mispriced
securities (Kothari, 2011)
Galatian, Gerasimova and Bykovsky (2011) the factors may be analysed, which
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should be taken into account on every step while carrying out the fundamental
analysis of an organisation, and also observe the ability of investor, who wants to
create an attractive portfolio of stocks.
Kim and Doyoun (2010) became determine the intrinsic value by means of
Discounted Cash flow model and free cash flows of the firm have been projected and
discounted to the present value at the decent discount rate calculated through
weighted average cost of capital. with the aid of adding up discounted free cash flows,
the firm value reckoned, and by using subtracting debt amount, the value of equity
portion become accrued. Via dividing the equity cost by the number of outstanding
share, the final intrinsic cost of each share determined. This paper examines how well
the firm-basis principle predicts the price.
Research design
Statement of the Problem:
Equity research is an act of making an ex-ante evaluation of equity shares. The
purpose of which to evaluate the investment worthiness of equity share & find out
about appropriate timing of investment in such shares. An important method of
conducting equity research is through fundamental analysis. Fundamental analysis is
an analysis of various fundamental factors likes economic aggregate, industrial
indicators, financials related to companies. Under fundamental research an investor or
portfolio manager analyses several factors to have a fair idea about the growth &
development of the economy, industry and company as a whole to forecast the future
trend of market. When the capital market in particular seems promising the different
equity shares are evaluated by applying appropriate techniques. The aim of which is
to find out undervalued shares or shares which are likely to do better in future.
Similarly, fundamental analysis can also be carried out at the time of disinvestment
also. Here portfolio manager is interested to identify the appropriate timings for
liquidating its investment in particular share.
Pharmaceutical market is one of the largest in India. It ranks 4th
in world pertaining to
sales. The market capitalisation of pharmaceutical is 8.63% in BSE and 6.93% in
NSE. Most of the investor usually include pharma stocks in their portfolio. A study on
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fundamental analysis of pharma stocks will be highly useful to such an investor for
their investment strategy.
Scope of the study:
1) The study will be conducted at Mentes Capital in Girinagar, Bangalore.
2) This study gives an overview on pharmaceutical stocks
3) This study consists of Economic-Industry-Company framework of analysis with
the following aspects
a) Economic analysis consists of various variables such as inflation, interest rates,
foreign exchange rates, infrastructure, and monsoon, economic & political stability.
b) Industry analysis consists of Demand, potential market, targeted Industrial growth.
c) Company analysis consists of financial statement, analysis of financial statements,
Companies prospects, growth, and Management board of company.
Objective of the study:
To gain in-depth knowledge regarding fundamental analysis.
To study the macro economic factors which directly or indirectly influence the
performance of selected pharma stocks.
To analyse the prospects of pharmaceutical Industry through industry analysis.
To conduct company analysis of selected pharmaceutical company stocks
through its financials.
To suggest the investors an appropriate strategy based on study at Mentes
capital, Bangalore.
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Methodology of Data Collection:
Exploratory research method will be adopted for the study. The study will be
done mainly based on secondary sources of data.
The fundamental analysis will be conducted for selected three companies of
pharmaceutical industry namely Sun pharma, Lupin, & Dr Reddy Labs. These
companies are selected based on their market capitalisation
This study requires qualitative and quantitative information related to
companies such as financial statements, performance charts, stock prices,
annual reports, management reports etc. The data will be collected from
various secondary sources such as company website, various Publication
books, magazines, newspaper, journals and reports prepared by research
Scholars etc.
Macro-economic analysis
o GDP
o Interest rates
o Inflation
Industry Analysis
o Industry Life Cycle
o Porter’s Five Forces
o Analysis of sector
Company Analysis
o Financial Statement Analysis
Horizontal
Vertical
Intrinsic Value is one major assumption in regard to equity valuation. Market
value of the publicly traded securities could be different from the intrinsic
value of the securities. An estimate if intrinsic value reflects the view of real
value of an asset.
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Valuation Process state three general valuation steps which involves
understanding the business, forecasting company performance, selecting the
appropriate model, converting forecast to a valuation and the last is applying
the valuation conclusion.
o Valuation
Relative valuation
DCF valuation
Analysis of Data:
The analysis will be conducted using EIC approach i.e. Economic analysis, Industry
Analysis and Company Analysis. The data so collected will be analysed through
tables, charts, graphs, averages, ratios, correlation, beta, alpha etc. statistical
techniques.
Limitations of the study:
1. The main limitation of this study is time constraint.
2. EIC analysis of Pharmaceutical company stocks uses only limited variables for the
analysis.
3. The data for this study is based on secondary sources only.
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Chapter 3
Profile of the Organisation
Industry Profile
Industry Overview:
The services area has been a super stimulus to the Indian economic system accounting
for 56.9% in keeping with cent of the gross Domestic product (GDP), in which the
financial services section has been a major contributor. The growth of the financial
area in India at present is nearly 8.5% every year. The last decades have seen the
sector growing a greater modern-day outlook. The government of India has helped on
this development, introducing reforms to liberalise, regulate and enhance the nation
economic and financial services. These days, India is acknowledged as one of the
world's most vibrant capital markets, notwithstanding challenges, the arena's future
seems to be in precise fingers. The asset management industry in India is most of the
quickest developing in the international. Total asset under management (AUM) of the
mutual fund enterprise clocked a Compound Annual growth rate (CAGR) of 12.05
consistent with cent over FY07-15 to reach US$ 179.6 billion. company investors
accounted for round 45.9 per cent of overall AUM in India, at the same time as High
Net worth individuals (HNWI) and retail buyers account for 28.6 consistent with cent
and 22.9 according to cent, respectively. The Indian capital markets have witnessed a
metamorphosis over the past decade. India is now located a number of the mature
markets of the arena. Key revolutionary initiatives taken by way of the Indian market
institutions has been the depository and percentage dematerialization structures that
have greater the efficiency of the transaction cycle, changing the flexible, however
regularly exploited, ahead buying and selling mechanism with rolling agreement, to
bring about transparency, Corporatisation of stock exchanges and so forth.
Indian capital markets have rewarded foreign Institutional investors (FIIs) with
appealing valuations and increasing returns. Many new instruments have been
introduced in the markets, which include index futures, index options, derivatives and
alternatives and futures in pick out shares.
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Source: - http://www.ibef.org/industry/financial-services-india.aspx
Organisation Profile: -
Founder: Mr Kiran Bindu & Mr C. Moral
About company:
In the fast changing dynamics of financial markets decisions involve knowledge,
analytics and experience, for blending the three to give a robust pipeline of trading
and investing Ideas to help outperform chosen benchmark MENTES CAPITAL
come into incorporation on 2nd
July, 2015. The team of analyst’s track stocks, gather
market intelligence and access information via publicly available sources to bring to
you high probability of investment successes. Over the years we have spent in these
markets the founders have honed their skills and have a reputation of dispassion and
focused professionals. The proprietary methods of stock screening and valuation to
find mispriced securities reveal investment and trading opportunities which have a
good success rate. Mentes Capital couple Technical and Fundamental sides of stock
Screening tools in our trade thus giving you the best time to exit or enter mispriced
assets. Mentes Capital is promoted by two finance professionals with a background in
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Trading and Investments and also a robust knowledge of conducting Financial
Research and Analysis for Corporate and even Non Profit Organizations. The
Promoters bring in experience in Investment management and investment appraisal.
Located in Bangalore with an access to specialized financial professionals with an
expertise diverse areas like International Financial Reporting system to Income Tax to
Derivatives to Macro Economics, the firm has a good network of experts who
contribute to the Knowledge available to make sound investment decisions. It is a
platform which is specially designed for working and business professionals who
don’t have time to track the Stock Market and wants to make good returns on their
investments. Mentes capital provides a platform for corporate finance, venture capital
practices, private equity and mutual funds. Merger and Acquisition is newly added up
working of Mentes Capital. A person can transform his skills into perfection, a hard-
core research over a particular stock is being done and then they make an interim
report over that and after that recommendation is given to the prospective clients. To
make people knowledgeable about the Equity Market, Mentes Capital also organizes
seminars related to Stock Market. They have globally presence with having their
clients in Middle East also. The research panel consists of highly qualified analysts
who work with Mentes Capital with full dedication.
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Vision:
Our vision at MENTES CAPITAL to be the nation’s top five financial advisory over
the next decade with a national reach and presence across all markets sectors.
Mission:
Our mission at MENTES CAPITAL is to provide reliable financial advisory in the
areas of Corporate Finance and Investments and Risk management through which
clients can benefit from. It will increase our core strengths continuously be investment
in our people, processes and practices.
Values:
‘Client first and Ethics before Clients’ Clients are important but ethics are before
clients, Mentes capital believe that a strong relationship should be built with clients as
it is not a short term business.
Quality Policy:
At MENTES CAPITAL, we always aim and strive to provide the best service and
recommendation of stocks to our prospective clients.
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About Founders:
KIRAN BINDU
Kiran Bindu has domain expertise in Finance. His areas of interest are Financial
Derivatives and Risk Management. Starting in 1995 Kiran has experience in
Accounting and Auditing areas too. His past corporate credentials include Companies
like Indus League Clothing Limited, MCS Software Consulting and System Domain.
Kiran has over 12 years of Teaching Experience in some of the Best schools in
Bangalore and France. He has Presented Papers in conferences at the International
Week at ESC Clermont (An AACSB accredited French Graduate School of
Management) in 2009 and published articles for Journals. He had delivered corporate
training in Finance in Oracle, HP and Symbol Technologies. His training on Financial
Spreadsheet Modelling has enhanced the learning experience of thousands of his
students over the past 12 years. Valuation is another area of passion, in the recent past
he has valued companies and natural resources like mines for Interest groups in the
Social Activism sphere. He has experience analysing the social cost of PPP and
raising pertinent questions before the Regulatory authorities in the areas of civil
aviation and Electric Utility Companies. As a Mentor at a leading Accelerator called
KYRON he has guided the financial projections and valuation effort of over a dozen
promising tech start-ups. In his spare time Kiran is an avid fitness enthusiast. He like
reading anything on Finance and follows global financial markets keenly.
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C MORAL
C Moral holds a Post Graduate Diploma in Business Management from Jain
University Bangalore given under the collaboration of Entrepreneurship Development
Institute of India (EDII) Ahmedabad. He has worked in Deutsche Bank, HBJ Capital
and Phillip Capital as an Investment Analyst and Advisor handling large teams of
Advisors and Private Bankers. He has a passion to create awareness of various aspects
of financial markets. As a research analyst and financial planner his experience helps
clients make better investment choices. He is young, energetic and brilliant in spotting
mispriced assets and has great network in the industry. Young investors and first time
investors can especially seek his guidance on how to invest their savings and can
expect a robust and informed response from him. Be it Traders or Investors speaking
to C Moral get trading tips and advices online real time. While Investors get insight
into stocks likely to be solid multibaggars in years to come.
Source: - http://www.mentescapital.com/about-us.html
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Competitors of Mentes Capital:
Mentes Capital being a top research company have many direct competitors &
indirect competitors.
Direct Competitors: Direct competitors are those which are directly related to the
business of the company. Following are some direct competitors of Mentes Capital.
CapialVia
Equicom Financial Services
Stock Axis
Epic Research
Indirect Competitors: Indirect Competitors are those which have similar kind of
services with some different business model. Normally these are broking firms.
Share khan
Religare Securities
Motilal Oswal
HDFC Securities
ICICI Direct
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Service Products of Mentes Capital:
Mentes Capital provide services in Trading, Investment and Corporate Finance and
Research.
Trading:
Cash
Intraday calls are based on technical analysis of after various level of
screening process through technical tools like VSA &RSI etc. on each call.
We have the only superior plan to help you to give descent ROI of 2%-5%
every day with proper risk and rewardbase estimation of the call
Future
Stock Future trading is the only medium that Mentes Capital believes that a
man could be rich and wealthy but proper follow up in terms of entry and exit
is important at every single investment, where stop loss is strictly mandated.
Purely on technical based calls provided by our certified financial analysts
with experienced more than 30 years in the stock market.
Options
Option trade is a derivative contract which disseminates the holder is having
right but not the obligation, to buy or sell shares of the underlying financial
securities at a particular price on or before the expiry date. It is also known as
derivative strategy with low risk in the riskiest market with a gain of
handsome money. This service is designed for them who want to book 20%-
40% profit per day in Nifty and stock option segment.
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Commodity
Commodities consist of Bullions, Base Metal & Energy. Traders generally
trade in Bullion Segment i.e. all the Gold & Silver, MCX Metals (Copper,
Zinc, Lead, Nickel, Aluminium & MCX Energy Segment I.e. Crude and
natural Gas.
Signature Hedging
Hedging or limiting your losses is the strategy adopted only by the most
sophisticated investors. These often complex strategies are restricted to
evolved investors. At Mentes Capital our aim to ensure that our clients’ money
is smart money and smart money always wins. Irrespective of the market
turmoil. The best way to understand hedging is to think of it as insurance.
When people decide to hedge, they are insuring themselves against a negative
event. This doesn't prevent a negative event from happening, but if it does
happen and you're properly hedged, the financial impact of the event is
reduced. So, hedging occurs almost everywhere, and we see it every day.
Investment:
Mentes Multi-bagger
Mentes Capital picks the potential Multi-bagger companies which have a
potential to report explosive growth over a period of time. We predict from
our many years of experience of tomorrow’s large cap from today’s small or
mid cap. Well before FII’s or DII’s enter into a stock we will recommend
monthly one scrip with exclusive reports on every scrip recommended,
Monthly one scrip so as to build up a healthy portfolio in a years’ time. This
will help our client to create “MASSIVE WEALTH”.
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Mentes Bulls Eye
Mentes capital rightly observed and realized some short and midterm
opportunities in the stock market. These rare but sure shot money making
agenda, which we made it incredibly possible in the past also for the investors
and traders. We believe that 25-30 such opportunities in a year’s time frame
with expected return of 25% -40% can be grabbed from the market.
Mentes PMS (Portfolio Management Services)
Mentes Capital create stock portfolio which includes midcaps, small caps and
large cap with mix variant potential businesses which have a greater amount of
tendency to become large cap. Portfolio is important to reduce the risk without
sacrificing the return. It is a complex process which tries to make investment
activity more rewarding and less risky. Across the world high net worth
individual turning to specialist portfolio management services for managing
their wealth. This is personalized tailor made service for high net worth
individual like you. We provide professional solutions customized to meet
your financial goals. Meeting investment easy yet rewarding high net worth
individual like you.
Corporate Finance:
Here specific focus is on start-ups and Entrepreneurs. Bangalore provides a vibrant
eco system for technology intensive firms to come to market with their app, service
and product offering quickly and scale their operations because of the availability of
talent. Non tech related start-ups have also come up in recent times delivering various
services and aggregating service providers.
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Research:
Fundamental Research
Fundamental Analysis is an attempt to analysis various fundamental and other
basic factors that affect the risk and the return of the securities. The analysis of
economy, industry, & company fundamental is the main ingredient of the
fundamental approach. Fundamental analysis helps to analyse the strength of
the industry. The objective of Fundamental analysis is to appraise ‘intrinsic
value’ of a security.
Technical Research
Applied research oriented toward engineering disciplines (but not to a specific
product or process) and aimed at developing tools and test equipment and
procedures, and at providing solutions to specific technical problems.
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BBC Analysis:
Brief of the business
Mentes Capital is an independent equity research and financial advisory firm,
related to Equity Market. Mentes Capital is a platform where a hard core
research is done for a particular industry and best gems are picked out after the
research and then recommendation is given to the prospective clients. Our
clients are from all over the India and are business and working professionals
those who have some knowledge about the Equity Market and can easily
understand the business model of the company. Mentes Capital have unique
business model which is especially designed for those people who don’t have
enough time to track the market on daily basis and wants to make some decent
returns from their investments. Business model of Mentes Capital is totally
based on the hard core research, recommendations and satisfactions of the
prospective clients.
Best Practices
A best practice is a method or technique that has been generally accepted as superior
to any alternatives because it produces results that are superior to those achieved by
other means or because it has become a standard way of doing things. Mentes
Capital is a start-up so they don’t have such kind of best practice as their
business model is totally different, hence doesn’t required any alternative for
their business. The services they provide are very critical and planned by
highly qualified professionals.
Culture of the Organization
Organizational culture is a system of shared assumptions, values, and beliefs, which
governs how people behave in organizations. The organizational culture of Mentes
Capital is: -
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Employee Friendly: - Employees are treated as a friend here, they have
free rights to speak for their issues and for any kind of improvement which
they think is beneficial for the organization.
No Diversification: - Mentes Capital is strongly against of diversification,
employees of any culture, religion or community are welcomed and
equally treated.
Co-operative Environment: - The environment here is very cooperative,
people can manage and balance their professional and personal life very
easily. There is no hard and fast rule of time management. Managers are
very friendly and of helping nature.
Dressing Rule: - There is no restriction of dressing but it should be
professional. On Friday’s and Saturday’s, employees are free to wear
casual or semi casual.
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Details about SWOT Analysis:
Strengths:
Being a Financial Advisory Firm, Mentes Capital’s management is a core
strength of the company. Company is managed by two Finance Professionals
Mr Kiran Bindu and Mr C. Moral. Both of them have expertise and robust
knowledge of the industry.
The services provided by the Mentes Capital are the backbone of the
company, they are the sole-service provider of these kind of financial services
related to Equity Market. The charges are very nominal for the services they
provide and the work done for those services is highly valuable.
Research is one of the strength of Mentes Capital as, the research they do for
finding out the gems stock from the market is very critical and important.
They have highly qualified research team for the fundamental and technical
research.
Mentes Capital is globally present now, people all over the country and also in
Middle East knows about Mentes Capital, people from almost every part of
the country are member of Mentes Capital, which makes Mentes Capital is a
successful and renowned company in Financial Industry.
Weakness:
As a newly start-up company, adequate human resource is a problem for
Mentes Capital. They have limited number of employees and work pressure is
quite high, so having proper workforce is a weakness for them. They are
trying to deal with and soon there will be proper human resource for Mentes
Capital.
It always takes time for a plant to grow in a tree, likewise Mentes Capital is a
Young Brand, and it took time to establish properly in the market. In the
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current scenario, people are brand oriented so they did not consider new start-
ups they always trust old because for them ‘Old is Gold’
Opportunities:
Building a relationship with client is quite important and this opportunity
Mentes Capital is having as they deal with clients in such a manner that they
can build their trust and good customer relationship with the clients.
People are scared of Equity Market, they generally don’t want to park their
money in the Equity, Mentes Capital making people aware about Equity
Market and give them opportunity to start Investment with less amount so that
they feel safe and also get some good returns.
Threats:
Artificial Intelligence is a biggest threat for Mentes Capital, as there will be
some virtual robot who will update a person about the stocks and market and
person will start believing them. There will be some virtual computer and
that will do all the research work and give updates. The result will be close
to 80% exact and people will trust it. This will create a big threat to the
companies in this industry.
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Porter’s Five Force Model
1. Rivalry:
Market saturation will often prevent a single player from gaining an overriding sales
advantage and experiencing a surge in revenue. This internal threat is present in
almost every industry that is not dominated by a monopoly. The rivalries for Mentes
Capital are.
CapialVia, is a Financial Market Research and Consulting Company which
provides recommendation in day-to-day trading and commodities.
Stock axis, is an Investment Advisor which provides recommendation for
Multibaggars Stocks.
The Equicom Financial Services, is new start up and turns out to be a threat
for Mentes Capital.
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Epic Research that comes out to be the biggest rivalryfor Mentes Capital.
Amore Growth Financials, it is investment advisory and wealth management
firm provides advice for wealth management.
2. Threat of new entrants:
Barriers to entry are one of the most crucial components of Porter's framework.
Barriers to entry can exist in the form of patents, substantial capital requirements,
government regulations, access to a proper distribution network and technological
expertise.
If there is any new entrant with the same model, there will be huge
competition in the market.
Profitability of the existing firm will be affected.
Growth of the industry will face decline.
Competition will face a new level.
Equity Market is a critical market; anyone will not be able to survive here.
3. Bargaining power of buyer:
Shifted towards the favour of buyers.
Buyers do bargaining as their sole right.
They always ask for discounts and offers.
Buyers consider that price of our services are quite high.
Investors always do bargaining as they will get their returns after a quite long
time.
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4. Bargaining power of suppliers:
The threat of disproportionate supplier bargaining power is typically a problem for
smaller companies that are exclusively dependent on the inputs provided by one
seller.
As there are old players present in the market and new players entering in the
market.
Advisors, their bargaining power has grown over the last 20 years.
Suppliers are very less in this industry, so there is no much bargaining power.
Service providers don’t need suppliers for their services, as there is no bargain
which can happen.
5. Threat of substitution:
5.1 Equity Market and Derivatives:
CapialVia
Stock Axis
Equicom Financial Service
SS Capital
5.2 Commodities:
MCX
Share khan
5.3 Broking Firms:
India Infoline
Karvy Financial Solutions
Kotak Securities
HDFC Securities
ICICI Direct
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Chapter 4
Data Analysis and Interpretation
Fundamental Analysis is a unique technique to measure the intrinsic value of an
equity share by analysing economic, industry, and company fundamental factors.
Fundamental analyst studies the entire factors that can have an effect on the security
price, consisting of macroeconomic elements (like the overall economy and industry
conditions) and investors related factors (just like the financial condition and
management of businesses).
The Fundamental analysis is a three phase analysis of
a) The Economy
b) The Industry and
c) The Company
Phase Nature of
Analysis
Purpose Tools and techniques
FIRST Economic
Analysis
To study the impact of
Macro Economic Factors on
stock market fluctuations.
Economic indicators
GDP, Interest Rates,
Inflation,
SECOND Industry
Analysis
To assess the prospects of
various company groupings.
Industry Analysis,
Industry life cycle,
Porters Five Forces Model.
THIRD Company
Analysis
To examine the financial
and Non-financial factors of
a company to determine
whether to buy, sell or hold
the stocks of a company.
Analysis of financial
Factors Analysis of the
companies through
3) Common size
4) Comparative size
5) Valuation of equity
shares of selected
pharma stocks to
compute its intrinsic
value
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Economy Analysis
GDP
GDP measure the entire cost of goods and services produced in India of particular
period. India: Real gross domestic product (GDP) growth rate from 2010 to 2020
(compared to the previous year)
The statistic shows the growth of the real gross domestic product (GDP) in India from
2010 to 2015, with projections up until 2020. GDP refers to the total market value of
all goods and services that are produced within a country per year. It is an important
indicator of the economic strength of a country. There’s two type of GDP that are
nominal GDP and real GDP. Nominal GDP keep aside the impact of price
adjustments for inflation. Real GDP includes the impact of price changes. Economic
growth also normally measured with the aid of the increase in as GDP suggests the
financial situation it also shapes the attitude of the market concerning positive for
India.
GDP growth rate in India
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Source - http://www.statista.com/statistics/263617/gross-domestic-product-gdp-
growth-rate-in-india/
Interpretation –
The GDP of India was 10.26% in year 2010 but after that it declined in the range of
6% to 7% in the following years. The present GDP of 2016 is 7.45% which indicate
the Indian economy is highly productive which in turn will have a positive impact on
stock market.
Interest Rate
The increasing Interest rate will lessen the current price of future cash flows, inflicting
lack of appeal to investment. Investment should shift rapidly in regard of change in
interest rate. Reserve Bank of India via monetary policy in charge of figuring out the
basic interest rate, in India it’s called “Interest rate”. The shift in interest rate have an
effect on time deposit rate and financial institution credit rate. If the interest rate
increases the cost of capital of the company increases, it reduces the possibility of the
company which in turn influences the share prices. If interest rate increases usually
investor s shift their investment towards fixed income securities than the share market
Inflation
Inflation is a procedure of increasing price of products and services in well known.
High inflation rate frequently associated with overheated economies in which the
demand for products and services is an extra than the manufacturing capacity which
leads to pressure to increase in price. In general inflation may want to cause lower in
investment. Because untamed inflation could result in increase in interest rates,
lowering the purchasing power, and if the government not able to intervene it could
cause recession. Inflation and stock market are negatively related. If inflation rises it
leads to increase in the prices of raw material or finished goods which in turn affect
the demand and profitability of the company and vice- versa
.
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Government Initiatives in Pharma Sector
The Addendum 2015 of the Indian Pharmacopoeia (IP) 2014, posted by way of the
Indian Pharmacopoeia commission (IPC) on behalf of the Ministry of health & circle
of relatives Welfare, is predicted to play a big role in enhancing the first-rate of
medicines that might in turn promote public health and boost up the increase and
improvement of pharmaceutical sector.
The authorities of India unveiled 'Pharma vision 2020' geared toward making India a
worldwide chief in quit-to-give up drug manufacture. Approval time for new centres
has been reduced to boost investments. In addition, the government introduced
mechanisms such as the Drug charge manipulate Order and the national
Pharmaceutical Pricing Authority to cope with the issue of affordability and
availability of drug treatments. Some of the fundamental initiatives taken by means of
the government to sell the pharmaceutical sector in India are as follows:
Indian Pharmaceutical association (IPA), the professional association of
pharmaceutical organizations in India, plans to prepare information integrity
suggestions with a view to assist to degree and benchmark the pleasant of Indian
corporations with worldwide friends.
The government of India plans to incentivise bulk drug producers, including each
state-run and personal organizations, to encourage. Make in India programme and
reduce dependence on imports of lively pharmaceutical ingredients (API), nearly 85
in line with cent of which come from China.
The department of prescribed drugs has installation an inter-ministerial co-ordination
committee, which would periodically overview, coordinate and facilitate the decision
of the problems and constraints faced by using the Indian pharmaceutical
organizations.
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The department of Pharmaceuticals has deliberate to release a venture capital fund of
Rs 1,000 crore (US$ 154 million) to support Begin-America within the research and
development in the pharmaceutical and biotech enterprise.
Indian and international organizations have expressed one hundred seventy-five
funding intentions well worth Rs 1,000 crore (US$ 146.72million) in the
pharmaceutical region of Gujarat. The memorandums of know-how (MoUs) would be
signed at some stage in the vibrant Gujarat Summit.
Telangana has proposed to set up India's largest included pharmaceutical city spread
over eleven,000 acres near Hyderabad, whole with effluent remedy plant life and a
township for employees, in a bid to attract funding of Rs 30,000 crore (US$ 4.41
billion) in stages. Hyderabad, that is referred to as the bulk drug capital of India,
money owed for nearly a fifth of India's exports of drugs, which stood at Rs ninety-
five,000 crores (US$ 13.94 billion) in 2014-15.
On the release of Cluster improvement Programme of pharmaceutical sector, Mr.
Ananth Kumar, Minister of Fertiliser and chemicals, announced that six
pharmaceutical parks may be authorised and established this 12 month with a view to
have enough infrastructure and facilities for trying out and treatment of medicine and
additionally for offering education to enterprise experts.
Road Ahead
The Indian pharmaceutical marketplace length is predicted to grow to US$ one
hundred billion by means of 2025, pushed via increasing customer spending, fast
urbanisation, and elevating healthcare coverage amongst others. Going ahead, better
growth in home sales would also rely upon the ability of businesses to align their
product portfolio toward persistent therapies for sicknesses inclusive of along with
cardiovascular, anti-diabetes, anti-depressants and anti-cancers which can be at the
upward push.
The Indian government has taken many steps to lessen costs and convey down
healthcare costs. Speedy creation of generic drugs into the market has remained in
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focus and is predicted to benefit the Indian pharmaceutical corporations. In addition,
the thrust on rural fitness programmes, lifesaving tablets and preventive vaccines also
augurs nicely for the pharmaceutical companies.
Investments in Pharmaceutical Sector
The union cabinet has given its nod for the modification of the prevailing foreign
direct investment (FDI) policy inside the pharmaceutical area so as to permit FDI up
to 100 percent under the automated course for production of medical electronics
gadgets concern to positive conditions.
The drugs and pharmaceuticals sector attracted cumulative FDI inflows really worth
US$ 13.45 billion among April 2000 and December 2015, according to statistics
releasedwith the aid of the department of industrial policy and promotion (DIPP).
A number of the primary investments in the Indian pharmaceutical sector are as
follows:
Pink Blue Supply Solutions Pvt Ltd, A Clinical materials provider, has raised
Rs 1.5 Crore (US$ 0.22 Million) In A seed round of investment from
Termsheet.Io, A transaction-targeted service provider for start-up and Investor
Dr Reddy's Laboratories, one of the foremost pharmaceutical companies of
India, has entered into a strategic collaboration settlement with Turkey-based
totally TR-Pharm, to check in and sooner or later commercialise three bio
similar products in Turkey
Lupin has completed the acquisition of US-primarily based GAVIS
pharmaceuticals in a deal worth US$ 880 million, which is anticipated to
beautify its product pipeline in dermatology, managed materials and
excessive-price speciality merchandise.
Cipla Ltd, one of the main pharmaceutical and biotechnology groups in India,
has received US-primarily based everyday drug makers, InvaGen
Pharmaceutical Inc. and Exelan Pharmaceutical Inc., for US$ 550 million,
which is expected to strengthen Cipla's US commercial enterprise
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Cipla announced the purchase of two US-based totally corporations, InvaGen
prescribed drugs Inc. and Exelan prescription drugs Inc., for US$550 million.
Glaxosmithkline prescribed drugs has commenced work on its largest
Greenfield pill manufacturing facility in Vemgal in Kolar district, Karnataka,
with an envisioned investment of Rs1, 000 crores (US$ 146.seventy-two
million).
Lupin has acquired US based totally pharmaceutical companies, Gavis
prescribed drugs LLC and Novel Laboratories Inc, in a deal really worth at
US$ 880 million.
Numerous on-line pharmacy shops like PharmEasy, Netmeds, Orbimed, are
attracting investments from several traders, because of double digit growth in
the Rs 97,000 crore (US$ 14.8 billion) Indian pharmacy marketplace.
StelisBiopharma introduced the leap forward creation of its customised,
multi-product, biopharmaceutical manufacturing facility at Bio-Xcell
Biotechnology Park in Nusajaya, Johor, Malaysia's park and surroundings for
business and healthcare biotechnology at a total project funding amount of us$
60 million.
Strides Arcolab entered right into a licensing settlement with US-based Gilead
Sciences Inc to fabricate and distribute the latter's fee-efficient
TenofovirAlafenamide (TAF) product to treat HIV sufferers in developing
international locations. The licence to fabricate Gilead's low-price drug
extends to 112 nations.
CDC, the United Kingdom development finance group, invested US$ 48
million in Narayana Hrudayalaya hospitals, a multi-speciality healthcare
provider, with an intention to increase less costly treatment in eastern, vital
and western India.
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Cadila Healthcare Ltd announced the release of a biosimilar for Adalimumab
- for rheumatoid arthritis and different automobile immune issues. The drug
can be advertised under the brand call Exemptia at one-fifth of the charge for
the branded model-Humira. Cadila’s biosimilar is the primary in class and an
exact reproduction of the original in terms of protection, purity and potency of
the product, claims the company.
Torrent pharmaceuticals entered into a distinctive licensing settlement with
Reliance existence Sciences for marketing three biosimilar in India —
Rituximab, Adalimumab and Cetuximab. Indian Immunologicals Ltd plans to
set up a new vaccine production facility in Pondicherry with an investment of
Rs 300 crore (US$ 44.02 million).
SRF Ltd has obtained international DuPont Dymel, the pharmaceutical
propellant business of DuPont, for US$ 20 million.
Intas pharmaceuticals is the first global corporation to launch a biosimilar
model of Lucentis, the sector largest selling drug for remedy of degenerative
eye situation referred to as Razumab.
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Industry Analysis
Pharmaceutical sector
The Indian pharmaceutical enterprise is anticipated to grow at 20 consistent with cent
Compound Annual growth rate (CAGR) over the next five years. The Indian pharma
enterprise, that's anticipated to develop over 15 per cent consistent with annum among
2015 and 2020, will outperform the global pharma enterprise, which is set to grow at
an annual rate of 5% among the same periods. Currently the market size of the
pharmaceutical industry in India stands at US$ 20 billion. As on March 2014, Indian
pharmaceutical manufacturing centres registered with the US Food and Drug
administration (FDA) stood at 523, highest for any country outside U S. Domestic
pharmaceutical marketplace grew at a CAGR of 12 per cent year-on-year in February
2016, broadly in step with the average of 12.9%. Since April 2015. Indian
pharmaceutical firms are eyeing acquisition possibilities in Japan's developing
frequent market as the Japanese government objectives to increase the penetration of
usual tablets to 60 % of the market by way of 2017 from 30% in 2014, because of
ageing populace and rising health cost. India has the largest wide variety US FDA
compliant plant. The industry is anticipated to attain US$ 55 million by 2020, out of
which US$ 30 million will be for exports. India's biotechnology industry comprising
bio-prescribed drugs, bio-offerings, bio-agriculture, bio-industry and bioinformatics is
expected grow at a 30% a year and attain US$ 100 billion by means of 2025.
Biopharma, comprising vaccines, therapeutics and diagnostics, is the largest sub-zone
contributing nearly sixty-two according to cent of the whole revenues at Rs 12,600
crore (US$ 1.9 billion).
Growth of Pharmaceutical sector
• The Indian pharmaceuticals market increased at a CAGR of 17.46 per cent in 2015
from US$ 6 billion in 2005 and is expected to expand at a CAGR of 15.92 per cent
to US$ 55 billionby 2020.
• By 2020, India is likely to be among the top three pharmaceutical markets by
incremental growth and sixth largest market globally in absolute size.
• India’s cost of production is significantly lower than that of the US and almost half
of that of Europe. It gives a competitive edge to India over others.
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-
Source: http://www.ibef.org/industry/pharmaceutical-india/showcase#sthash.lD8OuwtQ.dpuf
Generic drugs form the largest segment
With 70 per cent of market share (in terms of revenues), generic drugs form
the largest segment of the Indian pharmaceutical sector.
India supply 20 per cent of global generic medicines market exports in terms
of volume, making the country the largest provider of generic medicines
globally and expected to expand even further in coming years
Over the Counter (OTC) medicines and patented drugs constitute 21 per cent
and 9 per cent, respectively, of total market revenues of US$ 20 billion
Source at: http://www.ibef.org/industry/pharmaceutical-
india/showcase#sthash.lD8OuwtQ.dpuf
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Industry Life Cycle
An enterprise has to grow in cylical manner from very speedy start up growth
to strong mature growth. usually industry lifestyles cycles is assessed with the aid of 4
stages:
a) Start-up level
Start-up level is frequently characterised by using extensive speedy growth.
b) Consolidation level
Prior to start-up degree is consolidation stage, the survivors of start-up level
are becoming more stable. The industry growth continues to be quicker than
the overall economic system as product penetrate and emerge as normally
used.
c) Maturity level
Maturity level characterized through growth that is no faster than the general
economic growth, product become extra standardized and manufacturer are
competing on price basis resulting in lower profit margin.
d) Relative Decline
In relative decline stage, the industry would possibly have slower growth than
the general economy, or in reality shrinks in poor growth.
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Bargaining PowerofSuppliers
1) Volume benefits occurs inputs
standard, available locally,
2) Numerous Suppliers-switching cost
low supplier can go for forward
integration.
3) Raw material cost constitutes more
than 50% of the total expenses
Threats of Substitutes
1) No substitutes for
the medicine
2) Biotechnologyis a
threat to synthetic
pharma products
Barriersto Entry
1) Very low barriers to entry
2) Government policy
supportive for entrybut
price regulationexists
3) Economies of scale exist
4) Proprietarytechnology
exist and product will
exist after 2015.
Industry Competition
1) Highly competitive.
2) Top three players have
40% of market share.
3) Lower fixedcost and high
working capital
Bargaining Power of Buyers
1) End consumer do not have bargaining power
2) Brand identityexists but is in the hands of
Influencer(Doctors)
3) Price sensitivityis less
4) High fragmented market, so buyer
concentrationv/s industry is low
Pharmaceutical Sector through Porters Five Forces Model
1. Industry Competition-
Pharma industry is one of the most aggressive industries within the
country with as many extraordinary players fighting for the market share.
The contention inside the industry can be gauged from the reality that the
top participant in the India has most effective 25% market share, and the
top 3 players collectively have about 40% market share. hence, the
concentration ratio for this industry could be very high. high growth
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possibilities make it appealing for brand new players to enter within the
industry.
Another foremost component that adds to the industry rivalry is the truth
that the access obstacles to pharma Industry are very low. The fixed cost
requirement is low however the requirement for working capital is
excessive. The fixed asset turnover, that is one of the gauges of fixed cost
requirement, tells us that in larger companies this ratio is inside the range
of 3.five to 4 instances. For smaller businesses, it might be even better.
Many smaller players that are targeted on a selected location, have a
higher grasp of the distribution channel, making it easier to succeed, albeit
in a confined way. An crucial truth is that pharma is a stable market and its
growth rate commonly tracks the economic growth of the india with a few
multiple (1.2 instances common in India). although volume growth has
been constant over a time frame, value growth has now not followed.
The product differentiation is one key element, which offers competitive
gain to the companies in any industry. but, in pharma industry product
differentiation is not viable on the grounds that India has observed process
patents until date, with laws favouring imitators. therefore, product
differentiation is not the driving force, value competitiveness is. but,
businesses like Pfizer and Glaxo have created huge manufacturers in
through the years, which act as product differentiation tools. this may
decorate over the long time, as product patents come into play from 2015.
2. Bargaining power of Suppliers- The pharma industry relies upon upon
several natural chemicals. The chemical enterprise is once more very
competitive and fragmented. The chemical compounds used in the pharma
industry are largely a commodity. The providers have very low bargaining
power and the corporations within the pharma enterprise can switch from
their suppliers with out incurring a very excessive cost.
However, but, what can manifest is that the provider can go for forward
integration to become a pharma agency. organizations like Orchid
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chemicals and Sashun chemical were essentially chemical organizations,
who grew to become themselves into pharmaceutical companies.
3. Bargaining power of Buyers- The specific function of pharma industry is
that the end person of the product is different from the influencer (doctor/
physician). The customer has no preference however to buy what
physician says. but, whilst we have a look at the customer's power, we
study the have an impact on they've at the prices of the product. In pharma
industry, the customers are scattered and that they as such does not wield a
lot power in the pricing of the products. but, government with its
guidelines, performs an critical function in regulating pricing through the
NPPA. (National Pharmaceutical Pricing Authority).
4. Barriers to Entry-
Pharma industry is one of the most effortlessly available industries for an
entrepreneur in India. The capital requirement for the enterprise could be
very low, growing a local distribution network is easy, for the reason that
factor of sales is limited in this enterprise in India. but, creating brand
awareness and franchisee amongst doctors is the important thing for long-
term survival. additionally, satisfactory rules by using the government may
also positioned a few limitation for establishing new manufacturing
operations. Going ahead, the approaching new patent regime will raise the
barriers to entry. however it's miles not going to discourage new entrants,
as marketplace for generics will be as large.
5. Threats of Subtitutes- This is one of the benefits of the pharma industry.
anything happens, demands for pharma products continues and the
industry prospers. one of the key reasons for high competitiveness in the
industry is that as an on going concern, pharma industry seems to have an
infinite future. however, these days, the advances made in the subject of
biotechnology, can show to be a threat to the synthetic pharma Industry.
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6. Conclusion-
This model gives a fair concept the industry wherein a organization
operates and the various external forces that have an impact on it.
however, it ought to be stated that any industry is not static in nature. it is
dynamic and over a time period the version, which have used to examine
the pharma enterprise may also itself evolve.
Going ahead, we foresee growing competition inside the enterprise
however the form of competition could be extraordinary. it will likely be
between big players (with economies of scale) and it could be feasible that
a few form of oligopoly or cartels come into play. this is as a result of the
truth that the enterprise will circulate in the direction of consolidation. the
bigger players in the industry will continue to exist with their products
and franchisee. in the Indian context, corporations like Cipla, Ranbaxy
and Glaxo are probable to be key players. though consolidation in the
current big names isn't ruled out. Smaller players, who have no
differentiating strengths, are probably to both acquired or cease to exist.
The barriers to access will increase going forward. The change in the
patent regime, will see new proprietary products developing, making
imitation difficult. The players with big capability might be able to steer
widespread power of fringe players through their aggressive pricing with a
view to create issue for the smaller players. Economies of scale will play
an essential element too. last but not the least, in a sizeable united states of
america of ndia's length, authorities too may have larger position to play.
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NameLastPriceMarketCap.(Rs.cr.)SalesTurnoverNetProfitTotalAssetsNoofsharesO/SEPSP/EMcap/SalesMcap/AssetsNPMarginROAMarketShareAssetsShareIntrinsicValueValuationKratio
SunPharma811.7195354.158017.2-1474.1328209.4240.67-6.13-132.5224.376.93-18%-5.23%25.24%15.40%81405.35overvalue0.42
Lupin1475.366474.519752.472397.359067.8345.0653.2127.736.827.3325%26.44%8.59%4.95%41218.83overvalue0.62
DrReddysLabs3015.6551449.310010.941679.3513758.817.0698.4330.645.143.7417%12.21%6.65%7.51%52501.44undervalue1.02
AurobindoPharm740.743343.518095.11516.348256.0758.5225.9128.585.355.2519%18.37%5.60%4.51%35883.66Overvalue0.83
Cipla512.3541161.3910131.781181.0912470.7680.3414.7034.854.063.3012%9.47%5.32%6.81%49805.82Undervalue1.21
RanbaxyLabs859.836598.556864.94-8797088.0642.57-20.65-41.645.335.16-13%-12.40%4.73%3.87%30628.96Overvalue0.84
CadilaHealth319.432698.345284.431271.125788.6102.3712.4225.726.195.6524%21.96%4.23%3.16%24338.38Overvalue0.74
GlaxoSmithKline3772.9531958.023287.58471.651854.38.4755.6867.769.7217.2314%25.44%4.13%1.01%11141.75Overvalue0.35
DivisLabs982.2526075.653084.01847.063588.0926.5531.9130.788.467.2727%23.61%3.37%1.96%14684.42overvalue0.56
TorrentPharma135122861.9934766234990.8116.9236.8236.706.584.5818%12.48%2.95%2.73%18718.33overvalue0.82
Glenmark774.7521860.25085.61007.535299.6528.2235.7121.704.304.1220%19.01%2.82%2.89%22801.81undervalue1.04
PiramalEnter1019.517592.812401.41372.7415250.1517.2621.6047.207.331.1516%2.44%2.27%8.33%39953.99undervalue2.27
AlkemLab1371.116393.563182.93438.844175.1211.9636.7037.365.153.9314%10.51%2.12%2.28%16235.98overvalue0.99
AjantaPharma1370.8512063.651356.2306.37836.58.8034.8139.388.9014.4223%36.63%1.56%0.46%4760.06overvalue0.39
AlembicPharma604.911403.332011.04286.611002.1818.8515.2039.795.6711.3814%28.60%1.47%0.55%6513.02overvalue0.57
Wockhardt954.510548.071886.55331.822207.9911.0530.0331.795.594.7818%15.03%1.36%1.21%9012.71overvalue0.85
AbbottIndia4742.3510077.162288.64228.96937.522.12107.7544.014.4010.7510%24.42%1.30%0.51%6947.28overvalue0.69
Biocon481.496282241.6361.222651.920.0018.0626.654.303.6316%13.62%1.24%1.45%10773.85undervalue1.12
StridesShasun1045.259338.89929.42532.321801.328.9359.5817.5410.055.1857%29.55%1.21%0.98%6073.88overvalue0.65
SanofiIndia4046.759319.922193.1321.51485.842.30139.6028.994.256.2715%21.64%1.20%0.81%8002.31overvalue0.86
Pfizer1794.458209.21853.3169.821975.524.5715.26117.584.434.164%3.53%1.06%1.08%8410.72undervalue1.02
DrLalPathLab930.67690.92636.6187.97319.238.2610.6487.4312.0824.0914%27.56%0.99%0.17%2066.29overvalue0.27
IpcaLabs589.057433.763085.14256.113055.7112.6220.2929.032.412.438%8.38%0.96%1.67%13467.85undervalue1.81
SunPharmaAdv291.27189.42155.74-39.52103.4824.69-1.60-181.9246.1669.48-25%-38.19%0.93%0.06%563.61overvalue0.08
NatcoPharma397.656926.04715.57152.921143.8317.428.7845.299.686.0621%13.37%0.89%0.62%4119.92overvalue0.59
JubilantLife396.66317.093176.3205.114024.4915.9312.8830.801.991.576%5.10%0.82%2.20%15877.19undervalue2.51
SequentScienti147.13504.45444.8241.31484.2623.821.7384.837.887.249%8.53%0.45%0.26%2041.83overvalue0.58
Shilpa426.153285.7565.484.18630.177.7110.9239.035.815.2115%13.36%0.42%0.34%2628.84overvalue0.80
FDC176.63140.53877.65145.91930.4717.788.2021.523.583.3817%15.68%0.41%0.51%3971.39undervalue1.26
Wyeth1333.853030.52679.3387.92271.792.2738.7034.474.4611.1513%32.35%0.39%0.15%2047.28overvalue0.68
ShasunPharma428.552882.231078.441.34934.876.736.1569.722.673.084%4.42%0.37%0.51%4402.57undervalue1.53
AstraZeneca1152.52881.25517.07-20.84150.752.50-8.34-138.265.5719.11-4%-13.82%0.37%0.08%1429.78overvalue0.50
DishmanPharma337.32721.91478.6958.641341.978.077.2746.425.692.0312%4.37%0.35%0.73%4076.69undervalue1.50
IndocoRemedies2792570.99853.6482.81604.279.228.9931.053.014.2510%13.70%0.33%0.33%3174.16undervalue1.23
GranulesIndia119.752508.241213.3195.23784.9720.954.5526.342.073.208%12.13%0.32%0.43%4342.35undervalue1.73
SectorAnalysis
57. FUNDAMENTAL ANALYSIS
C I M S B-SCHOOL, BANGALORE P a g e | 56
NameLastPriceMarketCap.(Rs.cr.)SalesTurnoverNetProfitTotalAssetsNoofsharesO/SEPSP/EMcap/SalesMcap/AssetsNPMarginROAMarketShareAssetsShareIntrinsicValueValuationKratio
GranulesIndia119.752508.241213.3195.23784.9720.954.5526.342.073.208%12.13%0.32%0.43%4342.35undervalue1.73
SuvenLifeSci1952482.01520.86108.75649.0112.738.5422.824.773.8221%16.76%0.32%0.35%2578.55undervalue1.04
JBChemicals252.552142.131061.42113.581121.448.4813.3918.862.021.9111%10.13%0.28%0.61%4794.12undervalue2.24
FreseniusKabi132.52096.52596.380.59813.3415.825.0926.013.522.5814%9.91%0.27%0.44%3113.04undervalue1.48
UnichemLabs222.052017.171090.9864.4947.639.087.0931.321.852.136%6.80%0.26%0.52%4458.17undervalue2.21
MarksansPharma46.651909.45408.6867.11401.740.931.6428.454.674.7516%16.71%0.25%0.22%1776.99overvalue0.93
CaplinLabs1012.21529.43240.2340.9494.581.5127.0937.366.3716.1717%43.29%0.20%0.05%720.47overvalue0.47
MorepenLab26.81205.53370.260.58377.5344.980.012078.503.263.190%0.15%0.16%0.21%1641.06undervalue1.36
AartiDrugs448.051085.051087.2277.6706.432.4232.0413.981.001.547%10.98%0.14%0.39%3898.03undervalue3.59
Merck643.51068.17939.553.56554.31.6632.2719.941.141.936%9.66%0.14%0.30%3239.85undervalue3.03
Hikal118.25972.02871.8640.52965.938.224.9323.991.111.015%4.19%0.13%0.53%4040.44undervalue4.16
Alembic35.65951.97145.8124.15264.2326.700.9039.426.533.6017%9.14%0.12%0.14%910.84overvalue0.96
NectarLife37.15833.131643.6466.261818.7922.432.9512.570.510.464%3.64%0.11%0.99%7612.06undervalue9.14
TTKHealthcare950737.77482.9316.16156.560.7820.8145.651.534.713%10.32%0.10%0.09%1371.47undervalue1.86
SMSPharma87.1737.32579.2935.24406.898.474.1620.921.271.816%8.66%0.10%0.22%2146.75undervalue2.91
VivimedLabs418.15677.56431.5818.94967.891.6211.6935.771.570.704%1.96%0.09%0.53%3121.38undervalue4.61
NeulandLab702.1623.69464.715.78338.840.8917.7639.521.341.843%4.66%0.08%0.19%1750.58undervalue2.81
AmrutanjanHeal421.95616.69163.3317.29104.831.4611.8335.673.785.8811%16.49%0.08%0.06%582.63overvalue0.94
PanaceaBiotec93.1570.24679.2-65.231487.986.13-10.65-8.740.840.38-10%-4.38%0.07%0.81%4831.59undervalue8.47
HesterBio494.45420.6290.0414.58120.580.8517.1428.854.673.4916%12.09%0.05%0.07%464.95undervalue1.11
AstecLife196381.32253.4614.78221.711.957.6025.801.501.726%6.67%0.05%0.12%1039.29undervalue2.73
RPGLife222.4367.76242.271157.941.650.60367.761.522.330%0.63%0.05%0.09%869.81undervalue2.37
MangalamDrugs254.25365.57220.666.14100.551.444.2759.541.663.643%6.11%0.05%0.05%693.08undervalue1.90
OrchidPharma37.75335.841753.73-191.043579.998.90-21.47-1.760.190.09-11%-5.34%0.04%1.95%11875.43undervalue35.36
GuficBio42.1325.64151.753.7556.57.730.4886.842.155.762%6.64%0.04%0.03%447.68undervalue1.37
ThemisMedicare337.9287.72166.862.05146.480.852.41140.351.721.961%1.40%0.04%0.08%685.39undervalue2.38
LincolnPharma154.9252.65228.614.77159.421.639.0617.111.111.586%9.26%0.03%0.09%844.53undervalue3.34
Kopran49.3213.22325.5915.48211.624.323.5813.770.651.015%7.31%0.03%0.12%1167.49undervalue5.48
SectorialAnalysis
58. FUNDAMENTAL ANALYSIS
C I M S B-SCHOOL, BANGALORE P a g e | 57
NameLastPriceMarketCap.(Rs.cr.)SalesTurnoverNetProfitTotalAssetsNoofsharesO/SEPSP/EMcap/SalesMcap/AssetsNPMarginROAMarketShareAssetsShareIntrinsicValueValuationKratio
PiramalPhytoca67.45175.14.54-3.468.272.60-1.33-50.6138.5721.17-76%-41.84%0.02%0.00%28.46overvalue0.16
LykaLabs79.3174.7890.481.37125.982.200.62127.581.931.392%1.09%0.02%0.07%478.24undervalue2.74
BrooksLabs85.6138.5685.219.47111.931.625.8514.631.631.2411%8.46%0.02%0.06%435.01undervalue3.14
BalPharma105.9136.32187.134.02102.381.293.1233.910.731.332%3.93%0.02%0.06%626.94undervalue4.60
SharonBioMedi11130.83833.95-225.86939.1711.89-18.99-0.580.160.14-27%-24.05%0.02%0.51%3899.65undervalue29.81
NathBio-Genes77.3123.71185.3325.36128.071.6015.854.880.670.9714%19.80%0.02%0.07%681.98undervalue5.51
ParenteralDrug40.05119.41176.59-54.08516.82.98-18.14-2.210.680.23-31%-10.46%0.02%0.28%1553.69undervalue13.01
SterlingBio3.9106.15415.64-376.855587.1627.22-13.85-0.280.260.02-91%-6.74%0.01%3.05%13664.21undervalue128.73
VenusRemedies89.5102.41451.884.55750.211.143.9822.510.230.141%0.61%0.01%0.41%2665.56undervalue26.03
Wanbury45.5590.96249.923.21180.092.001.6128.340.360.511%1.78%0.01%0.10%936.58undervalue10.30
JagsonpalPharma33.387.24138.151.17134.742.620.4574.560.630.651%0.87%0.01%0.07%598.29undervalue6.86
AlpaLabs40.6585.5357.39-1.4115.122.10-0.67-61.091.490.74-2%-1.22%0.01%0.06%383.96undervalue4.49
ElderPharma37.376.6483.4717.181330.242.058.374.460.160.064%1.29%0.01%0.73%4059.86undervalue53.00
DrDatsonLabs6.470.13421.050.67782.9810.960.06104.670.170.090%0.09%0.01%0.43%2675.92undervalue38.16
BafnaPharma29.9555.87142.526.11135.321.873.289.140.390.414%4.52%0.01%0.07%608.78undervalue10.90
CelestialBio24.6550.527.451.397.82.050.6338.851.840.525%1.33%0.01%0.05%281.50undervalue5.57
KilitchDrugs35.647.1119.03-0.19119.951.32-0.14-247.952.480.39-1%-0.16%0.01%0.07%314.56undervalue6.68
PlethicoPharma12.141.22136.63-273.61802.593.41-80.32-0.150.300.05-200%-34.09%0.01%0.44%2124.21undervalue51.53
ParabolicDrugs5.232.18233.02-379.32761.416.19-61.29-0.080.140.04-163%-49.82%0.00%0.42%2232.11undervalue69.36
OrtinLabs17.930.3260.410.942.191.690.5333.690.500.721%2.13%0.00%0.02%223.32undervalue7.37
CountryCondos3.930.2632.931.67167.760.2218.120.921.895%10.44%0.00%0.01%105.71undervalue3.49
ArvindRemedies427.25787.07-320.04853.346.81-46.98-0.090.030.03-41%-37.50%0.00%0.47%3604.79undervalue132.29
Ind-Swift5.1525.93417.17-145.13870.925.03-28.82-0.180.060.03-35%-16.66%0.00%0.48%2869.13undervalue110.65
SyncomHealth5.923.661.86-3.82191.264.00-0.96-6.180.380.12-6%-2.00%0.00%0.10%567.67undervalue24.05
PanchsheelOrg2914.5435.81.8924.720.503.777.690.410.595%7.65%0.00%0.01%131.69undervalue9.06
TwilightLitaka4.2510.5331.5-139.58147.782.48-56.34-0.080.330.07-443%-94.45%0.00%0.08%404.43undervalue38.41
SuryaPharma0.152.4612.64-726.771830.8716.40-44.320.000.190.00-5750%-39.70%0.00%1.00%4218.47undervalue1714.82
SectorTotal773901.26129569.4211137.98183140.42
Average4.204.58
40.48%
MarketcapandSalesTurnover0.738597901SupposeaNewfirminthepharmaceuticalSpace/industryhas
MarketcapandAssetsinplace0.891045386Salesof100
Assets80
SectorismakingProfitThenusingtheMultiplesitsMarcapCapoughttobe419.53
SecondEstimateusingAssets366.34
Valueofthenewfirm(Average)392.93
SectorAnalysis
59. FUNDAMENTAL ANALYSIS
C I M S B-SCHOOL, BANGALORE P a g e | 58
Sector Analysis Methodology
Step 1: Select Stocks based on ROC and Rank them in the following trenches
ROA > 20% Top Category
ROA> 15% but less than 20% Second Category
ROAC>10% but less than 15% Third Category
ROA>5% but less than 10% Fourth Category
ROA is Positive Fifth Category
ROA is Negative Reject.
Stocks we have rejected because of Negative ROA
Step 2: Within Category pick lowest P/E ratio stocks as they are likely to be
undervalued, Within Category pick highest P/E ratio Stocks as they are likely
to be overvalued.
Step 3: Pick firms with highest M Cap Share, highest Market Share and
highest
Profit Shares as they are likely to be existing large cap stocks within the
sector.
Step 4: Using the Regression Characteristic Line Value all the firm on a
comparable company’s basis, call it Value or Intrinsic Value on Comparable.
Correlation between M Cap and Total Assets - 0.89
Correlation between M Cap and Net Profit - 0.11
Correlation between M Cap and ROC - 0.11
Pick the highest which is Total Assets since it explains the M Cap the best.
Regression Characteristic Line Mcap = a+b*Total Assets
Alpha - 718.009
Beta - 0.15
Market Capitalisation = Alpha + Beta*Total Assets
Step 5: Calculate the K - Ratio which is Value/Mcap. Higher this ratio larger
the undervaluation and better it is.
60. FUNDAMENTAL ANALYSIS
C I M S B-SCHOOL, BANGALORE P a g e | 59
Interpretation: -
The selected companies Sun Pharma, Lupin and Dr Reddys labs being the
large capitalisation acquire around 40.48% of the market share in
pharmaceutical sector.
74.44% of the companies are having good earning in the pharma industry i.e.
67 companies approx... Remaining are in losses because of the internal affairs
in the management.
It is observed that overvalued company’s prices are growing at a lesser rate,
and undervalued company’s prices at higher rates.
The intrinsic value helps in determination of overvalued and undervalued
stocks in the industry.
K-ratio is the ratio of the intrinsic value to the market capitalisation which
depicts that higher the ratio more undervalued the stock will be. These stocks
can be recommended for the investment for the long term considering the
other factor as well such as mergers and acquisition etc.
Astec Lifesciences is the good pick for the long term investment, it is selected
because it is undervalued 2.73 times i.e. company is giving good returns on
assets, Market capitalization of the Astec is 1.72 times of its Assets which
indicates the positive growth, it is negatively correlated with nifty means when
the nifty go up the stock Astec Lifesciences will drop down.
The companies selected with the red colour is recommended to sell, because
of the negative performance. These companies have borrowed huge amount of
fund for the working capital.
There are other companies which are undervalued such as suven lifesci,
morepen labs, unichem labs, glenmark, Piramal enterprises, etc. They have
positive ROC, NP margin, Market capitalisation to Sales, Market
61. FUNDAMENTAL ANALYSIS
C I M S B-SCHOOL, BANGALORE P a g e | 60
capitalisation to Assets, having an economical share price where an investor
can invest for the short and medium period of time i.e. 3 months to 9 months.
The overvalued companies having high volatility in the market and positively
correlated with the Nifty.
The company whose ROA is more than 20% having P/E ratio is low is likely
to be undervalued indicates the healthy company with the large market Share,
K ratio helps to identify the undervalued company, higher the ratio larger the
undervaluation.
62. FUNDAMENTAL ANALYSIS
C I M S B-SCHOOL, BANGALORE P a g e | 61
Company Analysis
Financial Analysis-
Financial statement analysis (or financial analysis) is the process of reviewing and
analysing a company's financial statements to make better economic decisions. These
statements include the income statement, balance sheet, statement of cash flows, and
a statement of changes in equity. Financial statement analysis is a method or process
involving specific techniques for evaluating risks, performance, financial health, and
future prospects of an organization
a) Horizontal Analysis-
Horizontal Analysis compares economic information over time, generally from
beyond quarters or years. Horizontal Analysis is executed by comparing financial data
from a past statement, which includes the financial statement such as Balance sheet,
income statement. While evaluating this beyond records one will need to look for
variations inclusive of better or lower profits.
b) Vertical Analysis-
Vertical analysis is a percentage analysis of financial statements. Each line item listed in the
financial statement is listed as the percentage of another line item. For example, on an income
statement each line item will be listed as a percentage of gross sales. This technique is also
referred to as normalization or common-sizing.
Valuation
a) Discounted Cash Flow
DCF valuation argues that the value of an asset may be envisioned by way of
calculating the present value of anticipated future cash flow which tied to the asset. In
stock holder perspective, dividends are one acquainted form of cash flow, which are
dispensed to the shareholders legal by means of the organization’s board of directors.
“Dividends represent cash flows at the shareholder perspective within the sense that
they may be paid without delay to shareholders.” The present value model which
undertake dividends as the future cash flows is referred to as dividend discount
models. The other type of cash flow is free cash flow.
63. FUNDAMENTAL ANALYSIS
C I M S B-SCHOOL, BANGALORE P a g e | 62
Free cash flow model typically classified into two, free cash flow to equity model
prior to the payment of debt holder liabilities, free cash flow to firm defines cash flow
before those payments. Discounted cash flow is a common method to cost debt
securities, in terms of equity valuation the task is greater. There’s two important
troubles in discounted cash flow valuation, the cash flow and the discount rate.
b) Relative Valuation
Relative valuation argues that the intrinsic price of an asset will be estimated by way
of looking at the pricing of similar asset associated similar variables including
incomes, book value, income, etc. The fundamental idea of relative valuation is that
comparable belongings could promote (sell) at similar prices, and relative valuation
usually applied by using the usage of price multiples or enterprise value multiples.
One of the most familiar price multiple is price-to-earnings ratio (PE), which is the
price of stock divided by Earnings per share. A stock with PE that is lower than the
comparable companies is said as enormously undervalued. One among conservative
investing strategies which the application of relative valuation is to really
overweighting relatively undervalued assets and underweighting to distinctly
overvalued assets. Relative valuation also often involves various classes of assets
comparison, clustered as industry, in preference to a single comparison.
64. FUNDAMENTAL ANALYSIS
C I M S B-SCHOOL, BANGALORE P a g e | 63
Sun Pharmaceutical Industries Ltd
Among the top five
Indian pharma
companies
Strong presence in
generics market
Over half the sales
from North America
Market
capitalization of US$ 15.6 billion
Revenue base of about US$ 2.1 billion-
Sun Pharmaceutical Industries Ltd is an international specialty pharma company. The
Company manufactures and markets pharmaceuticals formulations as branded
generics, as well as generics in India, the United States (US) and several other
markets across the world.
The Company’s business is divided into four segments: Indian Branded Generics, US
Generics, International Branded Generics (ROW) and Active Pharmaceutical
Ingredients (API).
Its brands are prescribed in chronic therapy areas like cardiology, psychiatry,
neurology, gastroenterology, and diabetology and respiratory. It makes specialty
APIs, including peptides, steroids, hormones and anticancer. APIs and Dosage forms
are made at 20 plants across India, Israel, the US, Canada, Hungary, Brazil, Mexico
and Bangladesh. Its API products include Acamprosate Calcium, Alendronate
Sodium, Amifostine trihydrate, Budensonide and Carvedilol.
In September 2010, it acquired Taro Pharmaceutical Industries Ltd.
Source: http://www.sunpharma.com/
65. FUNDAMENTAL ANALYSIS
C I M S B-SCHOOL, BANGALORE P a g e | 64
http://www.ibef.org/industry/pharmaceutical-india/showcase/sun-pharmaceutical-
industries-ltd#sthash.i7N0qBrN.dpuf
Sun Pharma: Leveraging its generic market capabilities
1983 Commenced operations in Kolkata
1987 Nationwide marketing operations
rolled out
2007 Launches Reditux™ (Rituximab) –
the world’s first biosimilar of a
monoclonal antibody
2004 First international acquisition: Niche
Brand in the US
2012 Acquired controlling stake in Taro
and full control on Caraco
Source: - http://www.ibef.org/industry/pharmaceutical-india/showcase/sun-
pharmaceutical-industries-ltd#sthash.i7N0qBrN.dpuf