` A PROJECT REPORT ON

FUNDAMENTAL EQUITY ANALYSYS OF IDEA CELLULAR AND BHARTI AIRTEL AT

SHAREKHAN BUSINESS PARTNER - DURGESH N. ANOKAR Raigad Colony, Ghatpuri Road, Khamgoan MASTER OF BUSINESS ADMINISTRATION IN (FINANCE)

SUBMITTED BY Satish Eknath Kale (2012-2013) OF

DBAR, SSGMCE, SHEGAON

D E C LA R A T I O N

I hereby declare that this project report entitled FUNDAMENTAL EQUITY

ANALYSYS OF IDEA CELLULAR AND BHARTI AIRTELsubmitted by me to the

college name is original work undertaken by me and it is not submitted to any other University or Institution for the award of any degree / diploma / certificate or published any time before. The source of material & data used in this study have been duly acknowledge.

Date: Place:

ACKNOWLEDGEMENT
The successful completion of any task would be put incomplete, without the mention of all those people who made it possible, whose constant guidance and encouragement crowns the effort with success.I would like to convey my sincere acknowledgement to Dr. H.O.D. of \\\\\\\ for giving me an opportunity to carry out this project. I am very much thankful to Mr. Durgesh N.Anokar ( Sharekhan Business Partner ) and all the staff of for their constant support throughout this project work.

Satish Eknath Kale

INDEX

Sr. No Chapter 1

Topics Introduction

Page No. 5

Chapter2 2.1 2.2 2.3 2.4 1.

Company Profile Objective of Study Scope of the Study 1 Research Methodology Limitation of the study

7 9 10 11 13

Chapter 3 3.1

Theoretical Backround
EQUITY ANALYSIS

14

Chapter 4 4.1 4.2

IDEA & AIRTEL Introduction Balance Sheet P & L A/cc

25 26-27 28-29

Chapter 5 5.1 Chapter 6 Chapter 7 Chapter 8 Chapter 9

Data analysis and Interpretation of the data Analysis and Interpretation Findings Conclusion Recommendation and Suggestion Bibliography 31 35 36 37 38

INTRODUCTION

A member of the Bombay Stock Exchange for the last 3 generations and serving investors since 1922, SSKI is a member of the National Stock Exchange, the Inter-connected stock exchange and a depository participant registered with both NSDL & CDSL. SSKI made its foray into institutional broking and corporate finance 19 years ago. Mr. Shripal Morakhia, chairman of the SSKI group turned into a professional outfit and established the group as the pioneer of the investment research in the Indian market. The SSKI group of companies is distributed in to four such divisions and they are as follows:-

SSKI Investors Services Ltd.(Sharekhan) S.S. Kantilal Ishwarlal Securities Pvt. Ltd. SSKI Corporate Finance. I dream Productions.

Sharekhan falls under the umbrella of S.S. Kantilal Ishwarlal Securities Pvt. Ltd (SSKI). Thus becoming the leading domestic player in Indian institutional business. Sharekhan has more than $1 billion of private equity deals. SSKI has been voted as Top Domestic Brokerage House in the research category as well as derivatives, depository services, commodities trading on the MCX & NCDEX and most importantly, investment advice tempered by eighty years of broking experience. Sharekhan is known for its research and it big share of its profit on research. 5

E-Broking Electronic broking is a means of buying and selling shares on the stock exchange electronically i.e. through the internet. The speed of transaction, confidentiality about the prices and ease of settlement in the paperless mode should be good reason for the retail investors to jump on the net. Online share trading is perfect combination of the medium of the net catering to real life concept. Given the trading is all about having access to multiple information sources from the organizations performance to the industrial and economical scenarios as well as processing the analytical tools to process this information, the net really is the perfect solution to investor needs.

ORGANIZATIONAL PROFILE Profile Of The Company Name of the company Year of Establishment Headquarter : Share khan ltd. : 1925 : Share Khan SSKI A-206 Phoenix House Phoenix Mills Compound Lower Parel Mumbai-Maharashtra, INDIA- 400013 : Service Provider : Depository Services, Online Services and Technical Research : Over 3500 : www.sharekhan.com : Your Guide to The Financial Jungle.

Nature of Business Services Number of Employees Website Slogan

ACHIEVEMENTS OF SHAREKHAN: A Rated among the top 20 wired companies along with Reliance, HUJl, Infosys, etc by Business Today, January 2004 edition. Awarded Top Domestic Brokerage House four times by Euro money and Asia money. Pioneers of online trading in India amongst the top 3 online trading websites from India. Most preferred financial destination amongst online broking customers. Winners of Best Financial Website award. Indias most preferred brokers within 5 years. Awaaz customers Award 2005.

Future Plans: 2, 00,000 plus retail customers being serviced through centralized call centers/ web solutions. Branches / Semi branches servicing affluent / aggressive traders through high skill financial advisor. 250 independent investment managers/ franchisee servicing 50,000 highly valued clients. New initiatives Portfolio management Services and commodities trading.

Vision: To be the best retail brokering Brand in the retail business of stock market. Mission: To educate and empower the individual investor to make better investment decisions through quality advice and superior service. Share khan is infect: Among the top 3 branded retail service provider. No. 1 player in the online business. Largest network of branded broking outlets in the country serving more than 7, 00,000 clients. A share khan outlet offers the following services: Online BSE and NSE executions (through BOLT and NEAT terminals) Free access to investment advice from share khans Research team. Share khan value line (a monthly publication with reviews of recommendations stocks to watch out for etc.) Daily research reports and market review (High Noon & Eagle Eye) Pre-market Report Daily trading calls based on Technical Analysis Cool trading products (Daring Derivatives and Market Strategy) Personalized Advice Live Market Information Depository Services: Demat & Remat Transactions Derivatives Trading (Futures and Options) Commodities Trading IPOs & Mutual Funds Distribution 8

` Internet-based Online Trading: Speed Trade

OBJECTIVES OF THE STUDY: Primary objective: 1.To do comparative study of Telecom Sector with special reference to Bharti Airtel Idea Cellular

Secondary objectives: 1. To study the movement of related stock prices. 2. To study various tools used in Fundamental Analysis to help investors. 3. To analyze Telecom Sector taking into consideration its current status & future prospects. 4. To Study the fundamental analysis & its importance for taking investment decision.

SWOT Analysis A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. SWOT analysis of the Indian automobile sector gives the following points: Strengths Large domestic market Sustainable labor cost advantage Competitive auto component vendor base Government incentives for manufacturing plants Strong engineering skills in design etc Weaknesses Low labor productivity High interest costs and high overheads make the production uncompetitive Various forms of taxes push up the cost of production Low investment in Research and Development Infrastructure bottleneck 9

Opportunities Commercial vehicles: SC ban on overloading Heavy thrust on mining and construction activity Increase in the income level Cut in excise duties Rising rural demand Threats Rising input costs Rising interest rates Cut throat competition

SCOPE OF THE STUDY

1. It includes Fundamental Analysis and various tools used in it. 2. Fundamental analysis helps to understand the basics of financial statements and gives the tools that help to make worthwhile investments. 3. It is a process of looking the business at the basic or fundamental financial level. This analysis examines ratios of a business to determine its financial health and value of its stock. 4. The scope of Project extends to the study of 2 players of Indian Telecom Sector. 5. Financials of these companies relevant to the last five years.

10

RESEARCH METHODOLOGY

Research has its special significance in solving various operational and planning problems of business and industry. Research methodology is a way to systematically analyze the research problem.

Development of Working Hypothesis: The hypothesis could be developed by discussing with the consulting department heads and guides about this exploratory research and reach to the conclusion that the data is to be collected by personal interaction with the clients, asking them about their investment planning and their need for financial advisory service from SHAREKHAN Ltd. First of all are they aware of tax and investment planning or not and then analyzing the findings to reach to the objectives of research.

Collection of Data

This research is solely based on primary research done by means of questionnaires targeted to respondents who primarily belong to the business and service sector. It is very essential in the research process to know the accuracy of the findings which depends on how systematically the study has been carried out so that it can make sense. I have executed the project after prior discussion with our guide and structured in the following steps:

11

a. Preparation of a questionnaire b. The focal point of the designing the questionnaire was to comprehend the current investment scenario with respect to tax planning part. c. This questionnaire was primarily aimed to respondents who belong to the service and business class people d. The questionnaires were discussed through personal interface with the respondents The data has been solely based on primary research done by interviewing the customers who primarily belong to the business and the service sector. The data is essential for the company so that on that basis they would do asset allocation. The main research has been done by collecting data from different websites and books. This can be a benchmark against which the findings can be tested.

1.

Primary data Observational Method.

2.

Secondary Data By Internet

RESEARCH APPROACH

Out of 2 ways of research approaches 1. Observation research. 3. Focus Group research

Sampling Plan: Sampling size Field Work area : 60 : Khamgoan City

Research Design Descriptive Type Methods of Data Collection Primary and Secondary Sample Size 2 Telecom Sector Companies 12

LIMITATION

There is no activity without limitations, the main Limitation has faced during project research are as follows:-

The research has been carried on time span of one months. The research is totally based on the personal opinion of the respondents which may vary
depending upon their personal view.
1.)

The Sample Size being taken for drawing a conclusion was too small to get an

accurate

result. 2)Changing the Mentality of people for investing in a particular Financial Product is a very difficult task.

13

Theoretical prospective
Definition of Fundamental Analysis : Fundamental analysis is a method used to determine the value of a stock by analyzing the financial data that is 'fundamental' to the company. That means that fundamental analysis takes into consideration only those variables that are directly related to the company itself, such as its earnings, its dividends, and its sales. Fundamental analysis does not look at the overall state of the market nor does it include behavioral variables in its methodology. It focuses exclusively on the company's business in order to determine whether or not the stock should be bought or sold.

EQUITY ANALYSIS
Effective and efficient investment decisions should be based on actual movement of share price measured both in money & percentage term. Decisions like whether one should buy or sell when trading in
the share market is a difficult task to do. It requires split-hair analysis of the market. To do so one also needs to have excellent understanding of the market. Equity analysis decides the stance one would take in the share trading industry. Finding out the highs and lows in the market and analyzing the equity is of utmost importance before making any sort of investment. The equity analysis does not discuss how to buy & sell shares,

but does discuss a method which enables the investor to arrive at buying & selling decision. Equity analysis forms an integral part of the share trading experience. The financial analysts always need tools to evaluate the efficiency & performances of any business unit at the time of investment. In Equity Analysis anticipated growth, calculations are based on considered FACTS & not on HOPE. Equity analysis is basically a combination of two independent analyses, namely fundamental analysis & Technical analysis. The subject of Equity analysis, i.e. the attempt to determine future share price movement & its reliability by references to historical data is a vast one, covering many aspect from the calculating various FINANCIAL RATIOS, plotting of CHARTS to extremely sophisticated indicators. The fundamental analysis is useful in long term investment decision. In Fundamental analysis a companys goodwill, its performances, liquidity, leverage, turnover, profitability & financial health was checked & analysis with the help of ratio analysis for the purpose of long term successful investment. Technical analysis refers to the study of market generated data like prices & volume to determine the future direction of prices movements. Technical analysis mainly seeks to predict the short term price travels. The focus of technical analysis is mainly on the internal market data, i.e. prices & volume data. It appeals mainly to short term traders. It is the oldest approach to equity investment dating back to the late 19th century. Assumptions for Equity Analysis: 1. Works only in normal share-market conditions with great reliability, it also works in abnormal share-market conditions, but with low reliability. 14

2. Equity analysis is purely based on the INVESTMENT PHILOSOPHY, so the investment object has vital importance associated to return along with risk. 3. Cash management gets the magnitude role, because the scenario of equity analysis is revolving around the term money. 4. Portfolio management, risk management was up to the investor s knowledge. 5. Capital market trend is always a friend, whether it is short run or long run. 6. You are buying stock & not companies, so don t be curious or panic to do postmortem of companies performances. 7. History repeats: investors & speculators react the same way to the same types of events homogeneously. 8. Capital market has a typical market psychology along with other issues like; perceptions, the crowd vs. the individual, tradition s & trust. 9. An individual perceptions about the investment return & associated risk may differ from individual to individual. 10. Although the equity analysis is art as well as sciences so, it also has some exceptions.

Over a period of more than two decades the Indian Automobile industry has been driving its own growth through phases. With comparatively higher rate of economic growth rate index against that of great global powers, India has become a hub of domestic and exports business. The automobile sector has been contributing its share to the shining economic performance of India in the recent years. To understand this industry for the purpose of investment we need to analyze it by following two approaches: 1) Fundamental Analysis 2) Technical Analysis Fundamental Analysis. Fundamental analysis is the study of economic, industry and company conditions in an effort to determine the value of a company s stock. Fundamental analysis typically focuses on key statistics in company s financial statements to determine if the stock price is correctly valued.

Most fundamental information focuses on economic, industry and company statistics. The typical approach to analyzing a company involves four basic steps : 1 Determine the condition of the general economy. 15

` 2 Determine the condition of the industry. 3 Determine the condition of the company. 4 Determine the value of the company s stock

Market potential A set of consumers who profess some level of interest in a designed market offer. Classic Demat a/c : Transferring fund Managing your profile Buying share Selling share Digital contract

The transaction cycle for purchasing and selling shares online is depicted below:

Transaction Cycle

Member/ Broking firm. Client Stock Exchange (BSE / NSE)

Member/ Broking firm. Client

16

Terms Using Share Trading

Bringing together under one site all the relevant factors to enable an informed investment is what online trading is all about. There are several terms which are commonly used for online share trading : 1. D Mat a/c This is a account where dematerialization takes place. Dematerialization is the process by which physical certificates of an investor are converted to an equivalent number of securities form and credited into the investors account with his/her DP. 2. DP A depository participant is an agent of the depository through which it interfaces with the investor. DP can offer depository services only it gets proper registration from SEBI. 3. Depository A depository is an organisation which holds securities of investor in electronic form at request at request of the investor through a registered repository participant. It also provides services related to transactions in securities.

4. Saving a/c - This is a regular bank a/c which is linked to D Mat a/c and trading a/c. Required amount of money is used for trading from saving a/c. 5. Trading a/c This is a a/c through which actual trading i.e. buying and selling takes place. In online share trading all three accounts are interlinked.

D-MAT ACCOUNT

SAVING ACCOUNT

TRADING ACCOUNT

17

6. Market order- Market order is an order to buy or sell stock at the current market price. Unless you specify otherwise, your broker will enter your order as a market order.

7.. Order- Investors have several options when it comes to placing an order to buy or sell the securities. For example, whether you place an order directly with your broker or trade online, you can instruct your broker to buy or sell at a specified price. Or you can place an order that is good for one day only or for an extended period.

8. Stop order- A stop order is an order to buy to sell a stock once the price of the stock reaches the specified price, know as stop price. When the specified price is reached, your stop order becomes a market order. Buy stop order- Investors typically uses a stop order when buying stock to limit a loss or protect a profit on short sell. The order is entered at a stop price that is always above the current price. 9.Sell Stop order- A sell stop order helps the investors to avoid further losses or to protect a profit that exists if the stock price continues to drop. A stop order to sell is always placed below the current market price. 10. Short Sell- A short sell is generally the sale of a stock you do not own. Investors who sell short believe the price of the stock will fall. If the price of the stock drops, you can buy the stock at lower price and make the profit. If the price of the stock rises and you buy it back later at higher price, you will incur a loss.

Account Opening To avail the services of depository one requires opening an account with any of the depository participants. The e-invest account is an account which allows a customer electronic trading on the exchange. Through this unique three in one trading every customer opening an e-invest account gets a bank saving account.

18

FORM SUBMISSION

SCRUTINY SEGERATE

OPEN A/C OR REJECT

BANK

VALID FORM

INTIMATES CPU

OPEN A/C OR REJECT

DP

19

` Process for Buying / Selling Online Log on to www.sharekhan.com

Click to trading zone put in your user login and password.

Fill in the features on the buy / sell screen and select the buy / sell option.

You will be automatically linked to bank site to place a hold.

Log on to your net banking a/c put in your net banking and client id and password.

Place hold of the required amt. (system will automatically tell you calculation of the total amt. to be placed on hold).

20

Type in your password and confirm order.

Order is accepted and goes to NSE.

Trade is executed and you get an email confirmation.

To exit the trading zone click on log out.

21

Fundamental Analysis consist of following Study of Balance sheet Study of Profit and Loss a/c Study of Ratios
Balance Sheet :
A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders. The balance sheet must follow the following formula: Assets = Liabilities + Shareholders' Equity Each of the three segments of the balance sheet will have many accounts within it that document the value of each. Accounts such as cash, inventory and property are on the asset side of the balance sheet, while on the liability side there are accounts such as accounts payable or long-term debt. The exact accounts on a balance sheet will differ by company and by industry, as there is no one set template that accurately accommodates for the differences between different types of businesses. It's called a balance sheet because the two sides balance out. This makes sense: a company has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it from shareholders (shareholders' equity). The balance sheet is one of the most important pieces of financial information issued by a company. It is a snapshot of what a company owns and owes at that point in time. The income statement, on the other hand, shows how much revenue and profit a company has generated over a certain period. Neither statement is better than the other rather, the financial statements are built to be used together to present a complete picture of a company's finances.

The balance sheet shows the financial condition of a business at a given point of time. As per the Companies Act, the balance sheet of a company shall be in either the account form or the report form.
Liabilities Share Capital Reserves and Surplus Secured loans UnSecured loans Current liabilities and provisions

Assets
Fixed Assets

Investments Current assets , loans & advances

Miscellaneous expenditure

22

Liabilities
Liabilities, defined very broadly, represent what the firm owes others. A liability arises when a firm receives benefits or services and , in turn, promises to pay cash or provide goods and services in future. The format prescribed in the Companies Act classifies liabilities as follows : Share Capital: Share capital includes equity capital and preference capital. Equity capital represents the contribution of equity shareholders who are the owners of the firm. Equity capital, being the risk capital, carries no fixed rate of dividend. Preference capital represents the contribution of preference shareholders and the dividend rate payable on it is general fixed. Reserve and Surplus: Reserve and Surplus comprise retained earnings as well as non earnings items like share premium and capital subsidy. In common practice for companies to transfer from the profit and loss account to various reserve accounts. This process is called appropriation. Secured loan: Secured loan are loans that are secured by a charge on the assets of the firm. The charge may be created in the form of pledge or hypothecation of movable assets such as inventories and debtors and or in the form of mortgage of immovable assets such as land, building, and plant and machinery. Unsecured loans: in contrast to secured loans, unsecured loans are loans which are not secured by a charge on the assets of the firm. Current liabilities and Provisions: current liabilities and provisions represent obligations that are expected to mature within a year. Current liabilities include items such as bills payable, sundry creditors, interest accrued etc. and provisions include items such as provision for taxes, dividend, and other exp.

Assets
Assets are resources which are expected to provide a firm with future economic benefits, by way of higher cash inflows or lower outflows. Assets are classified as follows under the Companies Act: Fixed Assets: fixed assets, also called non current assets, are assets that are expected to produce benefits for more that one year. These assets may be tangible or intangible. Tangible fixed assets include items such as land, buildings, plant and machinery, furniture. Intangible assets include goodwill, patents, and copyrights. Investment: investments represent financial securities owned by the firm. They are divided into two categories, long term investment and current investment. Current Assets: this category consists of cash and other assets which get converted into cash or which result in cash savings, during the operating cycle of the firm. The major components of current assets, loans and advances are: inventories, debtors, cash and bank balances, other current assets and loans and advances. 23

Miscellaneous Exp : this comprise of items such as preliminary exp, discount allowed on issue of securities, interest paid out of capital during construction, and development expenditure to the extent not written off or adjusted.

Profit and Loss a/c :

A financial report that - by summarizing revenues and expenses, and showing the net profit or loss in a specified accounting period - depicts a business entity s financial performance due to operations as well as other activities rendering gains or losses. Also known as the "profit and loss statement" or "statement of revenue and expense". The income statement is the most analyzed portion of the financial statements. It displays how well the company can assure success for both itself and its shareholders through the earnings from operations. The companies act has prescribed a standard form for the balance sheet, but none for the profit loss account. However, the companies act does require that the information provided should be adequate to reflect a true and fair picture of the operations of the company for the accounting period. Structure of Profit and Loss a/c Income Sales Expenditure Material and other expenditure Interest Depreciation Profit before tax Provision for tax Profit after tax While a single step profit and loss account aggregates all revenues and expenses, a multi step profit and loss account provides disaggregated information. Further, instead of showing only the final profit measure, the profit after tax figure, it presents proft measures at intermediate stages as well.

24

Company Introduction

Industry Specific Index Industry specific index also called as sectoral index are those indices, which represent a specific industry sector. All stocks in a sectoral index belong to that sector only. Hence an index like the BSE auto index is made of auto stocks. Sectoral Indices are very useful in tracking the movement and performance of particular sector. BSE Auto Index comprises all the major stocks in the BSE Index

Last Price Bharti Airtel Idea Cellular Reliance Comm Tata Comm . 411.15 85.40 93.60 220.40

Market Cap. (Rs. cr.) 156,135.45 28,214.08 19,319.29 6,281.40

Sales Turnover 38,015.80 15,389.00 11,989.19 3,409.00

Net Profit 7,716.90 844.60 -757.99 160.16

Total Assets 41,776.12 17,983.66 74,977.17 9,919.69

25

COMPANY ANALYSIS ( Idea Celluler & Bharti Airtel )

Idea Cellular
BSE: 532822 | NSE: IDEA | ISIN: INE669E01016 | --------------- in Rs. Cr. -------------------

Balance Sheet of Idea Cellular

Mar '06 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 2,742.53 2,259.53 0.00 483.00 -1,574.00 0.00 1,168.53 1,470.75 1,444.85 2,915.60 4,084.13 Mar '06 12 mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 3,975.11 1,157.63 2,817.48 95.91 307.03 8.81 90.82 40.12 139.75 1,408.64 88.97 1,637.36 0.00 762.24 11.39 773.63 863.73 0.00 4,084.15 213.92 3.03 Mar '07 12 mths 2,592.86 2,592.86 0.00 0.00 -413.71 0.00 2,179.15 3,539.77 710.74 4,250.51 6,429.66 Mar '07 12 mths 8,229.61 2,637.18 5,592.43 506.52 13.83 17.91 152.48 122.76 293.15 560.82 1,696.97 2,550.94 0.00 2,180.21 53.84 2,234.05 316.89 0.00 6,429.67 1,236.57 8.40 Mar '08 12 mths 2,635.36 2,635.36 3.76 0.00 906.91 0.00 3,546.03 5,454.43 1,060.33 6,514.76 10,060.79 Mar '08 12 mths 12,791.22 3,123.83 9,667.39 941.13 569.93 27.62 198.59 147.67 373.88 950.88 349.38 1,674.14 0.00 2,709.98 81.82 2,791.80 -1,117.66 0.00 10,060.79 2,308.87 13.44 Mar '09 12 mths 3,100.10 3,100.10 18.23 0.00 8,176.09 0.00 11,294.42 5,564.93 2,014.43 7,579.36 18,873.78 Mar '09 12 mths 15,562.75 4,739.86 10,822.89 1,721.82 4,928.81 42.73 329.59 140.86 513.18 2,278.21 2,203.57 4,994.96 0.00 3,496.04 98.65 3,594.69 1,400.27 0.00 18,873.79 2,279.41 36.37 26 Mar '10 12 mths 3,299.84 3,299.84 44.45 0.00 8,112.95 0.00 11,457.24 5,988.61 537.81 6,526.42 17,983.66 Mar '10 12 mths 22,834.40 7,907.34 14,927.06 462.58 2,755.13 46.70 430.12 129.13 605.95 3,533.15 151.31 4,290.41 0.00 4,313.76 137.76 4,451.52 -161.11 0.00 17,983.66 1,960.75 34.59

Bharti Airtel
BSE: 532454 | NSE: BHARTIARTL | ISIN: INE397D01024 | Telecom- Service

Balance Sheet of Bharti Airtel

Mar '06 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 1,893.88 1,893.88 12.13 0.00 5,437.42 2.13 7,345.56 2,863.37 1,932.92 4,796.29 12,141.85 Mar '06 12 mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 17,951.74 4,944.86 13,006.88 2,341.25 719.70 17.74 1,076.17 201.81 1,295.72 1,937.54 105.61 3,338.87 0.00 6,735.36 537.44 7,272.80 -3,933.93 7.94 12,141.84 4,740.34 38.71

---------- in Rs. Cr. -------------------

Mar '07 12 mths 1,895.93 1,895.93 30.00 0.00 9,515.21 2.13 11,443.27 266.45 5,044.36 5,310.81 16,754.08 Mar '07 12 mths 26,509.93 7,204.30 19,305.63 2,375.82 705.82 47.81 1,418.52 239.11 1,705.44 3,160.02 541.35 5,406.81 0.00 9,809.83 1,232.84 11,042.67 -5,635.86 2.66 16,754.07 7,615.04 60.19

Mar '08 12 mths 1,897.91 1,897.91 57.63 0.00 18,283.82 2.13 20,241.49 52.42 6,517.92 6,570.34 26,811.83 Mar '08 12 mths 28,115.65 9,085.00 19,030.65 2,751.08 10,952.85 56.86 2,776.46 200.86 3,034.18 5,103.13 302.08 8,439.39 0.00 12,400.38 1,961.95 14,362.33 -5,922.94 0.20 26,811.84 7,140.59 106.34

Mar '09 12 mths 1,898.24 1,898.24 116.22 0.00 25,627.38 2.13 27,643.97 51.73 7,661.92 7,713.65 35,357.62 Mar '09 12 mths 37,266.70 12,253.34 25,013.36 2,566.67 11,777.76 62.15 2,550.05 153.44 2,765.64 5,602.83 2,098.16 10,466.63 0.00 13,832.49 634.40 14,466.89 -4,000.26 0.09 35,357.62 4,104.25 145.01

Mar '10 12 mths 1,898.77 1,898.77 186.09 0.00 34,650.19 2.13 36,737.18 39.43 4,999.49 5,038.92 41,776.10 Mar '10 12 mths 44,212.53 16,187.56 28,024.97 1,594.74 15,773.32 27.24 2,104.98 54.89 2,187.11 6,276.12 761.86 9,225.09 0.00 12,183.25 658.75 12,842.00 -3,616.91 0.00 41,776.12 3,921.50 96.24

27

Profit & Loss a/cc of Idea Cellular

Mar '10 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses 11,850.24 0.00 11,850.24 383.83 0.00 12,234.07 0.02 942.27 561.17 5,187.63 1,823.48 91.58 0.00 8,606.15

Mar '09 12 mths 9,857.08 0.00 9,857.08 401.80 -0.05 10,258.83 18.92 533.54 458.46 4,022.86 1,621.90 82.76 0.00 6,738.44 3,118.59 3,520.39 1,206.35 2,314.04 1,096.72 146.13 1,071.19 15.68 1,086.87 85.65 1,001.21 6,719.52 0.00 0.00 0.00 31,000.95 3.23 0.00 36.37

Mar '08 12 mths 6,719.99 0.00 6,719.99 184.17 0.00 6,904.16 0.01 224.40 332.88 2,643.43 974.08 53.87 0.00 4,228.67 2,491.32 2,675.49 695.85 1,979.64 756.85 119.91 1,102.88 13.97 1,116.85 72.50 1,044.36 4,228.66 0.00 0.00 0.00 26,353.61 3.96 0.00 13.44

Mar '07 12 mths 4,366.40 0.00 4,366.40 27.64 -1.20 4,392.84 4.06 109.46 251.43 1,388.33 959.34 38.69 -0.08 2,751.23 1,613.97 1,641.61 478.26 1,163.35 563.67 108.14 491.54 5.23 496.77 6.99 502.06 2,747.16 0.00 0.00 0.00 25,928.61 1.94 0.00 8.40

Mar '06 12 mths 2,007.07 0.00 2,007.07 5.20 -0.01 2,012.26 0.04 37.86 115.08 626.41 439.02 18.22 -0.04 1,236.59 770.47 775.67 308.25 467.42 262.88 84.66 119.88 8.61 128.49 2.90 125.60 1,236.54 0.00 0.00 0.00 22,595.27 0.56 0.00 3.03

Operating Profit 3,244.09 PBDIT 3,627.92 Interest 982.44 PBDT 2,645.48 Depreciation 1,366.61 Other Written Off 184.59 Profit Before Tax 1,094.28 Extra-ordinary items 91.61 PBT (Post Extra-ord Items) 1,185.89 Tax 115.08 Reported Net Profit 1,053.66 Total Value Addition 8,606.12 Preference Dividend 0.00 Equity Dividend 0.00 Corporate Dividend Tax 0.00 Per share data (annualised) Shares in issue (lakhs) 32,998.38 Earning Per Share (Rs) 3.19 Equity Dividend (%) 0.00 Book Value (Rs) 34.59

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Profit & Loss A/cc of Bharti Airtel

Mar 10 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials 23.30 Power & Fuel Cost 0.00 Employee Cost 1,451.20 Other Manufacturing 13,558.40 Expenses Selling and Admin Expenses 0.00 Miscellaneous Expenses 9,634.80 Preoperative Exp 0.00 Capitalised Total Expenses 24,667.70 Mar '11 12 mths Operating Profit 13,355.30 PBDIT 13,468.20 Interest 130.80 PBDT 13,337.40 Depreciation 4,193.70 Other Written Off 417.90 Profit Before Tax 8,725.80 Extra-ordinary items 0.00 PBT (Post Extra-ord Items) 8,725.80 Tax 1,008.90 Reported Net Profit 7,716.90 Total Value Addition 24,644.40 Preference Dividend 0.00 Equity Dividend 379.80 Corporate Dividend Tax 60.10 Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) 37,975.30 20.32 20.00 115.43 38,015.80 0.00 38,015.80 112.90 7.20 38,135.90

Mar 09 12 mths 35,609.54 0.00 35,609.54 1,118.46 -34.91 36,693.09 278.72 0.00 1,401.66 11,882.41 6,856.42 1,482.39 -293.31 21,608.29 Mar '10 12 mths 13,966.34 15,084.80 283.35 14,801.45 3,890.08 207.84 10,703.53 -50.78 10,652.75 1,177.87 9,426.15 21,329.56 0.00 379.79 64.55 37,975.30 24.82 20.00 96.24

Mar '08 12 mths 34,048.32 0.00 34,048.32 -1,261.75 5.29 32,791.86 286.94 0.00 1,397.54 8,627.13 9,385.68 1,409.89 -269.25 20,837.93 Mar '09 12 mths 13,215.68 11,953.93 434.16 11,519.77 3,206.28 178.82 8,134.67 -46.15 8,088.52 321.78 7,743.84 20,551.00 0.00 379.65 64.52 18,982.40 40.79 20.00 145.01

Mar '07 12 mths 25,761.11 0.00 25,761.11 104.04 9.05 25,874.20 42.90 0.00 1,297.88 7,339.01 5,892.50 535.46 0.00 15,107.75 Mar '08 12 mths 10,662.41 10,766.45 393.43 10,373.02 3,166.58 266.07 6,940.37 -60.67 6,879.70 632.43 6,244.19 15,064.84 0.00 0.00 0.00 18,979.07 32.90 0.00 106.34

Mar '06 12 mths 17,851.61 0.00 17,851.61 105.62 30.07 17,987.30 52.16 0.00 1,076.95 5,017.27 4,030.48 444.28 0.00 10,621.14 Mar '07 12 mths 7,260.54 7,366.16 282.07 7,084.09 2,353.30 137.80 4,592.99 9.92 4,602.91 566.79 4,033.23 10,568.98 0.00 0.00 0.00 18,959.34 21.27 0.00 60.19

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Idea Cellular
------------------- in Rs. Cr. -------------------

Mar '10 Investment Valuation Ratios

Mar09

Mar08

Mar07

Mar06

Face Value

10.00

10.00

10.00

10.00

10.00

Dividend Per Share

--

--

--

--

--

Operating Profit Per Share (Rs)

9.83

10.06

9.45

6.22

3.41

Net Operating Profit Per Share (Rs)

35.91

31.80

25.50

16.84

8.88

Free Reserves Per Share (Rs)

24.53

25.71

2.66

-2.39

-7.41

Bharti Airtel
Mar '10 Mar '09 Mar '08 Mar '07 Mar '06

Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital 5.00 1.00 35.17 100.11 --5.00 1.00 36.65 93.77 84.64 82.49 10.00 2.00 69.50 179.37 121.78 82.51 10.00 -56.16 135.73 83.18 82.53 10.00 -38.28 94.16 49.88 82.61

30

Data Analysis & Interpretation

SALES
40,000.00 30,000.00 20,000.00 10,000.00 0.00 2010 2009 2008 Year 2007 2006

Airtel
Idea

31

Rs. In Cr. 10,000.00 8,000.00 6,000.00 4,000.00 2,000.00 0.00 2010

NET PROFIT

Idea Airtel

2009 Year

2008

2007

2006

32

Earning Per Share

2010 2009 2008 2007 2006 Idea Bharti Airtel

Earning Per Share (Rs) Earning Per Share (Rs) 3.19 3.23 3.96 1.94 0.56

20.32

24.82

40.79

32.90

21.27

Earning Per Share

Rs. In Cr. 50 Rs Idea 0 2010 2009 2008 2007 2006 Bharti Airtel

Year
EPS = Net income-Dividends on PreferredStock Outstanding shares

33

DIVIDEND PER SHARE

2 1.5 1 0.5 Idea Airtel

0
2010 2009 2008 2007 2006

Dividend per Share = Total amt of Dividend -------------------Share Outstanding

34

Findings

1. Both giants of Telecom industry shows positive trend in Sales Revenue over the past 5year. However recession brought hurdles but both companies have potential to grow in future as lots of products are still to add in their portfolio. The Sale of Bharti Airtel is more than Idea cellular over the past 5 year scenario. 2. The trend shows that Ideas net profit margin is quite little from 2006 to 2008 rising but it falls to 44 Cr. in 2009. While the net profit of Indias no.1 Telecom Services Bharti Airtel shows a continuous rising from 2006 to 2009 but it falls to 1710 Cr. in 2010 onwards. But the future prospect for both the companys profit is higher. 3 EPS measures the profit available to the equity shareholders per share, that is, the amount that they can get on every share held. Till 2008 both the companies had a rising EPS but in 2009and 2010 continuous both of them fall and the effect more on Bharti Airtel and fall in sales results in low EPS. But as trend shows but Bharti Airtel and Idea Cellular both have potential so an shareholder expect better in future.

4. Idea Cellular has not declared any dividend for the last several years. The trend shows that Bharti Airtel no paid dividend in 2006 and 2007 but in 2008 it rising up to Rs. 2 but also falls to Rs.1 in 2009 and 2010. Bharti Airtel has declared an equity dividend of 20.00% amounting to Rs 1 per share. Bharti Airtel had last declared a dividend of 20.00% for the year ending March 2011.

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CONCLUSION

Higher EPS is always better. From the collected annual results and different ratios of the two companies, it is concluded that EPS of Bharti Airtel is higher than Idea Cellular. Bharti Airtel has shown highest sales than the Idea Cellular. Among all the selected top two companies of Telecom sector it is also found that the investors should buy the shares of Bharti Airterl . as it will give better returns to them in future

36

Recommendations & Suggestions

The investors in market should always look for fundamental valuations of the shares they want to invest along with the market momentum. The fundamental analyst should know all the current market news for the company concerned as well as for the sector to which the company belongs. Collect the information about the market because information plays an important role in the movement of share price. Share prices change with demand and supply in the market. Invest in different shares and not in single share, always diversify the investment. While investing brokers recommendations should consider.

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Bibliography
Books Referred: Raghu Palat, Fundamental Analysis for investors, vision books pvt. Ltd., Third edition. Kothari C. R., Research Methodology Websites: www.nseindia.com www.bseindia.com www.financialexpress.com www.moneycontrol.com

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