Professional Documents
Culture Documents
TABLE OF CONTENTS:
CONTENT
PAGE NO.
1.6 Role of IT industry 1.7Contribution of Information Technology in Indian economy 1.8 Impact of IT sector 1.9 Future of Information Technology
1.10 Meaning of Equity
1-16
17-30
Page 1
31-57
4 5
Results, Analyses & Discussions Summary of Findings, Conclusions and Suggestions Recommendations Bibliography
58-88 89-93
94
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LIST OF TABLES:
Table No.
4.1 4.2
Description
Table showing Debt to equity ratio of TCS Table showing EPS of TCS Table showing Current ratio of TCS Table showing Debt to equity ratio of Wipro Table showing Current ratio of Wipro Table showing EPS of Wipro Table showing EPS of Infosys Table showing current ratio of Infosys Table showing EPS of Satyam computer services Table showing Debt to equity ratio of Satyam computer services Table showing current ratio of Satyam computer services Table showing Debt to equity ratio of HCL Technologies Table showing EPS of HCL Technologies Table showing current ratio of HCL Technologies Table showing Debt to equity ratio of Tech Mahindra Table showing EPS of Tech Mahindra Table showing current ratio of Tech Mahindra Table showing Debt to equity ratio of L&T InfoTech Table showing EPS of L&T InfoTech Table showing current ratio of L&T InfoTech
Page No. 63 64 66 67 68 69 71 72 74 75 76 78 79 80 81 82 83 85 86 87
4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20
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LIST OF CHARTS:
Chart No. 3.1 3.2 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27
Description
Graph showing major trends in Hiring Graph showing IT market structure Graph showing Debt to equity ratio of TCS Graph showing EPS of TCS Graph showing P/E ratio of TCS Graph showing current ratio of TCS Graph showing Debt to equity ratio of Wipro Graph showing current ratio of Wipro Graph showing EPS per year of Wipro Graph Showing P/E ratio of Wipro Graph showing EPS of Infosys Graph showing current ratio of Infosys Graph Showing P/E ratio of Infosys Graph showing EPS of Satyam computers services Graph showing Debt to equity ratio of Satyam computer services Graph showing current ratio of Satyam computer services Graph showing P/E ratio of Satyam computer services Graph showing Debt to equity ratio of HCL technologies. Graph showing EPS of HCL Technologies Graph Showing Current ratio of HCL Technologies Graph showing P/E ratio of HCL Technologies. Graph showing Debt to equity of Tech Mahindra Graph Showing EPS of Tech Mahindra Graph showing current ratio of Tech Mahindra Graph showing P/E ratio of Tech Mahindra Graph showing Debt to equity of L&T InfoTech Graph showing EPS of L&T InfoTech Graph showing current ratio of L&T InfoTech Graph showing P/E ratio of L&T InfoTech
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1.1: INTRODUCTION:
India is a developing country. Now days many people are interested to invest in financial markets especially on equities to get high returns, and to save tax in honest way. Equities are playing a major role in contribution of capital to the business from the beginning. Since the introduction of shares concept, large number of investors are showing interest to invest in stock market.
In an industry plagued with skepticism and a stock market increasingly difficult to predict and contend with, if one looks hard enough there may still be a genuine aid for the day trader and short term investor.
The price of a security represents a consensus. It is the price at which one person agrees to buy and another agrees to sell. The price at which an investor is willing to buy or sell depends primarily on his expectations. If he expects the security's price to rise, he will buy it; if the investor expects the price to fall, he will sell it. These simple statements are the cause of a major challenge in forecasting security prices, because they refer to human expectations.
Though there is really no right or wrong type of stock trading, it is necessary for investors to identify which type of trading is right for them. They can make a great amount of money either way however, they must consider their time frame, risk, and how much work you want to put into it.
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While traders can make more money much faster, they are required to do more work and monitoring than the typical investor. Determine what type of trader you want to be, and then make sure that the people you take guidance from have the same goals as you.
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1.4.3:- IT- Hardware and peripherals - The stuff which can be actually seen and touched, and would likely break if we threw it out, is hardware. This would include laptops, desktops, Storage devices, Networking devices, LCD, printers etc. 1.4.4:- IT- Education - This segment provides training for employment in the other segments. This would include companies providing various certification courses, like Java, Oracle etc. These companies also provide training for employees in corporate sector. Recently, some companies have also expanded this service to cater to schools and colleges.
1.5: History of Indian IT sector:Information Technology (IT) industry in India is one of the fastest growing industries. Indian IT industry has built up valuable brand equity for itself in the global markets. IT industry in India comprises of software industry and information technology enabled services (ITES), which also includes business process outsourcing (BPO) industry. India is considered as a pioneer in software development and a favorite destination for IT- enabled services.
The origin of IT industry in India can be traced to 1974, when the mainframe manufacturer, Burroughs, asked its India sales agent, Tata Consultancy Services (TCS), to export programmers for installing system software for a U.S. client. The IT industry originated under unfavorable conditions. Local markets were absent and government policy toward private enterprise was hostile. The industry was begun by Bombay-based conglomerates which entered the business by supplying programmers to global IT firms located overseas.
During that time Indian economy was state-controlled and the state remained hostile to the software industry through the 1970s. Import tariffs were high (135% on hardware and 100% on software) and software was not considered an "industry", so that exporters were
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Today, Indian IT companies such as Tata Consultancy Services (TCS), Wipro, Infosys, and HCL etc. all are renowned in the global market for their IT prowess.
Some of the major factors which played a key role in India's emergence as key global IT player are:
i.
resulting in a large number of science and engineering graduates. Mastery over quantitative concepts coupled with English proficiency has resulted in a skill set that has enabled India to reap the benefits of the current international demand for IT.
ii.
willingness to accommodate clients. India also has one of the largest pools of Englishspeaking professional.
iii.
Competitive Costs:
The cost of software development and other services in India is very competitive as
iv.
Infrastructure Scenario:
Indian IT industry has also gained immensely from the availability of a robust infrastructure (telecom, power and roads) in the country.
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In the last few years Indian IT industry has seen tremendous growth. Destinations such as Bangalore, Hyderabad and Gurgaon have evolved into global IT hubs. Several IT parks have come up at Bangalore, Hyderabad, Chennai, Pune, Gurgaon etc. These parks offer Silicon Valley type infrastructure. In the light of all the factors that have added to the strength of Indian IT industry, it seems that Indian success story is all set to continue.
The contribution of India's IT industry to economic progress has been quite significant. The rapidly expanding socio-economic infrastructure has proved to be of great use in supporting the growth of Indian information technology industry.
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The growth and prosperity of India's IT industry depends on some crucial factors. These factors are as follows:
i.
India is home to a large number of IT professionals, who have the necessary skill and expertise to meet the demands and expectations of the global IT industry.
ii.
The cost of skilled Indian workforce is reasonably low compared to the developed nations. This makes the Indian IT services highly cost efficient and this is also the reason as to why the IT enabled services like business process outsourcing and knowledge process outsourcing have expanded significantly in the Indian job market.
iii.
India has a huge pool of English-speaking IT professionals. This is why the Englishspeaking countries like the US and the UK depend on the Indian IT industry for outsourcing their business processes.
The emergence of Indian information technology sector has brought about sea changes in the Indian job market. The IT sector of India offers a host of opportunities of employment. With IT biggies like Infosys, Cognizant, Wipro, Tata Consultancy Services, Accenture and several other IT firms operating in some of the major Indian cities, there is no scarcity of job opportunities for the Indian software professionals. The IT enabled sector of India absorbs a large number of graduates from general stream in the BPO and KPO firms. All these have solved the unemployment problem of India to a great extent.
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ii.
Common Traditions: In the context of this report it is helpful to highlight a difference between "traditions"
and "activities/interests". Tradition can be defined as the following: An inherited, established, or customary pattern of thought, action, or behavior (as a religious practice or a social custom).Cultural continuity in social attitudes, customs, and institutions."
iii.
Cultural Continuity: Social attitudes have changed in that citizens of a society now expect the various
elements of that society to be better informed than previously. They also expect to be able to access more information about a specific product, service or organization so that they can make informed decisions with regard to their interactions with that entity.
iv.
Institutions:
The word institutions can incorporate a wide variety of organizations. For the purposes of this report the institutions will examine: 1. Governments, 2. Commercial businesses, 3. News & media organizations, 4. Educational organizations.
The focus is on how information technology development has improved the processes by which these institutions accomplish their tasks or goals.
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Equity analysis: Equity analysis is researching and analyzing equities, or stocks. These
stocks trade on various stock markets such as the BSE, NSE, New York Stock Exchange, and NASDAQ, AMEX or foreign stock markets.
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Valuation of Equity:
The methods used to analyze securities and market investment decision falls into two very broad categories: Technical Analysis Fundamental Analysis
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A Technical analyst believes that share prices are determined by the demand and supply forces operating in the market. These demand and supply forces in turn are influenced by a number of fundamental factors as well as certain psychological or emotional factors. Many of these factors cannot be quantified. The combined impact of all these factors is reflected in the share price movement. A technical analyst therefore concentrates on the movement of share prices. He claims that by examining past share price movements future share prices can be accurately predicted. Technical analysis is the name given to forecasting techniques that utilize historical share price data.
The rationale behind technical analysis is that share price behavior repeats itself over time and analysts attempt to derive methods to predict this repetition. A technical analyst looks at the past share price data to see if he can establish any patterns. He then looks at current price data to see if any of the established patterns are applicable and, if so, extrapolations can be made to predict the future price movements. Although past share prices are the major data used by technical analyst, other statistics such as volume of trading and stock market indices are also utilized to some extent.
The basic premise of technical analysis is that prices move in trends or waves which may be upward or downward. It is believed that the present trends are influenced by the past trends and that the projection of future trends is possible by an analysis of past price trends. A technical analyst, therefore, analyses the price and volume movements of individuals securities as well as the market index. Thus, technical analysis is really a study of past or historical price and volume movements so as to predict the future stock price behavior.
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Fundamental analysis thus involves three steps: 1. Economy Analysis. 2. Industry Analysis. 3. Company Analysis.
Here are some of the key economic variables that an investor must monitor as part of his fundamental analysis:
The prospective demand for the product is promising in this stage and the technology of the product is low. The demand for the product attracts many producers to produce the particular product. There would be severe competition and only fittest companies survive this stage. The producers try to develop brand name, differentiate the product and create a product image. In this situation, it is difficult to select companies for investment because the survival rate is unknown. b. Rapid growth stage:
This stage starts with the appearance of surviving firms from the pioneering stage. The companies that have withstood the competition grow strongly in market share and financial performance. The technology of the production would have improved resulting in low cost of production and good quality products. The companies have stable growth rate in this stage and they declare dividend to the shareholders. It is advisable to invest in the shares of these companies.
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Demand for the particular product and the earnings of the companies in the industry decline. It is better to avoid investing in the shares of the low growth industry even in the boom period. Investment in the shares of these types of companies leads to erosion of capital.
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Dearth of suitable candidates Quality of work Initiatives taken by the Government (setting Less Research and Development up Hi-Tech Parks and implementation of egovernance projects) Contribution of IT sector to Indias GDP is Many global players have set-up operations still rather small. in India like Microsoft, Oracle, Adobe, etc. Employee salaries in IT sector are Following Quality Standards such as ISO increasing tremendously. Low wages benefit
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Opportunities High quality IT education market Increasing number of working age people India 's well-developed soft infrastructure
Threats Lack of data security systems Countries like China and Philippines with qualified workforce making efforts to
Upcoming International Players in the overcome the English language barrier market IT development concentrated in a few cities only
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Rohatgi (1973) This research explains that the basic function of the stock market is to provide ready marketability or liquidity to holdings of securities. The ideal stock market is one that can provide instantaneous and unlimited liquidity. But it is reasonable to assume that a prudent long-term investor in equities would provide for his immediate cash needs. This is in agreement with the three motives of liquidity preference. If so, one would expect not `instant' liquidity, but moderate liquidity. It will be unreasonable for any investor to suppose that his equity holdings are as good as cash.
Mc Kinnon and Shaw (1973) This study investigated the advocate liberalization of financial market. Study argues the state intervention in setting interest rates and quantitative measures of resource allocation adversely affect, not only allocative efficiency but also depress the aggregate saving rate in less developed economies.
Khan (1976) This study of researcher examines the role, and the cost of raising funds from the market. The study goes on to suggest appropriate measures to enable the NIM to play a part in consonance with the requirements of the planned growth of industry. The core of the study deals with the new issues and company finance, the structure of underwriting, and the cost of capital. The study has important policy implications in terms of its relevance to the national economy. In the process of industrialization, a developed NIM would be instrumental in forging an organic link between the collection and distribution of industrial capital.
Blume and Friend (1978) This study states that the proportion of stock owned by institutional investors in America has increased sharply, while that owned by individual investors has decreased. They analyze the effects of the shift in stock ownership from individuals to institutions on the efficiency of equity market. They also examine, the pros and cons of numerous proposals for improving
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Panda (1980) In this, researcher has studied the role of stock exchanges in India before and after independence. The study reveals that listed stocks covered four-fifths of the joint stock sector companies. Investment in securities was no longer the monopoly of any particular class or of a small group of people. It attracted the attention of a large number of small and middle class individuals. It was observed that a large proportion of savings went in the first instance into purchase of securities already issued.
Gupta (1981) This research is an extensive study titled `Return on New Equity Issues' which states that the investment performance of new issues of equity shares, especially those of new companies, deserve separate analysis. The factor significantly influencing the rate of return on new issues to the original buyers is the `fixed price' at which they are issued. The return on equities includes dividends and capital appreciation. The study presents sound estimates of rates of return on equities, and examines the variability of such returns over time. The findings of this study suggest that the market seems to function largely on a `hit or miss' basis rather than on the basis of informed beliefs about the long-term prospects of individual enterprises. The main reason for the market's irrationality appears to be the preponderance of speculative influences over investment influences.
Gujarathi (1981) This study of researcher answers the question of the risk - adjusted return in the issue market. It is a significant work in the field of new issues in India. The difficulty of estimating the risk (Beta) of newly issued securities forced Guajarathi to use complicated methodology for arriving at the risk-adjusted return. His conclusion is that investors in the new issue market in 1970s earned an extra normal return of nearly 2 per cent per month.
Chitale (1983) This research has evaluated the underlying causes of the growing shortage of equity finance for funding new industrial enterprises in the private sector during the period 1960-1980. The
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Gupta (1985) This study has analyzed share price behavior in India in the context of efficient market hypothesis. Using data over a period of five years (January 1971 to March 1976) from the Indian stock market, the author has examined the applicability of Random Walk Hypothesis in describing share price behavior under the Indian conditions.
Cho (1986) This study of researcher argues that financial market liberalization may remain, incomplete without an efficient market for equity capital as a means of spreading risk and reward.
Gupta (1987) This study emphasis on the geographic distribution of corporate shareholders in India. The study shows that a process of `securitization' is going on in the Indian capital market. The spotlight of the study is on equity shareholders. It covers individual holders of industrial securities in India. It is based on a sample of 1,09,031 security holders drawn from 165 companies distributed over various regions of India. The study brings out the dominant share of the metropolitan cities. The respective percentage shares as per data related to 1983- 84 were; Bombay (35.3), Calcutta (10.0), Delhi (9.5) and Madras (3.9). An important factor for the very meager share of small towns and villages in the country's share - holding population, according to Gupta, is the lack of infrastructure needed for facilitating share transactions.
Deva Kumar (1987) This study reveals that earlier to 1985, there were very few investors and they were knowledgeable. During the 1985 boom, thousands of new investors invaded the market. The new investors suffered heavy losses compared to the professionals. A good number of new investors have walked out of the stock market to safer areas like UTI Units, NSC, etc. There is a mild shift of investment preferences to mutual funds also.
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Narayana Rao and Bhole (1990) This research point out that over longer periods of time, positive rate of return was being provided by equities, but in the short-run, the real return was often negative. The regression analysis shows that the nominal total return on equities in India has increased, but not in proportion to an increase in the rate of inflation. The coefficient of inflation is found to be nearer to zero than one. The real return on equity has been found negatively related to inflation throughout all periods. Thus equity share in India may only be a weak or partial hedge against inflation.
Gupta (1991) Researcher has made an extensive survey of Indian share-owners, around mid-1990. It throws light on many unknown aspects of the market for shares and other financial assets. The study covers a wide range of aspects and has generated much new data on investors, their investment habits and preferences. The study involved nearly 6000 households spread over more than 100 cities of India. According to the study there do around 38 lakh share owning households and about 90 to 95 lakh shares own individuals in India. The number of debenture - owning households is about 29 lakh and most of them are shareowners also. The most outstanding development is that share ownership has become a middle class phenomenon (7501'0). Nearly 6.5 percentages of the Indian households own shares and are mainly restricted to cities. The analysis reveals that nearly 75% of the share owners are long term investors.
Anshuman and Chandra (1991) This study of researcher has trace out the government policy of favoring small shareholders in terms of allotment of shares. They argue that such a policy suffers from several lacunae such as higher issue and servicing costs and lesser vigilance about the functioning of companies because of inadequate knowledge.
Jawahar Lal (1992) This study presents a profile of Indian investors and evaluates their investment decisions. He made an effort to study their familiarity with, and comprehension of financial information,
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Fama and French, (1992) This study titled, The cross section of expected returns, Journal of Finance identifies that value stocks (high book/market) significantly outperform growth stocks (low book/market). The average return of the highest book/market decile is reported to be one per cent per month higher than the average return for the lowest book/market decile. (www.aimsinternational.org).
Mayer (1992) This research has examined using company balance sheet data, found that internal resources finance bulk of corporate investment in major OECD countries and the roll of the stock market is very limited.
Pyare Lal Singh (1993) This study titled, Indian Capital Market, a functional analysis, depicts the primary market as a perennial source of supply of funds. It mobilizes the savings from the different sectors of the economy like households, public and private corporate sectors. The number of investors increased from 20 lakhs in 1980 to 150 lakhs in 1990 (7. 5 times). In financing of the project costs of the companies with different sources of financing, the contribution of the securities has risen from 35.01% in 1981 to 52.94% in 1989. In the total volume of the securities issued, the contribution of debentures / bonds in recent years has increased significantly from 16. 21 per cent to 30.14 per cent.
Subhash Chander and Ashwani Kansara (1994) This study has surveyed the perceived significance of the information contained in the abridged prospectus attached to the application form for shares / debentures of companies. For an existing company, the information necessary for investment decisions could be obtained from newspapers, magazines, annual reports, prospectus etc. But for a new
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Bajpai (1994) This study investigated that, the liquidity aspect is an essential constituent of an efficient stock market, a sub-system of capital market. The growth of the equity in the 1980s was supported by the actual experience of the Indian investors. Equity prices between 1978 and 1993 have outperformed other popular avenues of investment. The chance of lucrative capital gain along with annual return from equity investment attracted investors in a large scale towards primary and secondary capital markets. It highlighted the need for liquidity of investment. The fact is that only 6 per cent of the listed scripts remained on the active trading, and 28 per cent of them were traded once in a year just to satisfy the requirements of listing agreement.
Bhole (1995) This study "The Indian Capital Market at Crossroads" finds that various categories of people in India have become preoccupied, rather obsessed with, the industrial securities market since the middle of the 1980s, particularly since the launching of the New Economic Policy (NEP) in the middle of 1991. The stock market has been regarded and projected as the barometer of the health of the economy. The essentiality of the growth or spread of equity culture or equity is being constantly stressed. Though the stock market activity has been subject to wide fluctuations, the long-term trend has been one of steep increase. An accelerating or exponential increase in new issues has occurred during the 80s and 90s. The investors' asset preference has somewhat shifted from deposits to industrial securities.
Sahadevan and Thirpal Raju (1995) This study investigates into the lead-lag relationship between money supply and stock return in the Indian context. The study has attempted to trace the relationship between stock returns
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Amanulla and Kamaiah (1995) This research makes an attempt to assess the Indian stock market efficiency by using market integration approaches. The results show that there is no evidence in favour of market efficiency of Bombay, Madras and Calcutta Stock Exchanges, while the results confirm the existence of market efficiency in Ahmedabad and Delhi Stock Exchanges.
Feldman and Kumar (1995) This research shows the potential benefits of equity markets to developing countries. They argue that several constraints prevent banks from providing funds for long-term investment. Improving the functioning of secondary market trading has the added advantage of facilitating the primary issuance of equity shares. The combined capitalization of some 38 emerging stock markets had increased dramatically from less than $ 100 billion in 1983 to nearly $2 trillion by 1993. Information flows, disclosure requirements, auditing and accounting standards and the existence of credit rating institutions have an important bearing on the development and operations of capital markets.
Dowen, R.J. (2001) This study of researcher extends the Abarbanell and Bushee (1997, 1998) research on topic Fundamental Information and Monetary Policy: The Implications for Earnings and Earnings Forecasts by including new information developed in finance-related literature as additional signals in the form of dividend yield, firm size and book-to-market value of equity ratio. Monetary policy is also identified as a variable that may form the relationship. This is based on the belief that monetary policy influences equity returns. Similar results were found. Monetary policy relates both to the observed level of the signals and the level of earnings change. However, monetary policy does not alter the degree to which future earnings are predictable from publicly available information.
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A CMIE (1995) This study on Initial Public Offering (IPO) points out that average annualized returns obtained from issue date to list date by IPOs was 339%. But these returns fade away with time, so that after one-month of listing, they drop to 256%. Annualized returns after three months fell to 206% and subsequently to 120% after one year from listing. Returns on IPOs are also highly volatile in the first few days of listing. By the end of sixty days from listing, the volatility drops to 25 % of what it was in the first ten days of listing.
Debojit Chakraborty (1997) This study of researcher tries to establish a relationship between major economic indicators and stock market behavior. It also analyses the stock market reactions to changes in the economic climate. The factors considered are inflation, money supply, and growth in GDP, fiscal deficit and credit deposit ratio. To find the trend in the stock markets, the BSE National Index of Equity Prices (Natex) which comprises 100 companies was taken as the index. The study shows that stock market movements are largely influenced by, broad money supply, inflation and fiscal deficit apart from political stability.
CMIE (1997) This study explains that the proportion of rights issues was down to 16% during the first three-quarters of the1996-'97 from 21% in 1995- With an objective to judge, what kind of issues from the primary market have provided returns to the investors, CMIE analyzed the
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From the available review of literature mentioned above, there was no article or studies which is related to my area of interest. Hence in order to bridge the gap between this, I have selected this topic for my research.
To analyze the financial health of selected IT companies stock. To examine the growth of IT sector in Indian capital market. To prepare comparative study of top IT companies. The primary objective of equity research is to analyze the earnings persistence. To find out potentiality of selected companies through current ratios. To check companies performance on the basis of historical data. To study and examine the relevance of fundamental analysis in investment decisions making process.
viii.
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Advantages of selling stock: A company can raise more capital than it could borrow. A company does not have to make periodic interest payments to creditors. A company does not have to make principal payments stock/shares play a major role in acquiring capital to the business in return investors are paid dividends to the shares they own.
The role of equity analysis is to provide information to the market. An efficient market relies on information: a lack of information creates inefficiencies that result in stocks being misrepresented (over or under valued). This is valuable because it fills information gaps so that each individual investor does not need to analyze every stock thereby making the markets more efficient.
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3.2.1: IT Services:
It can further be categorized into Information Services (IS) outsourcing, packaged software support and installation, systems integration, processing services, hardware support and installation and IT training and education.
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3.2.4: E Business:
(Electronic business) is carrying out business on the Internet; it includes buying and selling, serving customers and collaborating with business partners.
Major Trends:
The bar chart shows that the recruitment of engineers and IT professionals in the industry is growing at the Compound annual rate of 14.5% approximately. In the FY06, the direct employment in the IT-ITES sector was 1.3 million people and the indirect employment was 3 million approximately.
A trend in salary hikes along with abundant growth opportunities, IT sector is one of the highest paying sectors. The average increase in salary in IT sector across the levels was around 16% and the average increase in the ITeS BPO sector across the levels was in between16%-18% Requisites for balanced salaries Review of compensation according to the skills Developing talent in-house
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COMPANY
TCS INFOSYS WIPRO HP IBM SATYAM HCL PATNI POLARIS CISCO KPIT CUMMINS I-FLEX SOLUTIONS MICROSOFT DELL LARSEN & TURBO
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Opening up of newer geographies like Anticipated slowdown in the US economy Europe Strong volume growth Increase in offshore spending Wage inflation Higher attrition rate
M&A to increase reach, clients and Lack of proper infrastructure offerings Setting training and development centers to Competition from low cost countries, China, train fresh entrants Philippines, Vietnam
As it can be seen from the table above, researcher has clocked the highest Sales CAGR of 99% in the past five years, followed by HCL Infosystems (50%), Infosys (24%) and Wipro (22%). However, the highest margins are enjoyed by the software majors Infosys (28%), closely followed by Educomp (27%) and TCS (24%).
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Domestic Markets:
India's domestic market has also become a force to reckon with, as the existing IT infrastructure evolves both in terms of technology and depth of penetration. According to NASSCOM, domestic IT market (including hardware) reached US $24.3 billion in FY 2008-09 as against US$ 23.1 billion in FY 2007-08, a growth of 5.3 per cent. India Inc's demand for IT services and products has bolstered growth in the domestic sector with deal sizes going up remarkably and contracts worth US$ 50 million-US$100 million up for grabs. Such growth in the software and services sector has been achieved because of spectacular growths in some segments. According to research firm Gartner, India's personal computer (PC) market is likely to grow by 13.7 per cent to 11.1 million units in 2009, aided by a surge in demand for laptops. The laptop market is expected to grow by 37 per cent from 2009 to 3.69 million units and constitute a third of the total PC market. The securities market has essentially three categories of participants (i) the investors, (ii) the issuers, (iii) the intermediaries. The Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI), Ministry of Corporate Affairs (MCA) and the Department of Economic Affairs (DEA) of the Ministry of Finance regulate these participants.
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Regional Stock Exchanges: 1. Ahmedabad 2. Bangalore 3. Bhubaneswar 4. Calcutta 5. Cochin 6. Coimbatore 7. Delhi
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Type
1968 Mumbai, India Ratan Tata (Chairman) S Ramadorai (vice chairman) N Chandrasekaran (CEO & MD) S Mahalingam (Executive Director & CFO) Phiroz Vandrevala (Executive Director& Head, Global Corporate Affairs) Ajoy Mukherjee (VP& Head, Global Human Resources)
Industry
Software services
TCS Bancs Products Digital Certification Products Healthcare Management Systems IT consulting IT services Outsourcing BPO Software Product
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Wipro Infotech is a leading manufacturer of computer hardware and provider of IT services in India and the Middle East region. Part of Wipro Ltd, the $6.98 billion conglomerate and global leader in technology enabled solutions, the company leverages on the parent's philosophy of 'Applying Thought' to enable business results by being a transformation catalyst. Wipros vast IT services portfolio includes consulting, systems integration, application development and maintenance, technology infrastructure services, package implementation and R&D services among others.
Type
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Girish Paranjpye Key people (Joint CEO) Suresh Vaswani (Joint CEO) SA Sudarshan
Industry
IT Services
Services
IT Consulting Business Process Outsourcing Product Engineering Solutions Technology Infrastructure Services
Revenue
Operating income
Profit
Total equity
Total assets
Employees
140569 (2012)
Website
www.wipro.com
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Type Founded
N R Narayana Murthy Nandan Nilekani N. S. RaghavanKris Founder(s) Gopalakrishnan S. D. Shibulal K. Dinesh Ashok Arora
Headquarter
Bangalore, India
N R Narayana Murthy (Chairman) Key People Kris Gopalakrishnan (CEO) & (MD) S. D. Shibulal (COO) & (Director)
Software services IT Services US $ 7.4 billion (2013) US$ 8.53 billion (2013) US$ 7.33 billion (2013) www.infosys.com
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Aerospace Banking, Financial Services & Insurance Energy and Utilities Life Sciences & Healthcare Manufacturing, Chemicals & Automotive Public Services & Education Retail Consumer Packaged Goods Travel, Transport, Logistics Telecom, Infrastructure, Media and Entertainment & Semiconductors Information Technology
Type Traded as
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Type Traded as
Key people
Shiv Nadar (Chairman & CSO) Vineet Nayar (VC & Joint Managing Director) Anant Gupta (President & CEO)
IT, business consulting and outsourcing services US$ 4.54 billion (Apr 2013) www.hcltech.com
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engagements mostly in the Telecom sector. Its executive management team consists of Vineet Nayyar(Executive Vice Chairman), CP Gurnani(MD), Sujit Baksi (President Corporate Affairs & Business Services Group), Sonjoy Anand (CFO), L. Ravichandran (President - IT Services), Amitava Roy (Chief Operating Officer), Sujitha Karnad (Senior Vice President - HR & QMG for IT Services).
Type
Industry
IT services, IT consulting
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Traded as
Conglomerate Mumbai, India (1938) Henning Holck Larse Soren Kristian Tobro
Headquarters
Key people
Products
Construction Heavy equipment Electrical equipment Power Shipbuilding Financial Services IT Services
Revenue Operating income Net income Total assets Total equity Website
US$ 13.5 billion (2012) US$ 1.488 billion (2012) US$ 907 million (2012) US$ 22.84 billion (2012 US$ 5.978 billion (2012) www.larsentoubro.com
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Earnings per share = Net profit/Number of shares outstanding The EPS is a good measure of profitability and when compared with EPS of similar other companies, it gives a view of the comparative earnings or earnings power of a firm. EPS calculated for a number of years indicates whether or not earning power of the company has increased. e) Dividend per Share (DPS): The extent of payment of dividend to the shareholders is measured in the form of dividend per share. The dividend per share gives the amount of cash flow from the company to the owners and is calculated as follows: Dividend per share = Total dividend payment / Number of shares outstanding The payment of dividend can have several interpretations to the shareholder. The distribution of dividend could be thought of as the distribution of excess profits/abnormal profits by the company. On the other hand, it could also be negatively interpreted as lack of investment opportunities. In all, dividend payout gives the extent of inflows to the shareholders from the company. f) Dividend Payout Ratio: From the profits of each company a cash flow called dividend is distributed among its shareholders. This is the continuous stream of cash flow to the owners of shares, apart from
KRUPANIDHI DEGREE COLLEGE Page 64
4.3. TCS (TATA CONSULTANCY SERVICES): Dividend: Based on the Companys performance, the Directors are pleased to recommend for approval of the members a nal dividend of 8 per share and a special dividend of 8 per share for the nancial year 2011-12 taking the total dividend to 25 per share (previous year 14 per share) on the capital of 1,95,72,20,996 equity shares of 1 each. The nal dividend and the special dividend on the equity shares, if approved by the members would involve a cash outow of 3,639.57 crores including dividend tax. For equity shares, the proposed nal dividend (including special dividend), interim dividends already paid and dividend tax for the nancial year 2011-12 would aggregate 5,686.82 crores, resulting in a payout of 51.93% of unconsolidated prot of the Company (54.75% of consolidated prot).
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i). Debt to Equity ratio = Long term debts/ Equity share holder fund Table No. 4.1 Showing Debt to equity ratio of TCS Year Debt to Equity Ratio Mar '12 0.01 Mar '11 0.01 Mar '10 0.01 Mar '09 0.04 Mar '08 0.05
Graph No. 4.1 Showing Debt to equity ratio of TCS Analysis: Researcher see that debt to equity ratio in mar 2008 was 0.05 and in mar 09 it was 0.04 and next year in mar 10 it came to 0.01 and still the same. Interpretation: Debt to equity ratio of company is decreasing from 2008 to 2012 in last 5 years it decreased to 80%. A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense.
KRUPANIDHI DEGREE COLLEGE Page 67
ii) EPS = Earnings available to Equity share holder/ No of Equity shares For the year ended 2011/2012 = For the year ended 2010/2011 = For the year ended 2009/2010 = For the year ended 2008/2009 = For the year ended 2007/2008 = 10523/19572.21 = 53.65
Table No. 4.2 showing EPS of TCS (in Rs. Cr.) Year EPS Mar 12 53.65 Mar 11 46.90 Mar 10 36.15 Mar 09 54.20 Mar 08 51.70
ratio
60 50 40 30 20 10 0 mar'08 mar'09 mar'10 mar'11 mar'12 ratio
Graph No. 4.2 Showing EPS of TCS Analysis: From the above table it can be seen that EPS of company in 2008 was 51.70 and it is increased in next year in 2008/09 by 4.84%. And there was decrease in EPS in the year 2009/2010 by 49.93%. Again EPS increases by 14.39% in March 2012 as compare to its previous year.
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iii) P/E ratio: Market price of share / EPS For the year ended 2007/2008 = For the year ended 2008/2009 = For the year ended 2009/2010 = For the year ended 2010/2011 = For the year ended 2011/2012 = 1430/51.70 1430/54.20 1430/36.15 1430/46.90 1430/53.65 = 27.66 = 26.39 = 39.56 = 30.50 = 26.65 (in Rs. Cr.)
P/E ratio
40 35 30 25 20 15 10 5 0 2007/08 2008/09 2009/10 2010/11 2011/12 P/E ratio
Graph No. 4.3 showing P/E ratio of TCS Analysis: From the above calculation it can be seen that price earnings ratio of company was decreased from 27.66 in 2007/08 to 26.39 in 2008/09. But in next financial year 2009/10 it increased to 39.56 and again decreased in next year 30.50 and 26.65 in 2010/11 and 2011/12 respectively. Interpretation: Researcher sees that there was up and down in P/E ratio of the company from 2007/08 to 201/12.
KRUPANIDHI DEGREE COLLEGE Page 69
current ratio
3 2.5 2 1.5 1 0.5 0 Mar '12 Mar '11 Mar '10 Mar '09 Mar '08 current ratio
Graph No 4.4 showing current ratio of TCS Analysis: The above table shows current ratio of the company which is 2.99:1 in 2007/08 and increased to 2.22:1 in next year mar 2009. But it decreased to 1.87:1 in mar 2010 and again increases to 2.69:1 in year 2011-12. Interpretation: The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. So for TCS, current ratio shows that they have more current assets than current liability. As graph shows that they have potential to pay its obligation so short term solvency for TCS is strong.
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Ratio
Graph No. 4.5 showing Debt to equity ratio of Wipro Analysis: From the above table researcher has observed that the debt to equity ratio of Wipro in 2007/08 was 0.38 and increased in 2008/09 to 0.42 and again it decreased to 0.34 in next 2009-10 year and 0.21 in 2011-12. Interpretation: From the above graph it can be seen that there is decrement after 2008/09 to 2011/12 it may be because of increase in employment of equity capital to its capital structure.
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current ratio
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 mar'12 mar'11 mar'10 mar'09 mar'08
current ratio
Graph No. 4.6 showing current ratio of Wipro Analysis: From the table it is analyzed that current ratio of company was decreased from 1.63:1 to 1.45:1 in mar 2009 but later on it is increasing continuously till 1.83 in mar 2012. Interpretation: Graph shows that the company does not have that much potential to pay its obligation as they have good current ratio but it should be more than ideal ratio 2:1 and here ratio has increased to 12.26 % from 2008 to 2012.
iii) EPS = Earnings available to Equity share holder/ No of Equity shares For the year ended 2007/2008 = For the year ended 2008/2009 = For the year ended 2009/2010 = For the year ended 2010/2011 =
KRUPANIDHI DEGREE COLLEGE
Table No. 4.6 showing EPS of Wipro (in Rs. Cr.) Year EPS 2007-08 22.25 2008-09 26.44 2009-10 31.28 2010-11 21.45 2011-12 22.76
EPS
35 30 25 20 15 10 5 0 2007-08 2008-09 2009-10 2010-11 2011-12 eps
Graph No. 4.7 showing EPS per year of Wipro Analysis: The above table shows EPS of Wipro is 22.25 in 2007-08, in next year 2008-09 it increased to 26.44 and again in next year 2009-10 it is increased to 31.28. But after it is decreased to 21.45 in 2010-11. Interpretation: From the graph shown above it can be said that there is increment in EPS till 2009-10 continuously but after that it is decreased and again continue to grow.
iv) P/E ratio = Market value per share/ Earning per share (EPS) (in Rs. Cr.) For the year ended 2007/2008 = For the year ended 2008/2009 = For the year ended 2009/2010 = For the year ended 2010/2011 = For the year ended 2011/2012 =
KRUPANIDHI DEGREE COLLEGE
400/22.25 = 17.98 400/26.44 = 15.12 400/31.28 = 12.79 400/21.45 = 18.64 400/22.76 = 17.57
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P/E ratio
20 15 10 5 0 2007/08 2008/09 2009/10 2010/11 2011/12 P/E ratio
Graph No. 4.8 Showing P/E ratio of Wipro Analysis: Table shows P/E ratio which was decreased to 18.91% from 2007-08 to 2008-09 and again it is decreased and comes to 12.79 in 2009-10. In 2010-11 it is increased by 45.74% compare to previous year and again it comes down to 17.57 in 2011-12 Interpretation: Researcher sees that there is decrease in P/E ratio from2007-08 to 2009-10 but after that it is growing.
i) Debt to Equity ratio = Long term debts/ Equity share holder fund Not available
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Table No. 4.7 showing EPS of Infosys (in Rs. Cr.) Year EPS March 12 164.20 March 11 145.10 March 10 119.05 March 09 109.20 March 08 104.53
EPS
eps
mar'12
mar'11
mar'10
mar'09
mar'08
Graph No. 4.9 showing EPS of Infosys Analysis: From above table it is analyzed that in mar 08 EPS of Infosys company was 104.53 and in mar 09 it is increased to 109.20 and again in next year mar 10 it is increased to 119.05 and continue increasing 145.10, 164.20 in year mar11 and mar12 respectively. Interpretation: EPS of Infosys is increasing continuously from mar 08 to mar 12 which is a good indicator for the growth of the company as well as for investors.
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current ratio
5 4 3 current ratio 2 1 0 mar'12 mar'11 mar'10 mar'09 mar'08
Graph No. 4.10 showing current ratio of Infosys Analysis: Table shows the Current ratio of Infosys which is 3.13:1 in mar 2008 and increased to 4.30:1 in mar 09. And in after that it is decreased to 3.98:1 in mar 10 and grows to 4.34:1 in mar 2012. The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. So for Infosys, current ratio shows that they have more current assets than current liability. Interpretation: According to researcher company shows a good potential as they have more than ideal ratio 2:1 in last 5 years. Current ratio is increased from 3.13 to 4.34 in last 5 years.
iv) P/E ratio= Market value per share/ Earning per share (EPS) For the year ended 2011/2012 = 2774/145.10 = 19.12
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P/E ratio
35 30 25 20 15 10 5 0 2007/08 2008/09 2009/10 2010/11 2011/12 P/E ratio
Graph No. 4.11 Showing P/E ratio of Infosys Analysis: From the above table it is analyzed that in 2007-08 P/E ratio was 34.05 and then after it is decreased to 26.53 in 2008-09 and in next year again it is decreased to 25.40 and keep on decreasing 23.30 in and 2011-12 to 19.29. Interpretation: P/E ratio of Infosys is decreasing continuously from 35.05 to 19.12 in 2011/12 to 2007/08.
4.6. Data analysis of Satyam computers services: i). Calculation of EPS: EPS = Earnings available to Equity share holder/ No of Equity shares For the year ended 2007/2008 =
KRUPANIDHI DEGREE COLLEGE
1687.89/6704.79
= 25.17
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1297.60/11767.98 = 11.03
Table No. 4.9 showing EPS of Satyam computer services (in Rs. Cr.) Year EPS (Rs.) Reported Net Profit (cr) Mar '12 11.03 1,297.60 Mar '11 -1.20 -140.70 Mar '10 -1.05 -123.90 Mar '09 -121.30 -8,174.60 Mar '08 25.17 1,687.89
EPS
40 20 0 -20 -40 -60 -80 -100 -120 -140 mar'12 mar'11 mar'10 mar'09 mar'08
Graph No. 4.12 showing EPS of Satyam computers services Analysis: From the above table it shows that the company was performing well till 2008 but after that EPS of company decreases to -121.30 to in mar 2009 then it is increased to -1.05 in mar 2010 again it is decreased to -1.20 in mar 2011. And then after EPS has increased up to 11.03 in mar12.
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ii). Debt to equity ratio: = Long term debts/ Equity share holder fund Or Total debt/Net worth Table No. 4.10 showing Debt to equity ratio of Satyam computer services Year Debt Mar '12 to 0.01 Mar '11 0.01 Mar '10 0.02 Mar '09 NA Mar '08 NA
equity ratio
ratio
0.02 0.015 0.01 0.005 0 2007/08 2008/09 2009/10 2010/11 2011/12 ratio
Graph No. 4.13 showing Debt to equity ratio of Satyam computer services Analysis: Above table shows the debt to equity ratio of Satyam which is decreasing from 0.02 to 0.01 from mar10 to mar 11 and after that in mar 12 in remains same as previous year to 0.01. Interpretation: Graph shows the decreasing debt to equity of Satyam computers from 2009/10 to 2011/12.
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iii). Current ratio: Current ratio= current assets/ current liability Table No. 4.11 showing current ratio of Satyam computer services (in Rs. Cr.) Year current ratio March 08 4.0 March 09 0.84 March 10 1.64 March 11 1.52 March 12 2.16
CURRENT RATIO
4 3.5 3 2.5 2 1.5 1 0.5 0 Mar '12 Mar '11 Mar '10 Mar '09 Mar '08
CURRENT RATIO
Graph No. 4.14 showing current ratio of Satyam computer services Analysis: Calculation in the above table shows the current ratio of Satyam computers which was 4:1 in 2007/08 then after it decreased to 0.84 in mar 2009.current ratio is increased to 1.64 and again increased in 2011/12 to 2.16. Interpretation: Researcher analyses in the above graph that current ratio is decreased suddenly from 4:1 to 0.84:1 in mar 2009 because of scandal and then after it is growing slowly.
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P/E ratio
20 0 -20 -40 -60 -80 -100 -120 2007/08 2008/09 2009/10 2010/11 2011/12 P/E ratio
Analysis: The above calculation of P/E ratio explains that in 2007-08 P/E ratio was 4.48 but in next year 2008-09 it was decreased to -0.93 and again in year 2009-10 it decreases to 107.60 but after it has increased to 10.24 in 2011-12. Interpretation: Above table shows P/E ratio is decreasing continuously from 2007/08 to 2010/11 and goes in negative but in 2011/12 it has increased to 10.24 because of market share has increased and EPS of company has also increased.
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ratio
0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 jun'08 jun'09 jun'10 jun'11 jun'12 ratio
Analysis: Above table calculation shows that in 2008/09 debt to equity ratio was 0.01 and in next year it has increased to 0.64 but after this year ratio starts decreasing every year continuously till June 2012 to 0.16. Interpretation: Graph shows continuous decrease in debt to equity after Jun 2009 till Jun 12.
(ii) EPS = Earnings available to Equity share holder/ No of Equity shares For the year ended 2007/2008 = For the year ended 2008/2009 =
KRUPANIDHI DEGREE COLLEGE
1053.83/6663.40 1319.45/6702.57
= 15.82 = 19.69
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Table No. 4.13 showing EPS of HCL Technologies (in Rs.) YearEPSJun12 35.01 Jun11 23.91 Jun10 18.55 Jun09 19.69 Jun08 15.82
eps
40 35 30 25 20 15 10 5 0 june'12 jun'11 jun'10 jun'09 jun'08 eps
Analysis: Above table shows that there was overall increment in EPS of the company. In jun08 EPS was 15.82 and increased to 19.62 in jun09 but in next year it has decreased to 18.55. Again from jun10 EPS was increased from 18.55 to 35.01 in jun12. Interpretation: From the above graph researcher sees that EPS of company is good and it is increasing per year so it is advisable to invest in this company for long term.
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current ratio
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 june'12 jun'11 jun'10 jun'09 jun'08
current ratio
Graph No. 4.18 Showing Current ratio of HCL Technologies Analysis: From the above table it shows current ratio of HCL which was 1.48 in jun08 and decreased to 0.69. Again in next year jun10 it has increased to 1.59 and continues growing to 1.78 in jun11 but in year table shows decrease of 1.36 in jun12. Interpretation: The above analysis shows the current ratio of HCL from five year which is increasing and decreasing every year, in June 2011 shows the better position of the company. The higher the current ratio, the more capable the company is of paying its obligations.
(iv) P/E ratio = Market value per share/ Earning per share (EPS) (in Rs.) For the year June 2012 = For the year June 2011 = 694/35.01 694/23.91 = 19.82 = 29.02
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ratio
45 40 35 30 25 20 15 10 5 0 jun'08 jun'09 jun'10 jun'11 jun'12
ratio
Graph No. 4.19 showing P/E ratio of HCL Technologies. Analysis: Above table shows P/E ratio of HCL techno. Which was 43.86 in Jun 08 and decreased to 35.24 and again it is increased to 37.41 and after that it is decreasing till 19.82 in jun2012. Interpretation: The above graph analysis shows that companies P/E is came down in last few years which were 43.86 in 2008 and falls to 19.82 in 2012.
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debt to equity
0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 mar'12 mar'11 mar'10 mar'09 mar'08 debt to equity
Graph No. 4.20 showing Debt to equity of Tech Mahindra Analysis: The above table describes the debt to equity ratio of company which was 0.02 in 2008 and increased to 0.74 in mar10 and after that it decreases to 0.54 in mar11 and in next year again it falls to 0.28. Interpretation: Above calculation shows that debt to equity of companys performance in year 2010 was good but after that it is decreasing till 2012. But as compare to 2008 company is performing well now.
ii) EPS = Earnings available to Equity share holder/ No of Equity shares For the year ended 2007/2008 = For the year ended 2008/2009 = For the year ended 2009/2010 = For the year ended 2010/2011 = For the year ended 2011/2012 = 329.40/1213.63 1014.60/1217.34 703.20/1223.20 435.60/1259.55 588.80/1274.87 = 27.14 = 83.35 = 57.49 = 34.58 = 46.19
Table No. 4.16 showing EPS of Tech Mahindra (in Rs.) YearEPS 2011/2012 46.19 2010/2011 34.58 2009/2010 57.49 2008/2009 83.35 2007/2008 27.14
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eps
100 80 60 eps 40 20 0 mar'12 mar'11 mar'10 mar'09 mar'08
Graph No. 4.21 Showing EPS of Tech Mahindra Analysis: Above table shows EPS of company which was 27.14 in 2008 and grows to 83.35 in 2010, then it decreases to 57.49 in mar10, again it decreases to 34.58 as compared to last year and increased to 46.19 in the year 2012. Interpretation: Above graph shows EPS of company that has given good return to shareholders and performed well in 2009 but after that it is decreasing for next two years.
Table No. 4.17 showing current ratio of Tech Mahindra YearCurrent ratio: Mar 12 1.09 Mar '11 1.70 Mar '10 1.53 Mar '09 1.98 Mar '08 1.63
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2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2007/08 2008/09 2009/10 2010/11 2011/12 ratio
Graph No. 4.22 showing current ratio of Tech Mahindra Analysis: Companys current ratio in 2008 was 1.63 and then in next year it is raised to 1.98. In year 2010 current ratio was 1.53 which was less compared to last year but again it has increased to 1.70 in 2011 and decreased to 1.09 in year 2012. Interpretation: The ideal ratio for current ratio is 2:1 and company have good ratio as it shows the potentiality for its obligation.
iv) P/E ratio = Market value per share/ Earning per share (EPS) For the year ended 2007/2008 For the year ended 2008/2009 For the year ended 2009/2010 For the year ended 2010/2011 = = = = 990/27.14 = 36.48 990/83.35 = 11.87 990/57.49 = 17.22 990/34.58 = 28.62 990/46.19 = 21.43
(in Rs.)
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Graph No. 4.23 showing P/E ratio of Tech Mahindra Analysis: From the above data it is analyzed that EPS of Tech Mahindra in 2008 was 36.48 which was decreased to 11.87 in 2009 and again increased to 17.22, 28.62 in 2010, 2011 respectively and it decreases to 21.43 in 2012. Interpretation: Above data shows that Tech Mahindra has good earnings per share and performing well after recession time.
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debt to equity
0.6 0.5 0.4 0.3 0.2 0.1 0 debt to equity
Graph No. 4.24 showing Debt to equity of L&T InfoTech Analysis: Above table shows debt to equity ratio of L&T Company which was 0.38 in mar 2008 and then it is increased to 0.53 in 2009 and decreased to 0.37 in 2010 and again increased to 0.37 in 2012. Interpretation: Analysis in graph describes debt to equity of company which is showing good performance of company in last 5 years.
ii) EPS = Earnings available to Equity share holder/ No of Equity shares For the year ended 2007/2008 = For the year ended 2008/2009 = For the year ended 2009/2010 = For the year ended 2010/2011 = For the year ended 2011/2012 = 2257.82 /2923.27 2934.66/5856.88 5442.32/6021.95 4447.66/6088.52 4682.29/6123.99 = 77.24 = 50.11 = 90.37 = 73.05 = 76.46
Table No. 4.19 showing EPS of L&T InfoTech (in Rs.) YearEPS: 2011/2012 76.46 2011/2012 73.05 2011/2012 90.37 2008/2009 50.11 2007/2008 77.24
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EPS
100 80 60 eps 40 20 0 Mar-12 mar'11 mar'10 mar'09 mar'08
Graph No. 4.25 showing EPS of L&T InfoTech Analysis: Above data shows EPS of company as 77.24 in mar08 which is decreased to 50.11 in mar09, again EPS is increased to 90.27 in mar10 and decreased to 73.05 in mar11 and it grows to 76.46 in 2012. Interpretation: According to above data company is good for long term investment as EPS of company is well in last few years. Company has given good return to shareholders.
iii) Current ratio= current assets/ current liability Table No. 4.20 showing current ratio of L&T InfoTech YearCurrent ratio: Mar '12 1.20 Mar '11 1.20 Mar '10 1.19 Mar '09 1.22 Mar '08 1.09
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current ratio
1.22 1.2 1.18 1.16 1.14 1.12 1.1 1.08 1.06 1.04 1.02 mar'12 mar'11 mar'10 mar'09 mar'08
current ratio
Graph No. 4.26 showing current ratio of L&T InfoTech Analysis: Above table shows the current ratio of L&T Company which was 1.09 in mar 2008 and 1.22 in 2009 which is decreased to 1.19 in mar10 and 1.20 in 2011, 2012. Interpretation: Above graph shows the current ratio of company is not more than 2 but ideal ratio says it should be 2:1. An ideal current ratio would be 2, indicating that even if the current assets are to be reduced by half; the creditors will be able to able to get their money in full.
iv) P/E ratio = Market value per share/ Earning per share (EPS) For the year ended 2007/2008 For the year ended 2008/2009 For the year ended 2009/2010 For the year ended 2010/2011 For the year ended 2011/2012 = = = = = 1457/77.24 1457/50.11 1457/90.37 1457/73.05 1457/76.46 = 18.86 = = = 29.07 16.12 19.94
= 19.05
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P/E ratio
30 25 20 15 10 5 0 ratio
Graph No. 4.27 showing P/E ratio of L&T InfoTech Analysis: Above data of P/E ratio of company says that it was 18.86 in 2008 which is increased to 29.07 (2009) at high in last 45 five years and again falls to 16.12(low in 2010). Again it starts increasing to 19.94 in 2011 and decreases to 19.05.
Interpretation: Above graph describes that company was performing well in 2009 but after that P/E ratio of company falls. If P/E ratio is decreasing means growth and market share of company is also decreasing.
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An investor must take research about stock of company and its previous data before
investing. Current ratio must be improved by company and it should be in ideal ratio 2:1 so that there are possibilities to meet the current obligations for the company.
Companies which are not much popular in stock market must adopt some strategies
for investors to encourage them to invest in their company. Few Suggestions for Right Stock Selection There are three factors which an investor must consider for selecting the right stocks. Business: An investor must look into what kind of business the company is doing, visibility of the business, its past track record, capital needs of the company for expansion etc. Balance Sheet: The investor must focus on its key financial ratios such as earnings per share, price-earnings ratio, debt-equity ratio, dividends per share etc. and he must also check whether the company is generating cash flows.
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The analysis gives an optimistic view about the industry and its growth which recommends the investors to keep a good watch on the major players to benefit in terms of returns on their investments.
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BIBLIOGRAPHY
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BIBLIOGRAPHY
1. A Theoretical Foundation for Technical Analysis," Journal of Technical Analysis, 59, 5-22, 2003 (University of Pittsburgh preprint 1994). 2. Ali, A., and Hwang, L. (2000). Country-Specific Factors Related to Financial Reporting and the Value Relevance of Accounting Data. Journal of Accounting Research, Vol. 38, No. 1, 1-21. http://dx.doi.org/10.2307/2672920 3. Allen, T., and M. S. Morton, eds. 1994. Information Technology and the Corporation of the 1990s. New York: Oxford University Press. 4. Atika Jauharia Hatta and Bambang Sugeng Dwiyant, The Company Fundamental Factors And Systematic Risk In Increasing Stock Price, Journal of Economics, Business, and Accountancy Ventura Volume No 15, No.2, August (2012), page 245256. 5. Chand, Vikram K. (2006), Reinventing public service delivery in India: Selected Case Studies, Sage Publications, ISBN 0-7619-3489-8. 6. David Keller, "Breakthroughs in Technical Analysis; New Thinking from the World's Top Minds," New York, Bloomberg Press, 2007 7. Dyna Seng Jason.R Hancock, Fundamental Analysis and the Prediction of Earnings, International Journal of Business and Management, Volume 7, No.3, February 2012, page 32-46, (2012). 8. Economies: Brazil, Russia, India, And China, International Business & Economic Research Journal Volume 7, No 3(2008),page 1-8. 9. Financial Planning Curriculum Framework". Financial Planning Standards Board. 2011. Retrieved 7 April 2012. 10. Graham, Benjamin; Dodd, David L. (1934). Security Analysis: Principles and Technique. New York: McGraw-Hill Book Co. ISBN 0-07-024496-0. 11. G. Caginalp and G. Constantine, "Statistical inference and modeling of momentum in stock prices," Applied Mathematical Finance 2, 225-242, 1995. 12. Griffioen, Technical Analysis in Financial Markets, Schwager, Jack D. Getting Started in Technical Analysis. Wiley, 1999, p. 2 13. "HCL Technologies Fast Facts". Hcltech.com. Retrieved 2012-07-25.
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