SYNOPSIS

Name: SHIVARJ GOUDAR

Reg, No: 19C01601

Title of the Project: “A STUDY OF EQUITY ANALYSIS ON PHARMA SECTOR”

Company Name: “SHREE MALHAR AGENCY”

INTRODUCTION

The field of equity research is very vast and one has to look into various aspects of the
functioning of the company to get to any conclusion about the possible performance of the
company in the market. The project on “Equity Research” was carried out by self-study. It
also provided an insight on what various services such as broking houses provide and what
efforts are required to manage such organization.

The reason behind choosing this project is that it provides hands on experience with what
goes on in the stock market on a day-to-day basis. Some value investors only look at present
assets/earnings and don’t place any value on future growth. Other value investors base
strategies completely around the estimation of future growth and cash flows despite the
different methodologies

OBJECTIVES OF THE STUDY

 The main objective of project is to do fundamental analysis of pharmaceutical

companies.
 It helps to provide an overview of pharmaceutical sector.
 To study about some of the major players in pharmaceutical sector while has good
investment prospects.
 To study the present scenario of pharmaceutical industry which analyse the
information collected on sales, profit, earning per share, market price etc.
 It helps to conclude about the fundamental position of the selected companies.
NEED OF THE STUDY

To start any business capital plays major role. Capital can be acquired in two ways by issuing
shares or by taking debt from financial institutions or borrowing money from financial
institutions. The owners of the company have to pay regular interest and principal amount at
end. Stock is ownership in a company, with each other each share of stock representing a tiny
piece of ownership. The more shares you, the more dividends you earn when the company
makes a profit in the financial world and ownership are called “Equity”

SCOPE OF THE STUDY

The stock market in the country is on a remarkable growth path in India, there has been a
significant growth in income and wealth levels over the past few years. Financial
intermediaries have begun to recognise the important of wealth management as a profitable
business. Investment areas in India normally include equities, mutual fund, bonds.

RESEARCH METHODOLOGY

1. PRIMARY DATA:
The information regarding primary data is collected by visiting the company and the
other relevant information was collected by personal discussion with the concern
department head and their subordinates.

2. SECONDARY DATA:
The secondary data is collected from the various sources, company manual and
company’s annual reports for the study period.

LIMITATIONS OF THE STUDY

 This study has been conducted purely to understand Equity Analysis for investors.
 The study is limited to the company’s having equities.
 Detailed study of the topic was not possible due to time limit.
  The information given by the company was limited.

CHPATER-2

CONCEPTUAL FRAMEWORK

EQUITY:-
In accounting and finance, equity is the residual claim or interest of the most junior class of
investors in assets, after all liabilities are paid. If valuations placed on assets do not exceed
liabilities, negative equity exists. In an accounting context, Shareholders equity represents the
remaining interest in assets of a company, spread among individual shareholders of common
or preferred stock.

SAt the start of a business, owners put some funding into the business to finance assets. This
creates liability on the business in the shape of capital as the business is a separate entity form
its owners. Businesses can be considered to be, for accounting purposes, sums of liabilities
and assets; this is the accounting equation. After liabilities have been accounted for, the
positive remainder is deemed the owners interest in the business.

This definition is helpful to understand the liquidation process in case of bankruptcy. At

first, all the secured creditors are paid against proceeds from assets. Afterwards, a series of
creditors, ranked in priority sequence, have the next claim/right on the residual proceeds.
Ownership equity is the last or residual claim against assets, paid only after all other creditors
are paid. In such cases where even creditors could not get enough money to pay their bills,
nothing is left over to reimburse owners’ equity. Thus owners’ equity is reduced to zero.
Ownership equity is also known as risk capital, liable capital and equity.
EQUTY SHARES
Total equity capital of a company is divided into equal units of small denominations, each
called a share. For example, in a company the total equity capital of 1,00,00,000 is divided
into 10,00,000 units of Rs 10 each. Each such unit of Rs 10 is called a Share. Thus, the
company then is said to have 10,00,000 equity shares of Rs 10 each. The holders of such
shares are members of the company and have voting rights.

EQUITY INVESTMENT
Equity investment generally refers to the buying and holding of shares of stock on a stock
market by individuals and firms in anticipation of income from dividends and capital gain as
the value of the stock rises. It also sometimes refers to the acquisition of equity participation
in a private company or a startup. When the investment is in infant companies, it is referred
to as venture capital investing and is generally understood to be higher risk than investment
in listed going-concern situations.

Why should one invest in Equity in particular?

When you buy a share of a company you become a shareholder in that company. Equities
have the potential to increase in value over time. It also provides your portfolio with the
growth necessary to reach your long term investment goals. Research studies have proved
that the equities have outperformed most other forms of investments in the long term.
Equities are considered the most challenging and the rewarding, when compared to other
investment options. Research studies have proved that investments in some share with a
longer tenure of investment have yielded far superior returns than any other investment.
However, this does not mean all equity investments would guarantee similar high returns.
Equities are high risk investments. One needs to study them carefully before investing.
How to invest in Equity Shares?

Investors can buy equity from Security market that is from Primary market or Secondary
market. The primary market provides the channel for sale of new securities. Primary market
provides opportunity to issuers of securities; Government as well as corporate, to raise
resources to meet their requirements of investment and/or discharge some obligation.
Investors can buy shares of a company through IPO when it is first time issued to public.
Once shares are issued to the public it is traded in the secondary market. Stock exchange only
acts as facilitator for trading of equity shares. Anyone who wishes to buy shares of a
company can buy it form existing shareholder of a company.