A PROJECT REPORT

ON "EQUITY ANALYSIS OF TELECOM SECTOR”

FOR "ANAND RATHI SECURITIES LTD.”

BY "SHILPA MANDHAN"

UNDER THE GUIDANCE OF "PROF. MAHESH HALALE"

SUBMITTED TO "UNIVERSITY OF PUNE"

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA)

VISHWAKARMA INSTITUTE OF MANAGEMENT PUNE-411048

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TO WHOMSOEVER IT MAY CONCERN

This is to certify that Ms. Shilpa Mandhan is a bonafide student of Vishwakarma Institute Of Management, Pune. She has successfully carried out his Summer Project titled , Equity Research of Telecom sector.

This is the original study of Ms. Shilpa Mandhan and important sources used by her have been acknowledged in his report. This report is submitted in the fulfillment of two-year full time course of MBA (20062008) as per the rules of the Pune University. She has worked under our guidance and direction.

Dr. Sharad Joshi

Prof. Mahesh Halale.

(Director VIM)

(Project guide)

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ACKNOWLEDGEMENT

Talent and capabilities are of course necessary but opportunities and good guidance are two very important things without which no person can climb those infant ladders towards progress. I am really thankful to ANAND RATHI SECURITIES PVT LTD., PUNE for giving me the permission to carry out my summer internship in their esteemed organization. I want to express my deep sense of gratitude to the management and staff of ANAND RATHI SECURITIES, for the support, cooperation and briefings they provided during the internship to make it a success. I express my sincere thanks to Prof. Mahesh Halale and Dr. Sharad L. Joshi, Director, Vishwakarma Institute of Management, Pune for their valuable advice and guidance. They are always a source of inspiration for me. My thanks are also due to the faculty and non-faculty member of Vishwakarma Institute of Management, Pune for their cooperation and support in completion of my project. Last but not least, I thank my parents, friends for their wholehearted support in this effort of mine.

Shilpa Mandhan

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1 2 3 4 5 6 7 8 9 10 11 12 13 Executive summary TOPIC Page No. No. 1 3 4 11 15 17 39 65 67 68 69 70 71 Objective and scope of the study Company Profile About Equity Analysis Research methodology Theoretical Framework Analysis and Interpretation of data Findings Recommendation Limitation Assumptions Conclusion Bibliography [iv] .CONTENTS Sr.

The field of equity research is full of challenges. It is your door to fame. Other value investors base strategies completely around the estimation of future growth and cash flows.. professional challenge. The duration of the project was two months i. the stock market (or the equities market). a very well known company in the field of stock broking and capital market services sector. The project initiated with understanding the mannerisms of the stock market trading followed by the dynamics of the telecom sector.. which is considered to be in its infant stage. is all set to grow in size. The project on “Equity Analysis of Telecom Sector” was carried out in Anand Rathi Securities Pvt Ltd. These two months were not only limited to learning and devoting time towards equity research but it also provided an insight on what various services such broking houses provide and what efforts are required to manage such organizations. Some of the major players in Telecom sector were then chosen for further analysis.e from 1st June 2007 to 31st July 2007. which is quiet impossible without proper research about the companies. Investors like warren buffet made a fortune out of investments in the stock market. above all. Despite the different methodologies. Pune. 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. it all comes back to trying to buy something for less than its worth. These companies were further [1] .CHAPTER I EXECUTIVE SUMMARY 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. In a world that is shrinking in size due to information technology and blurring boundaries between nations. fortune and.

competent management personnel. promising global forays was recommended as a “Buy or Hold” share. [2] . Based on the complete study of the companies. the company with strong financials. VSNL. and various news about these companies and their global forays. their expansion plans. Bharti Airtel Limited Looked promising and with a view to derive maximum value from the investment Bharti Airtel Limited.studied in detail with respect to their financials and the management’s future plans regarding the functioning of the company. a company with not so strong financials was seen to be too risky and was recommended as a “Sell” share.

The project does not extend its scope to any other sector of companies. telecom (service provider) sector. Bharti Airtel Limited and Videsh Sanchar Nigam Limited (VSNL). It is a method of evaluating a security by attempting to measure its future performance by examining related economic. financial and other qualitative and quantitative factors. SCOPE OF THE STUDY • The scope of this project is limited to only one sector i. Looking at this information to gain an insight on the company s future performance.e.CHAPTER II OBJECTIVE OF THE STUDY • • To analyze the telecom industry and find the future growth opportunities. [3] .e. Also to look at the historical performance data of the company and estimate the future performance of stocks. This project is concerned with only one sector of companies in the stock market. To estimate a value that an investor can compare with the security's current price and figure out what sort of position to take with that security. To carry out the company analysis of the selected companies and to suggest whether they are a viable investment option. the project is concerned with only two companies from among the major players in the Telecom sector i. • Also.

PHILOSOPHY: AnandRathi tries and understands the financial needs. corporate advisory. investment banking. today has a pan India presence as well as an international presence through offices in Dubai and Bangkok. [4] . mutual funds and insurance.all of which are supported by powerful research teams. Corporates and Institutions and was recently ranked by Asia Money 2006 poll amongst South Asia's top 5 wealth managers for the ultra-rich. The ability to think far ahead and formulate long-term strategy coupled with long hours of practice and research are the key drivers which make wealth work harder for you. Anand Rathi (AR) is a leading full service securities firm providing the entire gamut of financial services. structured products . AR provides a breadth of financial and advisory services including wealth management. to offer personal advice and expert analysis that one one needs for assets to go Xtra mile. In year 2007 Citigroup Venture Capital International joined the group as a financial partner. Anand Rathi. founded in 1994 by Mr. Private Clients. The firm. The entire firm activities are divided across distinct client groups: Individuals. commodities. brokerage & distribution of equities.CHAPTER III COMPANY PROFILE ANAND RATHI SECURITIES PVT LTD.

to help you maximize returns and minimize risks. ethics and professionalism. while maintaining the highest standards of excellence. • Equity Capital Market – IPO/Rights/Secondary issues – Delisting & Open Offers – Block Deals & Private Equity [5] . PMS.The company believes that the key to build wealth lies in allocating assets across various markets. SLOGAN: “behind every successful Investor” The firm's philosophy is entirely client centric. financial instruments and industry sectors. • Equities – Stocks. PRODUCT AND SERVICES: Wealth Management. Mutual Funds • Commodities & Precious Metals • Life & General Insurance • Real Estate Private Equity Fund • Currencies • Structured Products & Capital-Guaranteed Notes •Alternative & Non-correlated investments Investment Banking and Corporate Finance. Keeping this in mind it leverages its expertise in scientific asset allocation. with a clear focus on providing long term value addition to clients. Mutual Funds • Fixed Income – Bonds. Derivatives.

– Management Buy-outs • Advisory – Business Sale/Disposal – M&A / JVs / Strategic alliances – Valuations • Debt Advisory – Rupee & Foreign Currency – Debt Raising / Negotiation – – Debt Restructuring Creditor Settlement / OTS Distribution and Brokerage: • Equities • Derivatives • Commodities • IPO’s • Mutual Funds • Life & Non-Life Insurance • Depository Services • Bonds • Value-add services – backed by independent research teams – real-time support to clients MILESTONES: • 1994: Started activities with consulting and institutional equity sales with staff of 15. [6] .

WOS acquires membership of Dubai Gold & Commodity Exchange (DGCX) [7] .• 1995: Set up a research desk and empanelled with major institutional investors • 1997: Introduced investment banking businesses Retail brokerage services launched • 1999: Lead managed first IPO and executed first M & A deal • 2001: Initiated Wealth Management Services • 2002: Retail business expansion recommences with ownership model • 2003: Wealth Management assets cross Rs1500 crores Insurance broking launched Launch of Wealth Management services in Dubai Retail Branch network exceeds 50 • 2004: Commodities brokerage and real estate services introduced Wealth Management assets cross Rs3000crores Institutional equities business relaunched and senior research team put in place Retail Branch network expands across 100 locations within India • 2005: Real Estate Private Equity Fund Launched Retail Branch network expands across 200 locations within India • 2006: AR Middle East.

HLL. Wartsila Banks / FIs: Andhra Bank. GIC. BoI. Kuoni Travel. Sterlite. Thomas Cook. TISCO. Vedanta. Transworks. Hindalco.9% equity stake Retail customer base crosses 100 thousand Establishes presence in over 350 locations CLIENTELE Industrial groups: Birla’s .Ranked amongst South Asia's top 5 wealth managers for the ultra-rich by Asia Money 2006 poll Ranked 6th in FY2006 for All India Broker Performance in equity distribution in the High Networth Individuals (HNI) Category Ranked 9th in the Retail Category having more than 5% market share Completes its presence in all States across the country with offices at 300+ locations within India • 2007: Citigroup Venture Capital International picks up 19.Tata Investments. Nestle. Grasim. Indal. BoM. VSNL Multinationals: Bayer. Color Chem. Tata Motors. Canara Bank. Indian Rayon. IDFC. Indo Gulf. Godfrey Philips. Goodlass Nerolac. Datacraft. Hindustan Zinc. Quest International. United Bank [8] .Vedanta. Syngenta. Clariant.Grindwell Norton. HDFC Ltd. BOB.Birla Sunlife. Tata’s. Trent.Balco. LIC. PNB.

ICICI Ventures. Berger. Jindal Group. Himat Singka Siede. Globus. Godrej. ITC. Sonata Software. DCM. West Coast Paper. Gujarat Pipavav. Varun Shipping. Radico Khaitan. East India Hotels. Boots Piramal. Century Textiles. Gujarat Ambuja. Infosys PF.Corporates : ACC. Mastek. Crompton Greaves. CRISIL. M&M. Deepak Fertilizers. Cosmo Films. HCL group. Emami. Raymonds. Jet Airways. Wipro Private Clients: Individuals / Families across India. NCDEX. Gokuldas Exports. Datamatics. Dabur. GE Shipping. To remain at the top of this sector is no mean task and there are a lot of big companies which provide stiff competition to Anand Rathi Securities in this regard. L&T. DSL Software. Middle East and SE Asia (with minimum relationship size of USD 1 million+ / Rs 5 crores each) Priority Clients: Individuals / Families with minimum relationship size of Rs 50 lacs Competitors: In this field of financial services there are a whole lot of companies and a few keep adding every year. The list of competitors would include: • • • • • Motilal Oswal India Infoline Indiabulls Geojit Sharekhan [9] .

Shubham Centre. Mumbai 400 023 Tel: +91 22 663 77000 Fax: +91 22 663 77070 Brokerage and Retail Head Office: B-2. Bombay Samachar Marg. British Hotel Lane. 5th Floor. Mumbai 400 099 Tel: +91 22 4001 3700 Fax: +91 22 4001 3770 Key Locations: New Delhi Ahmedabad Chennai Kolkata Bangalore Hyderabad Pune Dubai Bangkok [10] . Cardinal Gracious Road. Andheri (E).Branches and Offices: Corporate Office: JK Somani Bldg. Chakala.

who let their heart rule. EQUITY ANALYSIS Economic Analysis Industry Analysis Company Analysis Fundamental Analysis Technical Analysis [11] . i. namely fundamental analysis & Technical analysis. watchful attention. covering many aspect from the calculating various FINANCIAL RATIOS. Decision should be based on actual movement of share price measured both in money & percentage term & nothing else. chart paper & your cautious mind. the attempt to determine future share price movement & its reliability by references to historical data is a vast one.CHAPTER IV EQUITY ANALYSIS Professional investor will make more money & less loss than. It should be pointed out that. but impatience can frequently be profitable. The subject of Equity analysis. but does discuss a method which enables the investor to arrive at buying & selling decision. pencil. A general investor can apply the principles by using the simplest of tools: pocket calculator. anticipated growth and calculations are based on considered FACTS & not on HOPE. Their head eliminate all emotions for decision making. Be ruthless & calculating.e. Equity analysis is basically a combination of two independent analysis. plotting of CHARTS to extremely sophisticated indicators. Greed must be avoided patience may be a virtue. you are out to make money. In Equity Analysis. this equity analysis does not discuss how to buy & sell shares. ruler.

Political feel. FII s perception to share market. Interest rates: standards of returns for measurement. Nature and prospects of the demand. Governmental Exim & other policies regarding businesses & industry. 4. 6. Economic growth. Nature of the competition. LPG (liberalization. privatization. 2. The risk and return associated with the purchase of the stock is analysed to take better investment [12] . Company Analysis: In the company analysis. which help the analyst to make a rational decision. Industry Analysis: Since each industry is unique. the following factors are considered as a whole with a perspective of industry & also considered with a perspective of individual company: 1. Costs. Inflation rates. globalization) 5. Technology and research. Industry analysis should focus on the following: Structure of the industry. 7. In the economic analysis. efficiency and profitability. the investor assimilates the several bits of information related to the company and evaluates the present and future values of the stock.Economic Analysis: An Economic analysis is the filter or scanner of the surrounding at the time of equity research. 3. a systematic study of its specific features and characteristics must be an integral part of the investment decision process.

3 Determine the condition of the company. It reflects the financial efficiency & financial position of a company.decisions. 4 Determine the value of the company s stock Fundamental analysis facilitates comparison between two companies. Fundamental analysis is fruitful in preparing plans for the future. Fundamental analysis typically focuses on key statistics in company s financial statements to determine if the stock price is correctly valued. Fundamental Analysis is helpful in forecasting likely position of company in near future. industry and company statistics. Most fundamental information focuses on economic. The typical approach to analyzing a company involves four basic steps: 1 Determine the condition of the general economy. The present and future values of the stock are affected by a number of factors such as: Earnings Capital structure Management Competitive edge Operating efficiency Financial performance Fundamental Analysis: Fundamental analysis is the study of economic. The ratio analysis concentrates on the inter-relationship among the figures appearing in the financial and accounting statements. Fundamental analysis is a very powerful analytical tool useful for measuring performance of an organization. However. 2 Determine the condition of the industry. The ratio [13] . industry and company conditions in an effort to determine the value of a company s stock. fundamental Analysis should not be considering as the ultimate objective test but it may be carried further based on the outcome & revelations about the cause of variations.

creditors and government to make an evaluation of financial aspect of a firm s performance. Technical analysis involves the use of various methods for charting. i. which not only studies but also reflecting the numerical & graphical relationship between the important financial factors.e. investors. It also provides the base for decision-making in investment. It is the tool of financial analysis. For that matter a variety of tools are used. The focus of technical analysis is mainly on the internal market data. It is important criteria for selecting the company to invest. The Technical analysis is helpful to general investor in many ways. prices & volume data. [14] . It is the oldest approach to equity investment dating back to the late 19th century. It appeals mainly to short term traders. calculating and interpreting graph & chart to assess the performances & status of the price. Ratio analysis allows interested parties like shareholders. It is one of the most frequently used yardstick to check and analyze underlying price progress. Fundamental Analysis consist of following: Study of Balance sheet Study of Profit and Loss a/c Study of Ratios Technical analysis: Technical analysis refers to the study of market generated data like prices and volume to determine the future direction of prices movements. Technical analysis mainly seeks to predict the short-term price travels.analysis helps the investor to analyze the past performance of the firm and to make further future projection regarding financial position. It provides important & vital information regarding the current price position of the company.

practical questions. It is usually descriptive in nature. Basic research often lays down the foundation for further applied research. it is only interested in the price movements of the company s share in the market. interpreting and revising facts. This intellectual investigation produces a greater understanding of events. and is usually associated with science and scientific method. behavior or theories and makes practical applications through laws and theories. BASIC RESEARCH: Basic research is also called as fundamental or pure research. Its primary objective is not to gain knowledge for its own sake. it involves looking at historical performance data to estimate the future performance of stocks whereas Technical analysis does not care one bit about the value of the company. Its primary objective is the advancement of knowledge and the theoretical understanding of the relations among the variables. As far as equity research is concerned there are two types of research methods that are followed: • • Fundamental analysis Technical analysis Financial statement analysis is the biggest part of Fundamental analysis also known as quantitative analysis. [15] . APPLIED RESEARCH: Applied research is done to solve specific.RESEARCH METHODOLOGY Research is often described as an active. It is almost always done on the basis of basic research. It is exploratory and often driven by researcher’s curiosity or interest. It is conducted without any practical end in mind. The term research is also used to describe a collection of information about a particular subject. diligent and systematic process of inquiry aimed at discovering.

the environment surrounding the telecom sector. In this research. Internet. primary data could not be gathered as the company officials could not be contacted for a one to one interview or a telephonic interview. The researcher in this project has tried to look into the details of the financial statements of the companies. press releases. In this regard the primary data for this project would be getting the necessary information from the company management by an interview. telephonic conversation or direct mail. the management discussions on the part of every company and the government policies concerned with the telecom sector. The data collected for this project was from a secondary source. DATA COLLECTION: • Primary data for a project is the first hand information regarding the project being studied. The data was complied with the help of sources like News articles. • Secondary data for a project would be the collection of information that has a bearing on the outcome of the project from secondary sources like news.This project deals with the fundamental analysis aspect of the equity research. Capitaline software. internet etc. [16] . the latest developments in this regard.

CHAPTER V THEORETICAL FRAMEWORK BASIC MODEL OF A TELECOM COMPANY A brief description of the four major segments that make up the telecom industry is as follows: I. Wireless/Mobile/Cellular services: The cellular mobile service providers (CMSPs) make available mobile telephone services where by a customer on possession of a handset and obtaining a connection by way of SIM card (for GSM based technology phones) is able to connect to the network [17] .

Enterprise services: These services are used by large and medium corporates for data transfer between their offices and/or their suppliers' offices. a broadband connection (Internet access that allows minimum download speed of 256 kilo bits per second from the point of presence of the service provider) allows you to transmit data at faster rate. There are two forms of Internet that are currently popular .of the service provider. II. which has the advantage of connectivity on the move. The need of users to have a seamless connectivity with their associates is what drives this business for telecom companies. Although this had been a dominant mode of telecommunication in the past. This is a wireless service that allows the customer to connect with other wireless customers as also wire line customers. Internet/Broadband: The Internet services are provided either by telecom service providers or independent Internet service providers (ISP) who deal exclusively in providing this service. Considering that this business takes care of data transfer needs of corporates. A CMSP derives its revenues by way of tariff charges for outgoing calls made by subscribers on its network. which may be spread in a city. [18] . IT and BPO sectors. in terms of ARPU and Subscriber base. Fixed line services: The fixed (wireline) services are dominantly provided for by the PSUs (BSNL and MTNL) in India. The fundamental business of a fixed line operator is almost similar to that of a CMSP. A customer can obtain a connection where by a wireline provides him with the last mile connectivity on the national telecom network. III. or a country. While both these forms are used for transmitting and receiving data. IV. who are not as 'affordability' conscious as the individuals. are the major users of Enterprise services. telecom companies generally earn higher margins on Enterprise services than they earn on any of the other three business lines. whose business is so data dependent.the dial-up connections and the broadband connections. or even across continents. it is fast being replaced with mobile telephony.

TELECOM COMPANY - REVENUE ANALYSIS

Let us first take up the revenue analysis of the various segments of the telecom service providers and then move on to their cost structure. A Cellular Mobile service provider (CMSP) derives its revenues by way of tariff charges for outgoing calls made by subscribers on its network. As such, revenue for a CMSP is simply a multiple of average revenue per subscriber per month (ARPU) and number of subscribers. Let us now understand what determines the ARPU’s and subscriber base.

Average Revenue Per User (ARPU): Average revenue per subscriber per month, or ARPU, is the amount of money that a CMSP generates per subscriber per month. It can be obtained by dividing the total wireless revenues by number of subscribers and then dividing the output by number of months in a period (i.e., 3 months for a quarter and 12 months for a year's calculation of ARPU). To even out the volatility in ARPUs, if any, it is better to arrive at the figure by averaging the wireless revenues and subscriber base for the latest two years. However, considering the rapid pace of subscriber addition for Indian CMSPs, ARPU calculated as dividing the trailing 12-months wireless revenues by latest subscriber base is also an appropriate figure. For instance, if a CMSP has earned a total of Rs 50,000 m as wireless revenues in the past 4 quarters (or trailing 12 months) and its current subscriber base stands at 20 m, its ARPU will be Rs 208 per month (Rs 50,000 m of wireless revenues divided by 20 m subscribers divided by 12 months). Another way to arrive at ARPU is to multiply the average number of minutes of usage (MOU) per subscriber per month with the per minute tariff. Most of the Indian CMSPs generally disclose their MOUs and per minute tariff and as such, these can be used to determine the ARPU. The ARPU in current industry scenario is decreasing day-by-day due to the decline in the margins and also competition.

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Subscribers: Growth in a CMSP's subscriber base is dependent on several factors, the key amongst them being: • Economic growth: With growth in the economy, and the consequent increase in

activity, it requires people to be in touch even when on the move. This brings out a pressing need for owning mobile/cellular phones. Thus, with a growth in economic activity there will be more and more people subscribing to telecom services, thus leading to growth in subscriber base for CMSPs. • Rising income level: As the real income levels in a society rise, more and more

people are able to afford usage of cellular phones. Also, with rising incomes, as personal consumption expenditure (as percentage of income) reduces, the consumer does not feel the pinch of rising telephone bill, thus having the propensity to talk more, thus leading to higher MOUs for telecom services providers. • Affordability: While there may be a need to be in constant touch as outlined by the

above two factors, it is the increased affordability that really increases the demand for such services. The affordability is interplay of lower tariff charges and availability of cheaper handsets. While lower handset costs make mobile more affordable at the entry level thus allowing more people to be a part of the 'mobile community', lower tariffs allow for an increased usage of telecom services, while not having such an overbearing impact on telephone bills. Apart from the usual - economic growth and rising income levels - the growth of the Internet business is dependent upon:

PC penetration: Internet penetration in India is currently at very low levels, as compared to its developing peers. This is set to take off with the rise in PC penetration, which will again be a consequence of affordability in terms of lower PC costs and reduced cost of data transfer. The cost of data transfer depends on whether one is using a dial-up or a broadband connection. The dial-up package entails a fixed charge for Internet access and a variable charge for the telephone connection. On the other hand, tariffs for broadband

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are usually designed on the basis of quantum of data transmission. As there is rationalisation of these tariffs going forward, Internet will become more affordable and this will drive growth, as the recurring expenditure will reduce.

Parental encouragement: An interesting change that has come is the way parents now look at computers. The age of a typical computer user has dropped significantly as parents increasingly realise the growing importance of computers in education in the years to come. So, unlike most products where children are targeted to drive sales of consumer durables, in the case of computers, it is the parents who are going all out to ensure that their child grows up to be a computer literate. Thus, with computers coming into homes, it will not be long before parents will wish their children to be wired to the web owing to the rich source of information.

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• Access deficit charge: The government also collects from the cellular operators an access deficit charge. • SG&A expenses: Telecom companies incur expenditure in the form of advertisement costs for enhancing their visibility and also to make their brand more appealing to the consumers.000 m and Rs 250 m respectively). [22] . let us now understand the major cost heads for these companies. Expenses are also incurred on customer acquisition and on maintenance of telecom equipment and network. These cost heads can be broken up into regulated and non-regulated costs. Licenses offered to the telecom players are for a limited period of time and these are required to be renewed on expiry. • Entry fee: The companies providing national and international long distance (NLD and ILD) services are required to pay a flat entry fee of Rs 25 m each (from earlier fees of Rs 1. sales. On the other hand. access deficit charge and license fee are regulated. general and administrative (SG&A) and employee expenses are non-regulated in nature. These fees are to be paid to the central government for obtaining a license for providing these services.5% percent of non-rural annual gross revenue (AGR) of the telecom service providers and the amount collected is used to subsidise the telecom service provided by BSNL in rural areas.TELECOM COMPANY – COST ANALYSIS After discussing the revenue aspects of telecom service providers. Entry fee. • License fees: Telecom companies are required to pay an annual license fee of 6% of their AGR to the Government of India. The charge payable is 1.

and customer relationship management in call centers.• Personnel expenditure: These are costs incurred for maintaining the staff for executing the telecom companies' marketing strategies. [23] . the benefits of faster subscriber addition are directly seen on companies' improving operating profitability (as fixed costs are apportioned over a larger subscriber base). for general administrative purposes. for maintenance and repair of telecom infrastructure. and. Telecom is an operating leverage play (indicates that each new subscriber will come at a higher profitability than the previously added subscriber). as such. Apart from these operating costs. telecom companies also incur cost for servicing debt and tax payments.

Also. these ratios must not be looked at in isolation and one should look at the past data as well to arrive at a trend. amongst others to arrive at a final view on the company (not the stock!). • • • • • • • • • • • • Sales growth Average revenue per user Subscriber growth EBIDTA margins or Operating margins [(Sales . which shall give a better perspective of the company's performance over the years.Operating expenditure)/Sales)] Interest coverage [Profit before interest and tax/Interest] Net profit margins [Net profits/Sales] Earnings per share EBIDTA per share Debt to equity Return on equity [PAT/Equity or Net worth] Return on capital employed [PBIT/Capital employed. an investor must closely look at the key financial operating and profit ratios of the company.Capex Working capital changes] Apart from these. working capital turnover and asset turnover. The ratios are nothing but an arithmetical representation of a company's financial data that help in gauging the health of the company. an investor must compare ratios of the company with the industry leader and its peers to gauge a company's relative performance. which is Equity + Debt] Free cash flow [Profit after tax + Depreciation . It is important to look at these ratios for 3-5 years in the past.Dividend & Dividend Tax . Key ratios to be look at for a telecom company are as under. investors should also compare other key ratios like receivable days. [24] .KEY FINANCIAL METRICS: Before investing in a telecom stock (or for that matter any stock). considering that most telecom companies in India do not have a history before that. Importantly.

In the initial 5-6 years the average monthly subscribers additions were around 0. DoT was responsible for telecom services in entire country until 1985 when Mahanagar Telephone Nigam Limited (MTNL) was carved out of DoT to run the telecom services of Delhi and Mumbai. the monthly mobile subscriber additions increased to around 2 million per month in the year 2003-04 and 2004-05. The mobile services were commercially launched in August 1995 in India.05 to 0. Mobile subscriber additions started picking up. after the number of proactive initiatives taken by regulator and licensor. The number of mobile phones added throughout the country in 2003 was 16 million.5 millions.TELECOM SECTOR IN INDIAN ECONOMY India.. Many private operators. Bharti. such as Reliance India Mobile. Although mobile telephones followed the New Telecom Policy 1994. In 1990s the telecom sector was opened up by the Government for private investment as a part of Liberalisation-Privatization-Globalization policy. However. followed by 22 millions in 2004. Hutch. the Department of Telecom (DoT) was separated from P&T. BPL. the industry heralded several pro consumer initiatives. 32 million in 2005 and 65 million in 2006 and over 100 million [25] . Tata Telecom. it became necessary to separate the Government's policy wing from its operations wing. successfully entered the high potential Indian telecom market. Idea etc. Therefore. The New Telecom Policy in 1999. growth was tardy in the early years because of the high price of hand sets as well as the high tariff structure of mobile telephones. The Government of India corporatised the operations wing of DoT on October 01. Growth of mobile technology: India has become one of the fastest growing mobile markets in the world [2] .1 million only and the total mobile subscribers base in December 2002 stood at 10. emerging as a major player: In 1975. 2000 and named it as Bharat Sanchar Nigam Limited (BSNL).

The mobile subscriber base (GSM and CDMA combined) has grown from 1. • As far as the Internet services are concerned. Of this. India currently has a subscriber base of 6. A new mobile connection can be activated with a monthly commitment of US$ 5 only. PSU major. The only countries with more mobile phones than India with 156. which ranks third with a market share of 11%.31 million mobile phones are China – 408 million and USA – 185 million. • The cellular telephony segment has emerged as the fastest growing segment in the Indian telecom industry..9 m at the end of FY00 to 140 m at the end of July 2007. PRESENT SCENARIO • Although India's tele-density has improved from under 4% in March 2001 to over 18% at the end of March 2007. [26] . This is followed closely by Sify. A slew of tariff reduction in the past few years has helped the segment to gain in scale. The cellular segment is playing an important role in the industry by making itself available in the rural and semi urban areas where teledensity is the lowest. BSNL holds the top spot with a market share of 42%. followed by MTNL with a share of 12%. around 19% is accounted for by broadband users (>=256 kbps). In 2005 alone 32 million handsets were sold in India.9 m users. The total annual telecom revenue is estimated to be over Rs 650 bn. some of the companies also provide the WLL service. India has opted for the use of both the GSM (global system for mobile communications) and CDMA (code-division multiple access) technologies in the mobile sector.by mid of 2007. In addition to landline and mobile phones. we are way behind other developing nations. The data reveals the real potential for growth of the Indian mobile market. The ARPU for this segment was Rs 210 at the end of FY06. The mobile tariffs in India have also become lowest in the world.

Demand: Given the low penetration levels in the country and continuously falling tariffs. the tariffs fell by 50% and the trend is likely to continue. demand will continue to remain higher in the foreseeable future across all the segments. In the first six months only. [27] . With the most favored customer status given to VSNL by fixed line majors like BSNL and MTNL going away. KEY POINTS: Supply: Intense competition has resulted in prompt service to the subscribers. and o Falling tariffs. Barriers To Entry: o High capital investments o Older and well-established players who have a nation wide network o License fee o Continuously evolving technology. smaller towns and villages continue to have waiting periods on account of nonavailability of adequate infrastructure. the segment has been witness to fierce competition. the end of VSNL's monopoly in 2002 brought three private players in the international basic telephony business and the immediate effect was the fall in tariffs.• On the international basic telephony front. However.

Competition: The entry of fourth cellular player and commencement of WLL services has resulted in intense competition in the bigger cities.Bargaining Power Of Suppliers: Improved competitive scenario and commoditization of telecom services has led to reduced bargaining power for services providers. of Subscribers (Mn) 200 150 100 50 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 year Subscriber Base (Source: TRAI) [28] . Bargaining Power Of Customers: A wide variety of choices available to customers both in fixed as well as mobile telephony has resulted in increased bargaining power for the customers. CHART SHOWING TOTAL TELECOM SUBSCRIBER BASE: Total Telecom Subscriber Base 250 No. as they will be unable to recover their high capital investments. Reducing tariffs will hurt the new entrants.

In the last year.00% 10. SECTOR CONTRIBUTION TO SENSEX GROWTH: SECTOR CONTRIBUTION TO SENSEX GROWTH 25.60% 0.80% 2.00% 20.00% 5.20% 0.40% 0. This growth would not have been possible without the help and support of the various sectors in the industry. Currently it has reached 15.80% 0.80% 2. thanks to multiple growth drivers like: • • • • • improving demographics lower handset prices expansion by wireless operators infrastructure sharing lower regulatory levies.4% whereas the contribution of Telecom sector was seen to be 4. Sensex grew by 19.10% 1.8%.The Indian telecom industry is witnessing rapid rise in subscriber base.00% 4.00% om e m ic al s Po w er G as Co ns um er M et al s Ph ar m a tw ar le c E& A ut o nk s m en nd Se n Ba se x C O il a t Ce So f Te he ro c CONTRIBUTION TO SENSEX (Source: Merill Lynch Research) The Sensex has grown immensely since 2005 and is still increasing. [29] Pe t SECTOR .00% 19.40% CONTRIBUTION(%) 15.90% 0.70% 2.000. One of the sectors which has a major contribution in this growth is the Telecom Sector.90% 0.70% 0.40% 2.

TRENDS IN INDIAN CELLULAR SERVICES Cellular Subscriber Base Operator BSNL (21) Bharti Airtel (23)* Idea (11) Hutchison Essar (18)$ Spice Communication (2) MTNL BPL Mobile (1) Dishnet Wireless (7) Reliance Telecom (23)# Total Cellular Subscriber base Source: COAI & AUSPI Figure in the brackets denotes the current operating circles * Include the WLL subscribers # Include the GSM Subscribers in 7 telecom circles. (%) 56% 86% 89% 64% 48% 21% 17% 342% 96% [30] . the subscribers of Reliable Internet in Kolkata circle and the WLL subscribers $ Includes the subscribers of BPL Cellular but excludes subscribers of BPL Mobile Mumbai 130607955 75290092 73% May'2007 27994410 40743725 15266618 18083466 3007118 2547895 2091353 1874481 4014404 May'2006 18000908 21860212 8062961 11040797 2027551 2097478 1792966 424475 2049254 Var.

May'2006 May'2007 BP L ice Operator ( Source: Cellular Operators Association of India) Indian Telecom subscriber base has increased rapidly by 47% to touch 218.39 million in May 2006. Nevertheless. from 148.61 million in May 2007 from 75.85 million in May 2007. thanks to strong growth in subscriber base. increasing non voice revenues and lowering fixed cost per unit. [31] Re l ia nc Sp . The surge in subscriber based was powered by impressive 73% spurt in GSM cellular subscriber base to 130. the Indian telecom service sector is set to report buoyant growth in revenues and profitability in the short to medium term.29 million in May 2007. Nevertheless. the country has been witnessing sustained fall in Average Revenue Per Unit (ARPU) from Rs 375 per unit in September 2005 to Rs 335 per unit in September 2006.Cellular Subscriber base 450 400 Subscriber Base (in lakhs) 350 300 250 200 150 100 50 0 l Id ea Co m m . Bh ar ti eC om m BS NL H M M D ish ne t A TN ob ile ut ch irt e L .

7 13.97 10. etc. The reason behind this is the widespread network.e. plethora of services. huge subscriber base. [32] . whereas reliance communication being a comparatively late entrant has attained a significant market share.3 15. it is observed that Bharti Airtel leads the race with a major market share i.MARKET-SHARE OF THE MAJOR PLAYERS IN THE TELECOM SECTOR: Players Marketshare (%) Bharti Airtel Reliance Communication BSNL Hutch Idea Tata teleservices Others Total 22 20.56 9.4 8. pace with the new technology.07 100 From the chart given above. it makes the role of new players unnoticeable.93% of the market share. 22%. The major players in the telecom industry cover almost 86. As competition among the existing players is huge.

most operators had to disconnect some subscribers whose documentary proofs could not be collected until March 31. 2007.e.f. 7. Under the new structure. 2007. * National roaming tariff: Domestic roaming tariffs have been revised with effect from February 15. * Increase in Foreign Direct Investment (FDI) cap from 49% to 74%: On November 03. ADC on incoming calls reduced to Rs. 20. in terms of collation of their identity/address proofs and updating of their database with subscriber details.REGULATORY CHANGES * Access Deficit Charge (ADC) regime: A revised ADC regime has been implemented w.5 bn * Universal Service Obligation (USO) Tender: The DoT has finally extended the USO subsidy to wireless networks with the successful conclusion of bidding under the USO scheme.1.75% of AGR and per-minute ADC on outgoing ILD calls has been abolished. DoT directed all service providers to complete the reverification of their entire prepaid subscriber base by March 31. * Subscriber re-verification: In November 2006. Government of India announced-enhancement of FDI ceiling from 49% to 740% in the telecom sector. April 01.00 per minute.in 19 service areas (except Metros). As DoT had imposed a penalty of Rs. DoT [33] . subject to certain preconditions. 2007 wherein revenue-share ADC reduced to 0. In view of the complications involved in implementation of the preconditions. there is no rental/surcharge for national roaming and lower ceiling for the 'per-minute charges' for roaming calls.954 towers are entitled to the subsidy . Incoming SMS while roaming is free though outgoing SMS rates continue under forbearance.000 per unverified subscriber after the expiry of the deadline. 2007. 2005. The revised estimate for ADC for 2007-08 is Rs.1.

Another significant change is that the slab rate for ports shall now be determined on the basis of the demand made and not on the basis of ports finally allotted by BSNL. On April 19. License Fee at 6% of AGR. hinting to operators to voluntarily reduce these tariffs * TRAI decision on roaming revenue sharing: After a public consultation. term of license being 10 years and identical terms for FDI ceiling as applicable to ILDOs. 2007. 2007. The broad conditions include entry fee at Rs. 2006. * TRAI decision on Interconnect Usage Charge for Short Message Service (SMS): On August 21. 2006 disallowing any revenue sharing on roaming calls.10 mn. TRAI issued a regulation on QoS for broadband services offered by all access and internet service providers pursuant to a public consultation conducted in June 2006. * Regulation on QoS for broadband services: In October 2006. TRAI published its decision on September 11. * Port Charges Regulation: In February 2007. This regulation was implemented on January 01.f. * Terms and Conditions of resale in IPLC segment: DoT has accepted the recommendations of TRAI on the terms and conditions on which reselling of international bandwidth is to be permitted in India. 2007 to report compliance. TRAI reiterated that the termination charges prescribed by them are cost based and since no additional cost is incurred in [34] . At the same time TRAI has expressed its concern that the tariff for premium rate SMS Is high and apparently unrelated to cost. April 01. thus leaving it under the Forbearance' category.had granted several extensions to the telecom licensees to ensure compliance. TRAI amended the existing Port Charges Regulation 2001. TRAI published its decision to refrain from specifying any termination charge for SMS. by reducing the port charges payable by private operators to BSNL/MTNL w. 2007 DoT finally notified the FDI limit with a deadline of July 18.e.

Service providers are required to enter into reciprocal and non-discriminatory agreements for technical and commercial aspects of such connectivity within three months. * Changes in the NLD and ILD licenses: There have been significant changes in the NLD and ILD licenses recently.terminating roaming traffic. which has already led to a number of new players entering the field. 2006.25 million each for ILD and NLD licences. there is no justification for higher payout to the terminating network. The entry fees for these licences have been substantially reduced to Rs. [35] . TRAI issued a regulation mandating all service providers to provide interconnection to all eligible service providers so that subscribers of all access providers can access the IN services offered by other service providers. * Regulation for interconnection of Intelligent Networks (IN) of all service providers: On November 27.

RECENT DEVELOPMENTS The Bharti group's application for direct-to-home (DTH) broadcasting is all set to be cleared and soon the group may be issued a letter of intent (LoI) for the DTH service. mini-ultra base stations. Nokia Siemens Networks will deploy the latest state of art equipment like flexi BTS. for payment of NLD and ILD license fee and related capital expenditures to set up base infrastructure for NLD/ILD. As against the multi-operator DTH scenario in India. Sun TV is also in the queue for DTH. The company was incubated by Infosys Technologies in 2000. Recently. Release 4 architecture. in connection with its DTH proposal. The Bangalore-based value-added services (VAS) provider OnMobile is planning to tap the capital market with an initial public offering (IPO) of Rs 500-600 crore. The company’s maiden offer is expected to open during the current financial year and it intends to invest the proceeds for its foray into the Wireless Application Protocol (WAP) and General Packet Radio Service (GPRS) segments. DTH attracts only one or two players. has lined up a public issue to raise Rs 464 crore at lower band (Rs 41) and Rs 520 crore at upper band (Rs 46). Nokia Siemens Network will expand Idea Cellular’s GSM/GPRS/EDGE networks to cover population centres across six more circles. The 2-year contract includes supply and services of GSM equipment. in most countries. Under the contract. and at present the IT major holds a 14 per cent stake in it. part of the B K Modi group and providing cellular services in the states of Punjab and Karnataka. Intelligent Network. Idea Cellular and Nokia Siemens Networks announced signing of a USD 500 million GSM network expansion contract. Value Added Services and Circuit and Packet core equipment. [36] . Spice Communications promoted by Dilip Modi. media gateways and MSS servers. The net proceeds from the issue are intended to be used for part repayment of longterm debt. clarifications were sought from Bharti on its foreign direct investment (FDI) component and the equity structure. Anil Ambani-promoted Reliance Blue Magic is expected to launch its DTH service soon.

which has touched 50 m subscribers by the end of FY06 (including WLL subscribers). Already.PROSPECTS OF TELECOM SECTOR • As far as the fixed line business goes. • Taking the competition further in the ILD space where we saw huge tariffs fall last year due to the entry of private players. • The International Long Distance (ILD) telephony business is expected to witness increased competition with the entry of private players.6 m subscribers would jump onto the cellular bandwagon all over India and this would entail an investment to the tune of Rs 252.4 bn. private players like Bharti. If the move goes through. the low penetration levels in the country and the increasing demand for data based services such as the Internet will act as major catalysts in the growth of this segment. MTNL and BSNL (together they account for 82% of the total fixed line connections) is likely to get reduced further as the penetration by private players spreads. It is being estimated that during the tenth five-year plan. Although increased competition will result in depressed revenues in the near term. apart from increasing competition in this space. The huge market share of public sector behemoths. around 31. • Increasing choice and one of the lowest tariffs in the world have made the cellular services an attractive proposition for the average consumer. This move is also believed to be a step forward in opening up the ILD sector [37] . low tariffs would ultimately result in increased volumes and higher usage. In spite of this the PSUs will continue to retain their dominant position this is on account of high capital investments required in setting up a nation wide network. it is expected that the bandwidth prices will come down by a further 20-25%. The segment has grown at over 73% YoY in FY06. Policy measures like lowering of taxes on the cellular industry and benefits of enhanced FDI limits shall further the prospects of the cellular industry. As a result. Reliance and Data Access have started providing ILD services and this has pulled the tariffs significantly down. TRAI has written to the Ministry of Telecommunication and Information Technology to permit resale of IPLC. the private sector players will have to rely on key business centers and pockets of high urbanization for their growth.

two companies were chosen from the whole telecom sector. Hutchison Essar Idea Cellular MTNL Reliance Communication Spice Telecommunication Tata Teleservices VSNL Time (2 months duration) being a major constraint. Some of the major players in Telecom sector are as follows: • • • • • • • • • • Bharti Airtel BPL Mobile Comm. Such companies have been chosen which showed consistent performance in the past and were also fundamentally sound. Escorts telecomm. three companies were chosen from a group of players in the telecom sector.SELECTION OF THE COMPANY After understanding the dynamics of the telecom sector and the various issues revolving around it. Companies chosen for further analysis are: Bharti Airtel VSNL [38] .

Bharti Airtel has bagged the 'Best Emerging Market Carrier' award at the Telecom Asia Awards 2007. Vodafone acquired 10% economic interest in the company by way of subscription of convertible debentures in Bharti Enterprises Ltd. Earlier. representing an indirect economic interest in Bharti Airtel Ltd and acquisition of direct interest in the company from Warburg Pincus LLC. Airtel Live and the company was the first wireless services operator to introduce Ring back tones(Hello Tunes). for promoting investments in diversified telecom service projects. 1995. a company promoted by Telecom Italia. Mobile Services which offers GSM [39] . supply & management and for its IT requirements respectively. BUSINESS OVERVIEW: Bharti is one of India's leading private sector service-provider of telecom services with more than 20 million customers in India and is the first to have an all India presence. The company is structured into three main units. During 2005-2006. Siemens. Ericsson and IBM for its network planning. in 2005 and 2006. The GSM service provider was adjudged best from among a list of 30 telecom companies in the Asia Pacific region. Bharti Airtel had won the 'Best Indian Carrier' award for two consecutive years. The company introduced new products like BlackBerry wireless solution. Also the company entered into the partnerships with the leading companies like Nokia. The company also signed a managed capacity expansion contract with Ericsson to provide managed services and expand its GSM/GPRS network into rural India in 15 circles. The company was formed as a 80:20 joint venture between the Bharti Group through its subsidiary Bharti Telecom and STET International Netherlands NV. Italy.CHAPTER VI DATA ANALYSIS AND INTERPRETATION BHARTI AIRTEL LIMITED Bharti Airtel Ltd (Formerly known as Tele-Ventures (BTVL)) was incorporated on 7th July.

There have been substitutes for telecom services like the Postman. All the services of company is been provided under brand name AIRTEL. With this coverage facility the company became the first operator to have an All-India footprint. VOLUME BASED BUSINESS: The profits of the company are totally based on the volume of their business. their turnover will increase accordingly and thereby adding additional profits to the company’s account. Technical failures and natural disasters could damage the telecommunication networks. and it does not face any serious market risk. The company was first GSM Operator to have more than ten million customers and also the first telecom company to cover all the 23 telecom circles of India. which has been available for years but the demand for it is getting decreased whereas the demand for telecom services has never been affected due to that. The more efficiently they provide the service. covering an addressable population of 59% of the total population. Changes in available technology could increase competition and the capital costs. [40] . BUSINESS RISK: The business is subject to extensive regulation by the Government. long distance and enterprise services which offers carriers and corporates.327 non-census towns and villages. The Company has a presence in 4.676 census towns and in 207. which could have an adverse effect on the business. it is slated to make the most of this situation. There is a permanent market for the product. With the expansion undertaken by the company in recent times.Mobiles Servies and Infotel Services which provides broadband & Telephone. considering the ever increasing demand of the telecom services. MARKET RISK: There is very little market risk in this segment.

focus on rural areas. Telephony penetration in urban areas is quite high as compared to rural penetration and as of now this is been taken into consideration by various players. MANAGEMENT OVERVIEW: It is evident that the management of the company is very experienced and the company looks to be in safe and able hands. ever increasing population. The management structure of Bharti Airtel is as follows: [41] . which would help not only in cost reduction but also in providing services efficiently. The reasons being the low tariffs. technology. Technology is also expected to improve a lot in the years to come. etc.FUTURE FORECAST: In long term the demand for telecom services is expected to rise further.

5 21. x Rs. Price BSE_SENSEX 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 Sensex [42] . 880.27 166930. Rs. Rs. Rs.75 881. 52W High at BSE 52W Low at BSE Rs. In Cr Rs.2 960 410 COMPARATIVE CHART OF BHARTI AIRTEL WITH SENSEX: Comparative Chart of Bharti Airtel with SENSEX 900 800 Market price of Bharti 700 600 500 400 300 200 100 0 2003 2004 2005 year 2006 2007 Avg.PRICE INFORMATION: Price Information BSE(13-07-07) NSE(13-07-07) P/E EPS Market Cap.9 37.

From the chart given above. ONE YEAR PRICE MOVEMENT OF BHARTI AIRTEL: One year Price movement of Bharti Airtel 1000 900 800 700 price (Rs. Some minor fluctuations were observed during the year but it did not affect the price movement to a remarkable extent.) 600 500 400 300 200 100 0 7-Jul 7-Feb 7-Jun 7-Jan 7-Oct 7-May 7-Mar 7-May 7-Nov 7-Aug 7-Dec 7-Sep 7-Jun 7-Jul 7-Aug 7-Apr 7-Apr The Chart given above shows a consistent rise in the price of Bharti Airtel in the previous one year. But the rise in the value of Bharti Airtel is more than that of SENSEX. [43] . The stock observed an uptrend during the year and is expected to rise further. it is observed that there has been an upside trend in the SENSEX as well as the Share price of Bharti Airtel.

231.936 2.93 17.365 5461.81 1.908 1205.07 7.) Mar 08(12)e [44] .330.99 4.547.404.8 10.725 1897148464 28.468.21059 59.84 2.05 6231.47 178.98 754.14 4.62 236.16 26871.89 2970.71 2.242.92 0.64 801.894.58 10763.79 273.851.9 11066.678.069.09 769.709529 16073.62 430.03 6. of Shares Earnings Per Share Market price of share P/E Ratio 54.47 4.936 10.57 37.58 1.62 Mar 06(12) Mar 07(12) (Rs.25 40.5 11.351.832.78 1.85 7.72 27140.63 37.311.102.95 39.23 1897148464 21.613.973.46 18.42 26.37 568.79 1079.72 303.07 671.030.14 4532.033.13 1.069.879 10099.91 282.709.08 1.02 2.81 3.012.27 798.5 53.285. In Crs.25 7.56 11.PROJECTED PROFIT AND LOSS ACCOUNT Projected Operating Income Statement Year INCOME : Net Sales Other Income Total Income EXPENDITURE : Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Administration Expenses Miscellaneous Expenses Less: Pre-operative Expenses Capitalised Total Expenditure Operating Profit Interest Gross Profit Depreciation Profit Before Tax Tax Reported Net Profit No.60 80.31 4.79026 1658.9 268.5 81.72 1.601.

As the industry is under the growth stage. which indicates that even though the company is operating on a larger scale the operations of the company are being carried out with utmost efficiency.47 10000 5000 0 2004-05 2005-06 Year 2006-07 7903. Turnover Chart 30000 25000 Turnover (Rs.6 26871. increasing rural penetration.9 T urnover 2007-08 Expenses: The expenses of the company are growing but the company is able to keep them within permissible limits. technology. [45] . In Crs. etc.Net Revenues: The net revenues of the company are growing at an average rate of 50. Operating Profit: The operating profit of the company as a percentage of net revenues is constantly above 30%.) 20000 15000 11231. Some of the reasons behind this are declining prices due to competition.52% per year. which would enable the company to earn higher operating profit. The profitability of the company has not taken a beating and real income of the company continues to look good.03 17851. this may help in boosting the revenues further.

PAT (Rs. PAT Growth 6000 5000 4000 3000 PAT 2000 1000 0 2004-05 2005-06 Year 2006-07 2007-08 Operating profit before tax: The operating profit before tax of the company is increasing consistently every year. It shows that the performance of the company in terms of their operations is good. Inspite of this.Profit after Tax: The company is being able to manage its financing very well and on that account has managed to retain more interest of its shareholders. This is a very good sign for the company that the operating profit of the company is ever increasing. The company is not only increasing its business in terms of volume but it is also realizing more profits or in other words its margins have not dropped. the PAT shows a consistent growth in the future years. An increase in the interest payments by the company is reflected in the profit after tax of the company.) [46] . In Crs.

562.470.93 9.97 -5.430.232.350.11 8.895. In Crs.45 11.44 22.25 16.47 97.939.26 1. Also. Loans & Advances Total Current Liabilities Net Current Assets Total Assets 13.232.458. As the current liabilities in the form of creditors are more.38 0 2.100. it signifies the creditworthiness of the company.083.09 29.825.38 7.949. [47] .947.100.72 11.20 16.88 5.845.255.515.23 Total Debt 4. there is a consistent increase in the fixed assets of the company.310.84 APPLICATION OF FUNDS : Net Block Lease Adjustment Capital Work in Progress Investments Current Assets.00 17.70 0 2.30 14. there is proportionate rise in the shareholders’ funds and the debts of the company.38 Mar 06 Mar 07 (Rs.772.380.61 Total Liabilities 12.939.35 7.28 -4.84 5.436.456.20 20.95 3.44 -9.285.84 The capital structure of the firm is stable i.48 247.09 22.818.14 5.89 7.93 12.433.88 147.PROJECETED BALANCE SHEET Projected Balance Sheet Year SOURCES OF FUNDS : Share Capital Reserves Total Shareholders Funds 1.) Mar 08e 1.013.504.893.505.93 12.346.e.895.60 0 2.

03 780. In. The rise in cash flow from operations increases considerably in the years 2007 and 2008. On looking at the operating profit before tax and the total cash flow from operations it is clear that the cash position of the company is secure.71 307.39 376.33 -5084.14 4631. This is a good sign for the company. The company looks to be in a cash rich position. [48] .95 -7975.43 Mar-06 (Rs.61 13343. The rise in the cash flow from the operations signifies that the company is able to extract maximum value from its available resources.46 571.PROJECTED CASH FLOW SUMMARY Projected Cash Flow Summary Year Cash and Cash Equivalents at Beginning of the year Net Cash from Operating Activities Net Cash Used in Investing Activities Net Cash Used in Financing Activities Net Inc/(Dec) in Cash and Cash Equivalent Cash and Cash Equivalents at End of the year 384.05 340. The cash flow statement of the company indicates that the company is managing its cash position very well and the inflows of cash are very well managed by the company and it is also evident that the company is allocating adequate cash to increase their fixed assets.34 -14954.8 2420492 -1530.97 Total cash from operations: The total cash flow from operations for the company is also increasing.31 1302.43 8107.35 -76. Crs) Mar-07 Mar-08 307. The company has managed to maintain its margins and thus not allowed its operating profit to dip.13 473.

and tax management.31 35. This means that even though the company is undertaking huge expansions it has maintained its operating profit margin.47 17.53 36.Key Financial Ratios: Key Ratios EBITDA Ratio Net Profit Ratio Debt-Equity Ratio Formulae EBITDA / Income PAT/ Income Debt / Equity Current Assets / Mar-06 0. which is considered to be favorable.2 0. In this case the company’s operating profit margin is consistently over 30%. The company has increased its sales considerably but if there is no rise in the operating profit margin then there is a lack of efficiency on the part of the company.41 0. Net Profit Margin Ratio: The net profit margin ratio measures the overall efficiency of production.83 29. selling. pricing. financing.46 10.83 Mar-07 0.18 0.41 0. administration.8 20. one can say that it is consistent.49 Current Ratio Interest Cover Return on Equity (%) Return on Capital Employed (%) Current Liabilities EBIT / Interest PAT / Equity EBIT / Capital Employed 0.54 Mar-08e 0.57 EBITDA or Operating Profit Margin: The operating profit margin in true sense is the indicator of the company’s actual operating efficiency.26 28.2 0.47 21.23 0.36 0. After looking at the company’s net profit margin.7 27.37 0. [49] .

Debt-Equity Ratio: The debt-equity ratio shows the relative contributions of creditors and owners.33 in India. Current Ratio: The current ratio measures the ability of the firm to meet its current liabilitiescurrent assets get converted into cash during the operating cycle of the firm. a major determinant of bond rating is widely used by lenders to assess a firm’s debt capacity. The debt-equity ratio of the company is declining. Return on Capital Employed: The ROCE measures the profitability of the capital employed i. Bharti Airtel has a favourable Return on Equity as it is increasing every year i. and is expected to still lower down.e. This ratio is of great interest to the equity shareholders. [50] .8 in 2years duration. from 27.e. Interest Coverage ratio in case of Bharti Airtel is quite favorable as it is increasing consistently. Even though the current ratio of the firm is consistent but it is much lower than the general norm i.e. and provide the funds needed to pay current liabilities. Bharti Airtel has attained a sharp rise in ROCE in 2007 but is expected to give comparatively low returns in 2008 due to comparatively low PBIT and increasing interest. The lower the debt-equity ratio. Return on Equity: This ratio measures the profitability of equity funds invested in the firm. 1. Interest Coverage Ratio: Interest Coverage Ratio. High interest coverage ratio signifies the ability of the firm to meet its interest burden even if the PBIT suffer a considerable decline. shareholder’s funds plus the total debt (both short term as well as long term). the higher the degree of protection enjoyed by the creditors.37 it has reached 36.

155.00 24.00 1. P/E Ratio: It is the parameter to judge the proper valuation of the company in the market. Higher P/E shows that the market is valuing the company at a higher multiple.5 to 37. A lower P/E is considered one of the most important criteria for the selection of the company by the investors. A growing EPS shows that the company is contributing to the shareholders value.Earnings per share: This ratio indicates the actual profit left for the owners of the company i.742.06 60.645.e.714.00 78.374.464. Hold. SHAREHOLDING PATTERN: (AS ON Jun 2007) Foreign Institutions Govt Holding Non Promoter Corp. of Shares 598.31 100 [51] . it can be said that Bharti is contributing consistently to the shareholders value.00 [%] 31.56 4. The P/E ratio of Bharti is decreasing from 40.00 0 39. A growing EPS leads to increase in the value (price) of the company in the market. This is the widely used parameter by the market for judging the over or under valuation of the company for investment purpose.897.148. Promoters Public & Others Totals No.15 0 2.5.397.678. which is a good sign from the point of view of the shareholders.301.799.00 1. Thus.797.92 1. shareholders.163.

Bharti Infratel would be the biggest tower company in the world. • Bharti Airtel signed a memorandum of Understanding with Nokia Siemens Networks for USD 900 Million in July 2007. Nokia Siemens Networks will expand Airtel’s GSM network in eight circles. approximately 125 million subscriber base.e.8 million Next Generation Network (NGN) ports and its International Calling Card prepaid service capacity by 4. • Currently the company has 40000 telecom towers and expected to reach about 65000 towers by March 2008. its wholly owned subsidiary. • The company plans a $8bn spread by 2010 and 25% of the market share i. [52] . fixed Network platforms. This is an expansion contract across Airtel’s mobile. • The company is making major investments in international infrastructure and going to buy full ownership of the i2i cable.FUTURE PROSPECTS: • The company has already completed the testing of IPTV in NCR region and will launch in select part in NCR region in November-December this year and in the next calendar year in other parts of the country. The company expects the demerger to take place in October 2007. • The company has filed the scheme of de-merger for approval of the Honourable High Court of New Delhi of its passive telecom (mobile) infrastructure to Bharti Infratel. After demerger with 65000 towers. its NLD and ILD network with 1.5 million new users. • Company expects to achieve 72-74% population coverage till March 2008 from current level of 62%.

frame relay and Internet Services. to take over the activities of the erstwhile Overseas Communication Services (OCS) and with a view to provide International Telecommunication Services to and from India. the tata group has become the biggest shareholder with a holding of over 45%. Enterprise and Carrier Data and other services. transponder leasing services etc. New-Delhi. Videsh Sanchar Nigam Ltd (VSNL) was incorporated in 1st April 1986 as a GOI company.g.VIDESH NIGAM SANCHAR LIMITED. enterprise data. The company provides value added telecommunication services such as international telephony. GOI divested 25% stake to the Tata Group as a strategic partner along with the right to manage the company. VSNL's main gateway centres are located at Mumbai. Kolkata and Chennai. dial-up internet. The international telecommunication circuits are derived via Intelsat and Inmarsat satellites and wide band submarine cable systems e. BUSINESS OVERVIEW: The company operates under three business segments in India. leased channels. In February 2002. VSNL is the first company to introduce retail internet services in India in 1995. broadband.Wholesale Voice. VSNL is the leading Indian provider of International Long-distance (ILD) and Internet related services. The company offers its products and services under the brand name Tata Indicom in India. M/s. a Department of the Ministry of Communications. Initially.202 per share. FLAG. which is Singapore's second [53] .Panatone Finvest Limited.12%. Apart from these services the company is also providing TV uplinking services. SEA-ME-WE-2 and SEA-ME-WE-3. a company which is owned by various Tata Group companies picked the stake at a price of Rs. The company took control and management of all international telecommunication services from OCS. net telephony.97% stake in VSNL. VSNL is the first Indian service provider to enter in to a Wireless Broadband roaming alliance with an international operator Star Hub. national long distance. GOI was holding 52. while the GOI stake in VSNL came down to 26. Following GOI's subsequent open offer of further 20% equity of VSNL's.

focus on rural areas. Telephony penetration in urban areas is quite high as compared to rural penetration and as of now this is been taken into consideration by various players. Technology is also expected to improve a lot in the years to come. VOLUME BASED BUSINESS: The profits of the company are totally based on the volume of their business. The reasons being the low tariffs. There have been substitutes for telecom services like the Postman. MARKET RISK: There is very little market risk in this segment. considering the ever increasing demand of the telecom services. their turnover will increase accordingly and thereby adding additional profits to the company’s account. it is slated to make the most of this situation. Technical failures and natural disasters could damage the telecommunication networks.largest info-communication company. which could have an adverse effect on the business. With the expansion undertaken by the company in recent times. The more efficiently they provide the service. and it does not face any serious market risk. FUTURE FORECAST: In long term the demand for telecom services is expected to rise further. Changes in available technology could increase competition and the capital costs. [54] . ever increasing population. etc. There is a permanent market for the product. which has been available for years but the demand for it is getting decreased whereas the demand for telecom services has never been affected due to that. BUSINESS RISK: The business is subject to extensive regulation by the Government. technology. The company one of the leading player in the growth of Wi-Fi hotspot industry in India has the largest public hotspot network in india with over 250 hotspots. which would help not only in cost reduction but also in providing services efficiently.

Rs. In Cr Rs.68 11448. x Rs.) 300 250 200 150 100 50 0 2003 2004 2005 Year 2006 2007 Avg. 52W High at BSE 52W Low at BSE Rs. Price BSE_SENSEX 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 [55] . Rs.96 15.PRICE INFORMATION: Price Information BSE (27-07-07) NSE (27-07-07) P/E EPS Market Cap. Rs.45 515 342 COMPARATIVE CHART OF VSNL WITH SENSEX: Comparative chart of VSNL with SENSEX 500 450 400 350 Price (Rs. 451.9 27.85 450.

From the chart given above.) 400 300 200 100 0 7-Aug 7-May 7-Nov 7-May 7-Aug 7-Apr 7-Apr 7-Jul 7-Sep 7-Feb 7-Dec 7-Mar 7-Jun 7-Oct 7-Jun 7-Jan 7-Jul closing price The chart given above shows some fluctuations which can prove unfavourable from investorss’ piont of views. But the rise in the value of VSNL is more than that of SENSEX. it is observed that there has been an upside trend in the SENSEX as well as the Share price of VSNL. One Year Price movement of VSNL: One Year Price movement of VSNL 600 500 Price (Rs. There is not much movement in the stock price and even if its there keeps on fluctuating. Also. it can be said that the stock volumes traded on the exchange is quite less. [56] .

91 25.92 1203.36 2473.38 686.95 253.95 245.83 212.80 1.041.96 391.56 490.59 434.103.71 500.05 254.75 4.66 288.18 479.) Mar 08(12) [57] .29 221.26 2.21 260.14 1.56 285000000 15.3 0 43.96 0 36.68 438.99 Mar 06(12) Mar 07(12) (Rs.54 194.3 132.99 2.92 207. In Crs.046.63 244.978.38 761.047.4 234.PROJECTED PROFIT AND LOSS ACCOUNT Projected Profit & Loss A/C Year INCOME : Net Sales Other Income Total Income EXPENDITURE : Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Administration Expenses Miscellaneous Expenses Less: Pre-operative Expenses Capitalised Total Expenditure Operating Profit Interest Gross Profit Depreciation Profit Before Tax Tax Reported Net Profit No.026.33 712.110.19 405.42 244.1 0 46.07 468.69 4509.48 1195.07 7.285.45 27.07 0 3.91 1.780.5 285000000 17.09 266.18 4.90 1.54 296195182 16.96 0 3306.72 207.87 6.01 4377.10 359.70 4.53 3.143. of Shares Earnings Per Share Market price of share P/E Ratio 0 2.254.378.98 27.8 1.

04 Sales 4041. except the selling expenses which are expected to increase comparatively more due to need arisen for more marketing.3 3780. Some of the reasons behind this are declining prices due to competition. But after that the company is trying to regain its earlier position by growing at a medium pace but with consistency.83 Turnover 2003-04 2004-05 2005-06 Year 2006-07 2007-08 Expenses: The expenses of the company are growing but the company is able to keep them within permissible limits. As the industry is under the growth stage. etc.Net Revenues: The net revenues of the company are growing at an average rate of 8. Ultimately. The revenues of the company underwent a sudden fall in 2004 due to the entry of various new players in the industry. technology.95 3164.5% per year. this would enable the company to earn not only higher profit but also increase the subscriber base. this may help in boosting the revenues further. [58] . increasing rural penetration.2 3303. Turnover Growth 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 4377.

) 600 500 400 300 200 100 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Year PAT Operating profit before tax: The operating profit before tax of the company is increasing consistently every year. it is quite fluctuating as is observed over a period of time. Profit after Tax: The growth in PAT is not consistent. This is a positive sign for the company that the operating profit of the company is ever increasing though at a low pace as compared to the other players in the industry.Operating Profit: The operating profit of the company as a percentage of net revenues is constantly above 20%. Also the amount of interest is much more high as compared to the interest that was paid some few years back. PAT Growth 800 700 PAT (Rs. which indicates that even though the company is operating on a larger scale the operations of the company are being carried out with utmost efficiency. Crs. It shows that the performance of the company in terms of their operations is satisfactory. [59] .

The Company is continuously making investments but there is no remarkable increase in the profits made by the company. Loans & Advances Total Current Liabilities Net Current Assets Total Assets 3.804.64 7.61 197.557.673.81 6.334.42 Mar06(12) Mar07(12) (Rs.17 0 340.50 6.04 221.PROJECTED BALANCE SHEET Projected Balance Sheet Year SOURCES OF FUNDS : Share Capital Reserves Total Total Shareholders Funds Secured Loans Unsecured Loans Total Debt Total Liabilities 285 5.80 578.61 6.832.42 3.411.359. In Crs.44 2.58 2.034.334.) Mar08(12) 285 6.519. the reason being rising current liabilities and simultaneously reducing current assets.55 0 147.34 2.159.6 6.17 6.26 3.008.67 6. The Capital Work in Progress is increasing continuously over a period of time.11 3.54 APPLICATION OF FUNDS : Net Block Lease Adjustment Capital Work in Progress Investments Current Assets.25 98. [60] .856.48 291. Also.54 The increase in debts of the company is more as compared to the equity.04 7.13 460.269.17 0 98.51 2.67 0 221.074.25 6.316.81 2.12 1.154.499.557.977.73 1.61 1.061.13 0 507.501.50 0 197. the net current assets held by the company are reducing every year.776.11 285 6.159.

[61] . The company has managed to maintain its margins and thus not allowed its operating profit to dip.02 -491. In Crs.11 160. The cash flow statement of the company indicates that the company is managing its cash position very well and the inflows of cash are very well managed by the company and it is also evident that the company is allocating adequate cash to increase their fixed assets.79 -141.PROJECTED CASH FLOW SUMMARY Projected Cash Flow Summary Year Cash Flow Summary Cash and Cash Equivalents at Beginning of the year Net Cash from Operating Activities Net Cash Used in Investing Activities Net Cash Used in Financing Activities Net Inc/(Dec) in Cash and Cash Equivalent Cash and Cash Equivalents at End of the year (Rs.04 268. On looking at the operating profit before tax and the total cash flow from operations it is clear that the cash position of the company is secure.13 -647.53 559.98 889.75 -136. The rise in the cash flow from the operations signifies that the company is able to extract maximum value from its available resources. The rise in cash flow from operations increases considerably in the years 2007 and 2008.) Mar-07 Mar-08 244. This is a good sign for the company.83 -52.28 -23.74 Total cash from operations: The total cash flow from operations for the company is also increasing.49 103.

77 7.29 EBITDA or Operating Profit Margin: The operating profit margin in true sense is the indicator of the company’s actual operating efficiency.9 1..27 0.13 7.13 0. Net Profit Margin Ratio: The net profit margin ratio measures the overall efficiency of production.32 382. As the company is undertaking huge expansions it has maintained its operating profit margin but it is low as compared to the other players in the industry.31 11. Debt-Equity Ratio: The debt-equity ratio shows the relative contributions of creditors and owners. The company has increased its sales but still there is no rise in the operating profit margin. and is expected to stay constant. pricing. financing.01 Mar-07 0.28 0.37 1. administration.36 11. the higher the degree of protection enjoyed by [62] .25 104. This signifies lack of efficiency on the part of the company even if the company’s operating profit margin is consistently over 20%. one can say that it is declining over a period of years.15 102.Key Ratios EBITDA Ratio Net Profit Ratio Debt-Equity Ratio Formulae EBITDA / Income PAT / Income Debt / Equity Current Assets / Mar-06 0.51 7. which is considered to be unfavorable.27 0.12 0.02 Mar-08 0.35 11. After looking at the company’s net profit margin. and tax management.11 0. The debt-equity ratio of the company is increasing since 2007. The lower the debt-equity ratio.02 Current Ratio Interest Cover Return on Equity (%) Return on Capital Employed (%) Current Liabilities EBIT / Interest PAT / Equity EBIT / Capital Employed 1. selling.

35 in 2years duration. shareholders. Also it is been observed that there was a sudden fall in the interest coverage ratio in FY07. from 7. VSNL has got an unfavourable Return on Equity as it is decreasing every year i. This ratio being of great interest to the equity shareholders. Interest Coverage Ratio: High interest coverage ratio signifies the ability of the firm to meet its interest burden even if the PBIT suffer a considerable decline. Interest Coverage ratio in case of VSNL is quite unfavorable as it is decreasing.e. Current Ratio: The current ratio measures the ability of the firm to meet its current liabilitiescurrent assets get converted into cash during the operating cycle of the firm. But in this case the debt-equity ratio is increasing that means the degree of protection enjoyed by the creditors is comparatively low. Earnings per share: This ratio indicates the actual profit left for the owners of the company i. they may loose interest in the company due to declining RoE. A growing EPS shows that the company is contributing to the shareholders [63] . 1.33 in India. Return on Equity: This ratio measures the profitability of equity funds invested in the firm.the creditors. The current ratio of the firm is declining every year and also it is lower than the general norm i.e.9 it has reached 7. and provide the funds needed to pay current liabilities. VSNL has attained a continuous decline in ROCE in previous two years and is expected to give comparatively low returns in 2008 due to comparatively low PBIT and increasing interest.e. Return on Capital Employed: The ROCE measures the profitability of the capital employed i.e. shareholder’s funds plus the total debt (both short term as well as long term).

076.24 2.538.000. The P/E ratio of VSNL is increasing from 25.586.value.00 217.00 6.852. In case of VSNL.1 12.00 [%] 8. Higher P/E shows that the market is valuing the company at a higher multiple. • The Company has drawn major plans to enable international roaming for business travellers by leveraging the alliance.00 0 1. Hold. Promoters Public & Others Totals Shares 23.54 76.000.96. which is not a good sign from the point of view of the shareholders. SHAREHOLDING PATTERN: (AS ON Jun 2007) Foreign Institutions Govt Holding Non Promoter Corp.202. P/E Ratio: It is the parameter to judge the proper valuation of the company in the market. there is no consistency in EPS. the EPS is expected to increase in FY08 but as observed in the earlier years.07 to 27.476.00 36.284. [64] .272.074.bringing the internet much more close to the large Indian travelling and on the move population.28 100 FUTURE PROSPECTS: • The company has drawn up major plans this year to further enhance the footprint to over 1000 hotspots .86 0 0.638.00 285. A lower P/E is considered one of the most important criteria for the selection of the company by the investors. This is the widely used parameter by the market for judging the over or under valuation of the company for investment purpose.

59 times (on the basis EPS of FY 2008e i. 28.79).27) and at 30. Bharti Airtel is in the process of preparing a detailed business plan for rolling out GSM operations in Sri Lanka within the next financial year.CHAPTER VII FINDINGS BHARTI AIRTEL LTD Investment rationale: At CMP 880.75 (as on 13 June 2007) the share price trades at 41. 21. Technologies like Triple Play. New technologies and paradigms: The trend towards adoption of Next Generation Networks (NGN) is global and the discussions in India are still at a preliminary stage. Strong strategic partnerships: Singtel continues to be an investor and a strategic alliance partner and the company expects to leverage the strengths and experience of Singtel in years to come [65] . I predict that the share prices would rise from 880.e.75 to 1079. Global foray: Sri Lanka is the first international operation of Bharti Airtel and is in line with the Company's plan to expand its telecom operations internationally in select markets.63 in a span of 8 months to 10 months. data and video on demand and IPTV.e. provide the company with a unique opportunity. wherein a single cable can deliver voice.4 times (on the basis EPS of FY2007 i.

85 (as on 27 June. An important concern for the Company in its voice business continues to be the lack of direct access to end customers.e. is expected to shrink the Company's addressable market and hence affect this business adversely. The implementation of the CAC regime has not fallen in place so far.68) and at 111 times (on the basis EPS of FY 2008e i. 2007) the share price trades at 28. The growth in broadband subscribers has been slower than that in mobile subscribers.VIDESH SANCHAR NIGAM LIMITED Investment Rationale: At CMP 451. The predominant reasons are the limited access to last mile networks that limits the ability to serve retail customers and the inability to demonstrate an adequate value proposition except to enterprises and a small group of individuals. some of who were VSNL's customers earlier.56).e15. The delay in implementation of the CAC regime is a cause of concern for VSNL. The increased competition in India with the DoT issuing ILD licences to new players.82 (on the basis EPS of FY 2007e i. 17. [66] . due to technical and other reasons.

I recommend Anand Rathi Securities Ltd.CHAPTER VIII RECOMMENDATIONS On completion of the company analysis. and all its clientele to Buy/Hold the company’s shares and derive maximum value from it. The company has made huge investments in domestic market as well as in international markets but still there is no significant rise in the profits made by the company and also the P/E ratio is rising. I feel that Bharti Airtel is fundamentally a very strong company and has a tremendous growth potential. I recommend to Sell the shares of VSNL as the rise in price is expected to be quite low [67] . According to me. the fundamentals of VSNL are weak.

CHAPTER IX LIMITATIONS While conducting the research I was unable to collect data from primary source which I feel would have had a bearing on the outcome of the research. In an environment characterized by discontinuities. [68] . over-valuations from unjustified optimism and misplaced enthusiasm for unreasonable lengths of time. The market behavior if irrational may give rise to – under-valuations for extended periods. the past record proves to be a poor guide to future performance. more so when the economic and business environment is buffeted by frequent winds of change. Through interviews with the concerned authorities I could have got first hand information about the company and this could have certainly given me a broader perspective on the company’s future plans. The slow correction of under or over valuation poses a threat to the analysis. Future changes are largely unpredictable.

Interest and tax rate are taken as per the current rates. By keeping the OPM % constant we can arrive at the operating profit for next year.CHAPTER X ASSUMPTIONS To arrive at a target price of the socks mentioned above. Profit earning ratio is assumed to be constant. As EPS is calculated from estimated profits. following assumptions were made: 1. 5. 3. The Operating Profit Margin is assumed to be constant. 4. depreciation is assumed to be constant. due lack of availability of facts about assets. Depreciation rate is assumed to be constant. target price is calculated by keeping P/E constant [69] . That helped to arrive at more accurate figures. method of calculating depreciation. 2. to arrive at operating profit figure. The estimated growth in sales is calculated by taking Compound Annual Growth Rate for last five years.

• Bharti Airtel. one of the major payers in the telecom service provider industry has attained a significant market share in the country with its widespread network. a company striving to make its presence felt in domestic as well as international market is lagging behind in the race against the new players. the enhanced capability of the Company to deliver services on a global basis is attracting new customers and opening up new markets. Also. there is significant growth in the existing customers' businesses globally. The reason behind this is the inability of the company to operate efficiently due to the large number of its subsidiaries. huge subscriber base and quality service. increasing non voice revenues and lowering fixed cost per unit. • There are two key drivers for the growth in this business.CONCLUSION • Strong growth in subscriber base. is spreading its wings to international markets. the Indian telecom service sector is set to report buoyant growth in revenues and profitability in the short to medium term. • VSNL. because of which there is no direct access to its end customers [70] . Second. the company to make its presence felt all across the globe. First.

nseindia.google. o Security Analysis and Portfolio Management – Punithavathy Pandian [71] .in BOOKS: o Investment Analysis and Portfolio Management.gov.BIBLIOGRAPHY WEBSITES: o www.com o www.com o www.capitalline.trai.bseindia.rathi.com o www.com o www.Prasanna Chandra.com o www.

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