PROJECT REPORT ON

“EQUITY RESEARCH AND ANALYSIS ON CEMENT SECTOR”

IN

KARVY STOCK BROKING LTD

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT

OF

MASTER OF MANAGEMENT STUDIES

BY

PRANAV SURESH PARMAR

ROLL NO 2016223

MMS-II (SEM III)

YEAR 2016- 2018

LALA LAJPATRAI INSTITUTE OF MANAGEMENT

MAHALAXMI, MUMBAI – 400034
 PROJECT REPORT ON
“EQUITY RESEARCH AND ANALYSIS ON CEMENT SECTOR”

IN

KARVY STOCK BROKING LTD

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT

OF

MASTER OF MANAGEMENT STUDIES

BY

PRANAV SURESH PARMAR

ROLL NO 2016223

MMS-II (SEM III)

YEAR 2016-2018

LALA LAJPATRAI INSTITUTE OF MANAGEMENT

MAHALAXMI, MUMBAI - 400034
SUMMER INTERNSHIP PROJECT

SUBMITTED BY

PRANAV SURESH PARMAR

ROLL NO – 2016223

MMS – II (SEM III)

YEAR 2016 - 2018

 Certificate

This is to certify that the project work titled “ EQUITY RESEARCH AND
ANALYSIS ON CEMENT SECTOR” is a summer internship work carried out by

Mr. PRANAV SURESH PARMAR.

The project was completed for “KARVY STOCK BROKING LTD”, under the
guidance of ARUN SADARANGANI

I further certify that the said work has not been submitted in the part or in full,
to any other University.

Date:

______________ _____________

Prof. N. Balasubramanian Dr V.B. Angadi

Project Guide Director
 DECLARATION

I, Mr. PRANAV SURESH PARMAR , student of Lala Lajpatrai Institute of

Management of MMS II (Semester III) hereby declare that I have completed
the summer internship project on EQUITY RESEARCH AND ANALYSIS ON
CEMENT SECTOR with KARVY STOCK BROKING LTD in the Academic

year 2016 - 2018. The information submitted is true & original to the best of my
knowledge.

PRANAV SURESH PARMAR

 ACKNOWLEDGEMENT

At the outset of this project, I would like to express my profound thanks to a

few people without whose help, completion of this project would not have been
possible.

First and foremost, I would like to express sincere thanks to KARVY STOCK
BROKING LTD for giving me this opportunity to work with them.

The list is endless but to name a few special people, I would like to thank Mrs
Riya Kudtarkar for being extremely supportive and guiding me throughout my
internship and giving me constant motivation and expert advice.

I would also like to thank the entire staff for providing me their precious time
and making this internship a successful learning experience.

I am very grateful to Dr. Angadi, Director of Lala Lajpat Rai Institute of

Management, for giving me the opportunity to do this project in KARVY
STOCK BROKING LTD.

I would also like to thank Prof. N. Balasubramanian for being an excellent

mentor and helping me whenever I approached her.

Last but not the least; I take pride in thanking my parents Mr. SURESH
PARMAR & Mrs. POOJA PARMAR , siblings and friends for their much
valued support.

TABLE OF CONTENTS
Chapter No. SUBJECTS COVERED PAGE NO.
1 INTRODUCTION

1.1 INTRODUCTION OF THE PROJECT 2

1.2 OBJECTIVES 2
1.3 LIMITATION 3
1.4 LITERATURE REVIEW 4
1.5 RESEARCH METHODOLOGY 5
1.6 SUMMARY OF PROJECT 5
2 COMPANY PROFILE
2.1 AN OVERVIEW OF KARVY STOCK BROKING 7
LTD
2.2 COMPANY PROFILE 8
2.3ORGANISATION STRUCTURE 9
TEAM COMPRISES
2.4 PRODUCTS OFFERED 12
2.5 SERIVICES OFFERED 13
2.6 COMPANY’S PERFORMANCE 14
2.7 GROWTH 14
2.8 SWOT ANALYSIS 15
2.9 COMPETITORS 16
3 INTRODUCTION TO STOCK MARKET
3.1 INTRODUCTION TO BASIC
TERMINOLOGIES PF STOCK MARKET
 EQUITY MARKET 18
 DEBT MARKET 19
 MUTUAL FUND 20
 DERIVATIVES 22

4 INTRODUCTION TO DATA ANALYSIS AND

INTERPRETATION TECHNIQUES
4.1 RESEARCH TECHNIQUES 24
 FUNDAMENTAL ANALYSIS 25
 TECHNICAL ANALYSIS 26

5 DATA INTERPRETATION AND ANALYSIS

 OF CEMENT INDUSTRY
5.1 EQUITY RESEARCH TECHNIQUES
 PE RATIO 33
 PEG RATIO 34
5.2 INTRODUCTION TO CEMENT
SECTOR 35
5.3 ANALYSIS OF CEMENT SECTOR
 ACC 40
 AMBUJA 44
 ULTRATECH 48
 SHREE CEMENT 52
56
 JK

6 OUTLOOK, INTERPRETATION AND CONCLUSION

6.1 OUTLOOK 60
6.2 INTERPRETATION 61
6.3 CONCLUSION 62

7 BIBLIOGRAPHY
7.1 REFERENCES 64
7.2 NEWSPAPERS 64
7.3 WEBSITES 64
 CHAPTER 1
INTRODUCTION

1
 INTRODUCTION

1.1 Introduction of project -

To study the cement sector stock in the market and the factors that affect the share prices of
the stocks of the sector. The growth of the Indian economy has slowed down in recent times
on account of the rising inflation, high interest rates, high prices of commodities and fuels.

Cement is the main binding agent in concrete and, thus, the most common building and
construction material in the world. A key feature of the cement industry is the strong direct
relationship between economic growth and cement consumption. It has been a very good
sector in terms of growth. The Indian cement industry is the 2nd largest market after China
accounting for about 7-8% of the total global production. It had a total capacity of about 420
m tonnes (MT) as of financial year ended 2016-17. Cement is a cyclical commodity with a
high correlation with GDP, growing at around 1.2x of GDP growth rate. The housing sector is
the biggest demand driver of cement, accounting for about 67% of the total consumption. The
other major consumers of cement include infrastructure, commercial & institutional and
industrial segment.

1.2 Objective -

 To provide an overview of Indian Cement Industry.

 To study about some of the major players in Indian Cement Industry which has good
investment prospects.
 To identify the growth drivers of the sector.
 To identify the top-line and bottom-line of the companies selected under the sector
and the factors that affect them.
 The analysis of various stocks of the Cement sector by calculating the various ratios,
the price targets and the technical analysis which would help us know which stock is
outperforming and which stock is underperforming. Apart from this the price target
will help us know that by how much our shares would rise or fall when the market
fluctuates in future.

2
1.3 Limitation -

 Shortage of capital-- The cement industry is capital-intensive in nature.

On account of its record on declining profitability, it is unable to raise the
required finance from the capital market.

 Power shortage-- Power is an important infrastructure, which the cement

industry needs. The cement industry is being adversely affected with the
State Electricity Boards (SEBs), raising costs year after year accompanied
by diminishing quality of power supplied, in terms of frequent voltage
fluctuations, power cuts and interruptions.

 By installing captive power plants-- The Indian cement Industry is today

supplementing grid power supply as a result, capacity has crossed
700MW.

 Location problems-- Cement industries are mainly situated in Western

and Southern regions producing about 71 per cent of the total output,
while the Northern and Eastern regions account for 29 per cent of the total
output. The Southern and Western regions consume only 57 per cent of
their total output, while the Northern and Eastern regions consume 43 per
cent of their total production. There is excess production in the Southern
and Western regions while there is excess demand from Northern and
Eastern regions. These factors lead do heavy transport cost.

3
1.4 Literature Review –

* Nair N.K. (1991) has studied the productivity aspect of Indian Cement Industry. This
study emphasized that cement, being a construction material, occupied a strategic place in the
Indian economy. This study has revealed that, in 1990-91, the industry had an installed
capacity of 60 million tonnes with a production of 48 million tonnes. In this study, the cement
industry was forecasted to have a capacity growth of about 100 million tonnes by the year
2000. This study has also analyzed the productivity and performance ratios of the cement
industry with a view to identifying the major problem areas and the prospects for solving
them.

* SUBIR COKAVN AND REJENDRA VAIDHA (1993) have made and attempt
to evaluate the performance of cement industry after decontrol. He found that the
performance of the cement industry after decontrol was characterized by outcomes that were
generally competitive and welfare enhancing. This study has revealed that the structure of the
industry changed significantly with large magnitude of relative technologically and superior
capacity being created by many new entrants into the industry. It was noticed in this study
that there were significant real price increase and an associated increase in profitability. The
performance of firms across the strategic group was different with firms operating relatively
new and large plants appeared to have an advantage. Further, the study has dealt with the
nature and effect of inter-firm heterogeneities in the cement industry.

* CHANDRASEKARAN N (1993) has made an attempt to examine determinants of

profitability in cement industry. He identified that profitability was determined by structural,
as well as, behavioural variables. He also identified that the other variables which influenced
profitability were growth of the firm, capital turnover ratio, management of working capital,
inventory turnover ratio etc. Some of the main changes in the cement industry environment
during 1980’s identified this study were: from complete control to decontrol, number of new
entrants and substantial additions of capacity, changing technology from inefficient wet
process to efficient dry process and from conditions of scarcity of cement to near gloat in the
market.

4
1.5 RESEARCH METHODOLOGY -

The project is on equity research analysis of the sector. Hence study has to be done on the
basis of information and news available about the sector i.e. secondary data by various
modes. This research had to be completed by doing Fundamental analysis and Technical
analysis of the companies.

Secondary data was collected from the internet, company websites, magazines and various
articles. However the main source of information is Annual Report issued by the companies
and also quarterly reports of the current year showing their performances in current market
scenario.

1.6 SUMMARY OF THE REPORT –

The main aim of this project is to do equity research on Cement sector and to find out the
opportunities of investment in these sector where returns can be Maximized. This report starts
with Sector Analysis of Cement sector followed by the fundamental analysis of the
companies. Analysis of the sector has been done. Economy of India, cement industry are
analysed on the basis of various factors and indicators. After analysing these companies,
stock price is estimated by Relative Valuation Method and the stocks were purchased by
creating a portfolio. Ratios are calculated and then the growth and value of the stocks were
estimated.

Technical analysis is used to study stock chart patterns of these companies. The observed
patterns are tested with various oscillators and decision about particular stock is made. Based
on these factors, trend of a particular stock is observed.

This report will help the investors to know about the current growth prospects of Indian
Economy in relation with Cement sector. They will get to understand various factors affecting
these sector and their impact on the growth of the sector. This report will help them in
comparing the stocks and their estimated future share prices, so that they can invest in better
options and get maximum returns.

This report will help Karvy Stock Broking Ltd on their investment decisions of the wealth
management team.

5
 CHAPTER 2

COMPANY PROFILE

6
 COMPANY PROFILE

2.1 An Overview of Karvy Stock Broking Ltd -

MISSION

An organization exists to accomplish something or achieve something. The

mission statement indicates what an organization wants to achieve. The mission
statement may be changed periodically to take advantage of new opportunities or
respond to new market conditions.

Karvy’s mission statement is “To Bring Industry, Finance and People together.”
Karvy is work as intermediary between industry and people. Karvy work as
investment advisor and helps people to invest their money same way Karvy helps
industry in achieving finance from people by issuing shares, debentures, bonds,
mutual funds, fixed deposits etc.

Company’s mission statement is clear and thoughtful which guide geographically

dispersed employees to work independently yet collectively towards achieving
the organization’s goals.

VISION

Company’s vision is crystal clear and mind frame very directed. “To be
pioneering financial services company. And continue to grow at a healthy pace,
year after year, decade after decade.” Company’s foray into IT-enabled services
and internet business has provided an opportunity to explore new frontiers and
business solutions. To build a corporate that sets benchmarks for others to
follow.

7
2.2 COMPANY PROFILE -

KARVY Stock Broking Limited, one of the cornerstones of the KARVY edifice, flows freely
towards attaining diverse goals of the customer through varied services. It creates a plethora
of opportunities for the customer by opening up investment vistas backed by research-based
advisory services. Here, growth knows no limits and success recognizes no boundaries.
Helping the customer create waves in his portfolio and empowering the investor completely
is the ultimate goal. KARVY Stock Broking Limited is a member of:

(1) National Stock Exchange (NSE)

(2) Bombay Stock Exchange (BSE)

(3) Hyderabad Stock Exchange (HSE)

Karvy Investor Services Limited

Deepening of the Financial Markets and an ever-increasing sophistication in corporate

transactions, has made the role of Investment Bankers indispensable to organizations seeking
professional expertise and counselling, in raising financial resources through capital market
apart from Capital and Corporate Restructuring, Mergers & Acquisitions, Project Advisory
and the entire gamut of Financial Market activities.

Karvy Investor Services Limited (‘KISL’), a SEBI registered Merchant Banker has emerged
as a leading Investment Banking entity in the country with over a decade of experience. KISL
has built its reputation by capitalizing on its qualified professionals, who have successfully
executed a large number of complex and unique transactions.

Our quality professional team and our work-oriented dedication have propelled us to offer
value-added corporate financial services and act as a professional navigator for long term
growth of our clients, who include leading corporates, State Governments, Foreign
Institutional Investors, public and private sector companies and banks, in Indian and global
markets.

We have also emerged as a trailblazer in the arena of relationships, both at the customer and
trade levels because of our unshakable integrity, seamless service and innovative solutions
that are tuned to meet varied needs. Our team of committed industry specialists, having
extensive experience in capital markets, further nurtures this relationship.

8
2.3 ORGANISATION STRUCTURE -
The leadership team provides strategic direction to group companies.

FOUNDERS:

1. Mr. C. Parthasarathy :

Mr. C. Parthasarathy is the Chairman and Managing Director of the diversified financial
services Karvy group. C Parthasarathy (CP as he is better known in the Industry), has the
uncanny knack of staying ahead of the curve and the foresight to spot opportunities that seem
invisible on the horizon for the others. Karvy’s entire history is a case study of turning
adversity into opportunity. CP is a chartered accountant by qualification, whose
entrepreneurial energy drove him to co-found Karvy in 1983 with a less-than-modest capital
of Rs 150,000.Over the years CP’s vision and leadership skills have helped the group
navigate through the turbulent times with a strong sense of purpose and clarity of thought.CP
is one of the pioneers of financial inclusion. Under his leadership Karvy has won numerous
industry awards and accolades. He also is an independent Director in many listed companies

2. Mr. M. Yugandhara:

Mr. M Yugandhar, Managing Director is a founder member of the KARVY Group. He is a

Fellow Member of the Institute of Chartered Accountants of India and has varied experience
in the field of financial services spanning over 30 odd years. Yugandhar has helped position
and build a strong brand for the group in the registry and other financial services businesses.
The registry business of Karvy is one of its flagship businesses and with the collaboration
with Computershare has grown to become the largest registrar in India for over two decades.
Yugandhar has played a key role in building strong relationships with public sector banks and
other PSUs which has helped Karvy win some important mandates from some of India’s
renowned companies.Karvy under his guidance has helped create the equity cult and
substantially built retail investor wealth. He is an Independent Director on the board of
several reputed companies.

3. Mr. M S Ramakrishna:

Mr. M S Ramakrishna, Director, founder member of KARVY GROUP, he is the orchestrator

of technology initiatives such as the call center in the service of the customer.Mr.
Ramakrishna was a member of the Hyderabad Stock Exchange and has more than 30 years of
experience in the financial services arena. He has helped KARVY diversify into the field of
medical transcription leveraging on the company's core competency of transaction
processing.He is an Independent Director on the board of several reputed companies.

9
  MANAGEMENT TEAM:

1. Mr. V Mahesh:

Mr. V Mahesh, is the Managing Director of Karvy Data Management and has work
experience spanning over 2 decades with in depth exposure to operations on most financial
services businesses. Commencing his professional stint with the Registry business where he
has to his credit managing over 300 IPOs and other forms of offerings, he was amongst the
first few to work closely on the Book Building process initiated by SEBI in 1995. After
initially working with MCS as an Assistant Vice President, he moved to Karvy. He was also
responsible to initiate the process of setting up the Depository participant business in Karvy
and was responsible for both the operations and the marketing of the business. He has been
nominated by the NSDL to various committees which addressed key changes to the overall
processes and policies for the Demat business.

2. Mr. V Ganesh:

Mr. V Ganesh is a Chartered and Cost Accountant by profession and has over 2.5 decades of
experience in the financial services space and is part of Karvy Group’s leadership team.
Before joining KARVY, he was associated with ITC’s risk management and financial audit
services department. Earlier he was associated with Proctor and Gamble and was responsible
for product pricing and financial support functions for P&G’s soaps and health care
businesses.

3. Mr. Sushil Sinha:

Mr. Sushil Sinha, the Country Head of Karvy Comtrade Ltd, has successfully made Karvy
Comtrade a force to reckon with in the marketplace. With over 10 years of expertise in the
broking sector, he is a well-known face today in the electronic and print media. Under his
aegis, the company has won numerous honours and awards nationwide, including the UTV
Bloomberg Leadership Award 2011 and India’s Best Market Analyst Award—for two
consecutive years—by Zee Business.

4. Mr. Ramapriyan:

Mr. Ramapriyan is working with Karvy for over 2 decades, He has strength of sorts in the
distribution of Financial products including Equity, Bonds, Fixed Deposits and Auto
Finance. He has successfully marketed several financial products for large number of
corporate of various sizes. He is also responsible for managing the Pan India Network of
brokers and sub-brokers. He has been instrumental in Karvy’s success in distribution of debt
products.

10
5. Mr. Rajiv R. Singh:

Mr. Rajiv R. Singh is the Vice President & Business Head of the Equity Broking business. He
has been associated with Karvy for more than a decade. He joined Karvy in 2001 and moved
up the corporate ladder with his sheer dedication, commitment and hard work.

6. Mr. Ramaswamy:

Mr. Ramaswamy, the Group Head for Corporate Affairs, is the official spokesperson for the
Karvy Group. Mr. Ramaswamy has more than 25 years of experience in various spheres of
the financial services industry, of which 10 years has been in the Legal and Secretarial
division of Reliance, handling various public issues, mergers, monitoring performance of
various departments, liaising with regulatory bodies and outside agencies (viz., the stock
exchange, SEBI, DCA and others), and coordinating all the board meetings.

7. Mr. Deepak Gupta:

Mr. Deepak Gupta brings with him over 20 years of experience in HR, spanning financial
services, ITes and manufacturing. Prior to joining Karvy, he was Chief People Officer,
Human Resources, with Bajaj Finance Limited, a Rahul Bajaj Group Company, based at
Pune. He has also had a successful career with a few prominent corporate, including SREI,
Enam, CRISIL, CEAT Financial Services and Reliance Industries.

8. Mr. G. Krishna Hari:

Mr. G. Krishna Hari holds a Bachelors degree in Commerce and is associate member of the
Institute of Chartered Accountants of India (ICAI). He has over 27 years of experience in the
areas of finance and accounts functions encompassing fund raising, financial reporting,
management accounting, working capital management, taxation, budgeting and forecasting
and financial due diligence reviews for mergers & acquisitions and investment proposals.

11
2.4 PRODUCTS OFFERED -
Sr. Product
No
1 Mutual Funds
2 Portfolio Management
System
3 Direct equity structured
products
4 Structured products
5 Alternate asset product
6 Real estate
About the Product
Mutual Funds give access to Indian equity and debt
securities. It offers advice on the entire universe of
mutual funds:
Equity funds – growth or capital appreciation
Debt funds – capital preservation
Portfolio Management System is a unique way to build
a customized portfolio of Indian equities. It acts as
authorized distributors for various PMS providers to
meet the growing needs of investors and expand a
portfolio beyond equities and bonds
It offers convenient, simple and efficient trading in
Indian equities. They provide with a seamless platform
to invest in the Indian secondary markets. The Wealth
Management advisor will provide valuable advice
based on their in-house research
It brings customized investment solutions, giving
access to various asset classes. Unlike most other
structures, returns can be linked to a variety of asset
types such as equity indices, basket of stocks, and
commodities.
Through its distribution tie-ups, they offer a wide
range of Private Equity Fund (which invest in unlisted
securities) to give the opportunity of investing in the
growing Indian economy. With these products and
investment strategy, one can preserve their capital,
ensure risk protection, leverage and diversify.
They bring in a combination of in-depth market
knowledge and real estate industry expertise to offer a
range of specialized real estate investment services.
They provide expert advice and innovate real estate
solutions tailor made to ones needs and objectives
12
2.5 SERVICES OFFERED –
Sr. Service
No
1 Research
2 Highly proactive services
3 Online Portfolio Access
4 Financial Planning
5 Regular Portfolio Reviews
About the Service
Karvy’s quality research provides clients with the
information they need to make informed
investment decisions. The research team is
dedicated to keeping the customer updated with
access to the latest publications and a wide range of
industry happenings including: market depth,
breaking commentary, long-term forecasts, detailed
daily updates and the latest financial news.
Service includes Daily Market Update, Weekly
update on mutual Funds and Event Based SMS to
keep the customer completely informed on the
markets
The online portfolio ensures every detail of one’s
investments at fingertips. One can constantly
monitor the composition of its portfolio, so you
always know if their long term objectives are being
met.
They offer a comprehensive financial planning
session to help devise the investment strategy. This
is followed by complimentary personalized report
outlining specific recommendations on the step-by-
step actions need to take to achieve the financial
goals
Customer portfolio undergoes regular reviews to
ensure your money is constantly working in your
best interest, keeping their personal financial goals
in sight.
13
2.6 COMPANY PERFORMANCE –
Company achieved gross revenue of Rs. 53.84 Crore during the year under review as against
the gross revenue of 64.51 Crore during the previous year, a decrease of 19%. Total
expenditure reduced marginally to 69.12 Crore as compared to 69.52 Crore during the
previous year. As a result, the total loss before depreciation and tax was 15.28 Crore as
against a loss of 5.01 Crore in the previous year. This increase in loss was primarily due to
continuous downside witnessed in domestic equities participation which resulted in the
growth of AUM of Mutual Funds, thus impacting overall revenue. The Company however
continues to expand its distribution channel across various asset classes of financial products
and range of product offering for its clients. During the year, Company mobilized aggregate
funds under different asset classes to the tune of 1,97,538 Crore. The Mutual Fund Assets
Under Advice (AUA) as at March 31, 2012 was 12,545 Crore as against 13,861 Crore last
year, a decrease of 9.5%. The market share of the Company’s closing AUA stood at 2.14%,
which makes it 3rd largest Corporate Distributors in terms of closing AUA as on 31st March
2012 (as per CAMS report).

2.7 GROWTH –
These regulatory changes remain dynamic and may change the overall structure for
investment management as well as the distribution industry. The state of equity market will
be the key for growth. Though the MF industry continues to be under pressure and the
revenue is at the decline, the Company has plans to strengthen its wealth management
segment, streamline its retail distribution network, focus on client acquisition and
engagement through its product offering across all segments, improved processes to increase
the revenue stream and at the same time work on cost optimizations measures.

14
2.8 SWOT ANANLYSIS –

Strength:-
1) Employees are highly empowered.
2) Strong Communication Network.
3) Good co-operation between employees.
4) Number 1 Registrar and Transfer agent in India.
5) Number 1 dealer of Investment Products in India.

Weakness:-
1) Low Presence in Rural Market
2) Lesser advertising as compared to competitors
3) High Employee Turnover.

Opportunity:-
1) Growing potential in the Rural Market
2) Alignment with Government Schemes
3) Better awareness amongst people for getting insurance
4) Growth rate of mutual fund industry is 40 to 50% during last year and it expected
that this rate will be maintained in future also.
5) Marketing at rural and semi-urban areas.

Threats:-
1) Economic crisis and economic instability
2) Entry of new NBFCs in the sector
3) Increasing number of local players.
4) Past image of Mutual Fund.

15
2.9 COMPETITORS OF KARVY STOCK BROKING LTD -

Broking and Consultancy Companies now-a-days face a lot of competition in the market.
The competitors of Karvy Stock Broking Ltd now competes with various other companies
providing such services, few competitors are as follow

1. India bulls

2. Motilal oswal securities

3. Religare.

4. SSKI Ltd. (Sharekhan)

5. Bonanza securities

6. Kotak Securities

7. CIL Securities

8. Eastern Financiers

9. Unicon investment solutions

10.India infoline

11.Reliance Money

12.Shriram Insight

16
 CHAPTER 3

INTRODUCTION TO STOCK MARKET

17
 INTRODUCTION TO STOCK MARKET

3.1 Introduction to Basic Terminologies of Stock Market –

 EQUITY MARKETS:

Equity Market
Equity market is the market in which shares are issued and traded, either through exchanges
or over-the-counter markets. Also known as the stock market, it is one of the most vital areas
of a market economy because it gives companies access to capital and based on its future
performance it gives its investors a slice of ownership in a company with the potential to gain
good returns.

* PRIMARY MARKET

•The primary market is that part of the capital markets that deals with the issuance of new
securities. Companies, governments or public sector institutions can obtain funding
through the sale of a new stock or bond issue.

* SECONDARY MARKET

•Once the initial sale is complete in the primary market, further trading is said to conduct
on the secondary market. There are totally twenty-one recognized stock exchanges in India
excluding the Over The Counter Exchange of India Limited (OTCEI) and the National Stock
Exchange of India Limited (NSEIL).

18
 * DEBT MARKET
Debt market refers to the financial market where investors buy and sell debt securities,
mostly in the form of bonds. These markets are important source of funds, especially in a
developing economy like India. India debt market is one of the largest in Asia. Like all other
countries, debt market in India is also considered a useful substitute to banking channels for
finance. The most distinguishing feature of the debt instruments of Indian debt market is that
the return is fixed.

Debt Markets in India and all around the world are dominated by Government securities,
which account for between 50 – 75% of the trading volumes and the market capitalization in
all markets. Government securities (G-Secs) account for 70 – 75% of the outstanding value of
issued securities and 90-95% of the trading volumes in the Indian Debt Markets.

Classification of Indian Debt Market:

Indian debt market can be classified into two categories:

It consists of central It consists of

and state Financial
government Institutions bonds,
securities. It means Corporate bonds
that, loans are and debentures and
Government being taken by the Public Sector Units
Securities central and state bonds. These bonds
government. It is Bond Market
Market (G-Sec are issued to meet
also the most financial
Market) dominant category requirements at a
in the India debt fixed cost and
market hence remove
uncertainty in
financial costs

19
  MUTUAL FUNDS

A Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed portfolio at a relatively low
cost. Any person with any surplus money that can be invested, even as little as a few
thousand rupees, can invest in Mutual Funds. Each Mutual Fund scheme has a defined
investment objective and strategy. The team undertakes this in the most professional manner.
Markets for equity shares, debentures, bonds and other fixed income instruments; real estate,
derivatives and other assets have reached their maturity and are driven by latest up-to-date
information. A mutual fund is thus the ideal investment vehicle for today’s complex and
modern financial scenario. Price changes in these assets are driven by global events occurring
every day, in-fact every minute in faraway places. It will be very difficult, in-fact next to
impossible for an ordinary individual to have the knowledge, skills, inclination and time to
keep track of events, understand their implications and act speedily. An individual also finds
it difficult to keep track of ownership of his assets, investments, brokerage dues and bank
transactions etc. A mutual fund is the answer to all these situations. It appoints professionally
qualified and experienced staff that manages each of these functions on a full time basis. The
costs of hiring these professionals per investor are very low, as the pool of money invested is
large. In effect, the mutual fund vehicle exploits economies of scale in all three areas -
research, investments and transaction processing.

Diversification of investments in mutual funds reduces the overall investment risks by

spreading the risks across different assets. The types of mutual funds are subject to large scale
variation subject to investment objective, size strategy and style.

The Three Basic Features of Mutual Funds

 All mutual funds charge expenses. Expenses namely marketing, management or

brokerage fees, fund expenses are generally passed back to the investors.
 Investors exercise no control over what securities the fund buys or sells.
 The buying and selling of securities within the mutual fund portfolio generates capital
gains and losses which are passed back to investors even if they have not sold any of
their mutual fund shares.

20
 DIFFERENT TYPES OF MUTUAL FUNDS

Hedge Funds Close-ended

Funds

Open-ended
Funds
Debt/Income
Funds

Tax Saving
Funds

Index Funds

Equity,Growth/
Funds

21
  DERIVATIVES

A derivative is a financial instrument that gets its value from some real good or stock. It is the
derived value of an underlying asset. It is, in its most basic form, simply a contract between
two parties to exchange value based on the action of a real good or service. Typically, the
seller receives money in exchange for an agreement to purchase or sell some good or service
at some specified future date.

Derivatives offer the some degree of leverage or multiplication as a mortgage. For a small
amount of money, the investor can control a much larger value of company stock than would
be possible without use of these instruments. This can work both ways, though. If the investor
is correct, then more money can be made than if the investment had been made directly into
the company itself. The losses are multiplied instead, however, if the investor is wrong.

The basic concept of a derivative contract remains the same whether the underlying happens
to be a commodity or a financial asset. However, there are some features which are very
peculiar to commodity derivative markets.

Financial Derivatives can be classified as below:

22
 CHAPTER - 4
INTRODUCTION TO DATA ANALYSIS AND
INTERPRETATION TECHNIQUES

23
 DATA ANALYSIS AND INTERPRETATION

4.1 RESEARCH TECHNIQUE –

The project is on equity research analysis of the sectors. Hence study has to be done on the
basis of information and news available about the sectors i.e. secondary data by various
modes. This research had to be completed by doing Fundamental analysis and Technical
analysis of the companies.

Secondary data was collected from the internet, company websites, magazines and various
articles. However, the main source of information is Annual Report issued by the companies
and also quarterly reports of the current year showing their performances in current market
scenario.

Firstly, data was analysed on the basis of the industry. Both the industry i.e. banking and
cement were focused on and its performance and relation with the Indian economy was
monitored and then specific stocks were chosen to be invested in depending upon the
fundamentals of the company stocks. These stocks were individually analysed and then
measured whether it would give maximum returns if invested in.

The research on the sectors and companies in those sectors is explained in the later part of the
report.

24
  FUNDAMENTAL ANALYSIS

Fundamental analysis of a business involves analysing its financial statements and health, its
management and competitive advantages, and its competitors and markets. When analysing a
stock, futures contract, or currency using fundamental analysis there are two basic approaches
one can use; bottom up analysis and top down analysis. The term is used to distinguish such
analysis from other types of investment analysis, such as quantitative analysis and technical
analysis.

Fundamental analysis is performed on historical and present data, but with the goal of making
financial forecasts. There are several possible objectives:

 To conduct a company stock valuation and predict its probable price evolution,
 To make a projection on its business performance,
 To evaluate its management and make projected decisions,

Fundamental analysis includes:

1. Economic analysis

2. Industry analysis

3. Company analysis

On the basis of these three analyses the intrinsic value of the shares are determined. This is
considered as the true value of the share. If the intrinsic value is higher than the market price
it is recommended to buy the share. If it is equal to market price, then hold the share and if it
is less than the market price then sell the shares.

25
  TECHNICAL ANALYSIS

Technical analysis is a financial term used to denote a security analysis discipline for
forecasting the direction of prices through the study of past market data, primarily price and
volume. Behavioural economics and quantitative analysis incorporate technical analysis,
which being an aspect of active management stands in contradiction to much of modern
portfolio theory.

Technical analysis employs models and trading rules based on price and volume
transformations, such as the relative strength index, moving averages, regressions, inter-
market and intra-market price correlations, business cycles, stock market cycles or,
classically, through recognition of chart patterns. Technical analysis stands in contrast to the
fundamental analysis approach to security and stock analysis. Technical analysis analyses
price, volume and other market information, whereas fundamental analysis looks at the actual
facts of the company, market, currency or commodity.

Most large brokerage, trading group, or financial institutions will typically have both a
technical analysis and fundamental analysis team.

Concepts -

 Resistance — a price level that may prompt a net increase of selling activity
 Support — a price level that may prompt a net increase of buying activity
 Breakout — the concept whereby prices forcefully penetrate an area of prior
support or resistance, usually, but not always, accompanied by an increase in
volume.
 Trending — the phenomenon by which price movement tends to persist in one
direction for an extended period of time
 Average true range — averaged daily trading range, adjusted for price gaps
 Chart patterns— distinctive pattern created by the movement of security prices on
a chart
 Momentum — the rate of price change

26
  Chart Types:

There are three main types of charts that are used by investors and traders depending on the
information that they are seeking and their individual skill levels. The chart types are: the line
chart, the bar chart, the candlestick chart.

i. Line Chart -

The most basic of the three charts is the line charts because it represents only the closing
prices over a set period of time. The line is formed by connecting the closing prices over the
time frame. Line charts do not provide visual information of the trading range for the
individual points such as the high, low and opening prices. However, the closing price is
often considered to be the most important price in stock data compared to the high and low
for the day and this is why it is the only value used in line charts.

27
 ii. Bar Chart -

The bar chart expands on the line chart by adding several more key pieces of information to
each data point. The chart is made up of a series of vertical lines that represent each data
point. This vertical line represents the high and low for the trading period, along with the
closing price. The close and open are represented on the vertical line by a horizontal dash.

The opening price on a bar chart is illustrated by the dash that is located on the left side of the
vertical bar. Conversely, the close is represented by the dash on the right. Generally, if the left
dash (open) is lower than the right dash (close) then the bar will be shaded black,
representing an up period for the stock, which means it has gained value. A bar that is colored
red signals that the stock has gone down in value over that period. When this is the case, the
dash on the right (close) is lower than the dash on the left (open).

28
 iii. Candlestick Charts –

The candlestick chart is similar to a bar chart, but it differs in the way that it is visually
constructed. Similar to the bar chart, the candlestick also has a thin vertical line showing the
period's trading range. The difference comes in the formation of a wide bar on the vertical
line, which illustrates the difference between the open and close. And, like bar charts,
candlesticks also rely heavily on the use of colors to explain what has happened during the
trading period. There are two color constructs for days up and one for days that the price falls.
When the price of the stock is up and closes above the opening trade, the candlestick will
usually be white or clear. If the stock has traded down for the period, then the candlestick will
usually be red or black, depending on the site. If the stock's price has closed above the
previous day’s close but below the day's open, the candlestick will be black or filled with the
color that is used to indicate an up day.

29
  Chart Patterns –

HEAD AND SHOULDER -

This is one of the most popular and reliable chart patterns in technical analysis. Head and
shoulders is a reversal chart pattern that when formed, signals that the security is likely to
move against the previous trend Head and shoulders top is a chart pattern that is formed at the
high of an upward movement and signals that the upward trend is about to end. Head and
shoulders bottom, also known as inverse head and shoulders is the lesser known of the two,
but is used to signal a reversal in a downtrend.

Cup and Handle -

A cup with handle chart is a bullish continuation pattern in which the upward trend has
paused but will continue in an upward direction once the pattern is confirmed. This price
pattern forms what looks like a cup, which is preceded by an upward trend. The handle
follows the cup formation and is formed by a generally downward/sideways movement in the
security's price. Once the price movement pushes above the resistance lines formed in the
handle, the upward trend can continue. There is a wide ranging time frame for this type of
pattern, with the span ranging from several months to more than a year.

Double Tops and Bottoms -

This chart pattern is another well-known pattern that signals a trend reversal - it is considered
to be one of the most reliable and is commonly used. These patterns are formed after a
sustained trend and signal to chartists that the trend is about to reverse. The pattern is created
when a price movement tests support or resistance levels twice and is unable to break
through. This pattern is often used to signal intermediate and long-term trend reversals.

Triangles -

Triangles are some of the most well-known chart patterns used in technical analysis. The
three types of triangles, which vary in construct and implication, are the symmetrical triangle,
ascending and descending triangle. These chart patterns are considered to last anywhere from
a couple of weeks to several months.

30
Flag and Pennant -

These two short-term chart patterns are continuation patterns that are formed when there is a
sharp price movement followed by a generally sideways price movement. This pattern is then
completed upon another sharp price movement in the same direction as the move that started
the trend. The patterns are generally thought to last from one to three weeks.

Wedge -
The wedge chart pattern can be either a continuation or reversal pattern. It is similar to a
symmetrical triangle except that the wedge pattern slants in an upward or downward
direction, while the symmetrical triangle generally shows a sideways movement. The other
difference is that wedges tend to form over longer periods, usually between three and six
months.

Triple Tops and Bottoms -

Triple tops and triple bottoms are another type of reversal chart pattern in chart analysis.
These are not as prevalent in charts as head and shoulders and double tops and bottoms, but
they act in a similar fashion. These two chart patterns are formed when the price movement
tests a level of support or resistance three times and is unable to break through; this signals a
reversal of the prior trend.

Rounding Bottom -

A rounding bottom, also referred to as a saucer bottom, is a long-term reversal pattern that
signals a shift from a downward trend to an upward trend. This pattern is traditionally thought
to last anywhere from several months to several years.

31
 CHAPTER-5
DATA INTERPRETATION AND ANALYSIS OF
CEMENT INDUSTRY

32
 DATA INTERPRETATION AND ANALYSIS OF CEMENT
INDUSTRY

5.1 EQUITY RESEARCH TECHNIQUE –

 Sector Analysis -

Sector Analysis was done on the basis of research and understanding various companies
of the sector i.e. Cement sector, which had strong Fundamentals over other companies of
the same sector. Companies’ growth and past performance was taken into account along
with its top-line (Revenue) and Bottom-line (Profits) for that period.

Companies with strong fundamentals were preferred.

The Ratios that were taken into consideration were:

 P/E Ratio -

In general, a high P/E suggests that investors are expecting higher earnings growth in the
future compared to companies with a lower P/E. However, the P/E ratio doesn't tell us the
whole story by itself. It's usually more useful to compare the P/E ratios of one company to
other companies in the same industry, to the market in general or against the company's own
historical P/E. It would not be useful for investors using the P/E ratio as a basis for their
investment to compare the P/E of a technology company (high P/E) to a utility company (low
P/E) as each industry has much different growth prospects.

The P/E is sometimes referred to as the "multiple", because it shows how much investors are
willing to pay per rupee of earnings. If a company were currently trading at a multiple (P/E)
of 20, the interpretation is that an investor is willing to pay Rs.20 for Re.1 of current
earnings.

It is important that investors note an important problem that arises with the P/E measure, and
to avoid basing a decision on this measure alone. The denominator (earnings) is based on an
accounting measure of earnings that is susceptible to forms of manipulation, making the
quality of the P/E only as good as the quality of the underlying earnings number.

 Generally a high P/E ratio means that investors are anticipating higher growth in the
future.
 The average market P/E ratio is 20-25 times earnings.
 The p/e ratio can use estimated earnings to get the forward looking P/E ratio.

33
  PEG ratio -

The PEG ratio that indicates an over or underpriced stock varies by industry and by company
type; though a broad rule of thumb is that a PEG ratio below one is desirable. Also, the
accuracy of the PEG ratio depends on the inputs used. Using historical growth rates, for
example, may provide an inaccurate PEG ratio if future growth rates are expected to deviate
from historical growth rates. To distinguish between calculation methods using future growth
and historical growth, the terms "forward PEG" and "trailing PEG" are sometimes used.

34
5.2 INTRODUCTION TO CEMENT SECTOR

The Indian cement industry is the 2nd largest market, responsible for 7-8 percent of global
cements production, and is also an exporter to 30 countries. The cement industry in India is
divided into five geographical segments, wherein the North and South regions are the leading
suppliers of cement. The East, West and Central regions face deficit of cement, thereby
relying on purchases from the North and South. According to the Cement Manufacturers’
Association (CMA), there are 139 large cement plants and 365 mini and white cement plants
in the country. The Cement industry in India had a total capacity of about 420 m tonnes (MT)
as of financial year ended 2016-17. According to the Cement Manufacturers Association
(CMA), cement sales for May 2016 were registered at 24.94 million tonnes (MT), which
signifies a 2 percent growth over the same period in 2015. Cement is a cyclical commodity
with a high correlation with GDP, growing at around 1.2x of GDP growth rate. The housing
sector is the biggest demand driver of cement, accounting for about 64% of the total
consumption. The other major consumers of cement include infrastructure (17%),
commercial & institutional (13%) and industrial segment (6%).

Though cement is the most preferred construction material in both housing and industrial
works, its demand is directly linked to the development and growth of others industry
domains, such as construction, infrastructure, finance, etc. In 2016, country’s cement
production capacity is expected to reach 395 million tonnes, which is expected to further
increase to 550 million tonnes by 2025. Government initiatives to boost infrastructure
development and ease transportation costs should keep the demand for cement on a consistent
rise. Furthermore, there are unexplored markets in the country, like the under-supplied North-
east region, that are currently experiencing increasing demand for cement.

Despite the fact that the Indian cement industry has grown at a commendable rate in the last
decade, registering a compounded growth of about 8%, the per capita consumption still
remains substantially poor when compared with the world average. Its per capita
consumption is only around 190 kg, much lower than the global average consumption of
about 350 kg. According to the latest report from the working group on the industry for the
12th five-year Plan , India would require overall cement capacity of around 550 million
tonnes. This would mean the industry will have to add another 200 million tonnes of capacity
during the period and our country has tremendous scope for growth in the Indian cement
industry in the long term.

Leading players in this sector (by market share) are Shree Cement, Ultratech Cement,
Ambuja Cement, Binani Cement, ACC Cement, India Cement, Dalmia Cement, Madras
Cement, Lafarge, and OCL India.

35
Given the high potential for growth, quite a few foreign transnational companies have
ventured into the Indian markets. Already, while companies like Lafarge, Heidelberg and
Italicementi have made a couple of acquisitions, Holcim has increased its stake in domestic
companies Ambuja Cements and ACC to over 50% to gain full control. Consolidation has
taken place with the top two cement groups controlling nearly one-third of the total domestic
capacity. However, the balance capacity still remains quite fragmented.

Factors that will drive growth in this sector

 Housing segment growth is leading to higher demand for cement for homebuilding.
 Government’s 12th Five Year Plan focuses on increasing infrastructure (upgraded
airports, ports, railway expansion, etc.) to drive construction activity.

 Rise in commercial and retail spaces, along with hotels in near future, will account for
increased demand for cement.

 Use of alternate fuels will help reduce low production costs and emissions and further
drive this sector.

 There is an increase in the sale of blended varieties of cement - Portland Pozzolana

Cement (PPC) and Portland Blast Furnace Slag Cement (PBFC)

36
* CEMENT SECTOR ANALYSIS

37
 CEMENT
COMPANY ANALYSIS

COMPANIES PRICE P/E EPS MARKET

CAPITAL
(CR)
ACC 1656.90 24.49 35.45 31114.47

AMBUJA 266.45 27.24 5.50 52907.52

ULTRATECH 3854.20 26.38 99.93 105806.59

SHREE 18580.10 26.03 365.00 64727.91

JK 954.00 14.69 39.77 6671.06

38
ACC LTD

39
Profile of ACC Ltd

ACC Limited (Formerly The Associated Cement Companies Limited) one of the largest
producers of cement in India. It's registered office is called Cement House. It is located on
Maharishi Karve Road, Mumbai. The stock price of company contributes in calculating
BSESensex.

The management control of company was taken over by Swiss cement major Holcim in 2004.
On 1 September 2006 the name of The Associated Cement Companies Limited was changed
to ACC Limited. The company is only cement company to get Superbrand status in India

ACC Limited is India’s foremost manufacturer of cement and ready mix concrete with a
countrywide network of factories and marketing offices.Established in 1936, ACC has been a
pioneer and trend-setter in cement and concrete technology. ACC’s brand name is
synonymous with cement and enjoys a high level of equity in the Indian market. Among the
first companies in India to include commitment to environment protection as a corporate
objective, ACC has won several prizes and accolades for environment friendly measures
taken at its plants and mines. The company has also been felicitated for its acts of good
corporate citizenship.

40
 PRICE CHART

41
INCOME STATEMENT EVOLUTION

Annual Income Statement

Data
Actuals in M INR Estimates in M INR

Fiscal Period December 2011 2012 2013 2014 2015 2016

Sales 94 387 111 305 109 084 121898 136174 156401

Operating income
21 126 21 956 16 300 17 925 22 027 28 078
(EBITDA)

Operating profit (EBIT) 16 373 16 367 10 462 17 454 21 380 20 906

Pre-Tax Profit (EBT) 15 404 14 515 12 136 15 412 18 647 23 134

Net income 13 253 10 612 10 947 11 382 13 416 15 880

EPS ( INR) 70,4 56,4 56,3 61,0 72,2 86,0

Dividend per Share ( INR) - 30,0 - 30,1 33,7 39,6

Yield - 2,07% - 2,07% 2,33% 2,73%

02/09/2012 02/07/2013 02/06/2014

Announcement Date - - -

42
AMBUJA CEMENTS LTD

43
Profile of Ambuja Cement Ltd

Ambuja Cement Limited (“Ambuja” or the “Company”) is one of the leading cement
manufacturing companies in India. The Company was set up in the year 1983 and
commenced cement production in 1986. Global cement major Holcim acquired management
control of Ambuja in 2006. Holcim today holds a little over 46% equity in Ambuja. The
Company was initially called as Gujarat Ambuja Cements Ltd and was founded by Narotam
Sekhsaria in 1983 in partnership with Suresh Neotia. Ambuja Cement is an established brand
in India for Ordinary Portland Cement (OPC) and Pozzolana Portland Cement, with
significant presence across western, eastern and northern markets of India. The Company's
customers range from individuals house builders to governments to global construction firms.

In FY 2012, the Company grew from 0.7 million tonne Cement Grinding capacity to 27.35
million tonnes. The Company has five integrated cement manufacturing plants and eight
cement grinding units across the country. Ambuja has a captive port with three terminals
along the country’s western coastline to facilitate timely, cost effective and environmentally
cleaner shipments of bulk cement to its customers.

The Company’s subsidiaries include Kakinada Cements Ltd., M.G.T. Cements Private Ltd.,
Chemical Limes Mundwa Private Ltd., Dang Cement Industries Private Ltd. and Dirk India
Private Ltd. In June 2011, the Company acquired Dang Cement Industries Pvt. Ltd. In
September 2011, ACL acquired 60% interest in Dirk India Pvt. Ltd.

The Equity Research Report presented below is based on a Fundamental

Analysis of Ambuja Cement.

44
  PRICE CHART

 INCOME STATEMENT EVOLUTION

45
Annual Income Statement
Data
Actuals in M INR Estimates in M INR

Fiscal Period December 2011 2012 2013 2014 2015 2016

104 117 127

Sales 85 145 96 749 90 868
904 646 408

Operating income
22 249 24 730 16 508 21 116 25 455 31 261
(EBITDA)

Operating profit (EBIT) 17 798 19 078 11 608 17 252 21 019 25 185

Pre-Tax Profit (EBT) 17 029 19 018 15 141 19 013 23 334 29 834

Net income 12 289 12 971 12 946 13 742 16 651 20 510

EPS ( INR) 8,00 8,41 8,37 8,55 10,4 13,1

Dividend per Share ( INR) 3,20 3,60 - 3,70 4,13 4,92

Yield 1,43% 1,61% - 1,66% 1,85% 2,20%

02/09/2012 02/07/2013 02/06/2014

Announcement Date - - -

46
 ULTRATECH CEMENTS LTD

Profile of Ultratech Cement Ltd

47
UltraTech Cement Limited (“UltraTech” or the “Company”) was set up in the year 1945 and
has emerged as India's largest and world’s 10th largest manufacturer of cement with an
installed capacity of 52 Million Tonnes Per Annum. The Company is part of the US$ 40
billion Aditya Birla Group. UltraTech provides a range of products including ordinary
portland cement, portland blast furnace slag cement, white cement, ready mix concrete,
building products and a host of other building solutions.

White cement is manufactured under the brand name of ‘Birla White’ , ready mix concretes
under ‘UltraTech Concrete’ and new age building products under the name of ‘UltraTech
Building Products Division’.

UltraTech operates through 11 integrated plants, 15 grinding units, 6 bulk terminals and 101
RMC plants – spanning India, UAE, Bahrain, Bangladesh and Sri Lanka. The Company is
also India's largest exporter of cement and clinker in countries around the Indian Ocean,
Africa, Europe and the Middle East.

The Equity Research Report presented below is based on a Fundamental

Analysis of UltraTech Cement.

48
  PRICE CHART

INCOME STATEMENT EVOLUTION

49
Annual Income Statement
Data
Actuals in M INR Estimates in M INR

Fiscal Period March 2012 2013 2014 2015 2016 2017

233 265 313

Sales 181 664 200 179 200 779
691 625 861

Operating income
41 474 46 755 38 179 47 257 57 282 72 509
(EBITDA)

Operating profit (EBIT) 32 449 37 301 27 656 46 782 57 770 55 565

Pre-Tax Profit (EBT) 33 929 38 254 27 755 34 110 42 815 57 956

Net income 24 462 26 554 21 445 25 022 30 475 40 722

EPS ( INR) 89,2 96,9 78,2 91,6 111 149

Dividend per Share ( INR) 8,00 9,00 9,00 10,4 11,9 14,5

Yield 0,31% 0,35% 0,35% 0,40% 0,46% 0,56%

04/23/2012 04/22/2013 04/23/2014

Announcement Date - - -

50
SHREE CEMENTS LTD

51
Profile of Shree Cement Ltd

Shree Cements Limited ("Shree Cements" or the "Company") is engaged in the manufacture
and sale of cement in India. The Company offers cement under brands like Shree Ultra,
Bangur Cement, and Rockstrong Cement. The Company's cement plants are located at
Beawar, Ras, Khushkhera, Jobner (Jaipur) and Suratgarh in Rajasthan and Laksar (Roorkee)
in Uttarakhand. Shree Cement sells majority of the cement it produces in North India.

The Company has a cement production capacity of 13.5 Million Tons Per Annum (MTPA).
Shree Cement plans to increase its existing capacity by setting up two new clinker
manufacturing units of 2 MTPA capacities. The Company has also planned a new grinding
unit in the state of Bihar and an integrated unit in the state of Chattisgarh. Shree Cement has a
power generation capacity of 560 MW with plants located at Beawar and Ras in Rajasthan.
The Company's heat recovery power plants have a total capacity of 46MW which is the
largest such capacity in the global cement industry (excluding China).

For FY 2013, the Company’s total income from operations went down by 5.22 % to
Rs. 5,590.25 Cr. as against Rs. 5,898.12 Cr. in FY 2012. For the same period, net profit went
up by 62.32 % to Rs. 1,003.97 Cr. as against Rs. 618.50 Cr. in FY 2012.

52
The Equity Research Report presented below is based on a Fundamental
Analysis of Shree Cements.

 PRICE CHART

53
INCOME STATEMENT EVOLUTION

Annual Income Statement

Data
Actuals in M INR Estimates in M INR

Fiscal Period June 2011 2012 2013 2014 2015 2016

Sales 35 119 46 251 55 671 57 559 67 589 79 194

Operating income (EBITDA) 9 324 11 646 15 609 13 331 17 149 21 089

Operating profit (EBIT) 2 566 3 733 11 253 8 352 11 587 14 674

Pre-Tax Profit (EBT) 1 103 3 042 11 194 8 490 11 547 15 214

Net income 2 097 2 670 10 039 7 151 9 429 12 230

EPS ( INR) 60,2 76,6 288 203 272 349

Dividend per Share ( INR) 14,0 - 20,0 19,4 21,7 24,8

Yield 0,19% - 0,27% 0,27% 0,30% 0,34%

05/27/2011 05/15/2012 07/30/2013

Announcement Date - - -

54
JK CEMENTS LTD

55
Profile of JK Cement Ltd
In the year-1982 a remote area in the zero-industry district of Sirohi in Rajasthan.the story of JK Lakshmi
Cement Limited thus began. And today as it completes 25 yearsof existence, it is a company that’s renowned
for its strength, quality and performance.

One of the established names in the cement industry, JK Lakshmi Cement Ltd has state of the art plants at
Jaykaypuram, distt. Sirohi, Rajasthan having a capacity of more than 3.5million tonnes. With use of the latest
technology from M/s Blue Circle Industries andModern equipments from M/s Fuller International of USA,
we are going from strength to strength.

It is also the first grey cement producer of northern India to be awarded an ISO 9002certificate and be
accredited by NABL (Department of Science & Technology,Government of India) for its Lab Quality
Management systems.

Primarily a cement focused company, we have now diversified into a variety of productsincluding Cement
(OPC & PPC), Power Mix (RMC) and Plaster of Paris to meet thestated needs of our customers. We are also
in the midst of finalising certain customercentric services to provide a much better cement purchasing
experience.

Products

Upholding the tradition of JK Organisation for maintaining the highest standards inquality, JK Lakshmi
Cement today is one of the most preferred brands in its marketingarea with a network of about 1500 dealers
spread in the states of Rajasthan, Gujarat,Delhi, Haryana, U.P., Uttaranchal, Punjab, J&K, H. P. and Mumbai.
Our endeavor isalways to give our best and maintain the highest standards of customer satisfaction.

No wonder the discernible buyers prefer this cement over other brands owing to itsconsistency, higher level
of quality and impeccable customer service

PRICE CHART
56
INCOME STATEMENT EVOLUTION

57
Annual Income Statement
Data
Actuals in M INR Estimates in M INR

Fiscal Period March 2012 2013 2014 2015 2016 2017

Sales 25 378 29 040 27 815 33 940 42 291 48 556

Operating income (EBITDA) 5 166 5 600 3 749 5 370 7 352 9 600

Operating profit (EBIT) 3 911 4 318 2 409 3 915 5 126 7 923

Pre-Tax Profit (EBT) 2 858 3 406 1 363 1 974 3 261 5 471

Net income 1 773 2 335 970 1 415 2 216 3 830

EPS ( INR) 25,4 33,4 13,9 19,1 30,6 54,8

Dividend per Share ( INR) 5,00 6,50 3,00 4,91 6,93 6,00

Yield 1,26% 1,64% 0,76% 1,24% 1,75% 1,52%

05/26/2012 05/13/2013 05/19/2014

Announcement Date - - -

58
 CHAPTER-6
OUTLOOK, INTERPRETATION, CONCLUSION

59
 6.1 OUTLOOK -

Indian Cement Industry Outlook

Cement is one of the core industries that plays a vital role in the growth and development of a
nation. In India, which is second largest producer of cement worldwide, the cement industry
has been expanding on back of increasing infrastructure activities and demand from housing
sector over the past many years.

In order to apprise our clients about the direction in which the cement industry is likely to
progress in the coming years, our new report, “Indian Cement Industry Outlook 2016” has
presented the forecasts for production, consumption, capacity utilization, and installed
capacity. The sector is expected to witness positive growth in coming years, with demand set
to increase at CAGR of more than 8% during 2013-14 to 2015-16.

The overall study also provides the regional analysis of cement consumption, production,
capacity utilization, and installed capacity in the country. On analyzing the regional trend of
cement consumption, we observed that the Southern region is creating maximum demand,
which is expected to increase more in future. Besides, we have also provided the state-wise
statistics for cement consumption, production, capacity utilization, and installed capacity.

For complete understanding of the market, we have studied government regulations, cement
pricing and export & import scenario. Our comprehensive study has also included types of
cement production by region and state. In addition, the report provides statistics on the plants
by installed capacity and production, along with the cement dispatch by transportation modes
to present client’s valuable information of different aspects of the cement industry.

With a view to helping our clients in understanding the market dynamics and recent activities
of key players, we have covered the competitive landscape. This section covers the major
four cement manufacturers’ business description, strategic analysis and recent developments.
Overall, the report is an optimum presentation of Indian cement industry, which caters to all
those interested in construction/infrastructure domain.

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6.2 INTERPRETATION –
 The main aim of this project which was to do equity research in Cement sector and it
also shows the opportunities of investment where returns can be maximized.

 The major players in Indian Cement Industry which has good investment prospects
are –

ACC

AMBUJA

ULTRATECH

SHREE

JK

 The top-line (Revenue) and bottom-line (Profit) of the companies selected under
cement sector are performing better than others in similar sector.

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6.3 CONCLUSION -
This project has given me broad aspect to gain knowledge of the financial activities. This
project was a good exposure for us to get acquainted with the sector analysis as well as other
financial aspects i.e. equity markets, debt markets, mutual funds, derivatives, etc. and how the
work in the real life.

From the project it can be concluded on the sector that,

 Cement industry is a cyclical commodity industry where the profit and return on
capital is dependent on the demand cycle picture. Given the high potential
growth, quite a few foreign transnational’s have been eyeing the Indian Markets
and are planning to acquire domestic companies. This could lead to higher
prospects of growth to this sector in the coming years.

This Internship and project has not only exposed us to do this research but has also given us
an opportunity to understand the corporate world, work culture and professionalism, which
would help us to excel in our career

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 CHAPTER–7
BIBLIOGRAPHY

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 BIBLIOGRAPHY

7.1 REFERENCES –
1) Nair N.K.
2) SUBIR COKAVN AND REJENDRA VAIDHA
3) CHANDRASEKARAN N

7.2 NEWSPAPER –
1) Economic Times of India
2) Business Standard

7.3 WEBSITES
1) www.karvyonline.com
2) www.info.shine.com
3) www.moneycontrol.com
4) www.equimaster.com
5) www.indiainfoline.com
6) www.moneyworks4me.com
7) www.ibef.org

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