Equity Analysis & Research on NIFTY 50 Stocks
A PROJECT REPORT
Submitted by
DHRUVIN G BORADIA
PG - FINANCE Roll no-12 Batch 2012-14
In partial fulfillment for the award of the degree of
POST GRADUATE DIPLOMA IN MANAGEMENT
Under the Guidance of
Prof Namrata Acharya
THAKUR INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH KANDIVILI MUMBAI
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CERTIFICATE
This is to certify that this project report Analysis & Equity Analysis & Research on Nifty 50 stocks is a bonafide work of Dhruvin G Boradia in part completion of the Post Graduate Diploma in Management has been done under my guidance.
The project is in nature of original work that has not so far been submitted for any degree of this university. References of work and relative sources of information have been given at the end of the project.
Signature or the candidate
(Dhruvin Boradia)
Forwarded through the research guide
Signature of the guide
Name of the guide: Mrs Namrata Acharya Designation: Assistant Professor
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Table of Contents
Executive Summary ................................................................................................................... 4 1. 2. 3. 4. 5. 6. Company profile ............................................................................................................... 5 Introduction ...................................................................................................................... 6 2.1 What is NSE Index Nifty 50 ............................................................................................ 6 Scope of Study ................................................................................................................... 7 Companies in Nifty 50 ...................................................................................................... 7 Determining Targets of NIFTY 50 Stocks with their respective Sector P/E .............. 9 5.1 Companies Selected as per above working .................................................................... 12 Company Analysis & Research ..................................................................................... 13 6.1 GAIL India Ltd .............................................................................................................. 13 6.1 Hero Motocorp Ltd ........................................................................................................ 15 6.3 Hindustan Unilever Ltd.................................................................................................. 17 6.4 Bharti Airtel Ltd ............................................................................................................. 19 6.5 ICICI Bank ..................................................................................................................... 21 6.6 Coal India ....................................................................................................................... 23 7. Company to Invest from Nifty 50 .................................................................................. 25 7.1 State Bank of India......................................................................................................... 25 7.2 Tata Steel ....................................................................................................................... 26 8. 9. 10. 11. Market Outlook as on 30/7/2013 ................................................................................... 27 Recommendation ............................................................................................................ 28 Conclusion ................................................................................................................... 28 Bibliography/References ............................................................................................ 29
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Executive Summary
Objective
? The main aim of this project is to do equity research for the companies falling under the Index of Nifty50 and to find out the opportunities of investment where returns can be maximized. To analyze of the Indian stock market S&P CNX nifty 50(Top10 Holdings) using technical analysis. To make projections on the trend performance. To indicate buy and sell signals for the selected scrips and to identify the right time to invest in those scrips Give suitable investment suggestion to an investor before investing in companies. To analyze the growth potential of the company and what returns the investor can get.
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Summary of the Report
This report starts from the fundamental analysis where EIC (Economy, Industry, Company) analysis of the top companies in Nifty 50 is done. Economy of India are analyzed on the basis of various factors and indicators. Above mentioned companies were analyzed based on the various qualitative and quantitative factors. After analyzing these companies, stock price is estimated using relative valuation method. Technical analysis is used to study stock chart patterns of these Index. The observed patterns are tested with various oscillators and decision about particular stock is made. Based on these factors, trend of a particular stock is observed and then the target price is estimated. This report will help the investors to know about the current growth prospects of Nifty 50 stocks and their respective sector. They will get to understand how various factors affect the prices of various stock and will help to know the impact on their future growth. This report will help them in comparing the above mentioned companies and their estimated future share prices, so that they can invest in better options.
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1. Company profile
Established in 2000, Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the Aditya Birla Group, a well known and trusted name globally amongst Indian conglomerates and Sun Life Financial Inc, leading international financial services organization from Canada. The local knowledge of the Aditya Birla Group combined with the domain expertise of Sun Life Financial Inc., offers a formidable protection for its customers' future. With an experience of over 11 years, BSLI has contributed significantly to the growth and development of the life insurance industry in India and currently ranks amongst the top 6 private life insurance companies in the country. Known for its innovation and creating industry benchmarks, BSLI has several firsts to its credit. It was the first Indian Insurance Company to introduce "Free Look Period" and the same was made mandatory by IRDA for all other life insurance companies. Additionally, BSLI pioneered the launch of Unit Linked Life Insurance plans amongst the private players in India. To establish credibility and further transparency, BSLI also enjoys the prestige to be the originator of practice to disclose portfolio on monthly basis. These category development initiatives have helped BSLI be closer to its policy holders' expectations, which gets further accentuated by the complete bouquet of insurance products (viz. pure term plan, life stage products, health plan and retirement plan) that the company offers. Add to this, the extensive reach through its network of 600 branches and 1, 47,900 empanelled advisors. This impressive combination of domain expertise, product range, reach and ears on ground, helped BSLI cover more than 2.4 million lives since it commenced operations and establish a customer base spread across more than 1500 towns and cities in India. To ensure that our customers have an impeccable experience, BSLI has ensured that it has lowest outstanding claims ratio of 0.00% for FY 2010-11. Additionally, BSLI has the best Turn Around Time according to LOMA on all claims Parameters. Such services are well supported by sound financials that the Company has.
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2. Introduction 2.1 What is NSE Index Nifty 50
About Nifty 50 S&P CNX Nifty (also known as Nifty 50) is a well-diversified 50 stocks index of companies from 21 sectors of the economy. These stocks are considered to be the barometers of the economy and are market leaders in their own sectors. WHY INVEST IN NIFTY50 COMPANIES? S&P CNX Nifty is a professionally maintained Index by India Index Services and Products Ltd. IISL has a marketing and licensing agreement with Standard & Poor's (S&P), who are world leaders in index services. It is used for benchmarking fund portfolios, index based derivatives and index funds. As the companies are market leaders in their sector, if any sector were to grow faster than other sectors they would be one of the primary beneficiaries. These are tracked and followed more aggressively by media and analysts, so if there are any rude surprises it will be known much before than for smaller companies. eg. Infosys slowdown was anticipated by most analysts. These companies are held by institutions and fund houses in much more larger percentages than smaller companies. More institutional holding leads to better corporate governance and best corporate practices that are in line with minority shareholders’ interests The Nifty Index is a composite of the top 50 stocks listed on the National Stock Exchange (NSE). It is a simplified tool that helps investors and ordinary people alike, to understand what is happening in the stock market and by extension, the economy. If the Nifty Index performs well, it is a signal that companies in India are performing well and consequently that the country is doing well. The Nifty Index is based upon solid economic research. It is internationally respected and recognized as a pioneering effort in providing simpler understanding of stock market complexities. Nifty is the flagship index of NSE, the 3rd largest stock exchange in the world in terms of number of transactions (Stock Futures).
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3. Scope of Study
? ? ? ? ? The investors should have a fair knowledge of the sector and the companies to make value investment. The Scope of the Study is limited to the top 10 nifty holdings. An overall analysis of the companies has been undertaken in terms of the risk level and returns yielded by the companies. The research process will bring visibility for the company and facilitate investors to make informed investment decision. Thus, the Study has much greater scope and applicability with respect to the suggestions given from the analysis and interpretation if these properly implemented.
Need for Study
? ? ? ? In today’s scenario, investment is one of the most fruitful, ever changing and exciting dimensions of our lives. Investment is “an activity by which we employ our savings in a profitable venture to earn a higher and regular return.” The stock market is booming at a very high rate and the number of investors investing in it is also increasing. This study shows why and on what basis an investor can invest, which has always exceeded the expectations of all ranging from small time investors to foreign companies.
4. Companies in Nifty 50
1 2 3 4 5 6 7 8 9 ACC Ambuja Cement Asian Paints Axis Bank Bajaj Auto Bank Of Baroda Bharti Airtel BHEL BPCL 26 27 28 29 30 31 32 33 34 Infosys ITC Jindal Steel & Power JP Associate Kotak Mahindra Bank Larsen & Toubro Lupin Mahindra & Mahindra Maruti Suzuki 7
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Cairn India Cipla Coal India DLF Dr Reddys Lab GAIL India Grasim Industries HCL Tech. HDFC HDFC Bank Hero MotoCorp Hindalco Hindustan Unilever ICICI Bank IDFC Indusind Bank
35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
NMDC NTPC ONGC PNB Power Grid Corpn. Ranbaxy Labs. Reliance Industries Reliance Infra SBI Sesa Goa Sun Pharma Inds. Tata Motors Tata Power Tata Steel TCS Ultratech Cement
No.of Companies Sector wise.
8 7 6 5 4 3 2 1 0
No of Co.
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5. Determining Targets of NIFTY 50 Stocks with their respective Sector P/E Dated : 5/7/2013
NAME SECTOR ALUMINIUM Sector PE
CMP 99.65
P/E 11.26 12.08
EPS 8.87
ST 99.88
LT 107.15
STT Buy
LTT Buy
Hindalco Industries Ltd. Bajaj Auto Ltd. Hero Honda Motors Ltd. Mahindra & Mahindra Ltd. Maruti Suzuki India Ltd. Tata Motors Ltd. Axis Bank Ltd. Bank of Baroda HDFC Bank Ltd. ICICI Bank Ltd. IndusInd Bank Ltd. Kotak Mahindra Bank Ltd. Punjab National Bank State Bank of India ACC Ltd. Ambuja Cements Ltd. Grasim Industries Ltd. UltraTech Cement Ltd.
AUTOMOBILES AUTOMOBILES AUTOMOBILES
1879.50 1648.90 971.65
17.81 15.53 17.72
105.18 106.67 54.61
1873.26 1656.59 967.69
1588.97 1611.48 825.00
Sell Buy Sell
Sell Sell Sell
AUTOMOBILES AUTOMOBILES Sector PE BANKS BANKS BANKS BANKS BANKS BANKS
1554.55 269.20
19.57 315.11 15.11
79.19 0.94
1549.75 296.20
1196.33 14.20
Sell Buy
Sell Sell
1288.05 558.55 667.75 1051.55 475.05 702.65
11.51 5.16 23.18 14.74 23.34 38.45
110.68 106.05 28.27 72.17 20.30 18.23
1273.93 547.22 655.30 1063.79 473.80 700.94
888.73 851.55 227.00 579.51 163.00 146.38
Sell Sell Sell Buy Sell Sell
Sell Buy Sell Sell Sell Sell
BANKS BANKS Sector PE CEMENT CEMENT CEMENT CEMENT
625.20 1894.45 1238.45 190.20 2806.10 1926.25
4.61 9.65 8.03 21.91 23.45 20.93 19.63
134.32 206.20 56.46 8.01 133.56 96.86
619.22 1989.83 1237.04 187.83 2795.41 1901.36
1078.56 1655.73 708.67 100.54 1676.40 1215.75
Sell Buy Sell Sell Sell Sell
Buy Sell Sell Sell Sell Sell
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Sector PE
I T C Ltd. HCL Technologies Ltd. Infosys Technologies Ltd. Tata Consultancy Services Ltd. DLF Ltd. Jaiprakash Associates Ltd. Bharat Heavy Electricals Ltd. Larsen & Toubro Ltd. Housing Development Finance Corporation Ltd. Infrastructur e Development Finance Co. Ltd. GAIL (India) Ltd. Coal India Ltd NMDC Ltd. Sesa Goa Ltd. Cairn India Ltd. Oil & Natural Gas
CIGARETTES Sector PE COMPUTERS - SOFT
342.60
12.55 36.06 19.26 27.28
9.39
338.60
180.85
Sell Sell Sell
Sell Sell Sell
795.65
28.13
767.39
368.27
COMPUTERS - SOFT
2456.20
15.46
158.75
2454.28
2078.32
Sell
Sell
COMPUTERS - SOFT Sector PE CONSTRUCTION CONSTRUCTION Sector PE ELECTRICAL
1530.20
23.48 13.09 60.51 22.95 9.50
65.33
1533.95
855.29
Buy
Sell
177.65 54.45
2.95 2.26
178.50 51.87
28.02 21.46
Buy Sell
Sell Sell
178.70
6.49 73.93
27.03
175.42
1998.31
Sell
Buy
Sector PE ENGINEERING Sector PE
1408.80
17.58 14.93
79.80
1402.88
1191.11
Sell
Sell
FINANCE
850.10
27.16
31.35
851.47
1091.38
Buy
Buy
FINANCE
129.80
10.66
11.65
124.19
405.57
Sell
Buy
Sector PE GAS Sector PE MINING MINING MINING Sector PE OIL EXPLORATION OIL EXPLORATION
34.81 326.95 10.49 15.90 296.85 103.95 143.20 19.29 6.32 102.30 16.47 291.10 316.05 3.79 12.61 77.20 24.46 292.59 308.44 752.22 238.33 Buy Sell Buy Sell 15.51 16.00 1.39 299.19 101.12 142.20 255.48 263.55 22.90 Buy Sell Sell Sell Buy Sell 31.71 332.64 504.32 Buy Buy
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Corporation Ltd.
Sector PE
9.74 4668.80 41.70 28.58 609.35 399.05 2238.85 835.00 342.00 34.22 40.05 21.15 29.87 29.51 0.00 17.56 18.77 74.51 28.16 0.00 600.90 396.99 2225.61 831.00 703.29 278.57 1105.80 417.92 0.00 Sell Sell Sell Sell Sell Buy Sell Sell Sell Sell 109.47 4564.90 3128.87 Sell Sell
Asian Paints Ltd. Hindustan Unilever Ltd. Cipla Ltd. Dr. Reddy's Laboratories Ltd. Lupin Ltd. Ranbaxy Laboratories Ltd. Sun Pharmaceutic al Industries Ltd. NTPC Ltd. Power Grid Corporation of India Ltd. Reliance Infrastructur e Ltd. Tata Power Co. Ltd. Bharat Petroleum Corporation Ltd Reliance Industries Ltd. Jindal Steel & Power Ltd. Tata Steel Bharti Airtel Ltd.
PAINTS Sector PE PERSONAL CARE Sector PE PHARMACEUTICALS PHARMACEUTICALS PHARMACEUTICALS PHARMACEUTICALS
PHARMACEUTICALS
1035.75
134.55 14.84 9.41 11.76
7.69
1034.69
114.13
Sell
Sell
Sector PE POWER POWER
143.65 107.60
15.30 9.15
143.97 107.60
255.75 152.95
Buy Buy
Buy Buy
POWER POWER Sector PE REFINERIES
360.25 85.80
4.73 19.79 16.72
76.02 4.32
359.57 85.49
1270.75 72.21
Sell Sell
Buy Sell
365.40
10.03
36.55
366.60
400.13
Buy
Buy
REFINERIES Sector PE STEEL STEEL Sector PE TELECOM – SERVICES Sector PE
880.35
13.25 10.95
65.04
861.78
712.03
Sell
Sell
223.85 264.70 295.85
12.70 5.17 27.31 21.93 25.90
17.04 52.12 13.42
216.41 269.46 294.30
465.35 1423.35 347.60
Sell Buy Sell
Buy Buy Buy
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5.1 Companies Selected as per above working
Scrips Details GAIL (India) Ltd. Hero Honda Motors Ltd. ICICI Bank Ltd. Coal India Ltd Hindustan Unilever Ltd. Bharti Airtel Ltd. CMP as on 5/7/2013 326.95 1648.9 1051.55 296.85 609.35 295.85 Target 332.64 1656.59 1063.79 299.19 703.29 347.6
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6. Company Analysis & Research
6.1 GAIL India Ltd
Ownership Pattern
Looking at the picture it is quite visible that majority of the holding are being under the hands of promoters & DII’s which gives an indication that company is volatile as FII’s holdings being relative less.
Price Movement
This charts gives and view that the company had touched the lowest price in his last 5years that is 300 & has picked up from there & with that movement it is the right time to put in their money in this stock as it will generate high returns in long run which might goes upto 350-365.
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Perfromance Chart
Net Sales & Net Profit showing an upward trend indicates that company is trying to generate more income as compare to previous year & by this it can be clearly said that company would be successful in providing good returns to the shareholders in long run as we can see a growth in the business of the company.
Key Data Particulars PE Ratio EPS DPS ROE ROA Book Value Sales PAT 2012 2011 2010 2009 2008 10.53 16.43 16.55 10.50 9.58 28.8 28.07 24.75 22.1 30.76 8.7 7.5 7.5 7 10 16.89 18.49 18.69 18.98 20 170.48 151.78 132.43 116.44 153.79 170.48 151.78 132.43 116.44 153.79 40280.74 32458.64 25103.25 23960.8 18580.81 3653.84 3561.13 3139.84 2803.7 2601.46
Key data reveals that company is doing relatively very good business with Increase in Sales & PAT over the last years on a constant basis also even though return on equity seems to indicate downward trend but somehow company has shown a great resistance and also dividend over the year has gone up. With all these the target which was set for these company on 5/7/2013 was achieved in quick time i.e 332.64 on 23/7/2013 and the price of the shares went upto 336.50 on NSE. Hence it would be rightly said that company has always provided good returns to their share holders & it would be suggested to invest in this company as a long term perspective.
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6.1 Hero Motocorp Ltd
Ownership Pattern
Looking at the above chart it is being visible that majority of the ownership belongs to promoters which is followed by FII’s & then by the DII’s which gives an indication that the company is mainly funded by foreign investors the & the investments are known to be Hot money as they are largely volatile & could be highly unpredictable as compare to DII’s fund. Price Movement
As it is quite visible that the price of the shares have relatively went down in last 2 years it would suggested that investment in this stock should done as it is being an major companies in 2 wheeler automobile sector and also its capability considering its current performance it can be said that in the near future within 1 year company may touch the price level of around 1950-2000 respectively to the shareholders considering its past price level.
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Performance Chart
In mid of the year 2012-13 company shows a dip in both net profit & net sales due less demand in the automobile sector industry which affected the performance of the company but as it is visible that company has maintained a good rate of performance one cannot lose confidence in the performance of the company as it can be seen that company had again started performing well in just a short span of time & it has also grown as compare to previous years.
Key Data Particulars PE Ratio EPS DPS ROE ROA Book Value Sales PAT 2012 2011 2010 2009 2008 16.88 16.30 18.19 16.03 14.33 119.09 96.55 111.77 64.19 48.47 45 105 110 20 19 55.43 65.21 64.41 33.72 32.41 214.83 148.03 173.52 190.33 149.55 214.83 148.03 173.52 190.33 149.55 25252.98 20787.27 16856.43 13553.23 12048.3 2378.13 1927.9 2231.83 1281.76 967.88
Considering the above key data it suggested to invest in the company as it has a great potential as in providing returns to the stakeholders & also one of the premium brand in the country sales have always shown an upward trend in last years which is directly related to the PAT. Hence the above data & analysis had rightly supported by the CMP of Hero Motocorp Ltd which is 1847.60 compare to the price on 5/7/2013 which was 1648.9 and the target which was set was achieved on day 1 & also within 3weeks tenure the stock has given 15% returns. 16
6.3 Hindustan Unilever Ltd
Ownership Pattern
Ownership pattern looks out be mixed one having equal proportion of FII’s & DII’s in the company making it a balanced company & also the volatility will be relative less as compare to other companies in FMCG sector. Price Movement
Price chart had always shown an upward trend for HUL which every investor would like to see in a company & HUL is one of that. Recently it has touched its all time high price of above 700 but have certainly came down within last 3 days. So it would be suggested to hold on as it will still fall to some extent around 600 at which it would be affordable to put in the money from a long term perspective.
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Performance Chart
Net Profit & net Sales also are going in upward direction for HUL is past 4 years & the major reason for Net profit to go up is mainly due to HUL is a debt free company which eliminates the interest factor & hence resulting in greater PAT over the year Key Data Particulars PE Ratio EPS DPS ROE ROA Book Value Sales PAT 2012 2011 2010 2009 2008 33.55 26.18 23.81 20.06 30.48 12.45 10.68 10.09 11.47 8.12 7.5 6.5 6.5 7.5 9 76.62 87.57 85.25 121.34 122.97 16.25 12.2 11.84 9.46 6.61 16.25 12.19 11.84 9.45 6.61 23181.09 20598.89 18462.34 21927.23 14937.88 2691.4 2305.97 2202.03 2500.71 1769.06
The above table shows some positive numbers from the investors perspective also HUL as a Debt free company it attracts more equity shareholders as return on shares is relatively high down the line which in case of debt is comparatively bit less. Hence it is one the best company to invest from long term perspective. Considering the target set for HUL which was 700 was achieved within 3 weeks & it also reached its all time high giving returns nearly around 20% from 5/7/2013. But recent downfall in the price & volatile market condition it is suggested to hold on it & wait for the market to get stable & invest it from a long term perspect.
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6.4 Bharti Airtel Ltd
Ownership Pattern
In this company ownership is majorly is in the hands of promoters followed by FII’s which are termed as Hot money & also due to their large volatility the company’s performance on stock exchange is also being not stable hence it is advisable to invest in this company at time when market condition are getting favorable & go with a long term mind set.
Price Movement
Looking at the above chart currently the company has performed well on the market & with 100% FDI allowed in Telecom sector the price of the shares are showing is an upward trend & its advisable to invest in the company at a price around 310 with a target of price 350 within a year or so.
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Performance Chart
As it is being quite visible that the company does not have a stable growth in the last 5 years & it is being going on both the directions i.e upward & downward in terms of Net sales & Net profit. With these view it can be justify that company performance might be not stable & due to which even the price will be highly volatile. So it is advisable sell out the shares once the target is achieved in the year. Key Data Particulars PE Ratio EPS DPS ROE ROA Book Value Sales PAT 2012 2011 2010 2009 2008 22.39 16.77 12.76 7.67 12.85 15.09 20.32 24.82 40.79 32.9 1 1 1 2 0 11.6 17.6 25.79 28.13 30.94 130.03 115.43 96.24 145.01 106.34 130.16 115.42 96.24 145.01 106.34 41603.8 38015.8 35609.54 34048.32 25761.11 5730 7716.9 9426.15 7743.84 6244.19
EPS & DPS & return on equity have shown a downward trend in this company whereas the PE ratio is showing a upward trend which indicates that company is performing good on the stock market & investor has a great confidence on it relying upon PE ratio. But somehow in the year 2012 companies sales have increased but the PAT has gone down comparing to previous 4 years which may not be good in the nearby future. Considering the target which was set for Bharti Airtel i.e Rs 347 on 5/7/2013 was nearly achieved on 29/7/2013 were it was on high at Rs 346.80 giving more than 15% returns within 3 weeks. Hence high volatility, unstable companies performance & various other aspect it is advisable for the investor to have a thorough study before investing in this company. Market & company anlaysis is must before investing & the investment should be kept for short term purpose due to high risk.
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6.5 ICICI Bank
Ownership Pattern
One of the major private sector bank in India mainly has a large percentage of FII’s holding comparing to the PSU banks. It indicates that the Foreign investor has a good confidence over the bank over the years which makes its less volatile. Price Movement
ICICI bank price has always shown a upward trend in the last 5 years which indicates that investors have gain good returns on their investment in long run. But somehow considering the current market condition, rupee falling dwon with RBI tight government policy the growth of the bank has being affected & its trending relatively down as compare to its previous years price.
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Performance Chart
Net profit & Net sales always have shown a upward trend in ICICI bank which has help in gaining Investor confidence over the last 5 years & this is also very much visible considering price movement on the stock exchanges.
Key Data Particulars PE Ratio EPS DPS ROE ROA Book Value Sales PAT 2012 2011 2010 2009 2008 12.11 19.83 21.68 9.58 25.15 72.17 56.09 44.73 36.1 33.76 20 16.5 14 12 11 12.48 10.7 9.27 7.53 7.55 578.21 524.01 478.31 463.01 444.94 578.21 524.01 478.31 463.01 444.94 48421.3 41450.75 33082.96 32999.36 39210.31 8325.47 6465.26 5151.38 4024.98 3758.13
Key data of ICICI bank indicates positive scenario for according to investor outlook except for PE ratio which has gone down over the last 5years. Hence it is rightly said bank stock are less risky as compare to other stocks considering for long term investment. Hence the target which was set for ICICI bank on 5/7/2013 i.e Rs 1063.79 was achieve on 12/7/2013 within one week at Rs 1068.50 giving more than expected. Considering the current scenario the price is going down & its trading below 850 it is advisable to investor to invest in the bank for long term perspective & wait till the market condition gets stable i.e INR starts appreciating & RBI easing the monetary policy after which it will stretch return around 15-18%
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6.6 Coal India
Ownership Pattern
Coal India being PSU majority of its shareholdings belongs to its promoters & hardly is in hands of FII’s which makes it less volatile.
Price Movement
Majority PSU’s not performing as per the expectation & also various scams in PSU’s in recent time have affected the price movement of the company price as investor has less confidence due to various unfavourable outcome in recent times against the government & others PSU’s & also with election round the corner one can expect further fall in the price of Coal India ltd. Hence it is advisable to wait for the right tome to invest their money in this stock.
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Performance Chart
Performance has always been a major issue for PSU’s like Coal India which is quite visible from the above chart. But somehow in last 1 year its showing an upward trend & it can be taken as that company is trying to perform upto its capability. Key Data Particulars PE Ratio EPS DPS ROE ROA Book Value Sales PAT 2012 26.58 12.77 10 41.22 30.97 30.97 486.56 8065.1 2011 2010 2009 11.39 12.76 0 30.77 27.01 24.12 3.9 3.5 2.7 24.3 22.15 21.62 30.77 27.01 24.12 30.77 27.01 24.12 468.81 449.21 318.89 4723.56 3779.92 3295.38 2008 0 21.16 2.7 18.35 21.16 21.16 273.01 2453.8
Key data reveals that though company Sales are not growing but the PAT is growing beyond its expectation which also suggest that the company is not very much active from its core business activities & its gaining income from mainly from other sources. Considering the target set for Coal India Ltd which was Rs 299 it was achieved on 12/7/2013 within 1 week & it was achieved at Rs 300 also considering the current scenario it advisable to invest for short term perspective which may generate returns around 10-12% within 6 months.
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7. Company to Invest from Nifty 50
As on 31/7/2013
7.1 State Bank of India
Price Movement
Performance Chat
Considering the recent movement in the price of SBI its advisable to invest in these stock as it is trading to its 52 week low price i.e Rs 1697.50 & invest in the stock from a long term perspective which will fetch returns nearly around 15-17% i.e around Rs 1980 in the long run. Considering the above stocks one’s need to be patience & wait for the easing the monetary policy, reducing in CRR rate & also appreciation in INR may help the investor to achieve its target.
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Even the performance chart indicates that the bank is moving in upward direction considering the Net Sales whereas the Net profit has certainly gone down due to depreciation in INR & less liquidity in the economy.
7.2 Tata Steel
Price Movement
Performance Chart
Looking at the Price movement of Tata steel its trading at its all time low & it is advisable to invest at this time as it will fetch good returns beyond 15% in the long run. Also the performance chart reveals out that the after the downfall in Net profit & Sales have certainly started to raise in recent times which may help the company to regain its Investor confidence.
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8. Market Outlook as on 30/7/2013
NSE's NIFTY begun the week on a depressing note, as index spent entire session below the neutral line registering lower lows. NIFTY closed the session with loss of 55 points at 5,832 level, while, SENSEX closed the day with a decrease of 155 points at 19,593 level. NSE Cash segment witnessed the turnover of about Rs 9,178 crores as compared to Rs 11,516 crores earlier. Overall market breadth remained negative with 344 stocks advancing against 835 declining stocks. Except CNX AUTO & CNX IT, negative trend was witnessed amongst all sectoral indices during the day, where, CNX FMCG, CNX MNC & CNX REALTY emerged as top loser with a decrease of 2.6%, 2.5% & 2.3% respectively, while, none of the sectoral indices witnessed rise of more than 0.2%. Yesterday, NIFTY oscillated in negative bias post 16 points of gap down opening and after minor bounce back, continued prior momentum till the last trade of day and finally, wrap up the session nearing day's bottom level of 5,826. On Monday, weakness in FMCG, MNC, Realty and major frontline counters, kept market participants under pressure during the day. As NIFTY closed below the 5,850 mark (i.e. 200day Simple Moving Average), our near term technical view turned negative with closing based stop loss at 6,000 mark. On lower side, support is placed at 5,680 and then at 5,560 levels on a closing basis.
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9. Recommendation
After all the above ananlysis & research done on Indian Equity market & Nifty 50 stocks it is recommended that the current scenario may still see a downfall as RBI & Govt of India is trying to regain some energy or positive sentiments in the Indian market by reducing the liquidity in the market & by reducing growth of GDP from 5.7% to 5.5% in recent RBI credit Policy. So as per the current scenario it is advisable to the investor to hold on to the stock & avoid investing in the market. Investing can be done once the Monetary policy in eased by the RBI & also once INR start appreciating which will help in generating more liquidity in the market & would certainly increased the IIP rate of manufacturing sector. With money being reaching its all time low it is also advisable to invest in IT companies at it will fetch good returns on Short term basis. Investor who prefers to take moderate risk are suggested to invest their money in stocks like HUL, SBI & ICICI Bank etc mainly in FMCG & Banking sector as they are less risky & generates moderate returns around 10-12% respectively.
10. Conclusion
It would good to conclude on positive note that investment in equity market considering PE, & Sector PE & analyzing the Company thoroughly on its past trends helps in gaining average return of around 12-15% which is certainly beneficial in long run. Whereas it was also found that the investment should be done with a long term object as it helps in gaining better returns compare to FD’s Bonds etc.
Having knowledge of different aspects of wealth management is very important before entering in the stock market. Fundamental Analysis is most important to select companies. Macro-economic indicators have high impact on some sectors but less on others. Detailed sector analysis can help predict the future with respect to sales and profit margins of the firm. Technical analysis of stocks is a promising method, which helps in forecasting the direction of prices through the study of past market data, primarily price and volume. Concluding, the historical performance of stocks and markets are indications of future performance. Every sector has some fundamental ratios that have high impact than others. Such ratios can be found out for each sector and investment can be made based on them. With extensive research on various companies of stock market, one can find some companies with above average return and then invest accordingly.
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11. Bibliography/References
Websites:
www.moneycontrol.com www.in.finance.yahoo.com www.investopedia.com www.wikipedia.org www.bseindia.com www.nseindia.com www.moneyworks4me.com www.equitymaster.com www.google.com
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doc_435238989.docx
A PROJECT REPORT
Submitted by
DHRUVIN G BORADIA
PG - FINANCE Roll no-12 Batch 2012-14
In partial fulfillment for the award of the degree of
POST GRADUATE DIPLOMA IN MANAGEMENT
Under the Guidance of
Prof Namrata Acharya
THAKUR INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH KANDIVILI MUMBAI
1
CERTIFICATE
This is to certify that this project report Analysis & Equity Analysis & Research on Nifty 50 stocks is a bonafide work of Dhruvin G Boradia in part completion of the Post Graduate Diploma in Management has been done under my guidance.
The project is in nature of original work that has not so far been submitted for any degree of this university. References of work and relative sources of information have been given at the end of the project.
Signature or the candidate
(Dhruvin Boradia)
Forwarded through the research guide
Signature of the guide
Name of the guide: Mrs Namrata Acharya Designation: Assistant Professor
2
Table of Contents
Executive Summary ................................................................................................................... 4 1. 2. 3. 4. 5. 6. Company profile ............................................................................................................... 5 Introduction ...................................................................................................................... 6 2.1 What is NSE Index Nifty 50 ............................................................................................ 6 Scope of Study ................................................................................................................... 7 Companies in Nifty 50 ...................................................................................................... 7 Determining Targets of NIFTY 50 Stocks with their respective Sector P/E .............. 9 5.1 Companies Selected as per above working .................................................................... 12 Company Analysis & Research ..................................................................................... 13 6.1 GAIL India Ltd .............................................................................................................. 13 6.1 Hero Motocorp Ltd ........................................................................................................ 15 6.3 Hindustan Unilever Ltd.................................................................................................. 17 6.4 Bharti Airtel Ltd ............................................................................................................. 19 6.5 ICICI Bank ..................................................................................................................... 21 6.6 Coal India ....................................................................................................................... 23 7. Company to Invest from Nifty 50 .................................................................................. 25 7.1 State Bank of India......................................................................................................... 25 7.2 Tata Steel ....................................................................................................................... 26 8. 9. 10. 11. Market Outlook as on 30/7/2013 ................................................................................... 27 Recommendation ............................................................................................................ 28 Conclusion ................................................................................................................... 28 Bibliography/References ............................................................................................ 29
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Executive Summary
Objective
? The main aim of this project is to do equity research for the companies falling under the Index of Nifty50 and to find out the opportunities of investment where returns can be maximized. To analyze of the Indian stock market S&P CNX nifty 50(Top10 Holdings) using technical analysis. To make projections on the trend performance. To indicate buy and sell signals for the selected scrips and to identify the right time to invest in those scrips Give suitable investment suggestion to an investor before investing in companies. To analyze the growth potential of the company and what returns the investor can get.
? ? ?
?
Summary of the Report
This report starts from the fundamental analysis where EIC (Economy, Industry, Company) analysis of the top companies in Nifty 50 is done. Economy of India are analyzed on the basis of various factors and indicators. Above mentioned companies were analyzed based on the various qualitative and quantitative factors. After analyzing these companies, stock price is estimated using relative valuation method. Technical analysis is used to study stock chart patterns of these Index. The observed patterns are tested with various oscillators and decision about particular stock is made. Based on these factors, trend of a particular stock is observed and then the target price is estimated. This report will help the investors to know about the current growth prospects of Nifty 50 stocks and their respective sector. They will get to understand how various factors affect the prices of various stock and will help to know the impact on their future growth. This report will help them in comparing the above mentioned companies and their estimated future share prices, so that they can invest in better options.
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1. Company profile
Established in 2000, Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the Aditya Birla Group, a well known and trusted name globally amongst Indian conglomerates and Sun Life Financial Inc, leading international financial services organization from Canada. The local knowledge of the Aditya Birla Group combined with the domain expertise of Sun Life Financial Inc., offers a formidable protection for its customers' future. With an experience of over 11 years, BSLI has contributed significantly to the growth and development of the life insurance industry in India and currently ranks amongst the top 6 private life insurance companies in the country. Known for its innovation and creating industry benchmarks, BSLI has several firsts to its credit. It was the first Indian Insurance Company to introduce "Free Look Period" and the same was made mandatory by IRDA for all other life insurance companies. Additionally, BSLI pioneered the launch of Unit Linked Life Insurance plans amongst the private players in India. To establish credibility and further transparency, BSLI also enjoys the prestige to be the originator of practice to disclose portfolio on monthly basis. These category development initiatives have helped BSLI be closer to its policy holders' expectations, which gets further accentuated by the complete bouquet of insurance products (viz. pure term plan, life stage products, health plan and retirement plan) that the company offers. Add to this, the extensive reach through its network of 600 branches and 1, 47,900 empanelled advisors. This impressive combination of domain expertise, product range, reach and ears on ground, helped BSLI cover more than 2.4 million lives since it commenced operations and establish a customer base spread across more than 1500 towns and cities in India. To ensure that our customers have an impeccable experience, BSLI has ensured that it has lowest outstanding claims ratio of 0.00% for FY 2010-11. Additionally, BSLI has the best Turn Around Time according to LOMA on all claims Parameters. Such services are well supported by sound financials that the Company has.
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2. Introduction 2.1 What is NSE Index Nifty 50
About Nifty 50 S&P CNX Nifty (also known as Nifty 50) is a well-diversified 50 stocks index of companies from 21 sectors of the economy. These stocks are considered to be the barometers of the economy and are market leaders in their own sectors. WHY INVEST IN NIFTY50 COMPANIES? S&P CNX Nifty is a professionally maintained Index by India Index Services and Products Ltd. IISL has a marketing and licensing agreement with Standard & Poor's (S&P), who are world leaders in index services. It is used for benchmarking fund portfolios, index based derivatives and index funds. As the companies are market leaders in their sector, if any sector were to grow faster than other sectors they would be one of the primary beneficiaries. These are tracked and followed more aggressively by media and analysts, so if there are any rude surprises it will be known much before than for smaller companies. eg. Infosys slowdown was anticipated by most analysts. These companies are held by institutions and fund houses in much more larger percentages than smaller companies. More institutional holding leads to better corporate governance and best corporate practices that are in line with minority shareholders’ interests The Nifty Index is a composite of the top 50 stocks listed on the National Stock Exchange (NSE). It is a simplified tool that helps investors and ordinary people alike, to understand what is happening in the stock market and by extension, the economy. If the Nifty Index performs well, it is a signal that companies in India are performing well and consequently that the country is doing well. The Nifty Index is based upon solid economic research. It is internationally respected and recognized as a pioneering effort in providing simpler understanding of stock market complexities. Nifty is the flagship index of NSE, the 3rd largest stock exchange in the world in terms of number of transactions (Stock Futures).
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3. Scope of Study
? ? ? ? ? The investors should have a fair knowledge of the sector and the companies to make value investment. The Scope of the Study is limited to the top 10 nifty holdings. An overall analysis of the companies has been undertaken in terms of the risk level and returns yielded by the companies. The research process will bring visibility for the company and facilitate investors to make informed investment decision. Thus, the Study has much greater scope and applicability with respect to the suggestions given from the analysis and interpretation if these properly implemented.
Need for Study
? ? ? ? In today’s scenario, investment is one of the most fruitful, ever changing and exciting dimensions of our lives. Investment is “an activity by which we employ our savings in a profitable venture to earn a higher and regular return.” The stock market is booming at a very high rate and the number of investors investing in it is also increasing. This study shows why and on what basis an investor can invest, which has always exceeded the expectations of all ranging from small time investors to foreign companies.
4. Companies in Nifty 50
1 2 3 4 5 6 7 8 9 ACC Ambuja Cement Asian Paints Axis Bank Bajaj Auto Bank Of Baroda Bharti Airtel BHEL BPCL 26 27 28 29 30 31 32 33 34 Infosys ITC Jindal Steel & Power JP Associate Kotak Mahindra Bank Larsen & Toubro Lupin Mahindra & Mahindra Maruti Suzuki 7
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Cairn India Cipla Coal India DLF Dr Reddys Lab GAIL India Grasim Industries HCL Tech. HDFC HDFC Bank Hero MotoCorp Hindalco Hindustan Unilever ICICI Bank IDFC Indusind Bank
35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
NMDC NTPC ONGC PNB Power Grid Corpn. Ranbaxy Labs. Reliance Industries Reliance Infra SBI Sesa Goa Sun Pharma Inds. Tata Motors Tata Power Tata Steel TCS Ultratech Cement
No.of Companies Sector wise.
8 7 6 5 4 3 2 1 0
No of Co.
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5. Determining Targets of NIFTY 50 Stocks with their respective Sector P/E Dated : 5/7/2013
NAME SECTOR ALUMINIUM Sector PE
CMP 99.65
P/E 11.26 12.08
EPS 8.87
ST 99.88
LT 107.15
STT Buy
LTT Buy
Hindalco Industries Ltd. Bajaj Auto Ltd. Hero Honda Motors Ltd. Mahindra & Mahindra Ltd. Maruti Suzuki India Ltd. Tata Motors Ltd. Axis Bank Ltd. Bank of Baroda HDFC Bank Ltd. ICICI Bank Ltd. IndusInd Bank Ltd. Kotak Mahindra Bank Ltd. Punjab National Bank State Bank of India ACC Ltd. Ambuja Cements Ltd. Grasim Industries Ltd. UltraTech Cement Ltd.
AUTOMOBILES AUTOMOBILES AUTOMOBILES
1879.50 1648.90 971.65
17.81 15.53 17.72
105.18 106.67 54.61
1873.26 1656.59 967.69
1588.97 1611.48 825.00
Sell Buy Sell
Sell Sell Sell
AUTOMOBILES AUTOMOBILES Sector PE BANKS BANKS BANKS BANKS BANKS BANKS
1554.55 269.20
19.57 315.11 15.11
79.19 0.94
1549.75 296.20
1196.33 14.20
Sell Buy
Sell Sell
1288.05 558.55 667.75 1051.55 475.05 702.65
11.51 5.16 23.18 14.74 23.34 38.45
110.68 106.05 28.27 72.17 20.30 18.23
1273.93 547.22 655.30 1063.79 473.80 700.94
888.73 851.55 227.00 579.51 163.00 146.38
Sell Sell Sell Buy Sell Sell
Sell Buy Sell Sell Sell Sell
BANKS BANKS Sector PE CEMENT CEMENT CEMENT CEMENT
625.20 1894.45 1238.45 190.20 2806.10 1926.25
4.61 9.65 8.03 21.91 23.45 20.93 19.63
134.32 206.20 56.46 8.01 133.56 96.86
619.22 1989.83 1237.04 187.83 2795.41 1901.36
1078.56 1655.73 708.67 100.54 1676.40 1215.75
Sell Buy Sell Sell Sell Sell
Buy Sell Sell Sell Sell Sell
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Sector PE
I T C Ltd. HCL Technologies Ltd. Infosys Technologies Ltd. Tata Consultancy Services Ltd. DLF Ltd. Jaiprakash Associates Ltd. Bharat Heavy Electricals Ltd. Larsen & Toubro Ltd. Housing Development Finance Corporation Ltd. Infrastructur e Development Finance Co. Ltd. GAIL (India) Ltd. Coal India Ltd NMDC Ltd. Sesa Goa Ltd. Cairn India Ltd. Oil & Natural Gas
CIGARETTES Sector PE COMPUTERS - SOFT
342.60
12.55 36.06 19.26 27.28
9.39
338.60
180.85
Sell Sell Sell
Sell Sell Sell
795.65
28.13
767.39
368.27
COMPUTERS - SOFT
2456.20
15.46
158.75
2454.28
2078.32
Sell
Sell
COMPUTERS - SOFT Sector PE CONSTRUCTION CONSTRUCTION Sector PE ELECTRICAL
1530.20
23.48 13.09 60.51 22.95 9.50
65.33
1533.95
855.29
Buy
Sell
177.65 54.45
2.95 2.26
178.50 51.87
28.02 21.46
Buy Sell
Sell Sell
178.70
6.49 73.93
27.03
175.42
1998.31
Sell
Buy
Sector PE ENGINEERING Sector PE
1408.80
17.58 14.93
79.80
1402.88
1191.11
Sell
Sell
FINANCE
850.10
27.16
31.35
851.47
1091.38
Buy
Buy
FINANCE
129.80
10.66
11.65
124.19
405.57
Sell
Buy
Sector PE GAS Sector PE MINING MINING MINING Sector PE OIL EXPLORATION OIL EXPLORATION
34.81 326.95 10.49 15.90 296.85 103.95 143.20 19.29 6.32 102.30 16.47 291.10 316.05 3.79 12.61 77.20 24.46 292.59 308.44 752.22 238.33 Buy Sell Buy Sell 15.51 16.00 1.39 299.19 101.12 142.20 255.48 263.55 22.90 Buy Sell Sell Sell Buy Sell 31.71 332.64 504.32 Buy Buy
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Corporation Ltd.
Sector PE
9.74 4668.80 41.70 28.58 609.35 399.05 2238.85 835.00 342.00 34.22 40.05 21.15 29.87 29.51 0.00 17.56 18.77 74.51 28.16 0.00 600.90 396.99 2225.61 831.00 703.29 278.57 1105.80 417.92 0.00 Sell Sell Sell Sell Sell Buy Sell Sell Sell Sell 109.47 4564.90 3128.87 Sell Sell
Asian Paints Ltd. Hindustan Unilever Ltd. Cipla Ltd. Dr. Reddy's Laboratories Ltd. Lupin Ltd. Ranbaxy Laboratories Ltd. Sun Pharmaceutic al Industries Ltd. NTPC Ltd. Power Grid Corporation of India Ltd. Reliance Infrastructur e Ltd. Tata Power Co. Ltd. Bharat Petroleum Corporation Ltd Reliance Industries Ltd. Jindal Steel & Power Ltd. Tata Steel Bharti Airtel Ltd.
PAINTS Sector PE PERSONAL CARE Sector PE PHARMACEUTICALS PHARMACEUTICALS PHARMACEUTICALS PHARMACEUTICALS
PHARMACEUTICALS
1035.75
134.55 14.84 9.41 11.76
7.69
1034.69
114.13
Sell
Sell
Sector PE POWER POWER
143.65 107.60
15.30 9.15
143.97 107.60
255.75 152.95
Buy Buy
Buy Buy
POWER POWER Sector PE REFINERIES
360.25 85.80
4.73 19.79 16.72
76.02 4.32
359.57 85.49
1270.75 72.21
Sell Sell
Buy Sell
365.40
10.03
36.55
366.60
400.13
Buy
Buy
REFINERIES Sector PE STEEL STEEL Sector PE TELECOM – SERVICES Sector PE
880.35
13.25 10.95
65.04
861.78
712.03
Sell
Sell
223.85 264.70 295.85
12.70 5.17 27.31 21.93 25.90
17.04 52.12 13.42
216.41 269.46 294.30
465.35 1423.35 347.60
Sell Buy Sell
Buy Buy Buy
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5.1 Companies Selected as per above working
Scrips Details GAIL (India) Ltd. Hero Honda Motors Ltd. ICICI Bank Ltd. Coal India Ltd Hindustan Unilever Ltd. Bharti Airtel Ltd. CMP as on 5/7/2013 326.95 1648.9 1051.55 296.85 609.35 295.85 Target 332.64 1656.59 1063.79 299.19 703.29 347.6
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6. Company Analysis & Research
6.1 GAIL India Ltd
Ownership Pattern
Looking at the picture it is quite visible that majority of the holding are being under the hands of promoters & DII’s which gives an indication that company is volatile as FII’s holdings being relative less.
Price Movement
This charts gives and view that the company had touched the lowest price in his last 5years that is 300 & has picked up from there & with that movement it is the right time to put in their money in this stock as it will generate high returns in long run which might goes upto 350-365.
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Perfromance Chart
Net Sales & Net Profit showing an upward trend indicates that company is trying to generate more income as compare to previous year & by this it can be clearly said that company would be successful in providing good returns to the shareholders in long run as we can see a growth in the business of the company.
Key Data Particulars PE Ratio EPS DPS ROE ROA Book Value Sales PAT 2012 2011 2010 2009 2008 10.53 16.43 16.55 10.50 9.58 28.8 28.07 24.75 22.1 30.76 8.7 7.5 7.5 7 10 16.89 18.49 18.69 18.98 20 170.48 151.78 132.43 116.44 153.79 170.48 151.78 132.43 116.44 153.79 40280.74 32458.64 25103.25 23960.8 18580.81 3653.84 3561.13 3139.84 2803.7 2601.46
Key data reveals that company is doing relatively very good business with Increase in Sales & PAT over the last years on a constant basis also even though return on equity seems to indicate downward trend but somehow company has shown a great resistance and also dividend over the year has gone up. With all these the target which was set for these company on 5/7/2013 was achieved in quick time i.e 332.64 on 23/7/2013 and the price of the shares went upto 336.50 on NSE. Hence it would be rightly said that company has always provided good returns to their share holders & it would be suggested to invest in this company as a long term perspective.
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6.1 Hero Motocorp Ltd
Ownership Pattern
Looking at the above chart it is being visible that majority of the ownership belongs to promoters which is followed by FII’s & then by the DII’s which gives an indication that the company is mainly funded by foreign investors the & the investments are known to be Hot money as they are largely volatile & could be highly unpredictable as compare to DII’s fund. Price Movement
As it is quite visible that the price of the shares have relatively went down in last 2 years it would suggested that investment in this stock should done as it is being an major companies in 2 wheeler automobile sector and also its capability considering its current performance it can be said that in the near future within 1 year company may touch the price level of around 1950-2000 respectively to the shareholders considering its past price level.
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Performance Chart
In mid of the year 2012-13 company shows a dip in both net profit & net sales due less demand in the automobile sector industry which affected the performance of the company but as it is visible that company has maintained a good rate of performance one cannot lose confidence in the performance of the company as it can be seen that company had again started performing well in just a short span of time & it has also grown as compare to previous years.
Key Data Particulars PE Ratio EPS DPS ROE ROA Book Value Sales PAT 2012 2011 2010 2009 2008 16.88 16.30 18.19 16.03 14.33 119.09 96.55 111.77 64.19 48.47 45 105 110 20 19 55.43 65.21 64.41 33.72 32.41 214.83 148.03 173.52 190.33 149.55 214.83 148.03 173.52 190.33 149.55 25252.98 20787.27 16856.43 13553.23 12048.3 2378.13 1927.9 2231.83 1281.76 967.88
Considering the above key data it suggested to invest in the company as it has a great potential as in providing returns to the stakeholders & also one of the premium brand in the country sales have always shown an upward trend in last years which is directly related to the PAT. Hence the above data & analysis had rightly supported by the CMP of Hero Motocorp Ltd which is 1847.60 compare to the price on 5/7/2013 which was 1648.9 and the target which was set was achieved on day 1 & also within 3weeks tenure the stock has given 15% returns. 16
6.3 Hindustan Unilever Ltd
Ownership Pattern
Ownership pattern looks out be mixed one having equal proportion of FII’s & DII’s in the company making it a balanced company & also the volatility will be relative less as compare to other companies in FMCG sector. Price Movement
Price chart had always shown an upward trend for HUL which every investor would like to see in a company & HUL is one of that. Recently it has touched its all time high price of above 700 but have certainly came down within last 3 days. So it would be suggested to hold on as it will still fall to some extent around 600 at which it would be affordable to put in the money from a long term perspective.
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Performance Chart
Net Profit & net Sales also are going in upward direction for HUL is past 4 years & the major reason for Net profit to go up is mainly due to HUL is a debt free company which eliminates the interest factor & hence resulting in greater PAT over the year Key Data Particulars PE Ratio EPS DPS ROE ROA Book Value Sales PAT 2012 2011 2010 2009 2008 33.55 26.18 23.81 20.06 30.48 12.45 10.68 10.09 11.47 8.12 7.5 6.5 6.5 7.5 9 76.62 87.57 85.25 121.34 122.97 16.25 12.2 11.84 9.46 6.61 16.25 12.19 11.84 9.45 6.61 23181.09 20598.89 18462.34 21927.23 14937.88 2691.4 2305.97 2202.03 2500.71 1769.06
The above table shows some positive numbers from the investors perspective also HUL as a Debt free company it attracts more equity shareholders as return on shares is relatively high down the line which in case of debt is comparatively bit less. Hence it is one the best company to invest from long term perspective. Considering the target set for HUL which was 700 was achieved within 3 weeks & it also reached its all time high giving returns nearly around 20% from 5/7/2013. But recent downfall in the price & volatile market condition it is suggested to hold on it & wait for the market to get stable & invest it from a long term perspect.
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6.4 Bharti Airtel Ltd
Ownership Pattern
In this company ownership is majorly is in the hands of promoters followed by FII’s which are termed as Hot money & also due to their large volatility the company’s performance on stock exchange is also being not stable hence it is advisable to invest in this company at time when market condition are getting favorable & go with a long term mind set.
Price Movement
Looking at the above chart currently the company has performed well on the market & with 100% FDI allowed in Telecom sector the price of the shares are showing is an upward trend & its advisable to invest in the company at a price around 310 with a target of price 350 within a year or so.
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Performance Chart
As it is being quite visible that the company does not have a stable growth in the last 5 years & it is being going on both the directions i.e upward & downward in terms of Net sales & Net profit. With these view it can be justify that company performance might be not stable & due to which even the price will be highly volatile. So it is advisable sell out the shares once the target is achieved in the year. Key Data Particulars PE Ratio EPS DPS ROE ROA Book Value Sales PAT 2012 2011 2010 2009 2008 22.39 16.77 12.76 7.67 12.85 15.09 20.32 24.82 40.79 32.9 1 1 1 2 0 11.6 17.6 25.79 28.13 30.94 130.03 115.43 96.24 145.01 106.34 130.16 115.42 96.24 145.01 106.34 41603.8 38015.8 35609.54 34048.32 25761.11 5730 7716.9 9426.15 7743.84 6244.19
EPS & DPS & return on equity have shown a downward trend in this company whereas the PE ratio is showing a upward trend which indicates that company is performing good on the stock market & investor has a great confidence on it relying upon PE ratio. But somehow in the year 2012 companies sales have increased but the PAT has gone down comparing to previous 4 years which may not be good in the nearby future. Considering the target which was set for Bharti Airtel i.e Rs 347 on 5/7/2013 was nearly achieved on 29/7/2013 were it was on high at Rs 346.80 giving more than 15% returns within 3 weeks. Hence high volatility, unstable companies performance & various other aspect it is advisable for the investor to have a thorough study before investing in this company. Market & company anlaysis is must before investing & the investment should be kept for short term purpose due to high risk.
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6.5 ICICI Bank
Ownership Pattern
One of the major private sector bank in India mainly has a large percentage of FII’s holding comparing to the PSU banks. It indicates that the Foreign investor has a good confidence over the bank over the years which makes its less volatile. Price Movement
ICICI bank price has always shown a upward trend in the last 5 years which indicates that investors have gain good returns on their investment in long run. But somehow considering the current market condition, rupee falling dwon with RBI tight government policy the growth of the bank has being affected & its trending relatively down as compare to its previous years price.
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Performance Chart
Net profit & Net sales always have shown a upward trend in ICICI bank which has help in gaining Investor confidence over the last 5 years & this is also very much visible considering price movement on the stock exchanges.
Key Data Particulars PE Ratio EPS DPS ROE ROA Book Value Sales PAT 2012 2011 2010 2009 2008 12.11 19.83 21.68 9.58 25.15 72.17 56.09 44.73 36.1 33.76 20 16.5 14 12 11 12.48 10.7 9.27 7.53 7.55 578.21 524.01 478.31 463.01 444.94 578.21 524.01 478.31 463.01 444.94 48421.3 41450.75 33082.96 32999.36 39210.31 8325.47 6465.26 5151.38 4024.98 3758.13
Key data of ICICI bank indicates positive scenario for according to investor outlook except for PE ratio which has gone down over the last 5years. Hence it is rightly said bank stock are less risky as compare to other stocks considering for long term investment. Hence the target which was set for ICICI bank on 5/7/2013 i.e Rs 1063.79 was achieve on 12/7/2013 within one week at Rs 1068.50 giving more than expected. Considering the current scenario the price is going down & its trading below 850 it is advisable to investor to invest in the bank for long term perspective & wait till the market condition gets stable i.e INR starts appreciating & RBI easing the monetary policy after which it will stretch return around 15-18%
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6.6 Coal India
Ownership Pattern
Coal India being PSU majority of its shareholdings belongs to its promoters & hardly is in hands of FII’s which makes it less volatile.
Price Movement
Majority PSU’s not performing as per the expectation & also various scams in PSU’s in recent time have affected the price movement of the company price as investor has less confidence due to various unfavourable outcome in recent times against the government & others PSU’s & also with election round the corner one can expect further fall in the price of Coal India ltd. Hence it is advisable to wait for the right tome to invest their money in this stock.
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Performance Chart
Performance has always been a major issue for PSU’s like Coal India which is quite visible from the above chart. But somehow in last 1 year its showing an upward trend & it can be taken as that company is trying to perform upto its capability. Key Data Particulars PE Ratio EPS DPS ROE ROA Book Value Sales PAT 2012 26.58 12.77 10 41.22 30.97 30.97 486.56 8065.1 2011 2010 2009 11.39 12.76 0 30.77 27.01 24.12 3.9 3.5 2.7 24.3 22.15 21.62 30.77 27.01 24.12 30.77 27.01 24.12 468.81 449.21 318.89 4723.56 3779.92 3295.38 2008 0 21.16 2.7 18.35 21.16 21.16 273.01 2453.8
Key data reveals that though company Sales are not growing but the PAT is growing beyond its expectation which also suggest that the company is not very much active from its core business activities & its gaining income from mainly from other sources. Considering the target set for Coal India Ltd which was Rs 299 it was achieved on 12/7/2013 within 1 week & it was achieved at Rs 300 also considering the current scenario it advisable to invest for short term perspective which may generate returns around 10-12% within 6 months.
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7. Company to Invest from Nifty 50
As on 31/7/2013
7.1 State Bank of India
Price Movement
Performance Chat
Considering the recent movement in the price of SBI its advisable to invest in these stock as it is trading to its 52 week low price i.e Rs 1697.50 & invest in the stock from a long term perspective which will fetch returns nearly around 15-17% i.e around Rs 1980 in the long run. Considering the above stocks one’s need to be patience & wait for the easing the monetary policy, reducing in CRR rate & also appreciation in INR may help the investor to achieve its target.
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Even the performance chart indicates that the bank is moving in upward direction considering the Net Sales whereas the Net profit has certainly gone down due to depreciation in INR & less liquidity in the economy.
7.2 Tata Steel
Price Movement
Performance Chart
Looking at the Price movement of Tata steel its trading at its all time low & it is advisable to invest at this time as it will fetch good returns beyond 15% in the long run. Also the performance chart reveals out that the after the downfall in Net profit & Sales have certainly started to raise in recent times which may help the company to regain its Investor confidence.
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8. Market Outlook as on 30/7/2013
NSE's NIFTY begun the week on a depressing note, as index spent entire session below the neutral line registering lower lows. NIFTY closed the session with loss of 55 points at 5,832 level, while, SENSEX closed the day with a decrease of 155 points at 19,593 level. NSE Cash segment witnessed the turnover of about Rs 9,178 crores as compared to Rs 11,516 crores earlier. Overall market breadth remained negative with 344 stocks advancing against 835 declining stocks. Except CNX AUTO & CNX IT, negative trend was witnessed amongst all sectoral indices during the day, where, CNX FMCG, CNX MNC & CNX REALTY emerged as top loser with a decrease of 2.6%, 2.5% & 2.3% respectively, while, none of the sectoral indices witnessed rise of more than 0.2%. Yesterday, NIFTY oscillated in negative bias post 16 points of gap down opening and after minor bounce back, continued prior momentum till the last trade of day and finally, wrap up the session nearing day's bottom level of 5,826. On Monday, weakness in FMCG, MNC, Realty and major frontline counters, kept market participants under pressure during the day. As NIFTY closed below the 5,850 mark (i.e. 200day Simple Moving Average), our near term technical view turned negative with closing based stop loss at 6,000 mark. On lower side, support is placed at 5,680 and then at 5,560 levels on a closing basis.
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9. Recommendation
After all the above ananlysis & research done on Indian Equity market & Nifty 50 stocks it is recommended that the current scenario may still see a downfall as RBI & Govt of India is trying to regain some energy or positive sentiments in the Indian market by reducing the liquidity in the market & by reducing growth of GDP from 5.7% to 5.5% in recent RBI credit Policy. So as per the current scenario it is advisable to the investor to hold on to the stock & avoid investing in the market. Investing can be done once the Monetary policy in eased by the RBI & also once INR start appreciating which will help in generating more liquidity in the market & would certainly increased the IIP rate of manufacturing sector. With money being reaching its all time low it is also advisable to invest in IT companies at it will fetch good returns on Short term basis. Investor who prefers to take moderate risk are suggested to invest their money in stocks like HUL, SBI & ICICI Bank etc mainly in FMCG & Banking sector as they are less risky & generates moderate returns around 10-12% respectively.
10. Conclusion
It would good to conclude on positive note that investment in equity market considering PE, & Sector PE & analyzing the Company thoroughly on its past trends helps in gaining average return of around 12-15% which is certainly beneficial in long run. Whereas it was also found that the investment should be done with a long term object as it helps in gaining better returns compare to FD’s Bonds etc.
Having knowledge of different aspects of wealth management is very important before entering in the stock market. Fundamental Analysis is most important to select companies. Macro-economic indicators have high impact on some sectors but less on others. Detailed sector analysis can help predict the future with respect to sales and profit margins of the firm. Technical analysis of stocks is a promising method, which helps in forecasting the direction of prices through the study of past market data, primarily price and volume. Concluding, the historical performance of stocks and markets are indications of future performance. Every sector has some fundamental ratios that have high impact than others. Such ratios can be found out for each sector and investment can be made based on them. With extensive research on various companies of stock market, one can find some companies with above average return and then invest accordingly.
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11. Bibliography/References
Websites:
www.moneycontrol.com www.in.finance.yahoo.com www.investopedia.com www.wikipedia.org www.bseindia.com www.nseindia.com www.moneyworks4me.com www.equitymaster.com www.google.com
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