“EQUITY RESEARCH ON CEMENT SECTOR”

A SUMMER INTERNSHIP PROJECT FOR

MASTER OF BUSINESS ADMINISTRATION

BY

RAGHAV JHA

UNDER THE GUIDANCE OF

Mr. IQBAL SINGH BANSAL Prof. Ms. Mandeep

BUSINESS PARTNER

BIRLA SUNLIFE INSURANCE

22/07/2016
“EQUITY RESEARCH ON CEMENT SECTOR”

BY:

RAGHAV JHA

JULY,2016
 “EQUITY RESEARCH ON CEMENT SECTOR”

BY

RAGHAV JHA

UNDER THE GUIDANCE OF

Mr. IQBAL SINGH BANSAL Prof. XYZ

BUSINESS PARTNER DESIGNATION

BIRLA SUNLIFE INSURANCE SOB, GU, GAUTAM BUDH NAGAR

JULY,2016
 Certificate of Approval

The following Summer Internship Project Report titled "EQUITY RESEARCH ON CEMENT
SECTOR" is hereby approved as a certified study in management carried out and presented in a manner
satisfactory to warrant its acceptance as a prerequisite for the award of Master of Business
Administration for which it has been submitted. It is understood that by this approval the undersigned do
not necessarily endorse or approve any statement made, opinion expressed or conclusion drawn therein
but approve the Summer Internship Project Report only for the purpose it is submitted to the Summer
Internship Project Report Examination Committee for evaluation of Summer Internship Project Report

Name Signature

1. Faculty Mentor Prof. ********* ___________________

2. Industry Mentor Mr. Iqbal Singh Bansal ___________________

 ACKNOWLEDGMENT:

Hereby I sincerely thank RAWAL INSTITUTE OF MANAGEMENT & BIRLA SUNLIFE

INSURANCE for giving me this wonderful opportunity to do a Project with such a prestigious company.
It has been a privilege to work with Birla Sunlife insurance & I thank them for considering me worthy
enough to do Equity research for them. By doing this project of equity research on the Cement Sector I
was able to understand these sector thoroughly, the factors that affect these sector.

I would also like to take this opportunity to thank Mr. IQBAL SINGH BANSAL who was my mentor in
the company for the project. His constant monitoring & guidance has been an essential ingredient of my

project. The way he gave me the opportunity & confidence to go ahead in the research was truly

encouraging. The learning and understanding power that I got from him not only helped me in my

summer internship but am sure it will be helping me throughout my career.

I want to express my deep gratitude to Dr. Dimple Singhal, the Professor of School Of Business,
RAWAL INSTITUTE OF MANAGEMENT for giving me the opportunity to undertake this
project and enhance my knowledge.

At last but not least I would also like to thanks my friends for helping me in completion of this
project.
 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 COMPANY LOGO 7
2.2 MISSION AND VISION 8
2.3 HISTORY OF COMPANY 9
2.4 HISTORY OF INSURANCE SECTOR 10
2.5 DIFFERENT LOCATION OPERATIONS 11
2.6 RANGE OF COMPANY PRODUCT 12
2.7 ROI OF THE COMPANY 13
2.8 MARKET SHARES, POSITION AND 13
COMPETITORS
2.9 SWOT ANALYSIS 15
4 KEY OBSERVATIONS

6 INTRODUCTION TO STOCK MARKET

6.1 INTRODUCTION TO BASIC
TERMINOLOGIES PF STOCK MARKET
 EQUITY MARKET
 DEBT MARKET
 MUTUAL FUND
  DERIVATIVES

7 INTRODUCTION TO DATA ANALYSIS AND

INTERPRETATION TECHNIQUES
7.1 RESEARCH TECHNIQUES
 FUNDAMENTAL ANALYSIS
 TECHNICAL ANALYSIS
8 DATA INTERPRETATION AND ANALYSIS
OF CEMENT INDUSTRY
8.1EQUITY RESEARCH TECHNIQUES
 PE RATIO
 PEG RATIO
8.2INTRODUCTION TO CEMENT SECTOR
8.3 ANALYSIS OF CEMENT SECTOR
 ACC
 AMBUJA
 ULTRATECH
 SHREE CEMENT
 JK

9 OUTLOOK, INTERPRETATION AND CONCLUSION

 OUTLOOK
 INTERPRETATION
 CONCLUSION

10 BIBLIOGRAPHY
7.1 REFERENCES
7.2 NEWSPAPERS
7.3 WEBSITES
 CHAPTER 1
INTRODUCTION

INTRODUCTION

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 330 m tonnes (MT)
as of financial year ended 2011-12. 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, commercial & institutional and industrial segment.

1.2 Objective -

 To study Indian Cement Industry.

 To identify potential investment prospects in cement industry.
 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.

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.

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.

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.
 CHAPTER 2

COMPANY PROFILE

COMPANY PROFILE

2.1 COMPANY LOGO

MISSION

To consistently pursue investor's wealth optimization

by:
2.2 MISSION AND
−Achieving superior and consistent investment results.
VISION -
− Creating a conducive environment to hone and retain
talent.

−Providing customer delight. VISION

−Institutionalizing system-approach in all aspects of

functioning

−Upholding highest standards of ethical values at all

times.
To be leader and role model in a broad based and integrated financial services
business.

2.3 HISTORY OF COMPANY -

Established in 2000, Birla Sun Life Insurance Company Limited (BSLI) is a joint venture
between Aditya Birla Group, a well-known and trusted name globally amongst Indian
conglomerates and Sun Life Financial Inc. leading international financial services organization
from Canada. The local knowledge of the Aditya Birla Group combined with the domain
expertise of Sun Life Financial Inc. offers a formidable protection for its customer’s future.

With an experience of over 10 years, BSLI has contributed significantly to the growth and
development of the Life Insurance industry and currently ranks amongst the top 7 private Life
Insurance Company in the country.
Known from its innovation and creating industry benchmark, BSLI has several first to its credits.
It was the first Indian Insurance company to introduce “Free Look Period” and the same was
made mandatory by IRDA for all other Life Insurance Companies. Additionally, BSLI pioneered
the launch of Unit Linked Life Insurance plans amongst the private players in India. To establish
creditability and further transparency, BSLI also enjoys the prestige to be the originator of
practice to disclose the portfolio on monthly basis. These category development initiatives have
helped BSLI be closer to its policy holder expectations, which gets further accentuated by the
complete bouquet of Insurance products (viz. pure term plan, life stage products, health plan and
retirement plan ) that the company offers.

2.4 DESCRIPTION OF THE INSURANCE SECTOR .

Insurance in its current form has its history dating back until 1818, when Oriental Life Insurance
Company[3] was started by Anita Bhavsar in Kolkata to cater to the needs of European
community. The pre-independence era in India saw discrimination between the lives of
foreigners (English) and Indians with higher premiums being charged for the latter. In
1870, Bombay Mutual Life Assurance Society became the first Indian insurer.
At the dawn of the twentieth century, many insurance companies were founded. In the year 1912,
the Life Insurance Companies Act and the Provident Fund Act were passed to regulate the
insurance business. The Life Insurance Companies Act, 1912 made it necessary that the
premium-rate tables and periodical valuations of companies should be certified by an actuary.
However, the disparity still existed as discrimination between Indian and foreign companies. The
oldest existing insurance company in India is the National Insurance Company , which was
founded in 1906, and is still in business.
The Government of India issued an Ordinance on 19 January 1956 nationalizing the Life
Insurance sector and Life Insurance Corporation came into existence in the same year. The Life
Insurance Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers as also 75 provident
societies—245 Indian and foreign insurers in all. In 1972 with the General Insurance Business
(Nationalization) Act was passed by the Indian Parliament, and consequently, General Insurance
business was nationalized with effect from 1 January 1973. 107 insurers were amalgamated and
grouped into four companies, namely National Insurance Company Ltd., the New India
Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance
Company Ltd. The General Insurance Corporation of India was incorporated as a company in
1971 and it commence business on 1 January 1973.
The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private
sector. Before that, the industry consisted of only two state insurers: Life Insurers (Life Insurance
Corporation of India, LIC) and General Insurers (General Insurance Corporation of India, GIC).
GIC had four subsidiary companies. With effect from December 2000, these subsidiaries have
been de-linked from the parent company and were set up as independent insurance
companies: Oriental Insurance Company Limited, New India Assurance Company
Limited, National Insurance Company Limited and United India Insurance Company Limited.

2.5DIFFERENT LOCATION OPERATIONS

Registered Office: 
One India bulls Centre Tower1,
16th Floor, Jupiter Mill Compound,
841, Senapati Bapat Marg,
Elphinstone Road,
Mumbai – 400013

Head Office: 
G Corp Tech Park,
5th & 6th Floor,
Kasar Wadavali, Ghodbunder Road,
Thane West – 400601

Zonal Office: 
15th Floor,
at R-Tech Park, 
Off Western Express Highway,
Goregaon (East),
Mumbai – 400063
2.6 RANGE OF COMPANY PRODUCT-

Sr. Product About the Product

No
1 Protection Solution It helps in securing the family’s future in this
increasingly uncertain world and don’t leave their
dreams fate.
 BSLI Protector Plus Plan
 BSLI Future Guard Plan
 BSLI Easy Protect Plan
 BSLI Protect@Ease

2 Health and Wellnes Paln and ensure that you spend time with your loved
Solution ones when they need the most rather that worrying
about medical expensis.
 BSLI Hospital Plus Plan

3 Children’s future solution Give your child the freedom to pursue his/her real
passion by ensuring that you give him/her the right
financial support.
 BSLI Vision Star Plan

4 Retirement Solution Plan your retirement well to build a good corpus

because during retired life, income stop but expenses
don’t.
 BSLI Empower Pension Plan
 BSLI Immidiate Annuity Plan

5 Wealth With Protection
Solution
6 Savings with protection
solution
INTRODUCTION TO STOCK MARKET
 BSLI Empower Pension-SP Plan
Secure your family’s dreams and live through life’s
highs and lows with confidence while you reach your
financial milestones as planned.
 BSLI Wealth Max Plan
 BSLI Wealth Secure Plan
 BSLI Wealth Assure Plan
 BSLI Fortune ElitePlan
 BSLI Wealth Aspire Plan
Strike the right balance between living comfortably
today and staying financialy secure in the future with
small disciplined savings at regular interval.
 BSLI vision money back plus plan
 BSLI vision life income plan
 BSLI vision endowment plan
 BSLI savings plan
 BSLI vision life secure plan
 BSLI income assured plan
 BSLI vision regular returns plan
 BSLI vision endowment plus plan
 BSLI guaranteed future plan
 BSLI secure plus plan
CHAPTER 6
 INTRODUCTION TO STOCK MARKET

6.1 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).

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

 DIFFERENT TYPES OF MUTUAL FUNDS

Hedge Funds Close-ended

Funds

Open-ended
Funds
Debt/Income
Funds
 Tax Saving
Funds

Index Funds

Equity,Growt
h/Funds

 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:

 CHAPTER
DATA ANALYSIS AND INTERPRETATION
TECHNIQUES

DATA ANALYSIS AND INTERPRETATION

7.1 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 analyzed 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 analyzed 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.

 FUNDAMENTAL ANALYSIS

Fundamental analysis of a business involves analyzing its financial statements and health, its
management and competitive advantages, and its competitors and markets. When analyzing 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.
  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.
Behavioral 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 analyzes 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
  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.
 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).
 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.
  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.

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.
 CHAPTER-8
DATA INTERPRETATION AND ANALYSIS OF
CEMENT INDUSTRY
 DATA INTERPRETATION AND ANALYSIS OF CEMENT
INDUSTRY

8.1 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.
H, W WJBJOIYI6
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.
  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.
8.2 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 330 m tonnes (MT) as of financial
year ended 2011-12. According to the Cement Manufacturers Association (CMA), cement sales
for May 2012 were registered at 16.26 million tonnes (MT), which signifies a 14 percent growth
over the same period in 2011. 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. The housing segment that accounts for a major portion
of domestic demand for cement in India is expected to witness a demand of 4.3 million housing
units between 2010 and 2014. 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 170 kg, much lower than the global average consumption of about 430 kg. According to
the latest report from the working group on the industry for the 12th five-year Plan (2012-17),
India would require overall cement capacity of around 480 million tonnes. This would mean the
industry will have to add another 150 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.
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)
Porter’s 5 forces analysis for
Cement Sector

Supply The demand-supply situation is highly

skewed with the latter being significantly
higher.

Demand Housing sector acts as the principal growth

driver for cement. However, industrial and
infrastructure sectors have also emerged as
demand drivers.

Barriers to entry High capital costs and long gestation

periods. Access to limestone reserves (key
input) also acts as a significant entry barrier.

Bargaining power of suppliers Licensing of coal and limestone reserves,

supply of power from the state grid etc are
all controlled by a single entity, which is the
government. However, nowadays producers
are relying more on captive power, but the
shortage of coal and volatile fuel prices
remain a concern.

Bargaining power of customers Cement is a commodity business and sales

volumes mostly depend upon the
distribution reach of the company. However,
things are changing and few brands have
started commanding a premium on account
of better quality perception.

Competition Intense competition with players expanding

reach and achieving pan India presence.
 CEMENT SECTOR ANALYSIS
 CEMENT
COMPANY ANALYSIS

COMPANIES PRICE P/E EPS LTPT

ACC 1452.40 25.83 56.23 2094.57

AMBUJA 223.70 26.10 8.57 319.23

ULTRATECH 2604.30 33.32 78.16 2911.46

SHREE 7276.00 31.90 228.07 8495.61

RAIN 43.00 100.00 0.43 16.02

PRISM 73.00 NIL NIL NIL

RAMCO 303.60 52.44 5.79 215.68

JK 390.00 28.42 13.88 517.03

SECTOR P/E 37.25

 SELECTED COMPANIES

COMPANIES PRICE PRICE PROFIT VOLUME AMT P/E LTPT

AS ON AS ON AS ON
05/07/2016 01/07/2016 05/07/2016
ACC 1481.00 1452.40 28.60 6,752 1 cr 25.83 2393.71

AMBUJA 225.00 223.70 1.3 33,333 75 lakhs 26.10 364.82

ULTRATECH 2631.00 2604.30 26.7 950 25 lakhs 33.32 3327.27

SHREE 7417.10 7276.00 141.1 674 50lakhs 31.90 9708.94

JK 394.45 390.00 4.45 12,676 50lakhs 28.42 590.87

TOTAL 3crs
  ASSOCIATED CEMENT COMPANIES LIMITED

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.
  INCOME STATEMENT EVOLUTION

Annual Income Statement

Data
Fiscal Period December 2011 2012 2013 2014 2015 2016

Sales 94 387 111 305 109 084 121898 136174 156401

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

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 - - -
  AMBUJA CEMENT

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.

 INCOME STATEMENT EVOLUTION

Annual Income Statement
Data
Fiscal Period December 2011 2012 2013 2014 2015 2016

Sales 85 145 96 749 90 868 104 904 117 646 127 408

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

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 - - -
  ULTRATECH

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.
 
  INCOME STATEMENT EVOLUTION

Annual Income Statement

Data
Fiscal Period March 2011 2012 2013 2014 2015 2016

Sales 181 664 200 179 200 779 233 691 265 625 313 861

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

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 - - -

 SHREE CEMENT
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.

 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 - - -
  JK CEMENT

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

 INCOME STATEMENT EVOLUTION

Annual Income Statement
Data
Fiscal Period March 2011 2012 2013 2014 2015 2016

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 - - -
 CHAPTER-9
OUTLOOK, INTERPRETATION, CONCLUSION
 9.1 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 clients 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.
9.2 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.
9.3 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
 CHAPTER–10
BIBLIOGRAPHY
 BIBLIOGRAPHY

10.3 WEBSITES
 www.birlasunlife.com
 www.info.shine.com
 www.moneycontrol.com
 www.equimaster.com
 www.indiainfoline.com
 www.moneyworks4me.com