FUNDAMENTAL ANLYSIS

GROUP MEMBERS
USHAR PARAB T PRITAM SHINDE T RUCHIRA GAWADE. T CHETANA MASURKAR. T UDITA BHOSALE. T CHIRAG VAGHELA. M - 4054 M - 4159 M - 4010 M - 4124 M- 4106 M - 4042

NAME

: TUSHAR PARAB

ROLL NO : M- 4054. TOPIC : INTRODUCTION OF FUNDAMENTAL ANLYSIS.

WHY INVEST IN SHARES?

Shares price can fluctuate.

They have a ability to generate good returns.

There are 2 types of returns: 1) annual income 2) long term capital growth

Investor may buy the shares for the purpose of income.

WHAT SO GOOD & BAD ABOUT SHARE?

GOOD
Shares are easy to understand. Shares can provide the better returns in the long term. You can diversify your investment. Shares are the long term investment. Shares are liquid.

BAD Shares can decrease value.

FUNDAMENTAL ANALYSIS
To determine a securitys value

Fundamental analysis serves the answer questions:

 Is the company revenue growing?  Is it actually making a profit?  is it in a position strong enough to outrun its competitors in the future?  is it able to repay its debt?  is management trying to cook the book?

FUNDAMENTAL ANALYSIS

QUANTITATIVE ANALYSIS

QUALITATIVE ANALYSIS

INTRINSIC VALUE
Price on the stock market does not fully reflect a stock s real value

Why would you be doing price analysis if the stock market were always correct?

CRITICISM OF FUNDAMENTAL ANALYSIS

The biggest criticisms of fundamental analysis come primarily from two groups: proponents of technical analysis and believers of the efficient market hypothesis .

NAME

: PRITAM SHINDE

ROLL NO : M- 4159 TOPIC : ECONOMIC ANALYSIS

ECONOMIC ANALYSIS
Determination of the distribution of scarce resources Provides insight into how markets operate Used by Governments

ECONOMIC ANALYSIS
Achieving a Specific Objective Takes into account the opportunity costs of resources employed Stock Market does not operate in vacuum

ECONOMIC INDICATOR
Statistic about the Economy Allows analysis of Economic Performance Relationships to the Economy

RELATIONSHIPS TO THE ECONOMY

Procyclic Countercyclic Acyclic

TIMING CHANGES OF THE INDICATORS

Leading Lagged Coincident

INDICATOR Gross National Product General employment position Domestic savings rate Interest rates Tax rates Foreign exchange position Balance of trade Balance of Payments Inflation Agricultural production Industrial Production Freight movement of railways

FAVOURABLE IMPACT High growth rate Full or almost full employment High Low Low High Positive Positive Low High High High

UNFAVOURABLE IMPACT Slow growth rate Underemployment and Unemployment Low High High Low Negative Negative High Low Low Low

NAME

: RUCHIRA GAWADE.

ROLL NO : M- 4010. TOPIC : INDUSTRY ANALYSIS.

LIFE CYCLE OF AN INDUSTRY

Declining stage Pioneering stage

Stagnation stage

Expansion stage

CHARACTERISTICS
1 2 3 4

Past sale and earning performance. Labor conditions within the industry. Attitude of government towards the industry. Stock prices of firms in the industry relative to their earnings.

Entry of new compet itors

The bargaining power of the suppliers

The rivalry among the existing competitors.

The bargaining power of the buyers

The threat of substit utes

NAME

: CHETNA MASURKAR

ROLL NO : M- 4124 TOPIC : COMPANY ANALYSIS

COMPANY ANALYSIS
(NON-FINANCIAL)

 At the final stage of fundamental analysis, the investor analyses the company. It is imperative that one should look at the politico-economic analysis and the industry analysis before a company is analyzed because a companys performance is the reflection of the economy, political situation, and the business

NON FINANCIAL ANALYSIS OF COMPANY

ASPECT
History, Promoters & Management

REVIEW QUESTION
How old is the company? Who are the promoters? Is it family managed or professionally managed? What is the public image and reputation of the company, its products? Does the company use relevant technology? Is there any foreign collaboration? What are the production trends? What is raw material position? What is the companys product range? Marketing network? Brand image? Cost of sales promotion and distribution? What are the CSR activity?

Technology, facilities & Production Product range, Marketing, Selling & Distribution Industrial relations, Productivity personnel

SWOT ANALYSIS

SWOT ANALYSIS (SAIL)

BCG MATRIX

T CASH FLOWS: The business with low growth rate and high generation of cash and profits. Cash cows provide financial base foe the company.

T DOGS: If the business growth rate is low and the company relative market share is also low, attempts to increase market share would demand prohibitive investments.

T QUESTION MARK: Like Dogs, Question marks are businesses with low market share but the businesses have a high growth rate. Because of their high growth, the cash requirement is high, but due to their low market share, the cash generated is also low. T STARS: Businesses which have high growth rate and high market share, are called stars.

NAME

: UDITA BHOSALE

ROLL NO : M- 4106 TOPIC : ANALYSIS OF FINANCIAL STATEMENTS

ANALYSIS OF FINANCIAL STATEMENTS

Published financial statements are the only source of information about the activities and affairs of a entity available. This enables a forecasting of the prospects for future earnings, ability to pay interest, debt maturities both current as well as long term and probability of sound financial and dividend policies.

 financial statement analysis is largely a study of relationship among the various financial factors in business as disclosed by a single set of statements and a study of the trend of these factors as shown in a series of statements.

METHODS OF ANALYZING FINANCIAL STATEMENT

a) b) c) d) Comparative statements Common size statements Trend ratios Ratio analysis

a) Comparative financial statement analysis Absolute money values of each item separately for each of the periods stated. Increase and decrease in absolute data in terms of money values. Increase and decrease in terms of percentages. Comparison expressed in ratios. Percentages of totals. Such comparative statements are necessary for the study of trends and direction of movement in the financial position and operating results.. This calls for a consistency in the practice of preparing these statements, otherwise comparability may be distorted. Comparative statements enable horizontal analysis of figures.

b) Common size financial statement analysis Common size financial statement are those in which figures reported are converted into percentages to some common base. For this, items in the financial statements as percentages or ratios to total of the items and a common base for comparison is provided.  Common size income statement In a common size income statement the sales figures is assumed to be equal to 100 and all other figures of costs or expenses are expressed as percentages of sales. A comparative income statement for different periods helps to reveal the efficiency or otherwise of incurring any cost or expense.

c) Trend ratios analysis Trend ratios show the nature and rate of movements in various financial factors. They provide a horizontal analysis of comparative statements and reflect the behavior of various items with the passage of time.

d) Ratio analysis Profitability ratios A measure of profitability is the overall measure of efficiency. In general terms of efficiency, a business is measured by the inputoutput analysis. By measuring the out-put as a proportion of the input and comparing result of similar other firms or periods the relative change in its profitability can be established.

 Return on investment
Return on investment = (net operating profit *100)/Capital employed Return on shareholders funds = {net profit after interest and tax /shareholders funds} *100 Gross profit ratio or gross margin = {gross profit/net sales}*100

 Turnover ratios capital turnover ratio = (net sales/capital employed) total assets turnover ratio = (net sales/total assets)

Financial ratios
A. Current ratio = (current assets/current liabilities) B. Liquid ratio = (liquid assets/liquid liabilities) C. Debt equity ratio = debt/equity (shareholders funds)

Market test ratios

Earning per share = (net profit after pref. dividend/no. of equity shares) Price earning ratio = (market value per equity share/earning per share)

ADVANTAGES OF RATIO ANALYSIS

It helps to analyze and understand the financial health and trend of a business, its past performance, and makes it possible to forecast the future state of affairs of the business. Compares the performance of the business and the performance of similar types of business. Ratio analysis plays a significant role in cost accounting, financial accounting, budgetary control, and auditing. It accelerates the institutionalization and specialization of financial management.

NAME

:CHIRAG VAGHELA

ROLL NO : M- 4042 TOPIC : FUNDAMENTAL ANALYSIS OF INFOSYS

NON-FINANCIAL ANALYSIS OF INFOSYS

BCG MATRIX, INFOSYS

SWOT ANALYSIS OF INFOSYS

STRENGTHS Leadership in sophisticated solutions that enable clients to optimize the efficiency of their business Proven Global delivery model Commitment to superior quality Strong Brand and Long-Standing Client Relationships Ability to scale OPPORTUNITIES Domestic market set to grow by 20%. Expanding into new geographies Europe, Middle East, THREATS The economic environment, pricing pressure and rising wages in India and overseas Intense competition WEAKNESSES Excessive dependence on US for revenues 67 % Weak player in domestic market. Only 1 % Low R & D spending Rising wage bill 42.9 % to 44.8 % of revenues Low expertise in high end services like Consultancy and KPO.

Infosys is cash rich (Around US $ 1 Billion) - High dependency on a small clients Acquiring companies to increase expertise in Currency fluctuations Consultancy, KPO

FINANCIAL ANALYSIS OF INFOSYS

NPAT 6443cr (11); 5755cr (10) Net Current Asset 19715cr(11); 13792cr(10)

Ratio

Year ended March 31 2011 2010 0.95 32.89 28.89 29.13 27.22

Sales to total assets ratio Operating profit / average capital employed ratio (%) Return on average net worth(%) Return on average net worth (%) Profit after tax to sales ratio (%)

1.03 32.98 27.69 27.69 25.38

MARKETING ANALYSIS OF INFOSYS

Strategy
Global technology services company

Competition
TCS, Wipro, Deloitte, HP, Oracle, Accenture

Brand Valuation
Strengthening of the invisible Valuing the brand

HR ANALYSIS OF INFOSYS
Human Capital
104850 in 09 & 113796 in 10

Human Capital Development

Recruitment Training & Development Compensation

CONCLUSIONu

THANK YOUu