This action might not be possible to undo. Are you sure you want to continue?
Fundamental analysis is the examination of the underlying forces that affect the well being of the company, industry groups and companies. As with most analysis the goal is to develop a forecast of future price movement and profit from it. At the company level, fundamental analysis may involve examination of financial data, management , business concept and competition. At the industry level their might be an examination of supply and demand forces of the products. For the national economy fundamental analysis might focus on economic data to asses the present and future growth of the economy. Fundamental analysis is a method of evaluating a security by attempting to measure its intrinsic value by examining related economy, financial and other qualitative and quantitative factors. Fundamental analysis attempt to study every thing that can effect the securities value including macro economic factors and individual specific factors. Three phase of the fundamental analysis A. Understanding of the Macro Economic environment and developments (Economy analysis) B. Analyzing the prospectus of the industry to which the firm belongs(Industry analysis) C. Assessing the projected performance of the company( Company analysis)
The purpose of analyze economic condition of the country in fundamental analysis to asses the general economic situation both within the country and inter nationally. The economy is like the tide and the various industry groups and individual companies are like boats. When economy expands most industry groups and companies benefits and grows. When the economy decline, most sectors and companies usually suffer. The stock market does not operate in a vacuum it is an integral part of the whole economy of a country, more so in a free economy that of United States and to some extent in mixed economy like ours. To gain an insight into the complexities of stock market. One needs to develop a sound economic understanding and be able to interpret the impact of important economic indicators on stock markets. The following are some important factors which should be taken into account while doing fundamental analysis: • • • • • • • • • • • Economic Growth Per capita income Industrial Production Inflation Interest Rates Foreign Exchange Reserves Budgetary Deficit Domestic Savings and Investment Tax Rates Infrastructure Political Situation
and a multitude of services.48 9.80 7. India's diverse economy encompasses traditional village farming. The India Gross Domestic Product is worth 1217 billion dollars or 1.10% over the last 4 quarters.30 . a wide range of modern industries.60 7.70 5.INDIAN ECONOMY ANALYSIS India GDP Growth Rate • • • India Gross Domestic Product (GDP) expanded 6.00 9. according to the World Bank.80 6.5 Sep Dec Average GDP 8.8 8. Services are the major source of economic growth. handicrafts.10 2008 8.96% of the world economy. modern agriculture.70 9. accounting for more than half of India's output with less than one third of its labor force.6 6.20 9.80 2007 9.7 6.30 2009 5.6 Jun 8. India GDP Growth Rate chart Year Mar 2010 8.75 7.
INTERPETATION:As we can see that India’s GDP growth is increasing as compared to the last two years which shows good prospects for investors in future and the investor can get benefits by investing in Indian company. ..
influence on the stock price.” To assess the industry group potential.INDUSTRY ANALYSIS The purpose of industry analysis is to review prevailing conditions within specific industry and its segments. market size. The followings are some important factors which should be considered in fundamental Analysis • • • • • • • • • Growth: A growing industry gives room for profitability. While the individual company is still important. Demand-Supply: the wider demand supply gap. Even the best stocks can post mediocre returns if they are in an industry that is struggling. including the maturity of the sector and any cyclical effects that the overall economies have on it. “It is often said that a weak stock in a strong industry is preferable to a strong stock in a weak industry. Profitability: Average profitability of the industry should be attractive. its industry group is likely to exert as much as. An understanding of the industry sector involved. an investor would want to consider the overall growth rate. When stock move the usually move as groups. there are very few lone guns out there. The company's industry obviously influences the outlook for the company. the better is the industry’s fortune in the future Entry barrier Competition and Market share: Technology trends Government Policy Capacity Utilization Bargaining power of buyers . and its importance to economy. or more. is also necessary.
INDIAN TELECOMMUNICATION INDUSTRY Indian Telecommunication industry. Efforts have been made from both governmental and non-governmental platforms to enhance the infrastructure.BSNL and MTNL. Hutchison-Essar. Government of India is eager to reconstitute this telecom industry by enacting effective policies for more investments from foreign companies. and to transform it into a country of technologically aware people. It has earned good reputation for transparency and competence. . Two types of players exist in ' Telecom Industry India ' community – • • State owned companies like . Idea Cellular. Telecom industry in India has a big market potentiality and is a fast growing sector. telecommunication activities have gained momentum in India. Telecom Industry in India is regulated by 'Telecom Regulatory Authority of India' (TRAI).Reliance Infocomm and Tata Teleservices. which results in a very competitive and deregulated market in the world. Private companies like . with about 464. Bharti Tele-Ventures.82 million mobile phone connections (June 2009) . Escotel. BPL Mobile. is the third largest telecommunication network in the world and the second largest in terms of number of wireless connections. For the past decade or so. Spice Communications etc. The idea is to help modern telecommunication technologies to serve all segments of India’s culturally diverse society.
POLICIES OF TELECOM INDUSTRY IN INDIA Government of India implemented the unified access licensing regime. MAJOR SERVICES AND MARKET POTENTIALITY OF TELECOM INDUSTRY IN INDIA Telecommunication sector in India is primarily subdivided into two segments. In 1997. which are • • • • • • • • • Fixed Service Provider (FSPs) and Cellular Services Telephone Radio Television Internet GSM( Global System for Mobile Communications) CDMA(Code Division Multiple Access) Fixed Line and WLL (Wireless Local Loop) Telecom industry in India constitutes some essential telecom services like Telecom industry in India is specifically emphasizing on latest technologies like . which enables basic and cellular mobile service to use any modern technology. Telecom Regulatory Authority of India (TRAI) was formed to facilitate the growth of the telecom sector in India.
is the third largest in the world. • At the current pace. with about 414 million connections in February 2009. Indian telecom network.The Government of India has reiterated its commitment to reach out to the remote and uncovered areas and to augment the broadband facilities in rural areas. . the target of 500 million connections by 2010 is well within reach . while it is credited with the second largest wireless network in the world.GROWTH OF TELECOM INDUSTRY IN INDIA • • Indian telecom industry continued to register significant growth in 2008-09.
08 283.77 March 09 39.85 Source : Department of Telecommunications point to point 450 400 350 300 250 200 150 100 50 0 7 8 9 00 00 00 /3 /2 /3 /2 /3 /2 /3 /2 01 0 Fixed line CDMA GSM Wireless(CDMA &GSMA Gross Total 31 31 31 INTERPRETATION:• Graph shows that India telecom industry is growing in CDMA. 31 .47 165.70 261. 10 37.49 413.62 68.38 92.41 (in million) Feb. It will beneficial for investors to invest in telecom industry because it is growing industry.14 GSM Wireless (CDMA & GSM) 69.67 44.Economic Survey 2009-10 Growth Growth of telephones over the years March 07 Fixed lines CDMA 40.73 32.09 192.09 205.98 376. It shows overall upward trend of growth rate in these sectors.23 March 08 40.19 101. GSMA and wireless (CDMA & GSMA) sectors.86 300.12 Gross Total 142.86 120.
" These are quantitative factors of company analysis. the company itself is analyzed to determine its financial health. When performing ratio analysis on a company. COMPANY ANALYSIS The purpose of company analysis to analyze the financial and non-financial aspects of a company to determine whether to buy. price. leverage. or holds onto the shares of a particular company After determining the economic and industry conditions. From these statements a number of useful ratios can be calculated. This is usually done by studying the company's financial statements. the ratios should be compared to other companies within the same or similar industry to get a feel for what is considered "normal. and efficiency.• Future prospects are good in this industry. liquidity. there are also some qualitative factors which should be considered also. The ratios fall under five main categories: profitability. sells. . Following are some more important aspects about company • • • • • • • • Shareholding pattern Growth Technology Expansion Plan Profitability Capital History Marketing Capabilities Most important its financial statement So fundamental analysts use different tools and ratios to compare all sorts of companies no matter what business they are in or what they do.
Overall profitability analysis 5. Market test or valuation ratios . Balance sheet ratio analysis • • • • • • • • • Current ratio Quick ratio Gross margin ratio Net profit margin ratio Inventory turnover ratios Account receivable ratio Return on assets ratio Return on investment ratio Earning per share 2. Income statement ratio analysis 3. 1. The level and historical trends of these ratios can be used to make inferences about a company’s financial condition its operations and attractiveness as an investment. Ratio analysis helps you to evaluate the weak and strong points in your financial and managerial performance.FINANCIAL RATIOS A financial ratio is an expression of the relationship between two selected items from the income statement or the balance sheet. Financial ratio analysis is calculation and comparison of ratio which are derived from the information in a company’s financial statements. Management/efficiency ratios 4.
The Airtel Telemedia Services business offers broadband & telephone services in 95 cities and has recently launched a Direct-to-Home (DTH) service. The company also provides telephone services and Internet access over DSL in 14 circles. last mile connectivity in fixed-line and mobile circles. The company has a submarine cable landing station at Chennai. Enterprise services to the corporate customers through its nationwide fiber optic backbone. VSATs. behind China Mobile and China Unicom . Airtel digital TV. It also acts as a carrier for national and international long distance communication services. which connects the submarine cable connecting Chennai and Singapore. It also offers fixed line services and broadband services. It offers its telecom services under the Airtel brand and is headed by Sunil Bharti Mittal. The company provides end-to-end data. ISP and international bandwidth access through the gateways and landing station. Bharti is now the world's third-largest. single-country mobile operator and sixth-largest integrated telecom operator. The businesses at Bharti Airtel have always been structured into three individual strategic business units (SBU's) The mobile business provides mobile & fixed wireless services using GSM technology across 23 telecom circles.COMPANY ANALYSIS OF BHARTI AIRTEL • • • • • • • With this. Globally. Bharti Airtel is the 3rd largest in-country mobile operator by subscriber base.
the company has a 24.6 40.MARKET SHARE OF DIFFERENT TELECOM INDUSTRIES IN INDIA In India. followed by 17.7 17.4 Others Slice 5 .6% share of the wireless services market. Bharti Airtel 24.3 Reliance Communicationa Vodafone Essar 17.4% for Vodafone Essar.7% for Reliance Communications and 17.
5 0.72 0.45 0.55 0.65 0.6 0.69 0. BALANCE SHEET RATIO ANALYSIS YEAR RATIOS LIQUIDITY RATIOS Current Ratio Quick Ratio 0.COMPANY ANALYSIS OF BHARTI AIRTEL BY USING DIFFERENT RATIOS 1.57 0.7 0.1 0 Mra06 Mar07 Mar08 Mar09 Mar10 CURRENT RATIOS .44 0.3 0.8 0.4 0.72 March 06 March 07 March 08 March 09 March 10 0.47 0.2 0.47 0.
8 0.99 29.1 0 Mra06 Mar07 Mar08 Mar09 Mar10 Quick ratios INTERPRETATION:Bharti airtel’s both current and quick ratios are moving upward means shows increasing trends. INCOME STATEMENT RATIO ANALYSIS YEAR RATIOS Income statement Ratios Gross profit Ratio Net profit Ratio March 06 March 07 March 08 March 09 March 10 23.80 27.6 0. These shows company has good liquidity position and Company is able to pay day to obligations of company.0.46 29.33 22.08 23.3 0.2 0.47 22.97 26. 2.58 27.40 .5 0.14 17.4 0.7 0.
Mar.35 30 25 20 15 10 5 0 Mra.Mar.Mar06 07 08 09 10 Net profit ratio INTERPRETATION:High income ratio shows company is at good profitability condition.Mar. As we see that net profit ratio in 2009 decline.Mar. But company did not affected very much.Mar. But this is minor decline. This is due to high inflation rate and global meltdown. 3.Mar. MANAGEMENT/EFFICIENCY RATIOS YEAR RATIOS Management /efficiency March 06 March 07 March 08 March 09 March 10 .Mar06 07 08 09 10 Gross Profit Ratio 30 25 20 15 10 5 0 Mra.
Mar.31 453. 4. Company is efficient in using inventory properly and company able to collecting cash from debtors on time.Ratios Inventory Ratio Account receivable ratio 634.30 1400 1200 1000 800 600 400 200 0 Mra.Mar06 07 08 09 10 Inventory turnover ratio 18 16 14 12 10 8 6 4 2 0 Mra.35 14. OVERALL PROFITABILITY ANALYSIS .06 12.52 12.Mar. Bharti airtel’s both ratios are high in 2009 as compare to previous years.Mar.05 15.78 1307.28 547.Mar06 07 Mar.Mar08 09 10 Account receivable artio INTERPRETATION:High inventory turnover ratio and high debtor turnover ration shows the management’s efficiency in using inventory and collecting debts respectively.57 373.83 12.Mar. In this way it shows good prospectus for investors to invest in this company in future.
06 1.6 0.52 0.72 373.00 1307.81 1400 1200 1000 800 600 400 200 0 Mra06 Mar07 Mar08 Mar09 Mar10 Return on assets ratio 1.2 1 0.2 0 Mra06 Mar07 Mar08 Mar09 Mar10 Return on investment ratio INTERPRETATION:- .4 0.05 0.75 453.8 0.03 547.83 1.35 0.YEAR RATIOS Overall profitability analysis Return on asset Ratio Return on investment ratio March 06 March 07 March 08 March 09 March 10 634.
MARKET TEST OR VALUATION RATIOS YEAR RATIOS Market test or valuation ratio Earning per share ratio 10.03 point.High return on asset ratio shows that company’s overall profitability is goods.Mar. Bharti airtel’s this ratio is increasing year by year.27 32.90 40. 5. .Mar06 07 08 09 10 Earning per share ratio INTERPRETATION:High earning per share is considered good from investor’s point of view.Mar. It shows that investors has good prospectus in Bharti airtel if they will purchase is share. So its overall profitability is good whether its return on inventment ratio has reduced by . Bharti airtel’s this ratios is high in 2009 as compare to previous years. It may be due to inflation and global meltdown reason.62 21.82 March 06 March 07 March 08 March 09 March 10 45 40 35 30 25 20 15 10 5 0 Mar.79 42.Mar.
28=378. .52 o EXPECTED PE RATIO= 14.28 o INTRINSIC VALUE FOR MARCH 2010= 26.CALCULATION OF INTRINSIC VALUE FOR MARCH FY2010 o EXPECTED EPS = 26.52*14.70.70 Market Price 299.70 Intrinsic value is greater than market price therefore investor are suggested to buy bharti airtel’s share at current level on 299.
And Indian government is also providing various facilities in the development of telecom industry. good liquidity position. Earning per share we can say that company has good profitability condition. On the basis of its various ratios like Current ratio. Account receivable ratio. Net profit margin ratio. good market condition because earning per share is increasing every year and on the basis of intrinsic value we can say that investor can take benefit in future by purchasing bharti airtel’s share. . Quick ratio. Inventory turnover ratios. In India BHARTI AIRTEL is growing company. Return on investment ratio. Return on assets ratio.CONCLUSION On the basis of this assignment’s data we can say that there will be benefit to investors to invest their money in telecom industry because telecom industry is growing industry.
com/financials/bhartiairtel/ratios/ BA08 .in/ www.htm www.com › stocks.bharti.com/ www.about.REFRENCES: WEBSITES: en.finpipe.airtel.com/equity/fundanl.com/od/evaluatingstocks/a/Fundanatool s1.investopedia.htm www.moneycontrol.wikipedia.org/wiki/Fundamental_analysis www.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.