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RAM A STUDY ON EQUITY RESEARCH ANALYSIS AT INDIA BULLS LIMITED

SUBMITTED BY ENROLLMENT NO. SUBMITTED TO: – HYDERABAD A REPORT SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT OF MASTERS DEGREE IN BUSINESS ADMINISTRATION HYDERABAD
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DECLARATION I declare that this project report entitled “EQUITY ANALYSIS” is original and bonafide work of my own in the partial fulfillment of the requirements for the award of the Degree of MASTER OF BUSINESS ADMINISTRATION and submitted to the Department of Management, Hyderabad. The data that has been collected by me is truly authentic and contains true and complete information ,

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ACKNOWLEDGEMENT I am extremely grateful to my Faculty guide, whose experienced guidance has

supported my honest efforts at all stages of my report. I would like to express my heart-full gratitude to all those people who had enabled the successful completion of my Final thesis of my Management Thesis-II whose constant guidance and encouragement crowned all my efforts with success.

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CONTENTS

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if one looks hard enough there may still be a genuine aid for the Day Trader and Short Term Investor. if the investor expects the price to fall. Stock is ownership in a company. Capital can be acquired in two ways by issuing shares or by taking debt from financial institutions or borrowing money from financial institutions. and to save tax in honest way.e. the more of the company you own. because they refer to human expectations. In an industry plagued with skepticism and a stock market increasingly difficult to predict and contend with. Since the introduction of shares concept. they just cannot afford to ignore either fundamental or technical analysis NEED OF THE STUDY To start any business capital plays major role. The price of a security represents a consensus. These simple statements are the cause of a major challenge in forecasting security prices. The more shares you 5 . If he expects the security's price to rise. humans expectations are neither easily quantifiable nor predictable. he will buy it. with each share of stock representing a tiny piece of ownership. Since all the investors in the stock market want to make the maximum profits possible. That's not to say that knowing what a security should sell for isn't important--it is. large numbers of investors are showing interest to invest in stock market. fundamental analysis) becomes less important than knowing what other investors expect it to sell for. But there is usually a fairly strong consensus of a stock's future earnings that the average investor cannot disprove Fundamental analysis and technical analysis can co-exist in peace and complement each other. If prices are based on investor expectations. The price at which an investor is willing to buy or sell depends primarily on his expectations. Equities are playing a major role in contribution of capital to the business from the beginning. The owners of the company have to pay regular interest and principal amount at the end. Nowadays many people are interested to invest in financial markets especially on equities to get high returns. It is the price at which one person agrees to buy and another agrees to sell. then knowing what a security should sell for (i. As we all know firsthand.. The more shares you own.INTRODUCTION India is a developing country. he will sell it.

. analyzing and interpreting the data to diagnose the problem and react to the opportunity in such a way where 6 . OBJECTIVES OF THE STUDY The objective of this project is to deeply analyze our Indian Automobile Industry for investment purpose by monitoring the growth rate and performance on the basis of historical data. The role of equity analysis is to provide information to the market. The more shares you own the more dividends you receive.own.. Advantages of selling stock: •A company can raise more capital than it could borrow. Maruti Suzuki and Mahindra and Mahindra through fundamental analysis 3) Suggesting as to which company’s shares would be best for an investor METHODOLOGY Research design or research methodology is the procedure of collecting. An efficient market relies on information: a lack of information creates inefficiencies that result in stocks being misrepresented (over or under valued). •A company does not have to make periodic interest payments to creditors. the more dividends you earn when the company makes a profit. •A company does not have to make principal payments Stock/shares play a major role in acquiring capital to the business in return investors are paid dividends to the shares they own. The main objectives of the Project study are: 1) Detailed analysis of Automobile industry which is gearing towards international standards Analyze the impact of qualitative factors on industry’s and company’s prospects 2) Comparative analysis of three tough competitors TATA Motors. In the financial world. ownership is called “Equity”. This is valuable because it fills information gaps so that each individual investor does not need to analyze every stock thereby making the markets more efficient.

TATA Motors. For this project the the first hand has been collected from India bulls through personal interview Secondary Data: Secondary data is a data which is collected from secondary source. The project is based on tools like fundamental analysis and ratio analysis. The stocks are chosen from the automobile sector. Maruti Suzuki and Mahindra and Mahindra.e. • The scope is limited to only the fundamental analysis of the chosen stocks LIMITATIONS: • • • This study has been conducted purely to understand Equity analysis for investors. Fort he purpose of this project secondary data has been collected from News papers.the costs can be minimized and the desired level of accuracy can be achieved to arrive at a particular conclusion. The stocks are chosen in an unbiased manner and each stock is chosen independent of the other stocks chosen. The study is restricted to three companies based on Fundamental analysis. Detailed study of the topic was not possible due to limited size of the project. Further. The sample size for the number of stocks is taken as 3 for fundamental analysis of stocks as fundamental analysis is very exhaustive and requires detailed study Primary Data: Primary data is data which is collected first hand. The sample of the stocks for the purpose of collecting secondary data has been selected on the basis of Random Sampling. The methodology used in the study for the completion of the project and the fulfillment of the project objectives. 7 . the study is based on information of last five years. SCOPE OF THE STUDY The scope of the study is identified after and during the study is conducted. • • • • The analysis is made by taking into consideration five companies i. Internet etc. • The scope of the study is limited for a period of five years.

are discussed and demonstrated. provides a method for quantifying risk. using conventional statistical tools. as is the concept of leverage. The requirement that expected return/benefit be commensurate with risk/cost is known as the "risk/return trade-off" in finance. ensures that companies operating in it benefit from its 8 . If decisions are to lead to benefit maximization. These can be described as follows: a. Market/ Economy Risk: The performance of any company depends on the growth of an economy. it is necessary that individuals/institutions consider the combined influence on expected (future) return or benefit as well as on risk/cost. business risk and financial risk. Two categories of risk borne by the firm's stockholders. Suggestions and conclusions are based on the limited data of five years Review of Literature INTRODUCTION The equity analysis relationship is a fundamental concept in not only financial analysis.e. Risks In equity investment: Although an equity investment is the most rewarding in terms of returns generated. This session discusses the trade-off and. for a period of 45 days.• • There was a constraint with regard to time allocation for the research study i. certain risks are essential to understand before venturing into the world of equity. The Capital Asset Pricing Model (CAPM) is used to demonstrate the risk/return trade-off by relating the required return on the firm's investments to its beta (or market) risk. which continues to prosper. but in every aspect of life. The session also examines risk reduction via portfolio diversification and what requirements need to be met for firms to experience the benefits of diversification. An economy.

However. A slowdown in the economy pinches almost all sectors. c. d. Industry Risk: All industries undergo some kind of cyclical growth. Further. Shareholders get rewarded most during the expansion stage. Management changes often have a serious impact on policy matters of companies. borrowing money for business.e. i. services and manufacturing companies. once the industry reaches a maturity stage. a heavily leveraged company. thereby affecting the returns on shares. External risk is the result of operating conditions imposed upon the company by circumstances beyond its control. creates fixed payment obligations in form of interest that must be sustained. Economy related risks are usually reflected in the factors such as GDP growth. b. an equity shareholder also runs the risk of any downturn in the economy affecting the performance of his company. Industry specific government regulations too impact returns from investments made therein. e. Beyond a specified limit. thereby impacting the share price. companies belonging to industries where growth has retarded incur losses or declining gains. A management which is unable to meet the challenges posed by competition is likely to suffer in performance. Business risk can be classified into two broad categories: external and internal. It is the team which gives direction to the future course of action that a company will take. is at a greater risk of not being able to meet its liabilities and hence going bankrupt. inflation. the residual income left for shareholders gets reduced. interest rates.growth. Management Risk: The management is the face of an enterprise. 9 . especially infrastructure. Business Risk: Business risk is a function of the operating conditions faced by a company and the variability that these conditions inject into operating income and hence expected dividends. balance of payment positions. the rewards from investment are limited. However. the last few years have been very rewarding for investors in real estate. More importantly. it increases default risk. Internal business risk is largely associated with the efficiency with which a company conducts its operations within the broader environment imposed upon it. Financial Risk: Financial risk is associated with the way in which a company finances its activities. credit growth etc. A company. For instance. Quality of management is hence paramount.

f. Generally. an interest rate hike affects share prices of companies cutting across the board. h. which results in an increase in the prices of products and a corresponding slowdown in demand. g. adversely affects earnings. employment rate. share prices of most companies face a downturn as the expected fall in demand reduces their future expected income. Important Learning Terms • • • • • • • • Risk Systematic risk Unsystematic risk Return Portfolio Beta Leverage Diversification Systematic Risk Systematic Risk. This has implications for all the sectors in the economy. Hence. the rate and momentum of inflation and general level of consumer confidence etc. as was recently witnessed with technology companies. Macro factors such as domestic as well as international policies. Hence. Unsystematic Risk 10 . investors cannot hedge or diversify against this risk as it affects all kinds of asset classes and affects the entire economy as such. Inflation Risk: Rising prices or inflation reduces purchasing power for the common man resulting in a slowdown in the demand in the economy. Hence. Exchange Rate Risk: Companies today earn sizeable revenues from outside their parent country. as the name suggests is the risk inherent in the economic system. are what constitute systematic risk. caused by fluctuations in the general level of interest rates. in an inflationary environment. Interest Rate Risk: Interest rate risk refers to the uncertainty of future market values and size of future income. Rising interest rates increase cost of borrowing. any appreciation in the currency. which results in falling or stagnant share prices.

Reserve Bank of India (RBI) bonds. If there is a war. the answer is in the negative though the volatility is much less. However. one must remember that the diversification must be in the class of asset and not the asset itself. Adjusting the portfolio to the market rate of returns is called 'marking to market'.This is the risk inherent in a particular asset class. However. Cash Reserve Ratio (CRR) requirements. when the overall interest rates in the economy rise. In other words. An example of the above is evenly distributing your portfolio in bank deposits. does this mean that investing in debt instruments is entirely risk-free? Unfortunately. note that diversifying within the same asset class (buying different equity shares) is not strictly combating unsystematic risk. So first. then the presence of other classes of assets in your portfolio saves you from a total washout. Irrational exuberance with a rising market has left many an investor losing their shirts and in some cases even more sensitive garments. real estate and equities. 11 . Then there are the event-based factors that affect interest rates. Understanding Unsystematic Risk The one thing that almost all investors would agree upon is the fact that equity is definitely more risky than debt. the level of the fiscal deficit and the consequent inflation outlook etc. typically such events are temporary in nature and in fact a good fund manager can actually take advantage of such hiccups. However. let us take the example of mutual funds (MFs). Extraneous factors such as energy price fluctuations. forex reserves. commodity demand and supply and even capital flows may result in rates fluctuating. interest rates will rise. Interest rates in the economy may fluctuate due to several factors such as a change in the RBI's monetary policy. However. the 11/9 episode in the United States of America and 13/12 in India. To illustrate how fluctuations in interest rates affect the returns. For example. That way if a certain unsystematic risk affects let's say the real estate market (say the prices crashes). let us examine what kind of risks do debt instruments pose Interest Rate Risk Interest rates and prices of fixed income instruments share an inverse relationship. The best way to combat this risk is by diversification. the prices of fixed income earning instruments fall and vice versa.

There is simply no risk of default. it follows that if the investment is held till maturity. Investing in a highly rated instrument is safe but not sufficient.Investments such as 12 . Interest rate risk discussed earlier is always prevalent.000 units. Therefore.. Credit Risk This is the risk of default. You will be allotted only 9. where almost the entire corpus is invested in sovereign securities thereby achieving the same result. True. you will be allotted 10. the instrument may be down graded.000. 11. The returns on 9. Here comes the 'mark to market' concept.11. The only factor.000 units and not 10. 10 and its corpus is Rs. it comes into play only when a transaction is undertaken during the pendancy of the fixed income instrument. If the fund sells the units to you at it's current NAV of Rs. something has got to be done to protect their interest. Ergo. you have to be on the lookout for the same. which dilutes this risk somewhat. Deposits with plantation companies and time-share resorts are more cases in point. MFs offer gilt schemes. though the fund will be forced to invest your Rs. thereafter you wish to invest Rs. Credit risk can be simply eliminated by investing in sovereign securities --securities issued by the government. 10 per unit. This means that if the fund sells all the assets of the scheme and distributes the money on equitable basis to all the unit holders. This will benefit you immensely.000 units at 9%. Then there have been cases where the issuer has got rated by different agencies but chooses to indicate only the higher ones. Firstly.but everyone knows how much time our courts take. 1 lakh in the scheme. they will receive Rs. 1 lakh at the lower rate of 9%. The fund raises its NAV to Rs. This is injustice to the existing investors. You will be a partner in sharing the benefit of the higher returns of 10%. In other words. Realise that the entire corpus of the fund stands invested at an average return of 10%.We assume that the current Net Asset Value (NAV) of the MF is Rs. Or so we hope. there would be no interest rate risk. However. for retail investors. is the credit rating. the interest rate falls from 10% to 9%. Immediately.000 units at 10% would be identical with the returns on 10. Fixed income earning instruments get rated for varying degrees of safety. you have legal remedy.. Elimination of Risks There is some good news though. the NAV rises when the interest falls. Now suppose. 10. What if the company whose fixed deposit you invested in goes bankrupt? There have already been several such cases. 1000 crores.

a. Profits are distributed in part or in full in the form of dividends. The article began with the premise that return is BENEFITS TO SHAREHOLDERS. are normally held till maturity. Dividend is an earning on the investment made in shares.a. it is mentioned that the interest rate risk is eliminated by simply holding the instrument till maturity. your liability is limited only to the face value of the shares held by you. to 8% p. Dividend: An equity shareholder has a right on the profits generated by the company. Why should you purchase shares of a company? What are benefits that accrue to you as a shareholder? Apart from the right to vote and decide the future course of action that a company takes. Unfortunately. The benefits distributed by the company to its shareholders can be: 1) Monetary Benefits and 2) Non Monetary Benefits. Rates on other small saving instruments have also been slashed across the board. we have acquainted ourselves with the kinds of risks inherent in investment instruments.Public Provident Fund (PPF). 1. there is no escape from this risk --that of our government Measuring Risk So far. such principles of investment had not contended with unilateral governmental action. Relief Bonds have come down to 8%. However. However. In the previous paragraph. just like interest in case of bonds or debentures. At the same time. While final dividend is distributed only after closing 13 . the real benefit that you. A company can issue dividend in two forms: a) Interim Dividend and b) Final Dividend. Relief Bonds etc. the rates of PPF over the past three years have been consistently reduced by the authorities from 12% p. To add insult to injury these rates are applicable on the entire corpus and not on additional investment. These are examples where both the risks inherent in debt instruments are at a bare minimum Government Action Risk This is a unique kind of risk. merely knowing this much may not be enough to take an informed decision. as a shareholder have is in form of participation that you get in profit made by the company. Monetary Benefits: A. For example. which has reared its ugly head in recent times.

Rather than paying dividends. Capital Appreciation: A shareholder also benefits from capital appreciation. would entitle you to Rs 400 as dividend. A company wishing to increase its subscribed capital by allotment of further shares should first offer them to its existing shareholders.of financial year. This means an increase in net worth. However. Of course. Hence if X Ltd decides to issue bonus shares in a ration of 1:1. companies at times declare an interim dividend during a financial year. Simply put. The benefit of a rights issue is that existing 14 . a holding of 200 shares of X Ltd. depending upon market expectations. better future growth potential. the share price may rise or fall on the bonus announcement. an increase in the floating stock of the company. This means that your capital has appreciated by Rs 3000. etc. Rights Issue: A rights issue involves selling of ordinary shares to the existing shareholders of the company. after which the value of each share is Rs 35. 2. earns a profit of Rs 40 crore and decides to distribute Rs 2 to each shareholder. Prima facie. taking the bonus into account. in practice. However. every existing shareholder of X Ltd would receive one additional share free for each share held by him. the share price would also ideally fall by 50 percent post bonus. As the companies grow. Hence if X Ltd. investments in shares also fetch some type of non-monetary benefits to a shareholder. This is a return that you shall earn as a result of the investment made by you by subscribing to the shares of X Ltd. Hence. bonuses carry certain latent advantages such as tax benefits. Bonuses and rights issues are two such noticeable benefits. if you purchase 200 shares of X Ltd at Rs 20 per share and hold the same for two years. Bonus: An issue of bonus shares is the distribution free of cost to the shareholders usually made when a company capitalises on profits made over a period of time. Non-Monetary Benefits: Apart from dividends and capital appreciation. profits are reinvested in the business. companies give additional shares in a pre-defined ratio. which results in appreciation in the value of shares. this means an increase in the value of the company usually reflected in its share price. Companies generally do not distribute all their profits as dividend. it does not affect the wealth of shareholders.

This gets reflected in the appreciation of share value. Hence any adverse event related to any one company would not expose you to immense risk. Industries and businesses. These risks are called systematic risk as they arise from the system. to which companies belong. Purchasing shares of different companies and creating a diversified portfolio has proven to be one of the most reliable tools of risk reduction. As your portfolio expands to include shares of more companies. Sector specific risks get minimized when shares of other sectors are added to the portfolio. In fact. investors start reaping the benefit of their investment over a period of time. this results in an expanded capital base. mature over a period of time.shareholders maintain control of the company. . the process of equity investing itself comes with certain inherent risks. so do the profits of companies belonging to them. after which the company is able to perform better. 15 are reward . investors for taking systematic risk for equity investment The case for long-term investment in equities The movement during these fifteen years shows that it is rewarding to stay invested in equities for the long term. Also. The process of Diversification: When you hold shares in a single company. As industries grow. The best example of this can be found in the Indian telecommunications industry. The following factors justify this: 1. theoretically. the company specific risk reduces. which cannot be reduced by strategies such as diversification. Different ways to overcome risks: Most risks associated with investments in shares can be reduced by using the tool of diversification. The same logic can be extended to a sector or an industry. you run the risk of a large magnitude. such as interest rate risk and inflation risk. the weightage of each company’s share gets reduced. diversifying across sectors and industries reaps the real benefits of diversification. This is because a recession or a downtrend is not seen in all sectors together However all risks cannot be reduced: Though it is possible to reduce risk. The benefits of creating a well diversified portfolio can be gauged from the fact that as you add more shares to your portfolio. As these risks cannot be diversified. Hence.

4. In business. All other investments. are taxed for the gains made. which means that you own all the returns generated. which are exempt from long-term capital gains tax. 16 .In Financial Analysis. Risk is the uncertainty (today) surrounding the eventual outcome of an event which will occur in the future. While markets undergo cyclical phases. three outcomes can be experienced: win. although you may incur some losses in the short term. In a football match. bank deposits etc. The biggest beneficiary of this growth story would be the industries and service sector. the same can happen regarding the expected return on the investments in various sectors.2. 3. The outcome may be to have a Tail or the Head. So. An investor can ill-afford to ignore that India is a fast growing economy and it is widely perceived that this robust growth would continue for many more years to come. Example: when tossing a coin. some one is not sure exactly what will be the outcome. Equities are the only investment asset. It is almost certain that the Index of Industrial Production (IIP) would grow at a rate of over 10 per cent in the next few years. Risk refers to the probability that the return and therefore the value of an asset or security may have alternative outcomes. if you are looking to invest in equities you must always think long-term. This reduces the overall return in investment assets like NSC. so there is a concept of risk. This would enhance profit growth of companies and it would get reflected in the upward movement of their share price. Example: The risk averse individual faced with two events each having the same expected outcome will choose the outcome with the lower level of risk. which follow a series of peaks and troughs. the risk/return trade-off states that financial decisions that subject stockholders to more risk must offer a higher expected return. The Risk/Return Trade-off in Financial Analysis It is widely accepted that the major determinant of the required return on the asset (or the rate to be applied to a stream of receipts to capitalize its value) is its degree of risk. excluding PPF and life insurance. over a period of time these factors get negated and returns from stocks present a valid picture. lose or draw.

INDUSTRY PROFILE Industry Overview The securities market achieves one of the most important functions of channeling idle resources to productive resources or from less productive resources to more productive resources. Hence in the broader context the people who save and investors who invest focus more towards the 17 .

the number of listed stocks. bonds. basic regulations on trading. It is through financial markets and institutions that the financial system of an economy works. trading volumes and turnover on stock exchanges. It has grown exponentially as measured in terms of amount raised from the market. purchase of debentures. currencies and derivatives. The market has witnessed fundamental institutional changes resulting in drastic reduction in transaction costs and significant improvements in efficiency. Capital Market The capital market is a market for financial assets which have a long or indefinite maturity. capital 18 . bills. Generally. The past decade in many ways has been remarkable for securities market in India. FINANCIAL MARKETS Finance is the pre-requisite for modern business and financial institutions play a vital role in the economic system. For instance. Financial markets refer to the institutional arrangements for dealing in financial assets and credit instruments of different types such as currency. In a nutshell. bonds. there is no specific place or location to indicate a financial market. The Indian Capital Market has come a long way in this process and with a strong regulator it has been able to usher an era of a modern capital market regime. transparency and safety. it consists of a series of channels through which the savings of the community are made available for industrial and commercial enterprises and public authorities. it deals with long term securities which have a period of above one year. and investor population.economy’s abilities to invest and save respectively. market capitalization. granting of loan by term lending institutions. sale of shares and so on. claims and services. deposit of money into a bank. financial markets are the credit markets catering to the various needs of the individuals. etc. Financial market is a broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities. equities. This enhances savings and investments in the economy. issue of equity shares. As a whole. the two pillars for economic growth. it is deemed to have taken place in the financial market. In the widest sense. costs and fees and market forces determining the prices of securities that trade. cheques. Hence financial markets are pervasive in nature since financial transactions are themselves very pervasive throughout the economic system. bank deposits. Generally. Wherever a financial transaction takes place. They are typically defined by having transparent pricing. firms and institutions by facilitating buying and selling of financial assets.

which are derived from other forms of assets. by directing the same to projects yielding highest yield or to the projects needed to promote balanced economic development.Securing the foreign capital and know-how to fill up deficit in the required resources for economic growth at a faster rate. Primary market: Primary market is a market for new issues or new financial claims. and Treasury bill market. The major functions performed by a capital market are: 1. therefore. A derivative is a security whose price is dependent upon or derived from one or more underlying assets. securities which have already passed through new issue market are traded in this market. makes available a new block of securities for public subscription. 2.Effective allocation of the mobilized financial resources. it deals with raising of fresh capital by companies either for cash or for consideration other than cash. commercial bills market. The most common underlying assets include 19 . This market consists of all stock exchanges recognized by the government of India. The best example could be Initial Public Offering (IPO) where a firm offers shares to the public for the first time. 3. Capital market consists of primary market and secondary market. In other words. Generally. In other words. It basically deals with those securities which are issued to the public for the first time. acceptance market. Derivatives Market: Derivatives market is the financial market for derivatives. Money Market Money markets are the markets for short-term. The market. Its value is determined by fluctuations in the underlying asset. financial instruments like futures contracts or options. It consists of a number of sub-markets which collectively constitute the money market namely call money market. Money market securities are generally very safe investments which return relatively low interest rate that is most appropriate for temporary cash storage or short term time needs. such securities are quoted in the stock exchange and it provides a continuous and regular market for buying and selling of securities.market facilitates raising of capital. highly liquid debt securities. The derivative itself is merely a contract between two or more parties. Secondary market : Secondary market is a market where existing securities are traded. Hence it is also called as New Issue Market.Mobilization of financial resources on a nation-wide scale.

commodity. but 20 . currencies. It is arranged to reap the benefits arising from the fluctuations in the market – either currency market or interest rate market or any other market for that matter. The important financial derivatives are the following: Equity Analysis Forwards: Forwards are the oldest of all the derivatives. It is a worldwide decentralized over-the-counter financial market for the trading of currencies. but not the obligation. sell. bonds.stocks. It is nothing but a standardized forward contract which is legally enforceable and always traded on an organized exchange. it is the combination of forwards by two counterparties. Infact. A forward contract refers to an agreement between two parties to exchange an agreed quantity of an asset for cash at a certain date in future at a predetermined price specified in that agreement. Swaps: It is yet another exciting trading instrument. and retail forex brokers and investors. central banks. It is important to realize that the foreign exchange market is not a single exchange. commodities. so the buyer would want the stock to go up. they are believed to be the most efficient financial markets. hedge funds. The promised asset may be currency.Foreign exchange markets are made up of banks. Call options give the option to buy at certain price. investment management firms. The forex market is considered to be the largest financial market in the world. so the buyer would want the stock to go down. instrument etc. The contract offers the buyer the right. interest rates and market indexes. to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date (exercise date). Equity Analysis Foreign Exchange Market It is a market in which participants are able to buy. Put options give the option to sell at a certain price. commercial companies. • Options: A financial derivative that represents a contract sold by one party (option writer) to another party (option holder). exchange and speculate on currencies. Because the currency markets are large and liquid. Futures: Future contract is very similar to a forward contract in all respects excepting the fact that it is completely a standardized one.

including Mumbai. Thereafter when the Indian economy began liberalizing and the controls began to be dismantled or eased out. The development of the capital market in India concentrated around Mumbai where no less than 200 to 250 securities brokers were active during the second half of the 19th century. The corporate sector wasn't allowed into many industry segments. the securities markets witnessed a flurry of IPO’s that were launched. rubber.is constructed of a global network of computers that connects participants from all parts of the world. However the stock markets in India remained stagnant due to stringent controls on the market economy that allowed only a handful of monopolies to dominate their respective sectors. This was in marked contrast to the initial phase of growth in many of the fast growing economies of East 21 . By the early 1960s the total number of securities exchanges in India rose to eight. wheat. etc. For investors' purposes there are currently about 50 major commodity markets worldwide that facilitate investment trade in nearly 100 primary commodities.). pork. oil. The history of Indian capital markets dates back 200 years toward the end of the 18th century when India was under the rule of the East India Company. which were dominated by the state controlled public sector resulting in stagnation of Equity Analysis the economy right up to the early 1990s. etc. Ahmadabad and Kolkata apart from Madras. whereas soft commodities are agricultural products or livestock (corn. Kanpur. Delhi. Hard commodities are typically natural resources that must be mined or extracted (gold. Today there are 21 regional securities exchanges in India in addition to the centralized NSE (National Stock Exchange) and OTCEI (Over the Counter Exchange of India). Commodities Market It is a physical or virtual marketplace for buying. Ahmadabad and Kolkata were established as early as the 19th century. The financial market in India today is more developed than many other sectors because it was organized long before with the securities exchanges of Mumbai. Bangalore and Pune. sugar.) INDIAN FINANCIAL MARKETS India Financial market is one of the oldest in the world and is considered to be the fastest growing and best among all the markets of the emerging economies. Commodities are split into two types: hard and soft commodities. coffee. A remarkable feature of the growth of the Indian economy in recent years has been the role played by its securities markets in assisting and fuelling that growth with money rose within the economy. This resulted in many new companies across different industry segments to come up with newer products and services. selling and trading raw or primary products. soybeans.

or as principals for their own accounts. where members of the organization gather to trade company stocks or other securities. The NSE was conceived as the market for trading in the securities of companies from the large-scale sector and the OTCEI for those from the small-scale sector. 1956 a stock exchange is an association. established for the purpose of assisting. The regulating authority for capital markets in India is the SEBI (Securities and Exchange Board of India). During this phase in India much of the organized sector has been affected by high growth as the financial markets played an all-inclusive role in sustaining financial resource mobilization. After this initial phase of struggle SEBI has grown in strength as the regulator of India’s capital markets and as one of the country’s most important institutions Stock Exchanges in India Stock Exchanges are an organized marketplace.Asia that witnessed huge doses of FDI (Foreign Direct Investment) spurring growth in their initial days of market decontrol. either corporation or mutual organization. SEBI came into prominence in the 1990s after the capital markets experienced some turbulence. Many PSUs (Public Sector Undertakings) that decided to offload part of their equity were also helped by the well-organized securities market in India. The launch of the NSE (National Stock Exchange) and the OTCEI (Over the Counter Exchange of India) during the mid 1990s by the government of India was meant to usher in an easier and more transparent form of trading in securities. It had to take drastic measures to plug many loopholes that were exploited by certain market forces to advance their vested interests. As per the Securities Contracts Regulation Act. While the NSE has not just done well to grow and evolve into the virtual backbone of capital markets in India the OTCEI struggled and is yet to show any sign of growth and development. selling and dealing in securities 22 . The members may act either as agents for their customers. regulating and controlling business in buying. organization or body of individuals whether incorporated or not. The integration of IT into the capital market infrastructure has been particularly smooth in India due to the country’s world class IT industry. This has pushed up the operational efficiency of the Indian stock market to global standards and as a result the country has been able to capitalize on its high growth and attract foreign capital like never before.

Madhya Pradesh 13. Bangalore 3. Pune 18. Coimbatore 7. Delhi 8. Ludhiana 12. Magadh 15. List of Stock Exchanges in India Bombay Stock Exchange National Stock Exchange OTC Exchange of India Regional Stock Exchanges 1. Guwahati 9. The record keeping is central but trade is linked to such physical place because modern markets are computerized. Cochin 6. Bhubaneswar 4. Hyderabad 10.Stock exchanges facilitate for the issue and redemption of securities and other financial instruments including the payment of income and dividends. Madras 14. Meerut 17. Saurashtra Kutch 23 . The trade on an exchange is only by members and stock broker do have a seat on the exchange. Jaipur 11. Calcutta 5. Ahmedabad 2. Mangalore 16.

In the early days. but now it is a demutualised and corporatised entity incorporated under the provisions of the Companies Act. In the past and even now. SENSEX.BOMBAY STOCK EXCHANGE A very common name for all traders in the stock market." 24 ." It was established in the year 1875 and became the first stock exchange in the country to be recognized by the government. BSE was known as "The Native Share & Stock Brokers Association. BSE Vision The vision of the Bombay Stock Exchange is to "Emerge as the premier Indian stock exchange by establishing global benchmarks. In 1956. Earlier it was an Association of Persons (AOP). pursuant to the BSE (Corporatisation and Demutualization) Scheme. BSE obtained a permanent recognition from the Government of India under the Securities Contracts (Regulation) Act. BSE. but also in Asia. is also tracked worldwide. it plays a pivotal role in the development of the country's capital market. stands for Bombay Stock Exchange. This is recognized worldwide and its index. It is the oldest market not only in the country. 1956. 2005 notified by the Securities and Exchange Board of India (SEBI). 1956.

Indiabulls has over 640 branches all over India. Large scale projects worth several hundred million dollars are evaluated by them. Indiabulls entered the Real Estate business in the year 2005 with its group of companies. The customers of Indiabulls are more than 4.COMPANY PROFILE Introduction Indiabulls is India’s leading Financial. derivatives trading. The market capitalization of Indiabulls is around USD 2500 million (29thDecember. Indiabulls Financial Services Ltd is listed on the National Stock Exchange (NSE). Bombay Stock Exchange (BSE) and Luxembourg Stock Exchange. Real Estate and Power Company with a wide presence throughout India. loan against shares and mortgage & housing finance. They ensure convenience and reliability in all their products and services. The company employs around 4000 Relationship managers who help the clients to satisfy their customized financial goals. Indiabulls and its group companies have attracted USD 500 million of equity capital in Foreign Direct Investment (FDI) since March 2000.000 which covers from a wide range of financial services and products from securities. 2006). Some of the large 25 . research & advisory services. Consolidated net worth of the group is around USD 700 million. consumer secured & unsecured credit. depositary services.50.

It also became a market leader in securities brokerage industry. with the development of an in-house team. In this year: Indiabulls came out with its initial public offer (IPO) in September 2004. Indiabulls entered the Indian Real Estate market and became the first company to bring FDI in Indian Real Estate. Morgan Stanley and Farallon Capital. 26 . Wholesale Debt. Year 2001-03: The service offered by Indiabulls was increased to include Equity. the Steel Tycoon Mr. Mutual fund. Indiabulls Credit Services Ltd. Farallon Capital and its affiliates committed Rs. Merrill Lynch. Year 2004-05: • • • • • This was one of the most important years in the history of Indiabulls. Growth of Indiabulls Year 2000-01: One of India’s first trading platforms was set up by Indiabulls Financial Services Ltd. In the same year. Indiabulls won bids for landmark properties in Mumbai. 2000 million for Indiabulls subsidiaries Viz. The world’s largest hedge fund. Year 2005-06: In this year the company acquired over 115 acres of land in Sonepat for residential home site development. The world renowned investment banks like Merrill Lynch and Goldman Sachs increased their shareholding in Indiabulls. and Indiabulls Housing Finance Ltd. Goldman Sachs. with around 31% share in Online Trading. F&O. IPO Financing/Distribution and Equity Research. Indiabulls started its Consumer Finance business. Year 2003-04: In this particular year Indiabulls ventured into Distribution and Commodities Trading business.shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity Funds.

Indiabulls financial services limited has recently signed a joint venture agreement with sogecap.2% stake in Indiabulls Credit Services Ltd.. Indiabulls Financial Services Ltd.L N Mittal promoted LNM India Internet venture Ltd. Promoters for Indiabulls Sameer Gehlaut. On the asset management front. was included in the prestigious Morgan Stanley Capital International Index (MSCI). was benefited with the Farallon Capital agreeing to invest Rs. Indiabulls Financial Services Ltd Year 2008-09: Several developments across its group companies have propelled indiabulls forward and are expected to continue to power the rise of this conglomerate. acquired 8. Indiabulls Real Estate Business was demerged to become a separate entity called Indiabulls Real Estate Ltd. Rajiv Rattan and Saurabh Mittal 27 . Year 2006-07: In this year. Noble Realtors is a Company engaged in the business of construction and development of real estate projects. Indiabulls enter in to Public issue for his Indiabulls power Ltd. The company also received an “in principle approval” from Government of India for development of multi product SEZ in the state of Maharashtra. Resolved to Amalgamate Indiabulls Credit Services Ltd and demerge Indiabulls Securities Limited. The Board of Indiabulls Financial Services Ltd. the insurance arm of Societe Generale (SocGen) for its upcoming life insurance venture. Indiabulls Financial Services Ltd. 6.440 million in it. Indiabulls Financial Services Ltd acquired 100% of the equity share capital of Noble Realtors Pvt. At the same time it has also signed a Memorandum of understanding with MMTC. Ltd. the company has received formal approval uhby7hbfrom SEBI and is expected to shortly launch its first NFO.

its fortunes are very much dependent on the Performance of the capital markets. However. 28 . This team comprising highly qualified and experienced personnel has been responsible for the overall management of the company and has provided direction in diverse areas of business strategy. Total shareholders in the country are over 20 m (2% of population) and this is the third largest after the US and Japan. This highlights the long-term potential for the sector. While Sameer Gehlaut will have a 23. debt.e. The Indian equity markets have grown from strength to strength in the last decade with combined daily volumes of all segments on the BSE and the NSE touching Rs 232 bn in April 2004.Are the promoters of Indiabulls Financial Services Limited. if one were to compare the percentage of all households in India that are invested in the stock markets. to apply The Team: Indiabulls Securities Ltd. regulatory reporting.9% as compared to an estimated 52%(including indirect ownership by way of mutual funds) of all households in the US. main strength lies in its formidable team. derivative and equity markets. Sector Since Indiabulls derives most of its revenues from the brokerage business.0% stake in the company post the IPO Rajiv Rattan and Saurabh Mittal will have a post issue holding of 11. in absolute terms. from Rs 5 bn in FY96. human resources development and product development.5% and 10. it is only about 1. All the three promoters of the company are engineering graduates while Saurabh Mittal is a management graduate as well.1% respectively. i. operating management.

Senior Vice President Yuv Raj Singh Regional Manager Dashmeet Singh Branch Manager Senior Sales Manager Sujeet Roy Chowdary Support System Vishal Sujeet Roy Chowdary Sales Function Subrot Back Office Executive Ifran Khan Local Compliance Officer Chary RM/SRM Satish Kumar S ARM Raja Dealer Badri Nath 29 .

Clients & Stakeholder groups Indiabulls Group entities in India 30 .Vision statement: To become the preferred long term financial partner to a wide base of customers whilst optimizing stake holder’s value Mission statement: To establish a base of 1 million satisfied customers by 2010. We will create this by being a responsible and trustworthy partner Corporate action: An Approach to Business that reflects Responsibility. Respect for Employees. Transparency and Ethical Behavior.

Indiabulls Commodities Pvt. Indiabulls Credit Services Ltd. about institutional expertise and companies valuable understanding of the financial markets 31 . Pvt. Indiabulls Finance Co. Indiabulls Power Ltd. Indiabulls Resources Ltd. Ltd.• • • • • • • • • Indiabulls Capital Services Ltd. Ltd.48) in September 2004 has been rewarded almost 100 times in three and a half years – a feat unparalleled in the history of Indian capital markets Indiabulls Real Estate Limited partnered Farallon Capital Management LLC of the US to bring the first Foreign Direct Investment into real estate Seven Reasons why investing with Indiabulls Securities Limited is smarter 1) Customization: Formulates investment plans based on customer individual requirements 2) Expertise: Brings within customer reach. Ltd Indiabulls Housing Finance Ltd. 19 (US$ 0. Indiabulls Securities Ltd. Indiabulls Securities Ltd is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) and its global depository shares are listed on the Luxembourg Stock Exchange Reasons to choose Indiabulls Securities Ltd: The Indiabulls Financial Services stock is the best performing stock in the MSCI Index – the global benchmark for equity investments A person who bought Indiabulls shares in the IPO at Rs. Indiabulls Insurance Advisors Pvt.

5% in the online trading space. prospects are promising. The table below indicates the growth in volumes of the Internet trading segment on the NSE over the last few years. 4) Trust: Enjoys the pedigree of Indiabulls Securities Ltd and share its expertise in financial services. 5) Personalized service: Helps customer through the entire investment process.3) One-stop shop: Caters to all customers’ investment needs under one roof. which we believe is likely to be robust going forward as well. 6) Unbiased & Objective advice: We partner you in your investment process. with innovative and efficient services. To put things in perspective. Though this field is extremely competitive and requires significant research skills. significant decline in Internet charges. Though these businesses currently account for an insignificant portion of overall revenues. these are highly profitable business segments. This is primarily driven by increasing penetration of computers. Indiabulls currently has almost 20% market share of volumes in the Internet trading space. step by step. with our team of expert investment advisors Online trading potential is huge: Online trading accounted for 5% of overall market in FY04 as compared to an estimated 3% in FY03. Aggressive growth plans: 32 . Advisory services: Indiabulls is also into mutual fund and insurance advisory businesses.0% as compared to 0. considering the penetration levels of mutual funds and insurance in the country. the offline brokerage on equities is around 1. convenience of usage and cost advantage. The growth is indicative of the potential of this segment.

Derivatives. Commodities. Broking: Equity. This includes investments in upgradation of branch network and opening another 75 branches by the end of calendar year 2009 (150 in total). Indiabulls financial service offers: ? SME finance ? Mortgage loans ? Commercial vehicle loans ? Farm equipment loans ? Commercial credit loans ? Loan against shares and ? Third part distribution of insurance products. The platform provides enhanced trade information and executes orders on an integrated software based trading platform. The company has also indicated its intent to acquire strategic stake in other companies towards growing the business inorganically Products provided Power Indiabulls An online trading system designed for the high-volume trader. Distribution: Mutual funds.Indiabulls has set aggressive targets to expand its business in the offline space. Home loans. Divisions: Investment Advisory and Broking? Division 33 . Insurace. IPO’s. Currency Derivatives.

Services: Indiabulls securities provides a wide range of services that include Power Indiabulls: An online trading system designed for the high-volume trader. . 1) Equities 2) Commodities 3) Wholesale debts 4) Futures and options 5) Depository services 6) Equity research services 34 . The platform provides enhanced trade information and executes orders on an integrated software based trading platform.Project Syndication Division? Institutional Equity Broking? Division Institutional Debt Broking? Division Retail Offerings: ? Wealth Management Services ? Portfolio Management Services ? Securities Broking-Equities and derivatives ? Depository & Custodial Service & Distribution of financial Products. .

CITI BANK. 8) Depository Services 9) Payment Gateway 10) Other back office support Online Banks Tie-ups for trading: Company having online transaction tie-ups with banks like • • • • HDFC BANK.7) Post Trade -Custodial. The Indiabulls Financial Services stock is the best performing stock in the MSCI Index – the global benchmark for equity investments. IDBI BANK. ICICI BANK. Indiabulls Financial Services Limited was accorded the highest rating P1+ for short term debt and the highest rating of AAA (SO) by CRISIL for loan receivables securitization while 35 . Indiabulls Real Estate Limited partnered Farallon Capital Management LLC of the US to bring the first Foreign Direct Investment into real estate. Company Achievements: The Indiabulls Group is one of the top fifteen conglomerates in the country with businesses in several significant sectors.

3100 crore (US$ 775 million) and the group profit has surged to over Rs. 25.25 billion) while group revenues have grown at a cumulative annual rate of over 100% to now reach Rs. 700 crore (US$ 175 million) as dividend in the year 2008. Indiabulls acquired Pyramid Retail including Piramyd Megastores and Trumart.000 crore (US$ 6. Indiainfoline Ltd. their chain of lifestyle and convenience outlets Company competitors • • • • • • Kotak Securities Ltd. Its companies. ICICI Securities Ltd.Indiabulls Securities Limited is the only broker in India to be assigned CRISIL’s highest broker quality grading of BQ1. HDFC Securities Ltd. Birla Money. listed in important Indian and overseas markets. Indiabulls Financial Services Limited was accorded the highest rating P1+ for short term debt and the highest rating of AAA (SO) by CRISIL for loan receivables securitisation while 36 . have distributed over Rs. Religare Securities Ltd. In December 2007. 1200 crore (US$ 300 million). The group companies have a market capitalisation of over Rs. ABOUT INDIABULLS GROUP The Indiabulls Group is one of the top fifteen conglomerates in the country with businesses in several significant sectors.

The office had a tin roof and two computers. Rajiv Rattan and Saurabh Mittal acquired Orbis. a stock brokerage company in Delhi. their chain of lifestyle and convenience outlets.000 and from one office to 600 across the country The Indiabulls Financial Services stock is the best performing stock in the MSCI Index – the global benchmark for equity investments. The challenges facing it were immense – not least of all the mind set 37 . three IIT-Delhi alumni Sameer Gehlaut. Young entrepreneur Sameer Gehlaut established Indiabulls in 2000. Companies History in India In 1999.Indiabulls Securities Limited is the only broker in India to be assigned CRISIL’s highest broker quality grading of BQ1.48) in September 2004 has been rewarded almost 100 times in three and a half years – a feat unparalleled in the history of Indian capital markets Indiabulls Real Estate Limited partnered Farallon Capital Management LLC of the US to bring the first Foreign Direct Investment into real estate. Its original idea of leveraging technology bore fruit when Indiabulls was accorded permission to conduct online trading on Indian stock exchanges. it has grown from just five employees to 21. 19 (US$ 0. Indiabulls’ growth has been nothing short of stupendous. it was converted into a public limited company on 27th February 2004. The group started its operations from a small office near Hauz Khas bus terminal in Delhi. In December 2007. The company had achieved the distinction of becoming only the second brokerage firm in India to be granted this consent. In less than eight years since the company was first registered. The idea of leveraging technology for trading stocks led to the creation of Indiabulls Incorporated on 10th January 2000. A person who bought Indiabulls shares in the IPO at Rs. Indiabulls acquired Pyramid Retail including Piramyd Megastores and Trumart. after acquiring orbis Securities.a Delhi based stock broking company.

Opportunities were opening up in retail and infrastructure as well. F&O. In 2003/04.At the same time it has also signed a Memorandum of Understanding with MMTC. 38 .On the asset management front. the company later expanded its service portfolio to include equity. the new sunrise industry. Real estate. wholesale debt. was the next frontier for Indiabulls. But it wasn’t just real estate that was booming. when a case study on India’s youngest brands which have had a profound impact on the economy is crafted. the largest commodity trading house in India. To cement its position in the Indian business and industry firmament. Indiabulls Financial Services Limited has recently signed a joint venture agreement with Sogecap. Recent Developments Several developments across its group companies have propelled Indiabulls forward and are expected to continue to power the rise of this conglomerate. to establish a Commodities Exchange with 26% Ownership held by MMTC. Having overcome this resistance.of investors who were called to make the big leap from traditional stock trading to a completely online interface. Indiabulls ventured into insurance distribution and commodity trading. the Group believes that the bulk of its brand story is yet to be written. It successfully floated its IPO in September 2004 and in the same year entered the consumer finance segment. the insurance arm of Societe Generale (SocGen) for its upcoming life insurance venture. The company attributes its dominant position in the brokerage industry to the preferential status it enjoys with investors Coupled with its forays into various segments. the company has received formal approval from SEBI and is expected to shortly launch its first NFO. In 2004/05. Indiabulls will feature prominently in it. Indiabulls acquired Pyramid Retail In 2007 and marked its presence in the power sector by launching Indiabulls Power Brand Values Indiabulls is amongst the largest non-banking financial services companies in India and enjoys strong brand recognition and customer acceptance. mutual fund distribution and equity research. it entered this sector. Indeed.

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Economic analysis is a process whereby strengths and weaknesses of an economy are analyzed. 40 . The typical approach to analyzing a company involves three basic steps 1. Industry analysis c. Most fundamental information focuses on economic.I. industry and company statistics. 3. Determine the condition of the company. The automobile sector has been contributing its share to the shining economic performance of India in the recent years. India is 16th in the world in terms of nominal factory output. With comparatively higher rate of economic growth rate index against that of great global powers. Fundamental analysis typically focuses on key statistics in company s financial statements to determine if the stock price is correctly valued. To understand this industry for the purpose of investment we need to analyze it by the following approach: Fundamental Analysis (E. Economy analysis b.ANALYSIS OF AUTOMOBILE INDUSTRY Over a period of more than two decades the Indian Automobile industry has been driving its own growth through phases. Company analysis Fundamental Analysis Fundamental analysis is the study of economic. This is the pie. ECONOMY ANALYSIS Economic analysis is the analysis of forces operating the overall economy a country. GDP and Automobile Industry In absolute terms. 1. Determine the condition of the industry. industry and company conditions in an effort to determine the value of a company s stock. 2. Determine the condition of the general economy. India has become a hub of domestic and exports business.C Approach) a. Economic analysis is important in order to understand exact condition of an economy. The service sector is growing rapidly in the past few years.chart showing contributions of different sectors in Indian economy.

6% in 2010 by overcoming the setbacks of recession. As the world economy slipped into recession hitting the demand hard and the banking sector takes conservative approach towards lending to corporate sector. Major names among these are General Motors. 41 . This has contributed largely in making India a prime destination for many international players in the automobile industry who wish to set up their businesses in India. automobile sector in India is one of the key sectors of the economy in terms of the employment. These companies have major plans lined up for India auto industry. But it is in a good shape now. Recession Auto industry in India had been hit hard by ongoing global financial recession. Nissan Motors which is a well known Japanese car making company regarded India automobile market as a global car manufacturing hub for future and invested huge amount in our market. Automatic approval for foreign equity investment up to 100 per cent of manufacture of automobiles and component is permitted. During April-January 2010.1 per cent for 2008-09 and it has increased to 8. overall automobile exports registered a growth rate of 13. Foreign Direct Investment The automobile sector in the Indian industry is one of the high performing sectors of the Indian economy. Directly and indirectly it employs more than 10 million people and if we add the number of people employed in the auto-component and auto ancillary industry then the number goes even higher. Much of this optimism resulted from renewed interest being shown in India auto industry by reputed overseas car makers. There are some other automobile companies of world who have shown interest in India auto market. Exports Despite recession. These are few signs of the revolutionized auto industry after recession Inflation The rise in inflation will have adverse impact on the industry that will not only see interest rates getting further hardened but also a drop in demand due to the squeeze in purchasing power. Skoda Auto and Mercedes-Benz. more and more MNC’s coming in India to setup their ventures which clearly shows the scope of expansion.24 percent. the GDP growth has downgraded it to 7. the Indian automobile market continues to perform better than most of the other industries in the economy in coming future. The increase in the price of fuel and the steel due to inflation has led to a slower growth rate of the car industry in India.Today. The effect of inflation has affected every sector which is related to car manufacturing and production.

maturity and decline. In 2009. India emerged as Asia's fourth largest exporter of automobiles.3 million units in 2008. However. The Indian automobile sector has passed this stage quite successfully. buses.INDUSTRY ANALYSIS( AUT OMOBI LE ) The automobile industry in India is the ninth largest in the world with an annual production of over 2. Following is the segmentation that how much each sector comprises of whole Indian Automobile Industry Industry life cycle The industrial life cycle is a term used for classifying industry life over time. South Korea and Thailand. Two-wheelers. The growth rate of the automobile industry in India is greater than the GDP growth rate of the economy. Swot analysis: A scan of the internal and external environment is an important part of the strategic planning process. and Three-wheelers. passenger cars. In 2009. The industry is growing rapidly. behind Japan. and other vehicles. powered by the increase in the income is the primary growth driver of the automobile industry in India. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W). Commercial Vehicles. In the pioneer phase. Indian Automotive Industry is booming with a growth rate of around 15 % annually. tractors). tempos. Segmentation of Automobile Industry The automobile industry comprises of Heavy vehicles (trucks. The Automobile Industry is one of the fastest growing sectors in India. estimated rate of growth of India Auto industry is going to be 9% . and there is high risk of failure. Industry life cycle classification generally groups industries into one of four stages: pioneer. so the automobile sector can be very well be said to be in the growth phase. growth. and those external to the firm can be classified as opportunities 42 . The increase in the demand for cars. the product has not been widely accepted or adopted. leaving ample opportunity for volume growth. Business strategies are developing. often at an accelerating rate of sales and earnings growth. successful companies can grow at extraordinary rates.The Indian automobile sector is far from being saturated.

SWOT analysis of the Indian automobile sector gives the following points: 1. Strengths •Large domestic market •Sustainable labor cost advantage •Competitive auto component vendor base •Government incentives for manufacturing plants •Strong engineering skills in design etc Weaknesses • Low labor productivity ` 43 .(O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis.

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