euqity_analysis_kotak_vin.doc

ABSTRACT

INTRODUCTION

Equity ResearchThe exciting world of stock markets will paying way to fortune, money and professional challenge. In a world that is shrinking in size due to information technology and blurring boundaries between nations, the stock market (or the equities market) is all set to grow in size.

A quick overview of the roots

The "company" form of organization changed the way the world did business. The company raised the capital required to do business by issuing financial instruments (or assets) called "equity shares" to the general public. Such a purchase of shares from the company itself is a "primary market" activity. Such a purchase did not tie the investor to the company forever because they could sell these shares in the "secondary market" (or in other words, the stock exchange) unlock their investments.Purchase of equity shares in the market offered high returns to the investors. Apart from the dividend income that they received, the investors also made capital gains when the share prices shot up due to various reasons. Over and above these financial benefits, equity shares also gave ownership and control of the company in the same proportion as the number of shares held.These heavy returns do not come without associated risks. Good amount of subjectivity and ambiguity is involved in finding the true value of an equity share. This renders difficult, the decision regarding proper investment.

Investment Banks

Mutual funds

Financial Institutions

Stock Brokers

Financial newspapers

Financial websites

IMPORTANCE OF THE STUDY

Equitys are financial intermediaries concerned with mobilizing the savings of those who have surplus income and canalization of these savings in those avenues where there is demand for funds.The main objective behind this market survey on equity to see the response of equity fund distributors about equity fund and comparative study is done to analyze the performance of various equity funds and rank them accordingly based on the returns and risk involved in it and suggest the best fund for investors combined with benefits of low risk,Steady or consistent returns, high liquidity and capital appreciation through diversification and expert management.

SCOPE OF THE STUDY

The scope of the comparative study is combined to debt-medium term schemes followed by a market survey of the distribution houses .

For the purpose of the comparative study various equity schemes of SAIL(Steel authority of inida),Finolox ,Tatasteel of India limited were taken into consideration.

TECHNIQUES FOR DATA COLLECTION :

PRIMARY DATA

: It is collected through survey and fact sheets.

SECONDARY DATA: It is collected from the books, journals, past

records and all other types of published data.

OBJECTIVES OF THE STUDY

1) To study the nature and role of equitys in India

2) To study the performance of different schemes based on their returns and

comparing them with other equity schemes.

3) To analyze the performance of various equitys and rank them accordingly

based on there results.

4) To perform a market survey in order to extract the distributors feedback on equity.

LIMITAITONS

1) The comparative study is only confined to few equitys.

2) The project is completed within a short span of 45 days.

3) The comparative study has not covered all types of schemes.

4) Due to the corporate trade secrecy the information is not so exclusiveCOMPANY PROFILE

The symbol of Kotak Mahindra Bank represents the vision and operations very precisely where infinite ka reflects our global Indian personality. The ka is uniquely Indian while its curve forms the infinite sign, which is universal. One of the basic tenants of economics is that mans needs are unlimited. The infinite ka symbolizes that we have an infinite number of ways to meet those needs.

GENISIS OF KOTAK MAHINDRA BANK

KMBL has come into existence in March 2004 through the conversion of kotak Mahindra bank limited into a Commercial Bank. Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporate

.

The group has a net worth of over Rs.1,550 crore and employs over 3,000 employees in its various businesses. With a presence in 60 cities in India and offices in New York, London, Dubai and Mauritius, it services a customer base of over 5,00,000. Kotak Mahindra is fairly big and widely based with cross border operations. In 2009, the group had networth of over Rs 5,824 crores and employed over 20,000 people in its various business with a presence of 100 cities in India and offers in New York, London, Mauritius. Debit cards base increased to 5,00,000.

Kotak Mahindra owes its growth to its association with the international talent pool and has partnership with GOLDMAN SACHS (one of the worlds largest bank and brokerage firm) ford credit (one of the worlds largest dedicated automobile financiers) and old mutual (a large insurance, banking and asset management conglomerate).

Kotak Mahindra bank is the flagship company of the group. The company was incorporated in 1985 and over the years has spread its business into the entire spectrum of financial services either directly or through subsidiaries. In February 2004, the company reached a new milestone when it was given license to carry on banking business by the Reserve Bank of India. It was the first company in India to convert to a bank. The company has been in retail leading since mid 1990s. With the conversion into bank retail liabilities, treasury and corporate banking segments have been added.JOURNEY TO BANK: A SPECTACULAR METAMORPHOSIS

The Kotak Mahindra group was incorporated in 1985 as a Kotak Capital Management Finance Limited. This company was promoted by UDAY KOTAK, SIDNEY, PINTO AND KOTAK AND COMPANY

Industrialist HARISH MAHINDRA and ANAND MAHINDRA took a stake in 1986 and thus the company changed its name to KOTAK MAHINDRA FINANCE LTD.

KOTAK MAHINDRA group chairman is Mr.KM GHERDA

kotak mahindra vice chairman and managing director is Mr. UDAY KOTAK

KOTAK MAHINDRA chairman of board of directors is Mr.Dr.SHANKAR ACHARYA.

OVERVIEW OF KOTAK GROUP OF COMPANIES

Kotak Group of companies has various arms to help its reach objectives. They are

1) Kotak Investment Banking.

2) Kotak Institutional Equities.

3) Kotak Securities.

4) Kotak Car Finance.

5) Kotak Life Insurance.

6) Kotak Mutual Fund.

7) Kotak International Subsidiaries.

KOTAK INVESTMENT BANKING:

Kotak investment banking is a Indias premier investment bank which is a strategic joint venture between Kotak Mahindra Bank which is holding 75% and Goldman Sachs which is holding 25%. Kotak investment banking offers a full service investment banking solutions to its clients by combining the global reach and expertise of GOLDMAN SACHS.

Kotak investment banking identifies structures and executes merges, acquisitions, divestitures and issuance a debt and equity and also provides innovative solutions to corporates and government enterprise.

In equity business, Kotak investment bank works with top rated companies in accessing the public and private equity markets and providing innovative financing solutions. Kotak investment banking pioneered the concept of book built equity offering in India with the IPO of Hughes Software Systems Ltd and has raised equity through book building for some of the largest equity deals ever done in domestic market. Kotak investment bank has had the privileged of being the book runner to the landmark disinvestments of Maruthi Udyog Ltd and ONGC Ltd., which are considered a watershed in Indian capital markets.AWARDS:

Kotak Investment Banking achievements are awesome and hence got crowned with many as it deserves. Kotak investment banking has been awarded

KMB IT team got 6 awards organised by IBA.

KMB was in the top 5 for corporate governance amongst companies by technical criteria in the IR Global rankings 2009 for the Asia pacific/ Africa region.

BEST DOMESTIC EQUITY HOUSE by Asia money in 2004, 2005, 2007 , 2008 & 2009.

BEST DEAL IN INDIA for ONGO Limited by Asia money in 2005.

BEST INVESTMENT BANK IN INDIA by finance Asia in 2004, 2005, 2007 & 2009.

BEST ASIAN MID CAP EQUITY DEAL for Maruthi IPO in 2004 by Finance Asia.

BEST INVESTMENT BANK IN INDIA by Global finance in 2005 and 2006.

BEST EQUITY HOUSE IN INDIA by Euro money in 2004, 2005, 2006 , 2008 & 2009.

Indias equity house of the year by IFR Asia in 2005.

BEST PERFORMANCE EQUITY BROKERAGE in India CNBC financial advisor awarded in 2009 BEST BROKERAGE FIRM IN INDIA BY asia money in 2010 THE LEADING EQUITY HOUSE IN INDIA as Thomas extel survey in 2011 KOTAK INSTITUTIONAL EQUITIES

Kotak institutional equities focus on catering to the institutional clients including foreign institutional investors, banks, mutual funds and insurance companies.

Kotak research analysts were ranked top 3 in institutional investors 2005 all Asia ranking. It caters to institutional clients of India, London, New York, Hong Kong, Singapore, Japan and Middle east. The full service research teams sectoral analysis covers all the major areas of the India economy and constantly delivers comprehensive high quality research across a wide spectrum of industries.

KOTAK SECURITIES

Kotak securities are a strategic joint venture between KOTAK MAHINDRA BANK (holding 75%) & GOLDMAN SACHS (holding 25%) is Indias leading brokerage and securities distribution house. Kotak securities has been ranked the largest distributor of initial public offerings for 2007-2008 by PRIME database and has been awarded Indias best equity house for 2009 by Finance Asia, Best broker in India for 2009 by Finance Asia and best equities house in India for 2009 by Euro money.

The non-institutional division of Kotak securities offers both offline and online broking. Apart from broking services, the non-institutional segment offers wide range of products including portfolio management services, margin lending, depository services and other fee based activities.

The private client group (PCG) of the company provides investment advisory services to High Net Worth individuals, Non Resident Indians (NRIs) Investor Trusts and Corporate. The investment product range offered by PCG covers investments and trading, equity derivatives, portfolio management, IPOs and mutual funds. In 2010 the assets under discretionary portfolio management were in excess of Rs. 28 billion. Kotak securities average daily volume 5,300 crores (in 2010).KOTAK CAR FINANCE During 2006, the kotak Mahindra Groups ownership in Kotak Mahindra Primus Limited (KMPL) has gone up to 100% following the acquisition of 40% stake held by Ford Credit International (FCI). The primary business of KMPL is to finance passenger cars, multi-utility vehicles in India for retail customers and working capital and infrastructure requirements of dealers. KMPL offers finance for both new as well as used cars.

KMPL offers car financing primarily in the form of loans. KMPL also offers inventory funding to car dealers and has entered into strategic arrangement with various car manufacturers in India for being their preferred financier. KMPL has established a centralize customer services activity to ensure high quality and timely response to customer needs.

During 2009-10 KMPs gross advances crossed Rs. 5900 crore mark recording an increase of 44% as compared to financial year 2008.KMPL had a retail distribution network comprising of 88 branches (including representative offices) in 18 states in the country and had a wide network of direct marketing associates, brokers and agencies supporting the distribution network and servicing around 117,345 customers.

KOTAK LIFE INSURANCE

Kotak Mahindra Old Mutual Life Insurance Ltd is a joint venture between Kotak Mahindra Bank Ltd holding 74% and Old Mutual Plc. Holding 26% - a leading international financial services group listed on the London stock exchange. Old mutual plc, a UK based financial service group with 160 years of experience in insurance and banking, is a Fortune 500 company listed in London Stock Exchange and included in the FTSE 100 list of companies.

Kotak life insurance offers a wide range of innovative life insurance products aimed at making the Indian consumer financially independent. Kotak life insurance has full range of products from pure insurance to saving products and market linked products, from childrens insurance to retirement solutions. In a survey conducted by AC Nielson ORG MARG in march 2006, Kotak life insurance ranked 4th among insurance companies operating in India in terms of brand awareness in urban areas. For 2005-05, Kotak life insurance was ranked 6th amongst the private insurers in terms of premium garnered.

It currently offers 22 products, including pure risk products, return of premium products, participating products and unit linked investment products. The Kotak safe investment plan (KSIP) offers capital guarantee at a reasonable cost.

As a financial year 2009 first year regular premium 1,046 crores , 61 crores single premium , 585 crores renewal premium.

KOTAK MUTUAL FUND

Kotak Mutual Fund was established in 1998, right from starting it has built a reputation as a innovator among other things it has given Indian mutual fund industry its first guilt fund, first multi-manager equity fund of funds, first theme fund dedicated to globally competitive Indian companies, first investor loyalty scheme and first SMS-based information service which has led the way for rest of the industry.

Kotak Mutuals goal is to offer investors a full range of products, across the risk-return spectrum, to enable them to build wealth and achieve their financial goals. To achieve this, it tries to make investing in mutual funds a simple and convenient process for all investors, by constantly upgrading its service levels and relying on innovation to make the difference.

With assets of Rs.19,739 crores under management (2009 - 2010). The number of folios as on March 31, 2010 was about 9.40 lakhs as compared to about 5.36 lakhs as of March 31, 2009 a growth of 75%. It is a mind logging success where its success is based on three strategies: New product development, increased geographical expansions, improved distribution reach and penetration. Through this strategy, kotak mutual aims to be the best among the mutual funds of choice.

KOTAK INTERNATIONAL SUBSIDIARIES

The international subsidiaries offer brokerage and asset management services to high net worth individuals and institutions based outside India through its range of offshore India funds, as well as through specific advisory and discretionary investment management mandates from institutional investors. Kotak Mahindra International Ltd is the investment manager to over US $375 mn in equity assets invested into India through various funds. The international subsidiaries also dealing depository receipts and lead manage and underwrite international issuances of securities.

Kotak Mahindra UK Ltd is the first firm of Indian origin to be regulated by securities and futures authority in the United Kingdom. KMUK is a member of London stock exchange and is registered with

the SEBI as a Foreign Institutional Investor (FII). KMUK as an FII has 18 sub-accounts investing in to India as of September 30, 2010. Kotak Mahindra has financial intermediary regulated by the NASD in United States. KOTAK PRIVATE EQUITY FUND

During 2005-05, the Bank launched the private equity division. The private equity division has an experienced investment management team with a successful track record in the venture capital industry. Kotak SAFE India Fund (KSIF) is registered with SEBI as a venture capital fund. Indian growth fund, a scheme of KSIF had its final closing in September 2009 with commitments in excess of Rs. 7.8 bn, from domestic as well as international investorsKOTAK REAL ESTATE FUND

The group has launched Kotak Mahindra Realty Fund, a SEBI registered venture capital fund, with a focus on the Indian real estate and allied sectors. The primary objective of the fund is to invest in and provide finance to real estate sector and allied activities in Indian with an intention to generate superior risk adjusted returns..

NRI SERVICES

KOTAK MAHINDRA BANK offers a diverse set of NRI- centric financial solutions including investments, remittances and deposits. Ranging from NRE/NRO/FCNR accounts, Demat accounts are the value added benefits like At-par cheques, at home services, free inward funds transfer, mandate facility etc. The investment product ranges from mutual fund to insurance. The banks Portfolio Investment scheme (PINS) enables to deal in equities in secondary market. We offer a platform that includes a bank account a demat account and a broking account through Kotak securities. The tax and FEMA advisory services of the bank give advice on taxation or regulatory matters from the best experts in the field. The bank also offers an online remittance service for non resident Indians called FUNDS TO HOME. It includes a range of fast, economical and secure remittance services.

COMMERCIAL VEHICLES

This constitutes the largest part of the banks retail advances portfolio servicing a customer base of more than 49,345 customers. The division is moving towards becoming one stoop shop for all financing needs of transporters. Developing an efficient distribution network, implementing risk management techniques and identification of new products for the transport and infrastructure sectors continue to be the focus of this business the divisions foray into funding of construction equipment to infrastructure companies has resulted in the bank emerging as one of the key players on the sector. The banking platform provides the right opportunity to extend its reach and services

HOME LOANSKOTAK MAHINDRA BANK offers home finance solutions in may 2004. The home finance business of the bank has taken the approach of developing products for specific segments and customizing them to suit individual need. The bank now has a complete suite of home finance offerings with home loans, loan against property, balance transfer loans and loans for commercial property. The bank launched innovative home finance offerings with reset period of 36 months and with fixed deposit interest rate as the interest rate benchmark to expand its range of offerings and cater to newer segments.

AGRICULTURE FINANCE DIVISION

The agriculture finance division was launched in August 2004, to meet the priority sector advance target of the bank. Given the vast opportunities that are coming up in agriculture and rural sectors, the division is identifying profitable and yet risk controlled funding opportunities. The division now has focused teams with experience who are developing assets for the bank in the retail, SME and corporate segments. The products launched by the division include tractor loans to individual farmers including refinancing for the purchase of farm mechanization equipment, term loans for cropping activities and to high tech and scientific agricultural products, working capital loans to dealers and distributors of agricultural inputs and loans to farmers engaged in providing inputs under contract farming arrangement to large corporates and direct loans to corporates engaged in agriculture activities.CORPORATE BANKING KOTAK MAHINDRA BANK offers corporates and institutions a complete range of client-centric banking solutions and services. These include working capital trade services, transaction banking, money market and foreign exchange services and cash management. All the services are focused on specific client needs and delivered after factoring in industry imperatives and individual contexts. Kotaks years of experience ensures that it truly understands the financial needs of Indian corporate sector. The focus is on supporting supply chain and distribution. This business has gained significantly from banking platform with ability to offer a wider range of products and services to customers.

Profit before tax for corporate banking segment was up 99% from Rs. 101.65 crore in 2008 09 to Rs.202.64 crore in 2009 10.PERSONAL LOANSKOTAKS quick easy personal loans are called Jaldi Loans which range from Rs.50,000 to Rs.10,00,000 for salaried individuals, self-employed professional and businessmen. It services a customer base of around 37,000. These loans can be used for almost anything- to renovate houses, for children education, to buy a 2 wheeler, to go on a well deserved holiday. Jaldi loans offers minimal paper work and quick process within 24 hours for salaried and 72 hours for self employed professionals and businessmen with repayment tenures ranging from 12 to 48 hours.

Equity Research

The exciting world of stock markets will paying way to fortune, money and professional challenge. In a world that is shrinking in size due to information technology and blurring boundaries between nations, the stock market (or the equities market) is all set to grow in size.

A quick overview of the roots

The "company" form of organization changed the way the world did business. The company raised the capital required to do business by issuing financial instruments (or assets) called "equity shares" to the general public. Such a purchase of shares from the company itself is a "primary market" activity. Such a purchase did not tie the investor to the company forever because they could sell these shares in the "secondary market" (or in other words, the stock exchange) unlock their investments.Purchase of equity shares in the market offered high returns to the investors. Apart from the dividend income that they received, the investors also made capital gains when the share prices shot up due to various reasons. Over and above these financial benefits, equity shares also gave ownership and control of the company in the same proportion as the number of shares held.These heavy returns do not come without associated risks. Good amount of subjectivity and ambiguity is involved in finding the true value of an equity share. This renders difficult, the decision regarding proper investment.

The emergence of professional research

Common man could not understand the nuances of stock market and equity valuation. Also, the concept of pooled funds like insurance funds, retirement funds and mutual funds required professional investment management. Consequently, the field of market analysis emerged and gave rise to finance professionals who excelled at valuation of such financial assets.

Investment Banks

Mutual funds

Financial Institutions

Stock Brokers

Financial newspapers

Financial websites

In a market analysis one has to use various financial models, tools and techniques to arrive at simple decisions like buying or selling or standing still regarding the particular stock. If the research and analysis show that the stock price of a particular company may rise, you "go long" (buy it). If you have already bought it, you "hold" it. Alternatively, if the research indicates a possible downtrend in the stock price, you would immediately "go short" (sell it) so that you don't incur a loss (or reduced profit) at a later date. When once the decision is taken, there is absolutely no time to spare in implementing it.

FUNDAMENTAL ANALYSIS

Its a logical and systematic approach to estimating the future dividends & share price, as these two constitute the return from investing in shares. According to this approach, the share price of a company is determined by the fundamental factors affecting the Economy/Industry/Company such as Earnings Per Share, D/P ratio, Competition, Market Share, Quality of Management etc. it calculates the true worth of the share based on its present and future earning capacity and compares it with the current market price to identify the miss-priced securities. Fundamental Analysis helps to identify fundamentally strong companies, whose shares are worthy to be included in the investors portfolio, by providing an analytical framework, known as Economy Industry Company framework, for rational investment decision making. 1. Economic Analysis:

Economic factors play major role in any investment decisional, which is made for making a gain and better returns. Economic analysis and forecasting company performance and of returns is necessary for making investments.

Any investment is risky and as such investment decision is difficult to make. Investment decision is based on availability of money and information on the economy.

Companies are a part of the industrial and business sector, which in return is a part of overall economy. Thus the performance of a company depends recession or stagnation, the performance of the companies will be bed in general, with sum exceptions however, on the other hand, if the economy is booming, incomes are raising and the demand is good, then the industries and the companies is general may be prosperous, with some exceptions however.

In the Indian economy, the matters to be considered in the first place all the behavior of the monsoon and the performance of agriculture. India has a mixed economy, where the public sector plays a vital role. The government being the biggest investor and spender, the trends in public investment and expenditure would indicate the likely performance of the Indian economy. Concomitant with this, the government budget policy, tone levies and government borrowing program along with the extent of deficit financing will have a major influence on the performance of the Indian economy. The monitory situation along with the budgetary policy influences the movement in price inflation do have a major influence on the economy.

The economy and political stability in the form of stable and long term economic policies and a stable political with no uncertainty would also be necessary for a good performance of the economy in general and of companies in particular.

All the above factor of the economy influences the corporate performance and the industry in general. In the investment analysis, a broad picture of their factor and a forecast of the growth of the economy and of industry would be necessary to decide when to invest and what to invest in.

2. Industry Analysis:

On the economic analysis is made and the forecast of the economy is known the investor will then have some ides of the likely growth of the economy and its trend. After that, the analyst would look into the industry groups that are promising in the coming year or years and then only he will be able to choose the companies in those industry groups.

At any point of time, there may be industries, which are on the up swing of the cycle called sunshine industries and those, which are on the decline called sunset industries. In India, there are some growth industries like electronics and Tele communications, which are the key industries. The engineering, petrol chemicals and capital goods industries are in the core sector. A few industries like diamonds, engineering etc. are in the export sector. Jute and cotton textiles are the decedent industries. At present, Tele communications, energy etc., are some examples of sunrise industries.

The key characteristics that are to be considered in the analysis, which have a bearing on the prospects of the company are: -

Demand Supply Gap.

Competitive conditions in the industry.

Permanence.

Growth Rate of the Industry.

Attitude of Government towards the industry.

Labors Conditions.

Supply of Raw Materials.

Cost Structure.

Past Sales & Earnings Performance.

The gap between Demand and Supply in an industry is a fairly good indicator of its short-term or medium-term prospects. Excess supply reduces the profitability of the industry through a decline in the unit-price realization. On the contrary, insufficient supply tends to improve the profitability through higher unit-price realization. In an industry where supply exceeds Demand and there are many competing firms, the increased rivalry among the firms leads to price cuts and heavy advertising. In such a situation, the companies lose their competitive edge and their profitability gets erode.

In this age or rapid technological change, the important factor to be considered is the permanence of an industry, which is related to the products and the technology used by the industry. Another factor to be observed is the Cost structure of the Industry i.e., the proportion of the fixed costs to the variable costs that determines the level of Break-even point. The industry with lower break-even point is to be given more importance.

3. Company Analysis:

Company Analysis is the final stage of the Fundamental Analysis, which is to be done to decide the company in which the investor should invest. The Economy Analysis provides the investor a broad out line of the prospects of growth in the economy. The industry analysis helps the investor to select the industry in which the investment would be rewarding. Company Analysis deals with the estimation of the Risks and Returns associated with individual shares.

The stock price has been found on depend on the intrinsic value of the companys share to the extent of about 50% as per many research studies. Graharm and Dodd in their book on security analysis have defined the intrinsic value as that value which is justified by the facts of assets, earnings and dividends. These facts are reflected in the earnings potentials of the company. The analyst has to project the expected future earnings per share and discount them to the present time, which gives the intrinsic value of the share. Another method to use is to take the expected earnings per share and multiplying it by the industry average price earning multiple.

By this method, let the analyst estimate the intrinsic value or fair value of share and compare it with the market price to know whether the stock is over valued or under valued. The investment decision is to buy under valued stock and sell over valued stock.

3.1. Financial Analysis:

Share price depends partly on its intrinsic worth for which financial analysis for a company is necessary to help the investor to decide whether to buy or not the shares of the company. The soundness and intrinsic worth of a company is known only by such analysis. An investor needs to know the performance of the company, its intrinsic worth as indicated by some parameters like book value, EPS, P/E multiple etc., and come to a conclusion whether the share is rightly priced for purchase or not. This, in short is the importance of financial analysis of a company to the investor.

Financial analysis is analysis of financial statement of a company to assess its financial health and soundness of its management. Financial statement analysis involves a study of the financial statement of the company to ascertain its prevailing state of affairs and the reasons there of. Such a study would enable the public and investors to ascertain whether one company is more profitable than the other and also to state the cause and factors that are probably responsible for this.

3.1.1. Method or devices of Financial Analysis:

The term Financial statement is used in modern business refers to the balance sheet, or the statement of financial position of the company at a point of time and income and expenditure statement or the profit and loss statement over a period.

Interpret the financial statement; it is necessary to analyze them with the object of formation of an opinion with respect to the financial condition of the company. The following methods of analysis are generally used.

1. Comparative statement

2. Trend analysis

3. Common size statement

4. Fund flow analysis

5. Cash flow analysis

6. Ratio analysis

Fundamental Analysis has a very broad scope. One aspect looks at the general (qualitative) factors of a company. The other side considers tangible and measurable factors (quantitative). This means crunching and analyzing numbers from the financial statements. If used in conjunction with other methods, quantitative analysis can produce excellent results. Ratio analysis isn't just comparing different numbers from the balance sheet, income statement, and cash flow statement. It's comparing the number against previous years, other companies, the industry, or even the economy in general. Ratios look at the relationships between individual values and relate them to how a company has performed in the past, and might perform in the future.

For example current assets alone don't tell us a whole lot, but when we divide them by current liabilities we are able to determine whether the company has enough money to cover short-term debts.

Efficient Market Hypothesis

This theory presupposes that the Stock Markets are so competitive and efficient in processing all the available information about the securities that there is immediate price adjustment to the changes in the economy, industry and company. The Efficient Market Hypothesis model is actually concerned with the speed with which information is incorporated into the security prices.

The Efficient Market Hypothesis has three Sub-hypothesis:

Weakly Efficient: This form of Efficient Market Hypothesis states that the current prices already fully reflect all the information contained in the past price movements and any new price change is the result of a new piece of information and is not related/independent of historical data. This form is a direct repudiation of technical analysis.

Semi-Strongly Efficient: This form of Efficient Market Hypothesis states that the stock prices not only reflect all historical information but also reflect all publicly available information about the company as soon as it is received.

Strongly Efficient: This form of Efficient Market Hypothesis states that using both publicly available information as well as private or insider information cannot beat the market.

But even though the Efficient Market Hypothesis repudiates both Fundamental and Technical analysis, the market is efficient precisely because of the organized and systematic efforts of thousands of analysts undertaking Fundamental and Technical analysis. Thus, the paradox of Efficient Market Hypothesis is that both the analyses are required to make the market efficient and thereby validate the hypothesis.

Technical Analysis

Introduction

There are two major types of analysis for predicting the performance of a company's stock - fundamental and technical. The latter looks for peaks, bottoms, trends, patterns, and other factors affecting a stock's price movement and then making a buy/sell decision based on those factors. It is a technique many people attempt, though very few are truly successful.

Today, the world of technical analysis is huge. There are literally hundreds of different patterns and indicators investors claim to be successful. There are different types of stock charts and the various technical analysis tools.What is Technical Analysis?

Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, past prices, and volume. Technical analysts do not attempt to measure a security's intrinsic value; instead they look for patterns and indicators on stock charts that will determine a stocks future performance.

Technical analysis has become popular over the past several years, as more and more people believe that the historical performance of a stock is a strong indication of future performance. The use of past performance should not come as a big surprise. People using fundamental analysis have always looked at the past performance by comparing fiscal data from previous quarters and years to determine future growth. The difference lies in the technical analysts belief that securities move with very predictable trends and patterns. These trends continue until something happens to change the trend, and until this change occurs, price levels are predictable.

Some technical analysts claim they can be extremely accurate a majority of the time.

There are many instances of investors successfully trading securities with only the knowledge of its chart and without even understanding what the company does. Technical analysis is a terrific tool, but most agree that it is much more effective when combined with fundamental analysis.

Let's now look at some of the major indicators technical analysts use.The Bar Chart

Bar charts are some of the most popular type of charts used in technical analysis. As illustrated on the left, the top of the vertical line indicates the highest price a security traded at during the day, and the bottom represents the lowest price. The closing price is displayed on the right side of the bar and the opening price is shown on the left side of the bar. A single bar like the one to the left represents one day of trading.

The advantage of using a bar chart over a straight-line graph is that it shows the high, low, open and close for each particular day. This is the type of chart we will be using to display various indicators throughout this explanation. There are two more types of charts that are also frequently used for technical analysis that are similar to the bar chart. The first we will look at is called "Candlestick Charting".

Candle Stick Charting

Candlestick charts have been around for hundreds of years. They are often referred to as "Japanese Candles" because the Japanese would use them to analyze the price of rice contracts.

Similar to a bar chart, candlestick charts also display the open, close, daily high, and daily low. A difference is the use of color to show if the stock was up or down over the day.

The chart below is an example of a candlestick chart for AT&T (T), green bars

indicate the stock price rose, red indicates a decline:

Candlestick charts have a "love or leave" relationship with investors. People either love candlesticks and use them frequently, or are completely turned off by them. There are several patterns people look for with candlestick charts, here are a few of the popular ones and what they mean:

This is a bullish pattern, the stock opened at (or near) its low and closed near its high.

The opposite of the pattern above, this is a bearish pattern. This indicates that the stock opened at (or near) its high and dropped substantially to close near its low.

Called "The Hammer", this is a bullish pattern only if it occurs after the stock price has dropped for several days. A Hammer is identified by a small body along with a large range. The theory is that this pattern can indicate a reversal in the downtrend is in the works.

Called a "star". This pattern is used in others such as the "doji star". For the most part, stars typically indicate a reversal and or indecision. There is the possibility that after seeing a star there will be a reversal or change in the current trend.

Keep in mind there are over 20 other patterns used by technical analysts for candlestick charting.

Now, let's take a look at a more traditional style of charting stock price performance

called "Point & Figure Charting.

The Point & Figure Chart

This type of chart is somewhat rare, in fact most charting services do not even offer the point and figure chart. This is a chart that plots day-to-day increases and declines in price. A rising stack of Xs represents increases while a declining stack of Os represents decreases. These types of charts were traditionally used for intra-day charting (a stock chart for just one day), mainly because it can be long and tedious to create P&F charts over a longer period of time manually.

The idea behind P&F charts is that they help you to filter out less-significant price

movements and let you focus more on the most important trends. Below is an

example of a Point and Figure chart for AT&T (T):

There are two attributes that affect the appearance of a Point & Figure chart, box size and reversal amount. We won't get into much detail about these factors. Now that we've taken a look at three different types of charts used by technical analysts, let's look at various indicators.

Using the Moving Average

One of the easiest indicators to understand, the moving average shows the average value of a security's price over a period of time. To find the 50-day moving average, you would add up the closing prices (but not always) from the past 50 days and divide them by 50. Because prices are constantly changing, the moving average will move as well. It should also be noted that moving averages are most often used when compared or used in conjunction with other indicators such as MACD and EMA. The most commonly used moving averages are of 20, 30, 50, 100, and 200days.Each moving average provides a different interpretation on what the stock will do,there is not one right time frame. The longer the time span, the less sensitive themoving average will be to daily price changes. Moving averages are used toemphasize the direction of a trend and smooth out price and volume fluctuations (or "noise") that can confuse interpretation.

Notice back in September when the stock price dropped well below its 50-day average (the green line). There has been a steady downward trend since then and no real strong divergence, until the end of December where it rose above its 50-day average and continued to rise for several weeks.

Typically, when a stock price moves below its moving average it is a bad sign because the stock is moving on a negative trend. The opposite is true for stocks that protrude their moving average - in this case, hold on for the ride.

Using the Relative Strength Index

When talking about the strength of a stock there are a few different interpretations,one of which is the Relative Strength Index (RSI). The RSI is a comparison between the days that a stock finishes up against the days it finishes down. This indicator is a big tool in momentum trading.

The RSI is a reasonably simple model that anyone can use. It is calculated with the following formula. ( most likely, it is never have to do manually).

RSI = 100 - [100/(1 + RS)]

Where:

RS = (Avg. of n-day up closes)/(Avg. of n-day down closes)

n= days (most analysts use 9 - 15 day RSI)

The RSI ranges from 0 to 100. A stock is considered overbought around the 70 level and you should consider selling. This number is not written in stone, in a bull market some believe that 80 is a better level to indicate an overbought stock since stocks often trade at higher valuations during bull markets. Likewise, if the RSI approaches 30 a stock is considered oversold and you should consider buying. Again, make the adjustment to 20 in a bear market.

The shorter number of days used, the more volatile the RSI is and the more often it will hit extremes. A longer term RSI is more rolling, fluctuating a lot less. Different sectors and industries have varying threshold levels when it come s to the RSI. Stocks in some industries will go as high as 75-80 before dropping back and others have a tough time breaking past 70. A good rule is to watch the RSI over the long term (1 year or more) to determine what level the historical RSI has traded at and how the stock reacted when it reached those levels.

Here, we have an RSI chart for AT&T. The RSI is the green line, its scale is the numbers on the right hand side that go from 0 to 100. Notice the RSI was approaching the 60-70 levels in December and January and then the stock (blue line) sold off. Also, notice around October when the RSI dropped to 25 the stock climbed up nearly 30% in just a couple weeks.

Using the moving averages, trend lines, divergence, support, and resistance lines along with the RSI chart can be very useful. Rising bottoms on the RSI chart can produce the same positive trend results as it would on the stock chart. Should the general trend of the stock price tangent from the RSI, it might spark a warning, and the stock is either over/under bought.

The RSI is a great little indicator that can help you make some serious money. Beware that big surges and drops in stocks will dramatically affect the RSI, resulting in false buy or sell signals. Most investors agree that the RSI is most effective in "backing up" or increasing confidence before making an investment decision, don't invest simply based on the RSI numbers.

The Money Flow Index

Now that we've taken a look at the Relative Strength Index (RSI), let's take a look at a more stringent momentum indicator. The Money Flow Index measures the strength of money flowing into and out of a stock. The difference between the RSI and Money Flow is that where RSI only looks at prices, the Money Flow Index also takes volume into account.

Calculating Money Flow is a bit more difficult than the RSI:

First we need the average price for the day:

Day high + Day Low + Close

Average Price =

3

Now we need the Money Flow:

Money Flow = (Average Price) x (Day's Volume)

Now, to calculate the money flow ratio you need to separate the money flows for a period into positive and negative. If the price was up in a particular day, this is considered to be "Positive Money Flow". If the price closed down it is considered to be "Negative Money Flow".

Positive Money Flow

Money Flow Ratio =

Negative Money Flow

It is the Money Flow Ratio that is used to calculate the Money Flow.

The Money Flow ranges from 0 to 100. Just like the RSI, a stock is considered Overbought in the 70- 80 range and oversold in the 20-30 range. The shorter number of days you use, the more volatile the Money Flow is. For the example below we will use a 14-day average.

There are three key points on this chart. The blue circle is where the stock price started to create a "base" on the lower band; it appeared that the stock was over sold. Buying at this point would have been a wise choice, as the stock proceeded to jump 20% or more in the next few weeks.

The two red circles are areas where the stock price was touching or breaking through the upper red band. This is usually an indication that the stock is over bought. In both instances, the stock dropped substantially in following weeks.

The Bollinger bands are a good tool to use, but as we've been preaching all along, never invest solely based on what just one indicator says. Notice there were instances when the stock touched the upper or lower band and did not react. Rather than basing their investment decisions on Bollinger, many investors use this indicator mainly to solidify a decision they are about to make.

Conclusion

Technical analysis is one of those fields where everyone has a different theory on what works and what doesn't. If we can leave you with one last tip, it is to back test whatever strategy you decide to pursue. Back testing means looking back at several years worth of charts to see how a particular stock reacts. Different stocks do different things,

Here are a couple points to remember about technical analysis:

Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, past prices, and volume.

The advantage of using a bar chart over a straight-line graph is that it shows the high, low, open and close for each particular day.

One of the most basic and easy to use TA indicators is the moving average, which shows the average value of a security's price over a period of time. The most commonly used moving averages are the 20, 30, 50, 100, and 200 day.

Support and resistance levels are price levels at which movement should stop and reverse direction. Think of Support/Resistance (S/R) as levels that act as a floor or a ceiling to future price movements.

There are literally 100s of different price patterns and indicators.

In our humble opinion, technical analysis is a terrific tool, but much more effective when combined with fundamental analysis.

FINOLEX INDUSTRIES

Registered OfficeD1/10,M.I.D.C, Chinchwad,PuneMaharashtra411019

Tel:27408200

Fax27477217

[email protected]

Websitewww.finolex.com

CEOMr.K P Chhabria

Business GroupFinolex Group

IndustryPetrochem Polymers

BSE Code500940

NSE CodeFINPIPEEQ

Face Value10

Market Lot1

Board of Directors

Director NameDesignation

Mr. Prakash P ChhabriaDeputy Managing Director

Mr. K N AtmaramaniIndependent Director

Mr. S N InamdarIndependent Director

Mr. S S MaratheIndependent Director

Mr. M G BhideIndependent Director

Dr. N A KalyaniIndependent Director

Mr. K P ChhabriaManaging Director

Mr. P P ChhabriaNon Executive Chairman

Mr. P SubramaniamWhole Time Director

Mr. J S AroraWhole Time Director

Mr. S S DhanorkarWhole Time Director

About FINOLEX

The company was incorporated on 28th March 1981, in Maharashtra as a private limited company and was converted into a public limited company on 1st December 1988. It manufactures PVC Pipes and fittings. It was promoted by P.P. Chhabria and his associates. The company acquired a manufacturing plant at MIDC Chinchwad, Pune and started commercial production of PVC pipes in May 1981. In 1983, 3,67,650 shares issued without payment in cash to members of Finolex Plastics Pvt. Ltd. on its merger.

In 1994, the company has been granted the highest category credit rating, namely P1+ credit rating, by CRISIL for issue of commercial paper. The rating of P1 indicates that the degree of safety regarding timely payment on the instrument is very strong. "+" (plus) sign for rating reflects a comparatively higher standing within the category. The company has tied up with banks for working capital requirements of PVC resin division In 1996, The Pipes Division of the Company has been granted Quality Systems Certification Licence as per IS/ISO 9002 by Bureau of Indian Standards, accredited by Raad Voor de Certificates, Netherlands.

In 1999,The Company was honoured with the Mahratta Chamber of Commerce, Industries and Agriculture's prestigious Dr. R.J.Rathi 'Environmental Pollution Control' award for outstanding efforts in controlling pollution and protecting the environment at the plant. The Company signed during the year under review Tripartite Agreement with Central Depository Services (India) Limited and MCS Limited for dematerialisation of equity shares

Shareholding Pattern

Share Holding Pattern as on:31/03/201331/12/201230/09/2012

FaceValue10.0010.0010.00

Share HolderNo. Of Shares% HoldingNo. Of Shares% HoldingNo. Of Shares% Holding

PROMOTER'S HOLDING

Foreign Promoters00.0000.0000.00

Indian Promoters2336835118.842336835118.842336835118.84

Person Acting in Concert00.0000.0000.00

Sub Total2336835118.842336835118.842336835118.84

NON PROMOTER'S HOLDING

Institutional Investors

Mutual Funds and UTI13698151.1022230121.7941937653.38

Banks Fin. Inst. and Insurance15782521.2710376480.8412888091.04

FII's13727771.1138591393.1136723482.96

Sub Total43208443.4871197995.7491549227.38

Other Investors

Private Corporate Bodies4726515938.114561400136.784429086335.71

NRI's/OCB's/Foreign Others18530401.4915916561.2815696241.27

GDR/ADR00.0000.0000.00

Directors/Employees00.0000.005000000.40

Government00.0000.0000.00

Others5000000.405000000.4000.00

Sub Total4961819940.014770565738.474636048737.38

General Public4671052337.664582411036.954513415736.39

GRAND TOTAL124017917100.00124017917100.00124017917100.00

Capital History

FromToClass of SharesAuth. CapitalIssued CapitalPaid-up Shares (No's)Face Value (Rs)Paid-up Capital

1994 1995 Equity Share 2.002.00201100102.00

1995 1996 Equity Share 20.005.68567650105.68

1996 1997 Equity Share 20.0014.1914105691014.11

1997 1998 Equity Share 5,500.00109.131090431210109.04

1998 1999 Equity Share 900.00109.551094666210109.47

1999 2000 Equity Share 900.00149.801497166210149.72

2000 2001 Equity Share 1,650.001,297.53129744051101,297.44

2001 2002 Equity Share 1,650.001,297.53129744051101,297.44

2002 2003 Equity Share 2,350.001,475.60147551901101,475.52

2003 2004 Equity Share 2,350.001,475.52147551901101,475.52

2004 2005 Equity Share 2,350.001,487.06148697241101,486.97

20052006Equity Share 1,500.001,487.06148697241101,486.97

2006 2007 Equity Share 1,500.001,487.06148697241101,486.97

2007 2008 Equity Share 1,500.001,487.06148697241101,486.97

2008 2009 Equity Share 1,500.001,445.33144524468101,445.24

2009 2010 Equity Share 1,500.001,292.39129229972101,292.30

2010 2011 Equity Share 1,500.001,265.59126550536101,265.51

2011 2012 Equity Share 1,500.001,240.26124017917101,240.18

2012 2013 Equity Share 1,500.001,240.26124017917101,240.18

FINANCIAL STATEMENTS

Particulars20132012201120102009

BALANCE SHEET

Equity Share Capital124124127129144

Preference Share Capital00000

Total Reserve & Surplus447447402253325

- Revaluation Reserve00000

Total Debt318318372262324

Total Liabilities889889901644794

Net Block4884484511542561

CWIP24241066

Investments272272244104154

Net Current Assets108108135-872

Miscellaneous Expenditure00000

Total Assets889889901644794

INCOME STATEMENT

Sales1073818744654649

Other Income425917511

Total Income1115877761659660

Operating Profit199197180174119

Interest1213162138

Depreciation4443424141

Tax515041223

Net Profit9190808937

Dividend (Rs. Cr.)3737253921

Face Value Per Share (Rs.)1010101010

Dividend Per Share (Rs.)33221.50

Earning Per Share (Rs.)77673

RATIO ANALYSIS

Ratios20132012201120102009

Dividend per Share33221.5

Earning per Share77673

Pay out Ratio42.8541.2633.3328.5750

Book value per Share40.7637.4633.6429.5732.5

Return on Net Worth(%)16.216.417.620.97.9

Operating Profit Margin(%)23.42924.226.518.4

Total Assets Turnover Ratio1.20.920.831.020.82

Gross Profit Margin(%)15.212.6316.3619.1410.33

Net Profit Margin(%)11.3110.4910.7113.125.31

Inventory Turnover Ratio6.718.166.396.911.19

Exports as % of Total Sales14.0315.288.9411.2212.32

Share Price/31Mar(BSE)70.550.4033.7528.4-

Share Price/31Mar(NSE)70.7049.7533.5028.4518.15

FINANCIAL ANALYSIS

Financial highlights

Results

Finolex Industries Ltd (FIL), a major supplier of PVC resin and PVC pipes and fittings, reported a 30.5% yoy rise in gross turnover to Rs3.4bn in Q4 FY09. However, a 43.8% yoy rise in inter divisional transfer resulted into net sales growth being restricted to 28.1% yoy. Net sale for Q4 FY10 was at Rs2.4bn as against Rs1.9bn in Q4 FY10. The companys PVC plant operated at 113% capacity utilization.

In Q3 FY10 operating profit declined significantly by 33.8% to Rs318mn and OPM slumped by 12.5 percentage points (pps) yoy to 13.3%. The fall was driven by 20.4pps increase in raw material cost as a percentage of net sales mainly on account of surging crude oil prices. However, 180bps yoy

Ratio Analysis

In the above table, the dividend per share has increased over the years. Pay out rate is also increasing, EPS is more or less constant and BPS showing an increasing trend. Return on net worth is showing a decreasing trend from 2010.Operating margin also got down in 2011, Total asset turnover ratio is ok, and exports came down when compared to last year.

Trend Analysis :

YEARSALESPROFITABILITY

Amt (Rs)Trend %Amt (Rs)Trend %

200756010048100

200873713256117

20096491163777

201065411789185

201174413380167

201281812190188

2013107314691200

Interpretation : The above table and graph shows the Sales and Profitability of the company for seven years. Finolex Inds stands 22nd and 17th position respectfully this FY2010; both its sales and profits are volatile.

STEEL AUTHORITY OF INDIA Ltd

Registered OfficeIspat Bhawan,Lodi RoadNew DelhiDelhi110003

Tel:24367481

Fax24367015

[email protected]

Websitehttp://www.sail.co.in

CEODr.S K Bhattacharyya

Business GroupPublic Sector

IndustrySteel

BSE Code500113

NSE CodeSAILEQ

Face Value10

Market Lot1

Board of Directors


Mr. V S JainChairman / Chair Person

Mr. S K RoongtaDirector

Mr. D V SinghDirector

Dr. P K SenguptaDirector

Dr. S Y QuraishiDirector

Mr. V K AgarwalDirector

Mr. G C DagaDirector

Mr. Ashis DasDirector

Dr. Amit MitraDirector

Mr. Arun Kumar RathDirector

Mr. K K KhannaDirector (Technical)

Mr. R P SinghManaging Director

Dr. S K BhattacharyyaManaging Director

Dr. Sanak MishraManaging Director

Mr. U P SinghManaging Director

Mr. Ajoy KumarNominee Director

About SAIL

In 1973, Pursuant to a decision taken by the Government of India in January the Steel Authority of India, Ltd. was formed on 24th January, as a holding company for Steel and Associated input industries. CEDB was converted into a separate company in the name of Metallurgical Engineering & Consultants (India), Ltd., Bolani Ores Ltd., Metal Scrap Trade Corporation and Mysore Iron & Steel Co. Ltd. became subsidiaries of SAIL. Maharashtra Eleckrosmelt Ltd., Visvesvaraya Iron and Steel Ltd., Indian Iron & Steel Co., Ltd., IISCO-Ujjain Pipe & Foundry Co., Ltd. are all subsidiaries of the Company. In 1974, SAIL International Ltd., was incorporated to coordinate the export and import business

In 1978, The Indian Iron & Steel Co. Ltd. became a subsidiary of SAIL. The Kulti Works of this company, with an annual capacity of 1.57 lakh tonnes is the largest producer of cast iron and spun pipes. In1980, 273,32,471 shares allotted to the President of India (124,43,829 shares allotted for consideration other than cash). In1981, 44,39,100 No. of shares allotted to the President of India

In 1992, The Company's R&D unit at Ranchi was set up with a view to promote continuous improvement in critical performance indices of the steel plant in order to increase productivity, reduce production cost and improve quality by production optimisation or by introduction of new technologies. The centre undertook various collaborative ventures with agencies both in India and abroad. In 1997, SAIL is already the lowest quoted scrip (Rs.21) on the Mumbai Stock Exchange's 30-share Sensex.

Share Holding Pattern as on :31/03/201231/12/201230/09/2012

FaceValue10.0010.0010.00

Share HolderNo. Of Shares% HoldingNo. Of Shares% HoldingNo. Of Shares% Holding

PROMOTER'S HOLDING

Foreign Promoters00.0000.0000.00

Indian Promoters354469028585.82354469028585.82354469028585.82

Person Acting in Concert00.0000.0000.00

Sub Total354469028585.82354469028585.82354469028585.82

NON PROMOTER'S HOLDING

Institutional Investors

Mutual Funds and UTI303491820.731104867532.671383302133.35

Banks Fin. Inst. and Insurance1709093834.142537790606.141228502502.97

FII's1745211514.2300.00776500421.88

Sub Total3757797169.103642658138.823388305058.20

Other Investors

Private Corporate Bodies483928771.17573182631.39633536461.53

NRI's/OCB's/Foreign Others22406250.0520541720.0518895240.05

GDR/ADR19467350.0500.0025455850.06

Directors/Employees00.0000.0000.00

Government00.0000.0000.00

Others00.0021537350.0500.00

Sub Total525802371.27615261701.49677887551.64

General Public1573503073.811599182773.871790910004.34

GRAND TOTAL4130400545100.004130400545100.004130400545100.00

Capital History


2008 2009Equity Share 50,000.0041,304.0141304005451041,304.01

20092010Equity Share 50,000.0041,304.0141304005451041,304.01

20102011Equity Share 50,000.0041,304.0141304005451041,304.01

20112012Equity Share 50,000.0041,304.0141304005451041,304.01

2012 2013Equity Share 50,000.0041,304.0141304005451041,304.01


Particulars20132012201120102009

BALANCE SHEET



Total Reserve & Surplus907907-1605-1301406


Total Debt86898689129701392814251


Net Block1315413154140361479815177

CWIP3823823795561221

Investments543543543539435

Net Current Assets-731-73112871582


Total Assets1372613726154951675818788

INCOME STATEMENT

Sales2700424178192071520816233

Other Income13534474171182885

Total Income2835724625196241639017117


Interest597954138215881752

Depreciation11241123114711561144

Tax2133116-1200

Net Profit55192512-304-1707-729

Dividend (Rs. Cr.)00000


Dividend Per Share (Rs.)00000

Earning Per Share (Rs.)136-1-4-2

RATIO ANALYSIS

Ratios20132012201120102009

Dividend per Share00000

Earning per Share136-1-4-2

Pay out Ratio00000

Book value per Share12.1911.284.825.4510.08

Return on Net Worth(%)146.375.6-14.4-53.2-16.3

Operating Profit Margin(%)37.519.511.56.813.3


Gross Profit Margin(%)36.0315.535.17-6.714.63

Net Profit Margin(%)22.511.39-1.73-12.04-5

Inventory Turnover RatioN/A11.236.814.984.54

Exports as % of Total SalesN/A7.796.283.893.88

Share Price/31-Mar(BSE)62.9532.308.804.905.70

Share Price/31-Mar(NSE)63.2532.258.854.85.65

FINANCIAL ANALYSIS

Financial highlights

Highlights

1. Better product mix drives sales growth

Company recorded a 38% yoy growth in sales turnover in Q4 FY12, highest among all the quarters in FY12. The same surged from Rs68bn to Rs94bn in Q4 FY12. Steel prices remained stable throughout the year. Increase in demand for steel and better product mix helped company register an all time high sales of steel at 10.7MT. Sales revenue for FY12 grew by 32.4% yoy from Rs220bn to Rs291bn. SAIL focused on domestic market where the sales grew 8% over the previous year to reach a level of 10.3 MT. It also reported strong production growth in value added products such as plates (15%), rails (7%) and wheels & axles (34%).

2.PM soars to 42.5% in Q4 FY12

While sales grew by 38% yoy, the rise in operating expenditure was only 2% yoy in Q4 FY12. This led to a whopping 165.7% yoy growth in operating profit, which rose from Rs15bn to Rs40bn in Q4 FY12. Cost control efforts taken by the company at all operational levels helped it achieve an OPM of 42.5% for Q4 FY12, which rose by 2040bps over the same quarter previous year.

Trend Analysis

YEAR

SALESPROFITABILITY


200715060100-1574-100

200816250108-1720-109

200916233108-729-46

201015208101-1707-108

201119207128-304-19

2012241781612512160

2013270041795519350

The above table and graph shows the trend of sales and profitability of the company for over seven years. Sail is standing 20th and 14th position in sales and profit respectfully in the industry in this FY2012.This company is running in losses from past 5years, but its profits shooted up in FY 2012&2013 which may be an impressive move of the company.IRON & STEEL COMPANY Ltd

Registered OfficeBombay House,24 Homi Mody Street,FortMumbaiMaharashtra400001

Tel:56658282

Fax56658113 / 56658118

[email protected]

Websitewww.tatasteel.com

CEOMr.B Muthuraman

Business GroupTata Group

IndustrySteel

BSE Code500470

NSE CodeTISCOEQ

Face Value10

Market Lot1

Board of Directors


Mr. R N TataChairman / Chair Person

Mr. Kumar Mangalam BirlaDirector

Mr. Suresh KrishnaDirector

Mr. Ishaat HussainDirector

Mr. Keshub MahindraDirector

Mr. Nusli N WadiaDirector

Mr. S M PaliaDirector

Dr. Jamshed J IraniDirector

Mr. B MuthuramanManaging Director

Mr. P K KaulNominee Director

Mr. B JitenderNominee Director

Mr. A N SinghWhole Time Director

Dr. T MukherjeeWhole Time Director

About TISCO

The Tata Iron and Steel Company Limited was formed in 1907 at Mumbai. The Company manufactures rails, fishplates, bars, light structural, heavy structural, plates, black sheets, galvanised sheets, tin bars, sleeper bars, sleepers, blooms, billets, sheet bars, wheels, tyres and axles, skelp and strip, and special steels tools such as picks, beaters, hammers and shovels and red-oxide, coal tar, sulphate of ammonia, etc. Iron and steel are made by the open hearth, duplex electric and a combination of these processes, and the steel is rolled into finished products.

During the year 1917, 1,50,000 equity shares issued at par and 26,250 deferred shares issued at a premium of Rs.370 per share. With effect from 1st April 1973, the wholly owned subsidiary, West Bokaro Ltd., was amalgamated with the company. In 1985 with effect from 1st October, Indian Tube Co. Ltd was amalgamated with TISCO.

In October 1986, higher recovery of iron-bearing materials from waste materials viz., an Rs.18.5 crores waste-recycling plant, was commissioned. During the year 1991 Company acquired a 100% export-oriented ferro-chrome manufacturing unit of OMC Alloys Ltd. from the Orissa State Government at a total cost of 156 crores. It is located at Bammpal, Orissa, and has a capacity to produce 50,000 tonnes per annum of ferro-chrome.

Shareholding Pattern

Capital History


20072008Equity Share 4,400.003,683.74367771512103,677.72

2008 2009Equity Share 4,400.003,683.74367771880103,677.72

20092010Equity Share 4,400.003,683.74367771901103,677.72

20102011Equity Share 4,400.003,683.74367771901103,677.72

20112012Equity Share 4,400.003,683.74367771901103,677.72

2012 2013Equity Share 4,400.003,683.74367771901103,677.72


Particulars20132012201120102009

BALANCE SHEET



Total Reserve & Surplus49874987365754584380


Total Debt33733373422647084672


Net Block78587858754475447042

CWIP0000496

Investments219421941195913847

Net Current Assets-1479-1479-4861088255


Total Assets872987298252105349561

INCOME STATEMENT

Sales1465811921979376077703

Other Income717232-14211955

Total Income1537512153965277277758


Interest236141342403412

Depreciation622625558525492

Tax19459202504649

Net Profit342117461012205553

Dividend (Rs. Cr.)369369259149196


Dividend Per Share (Rs.)710845

Earning Per Share (Rs.)624727615

RATIO ANALYSIS

Ratios20132012201120102009

Dividend per Share710845

Earning per Share624727615

Pay out Ratio11.2921.2729.6266.6633.33

Book value per Share100118.5586.666.81104.09

Return on Net Worth(%)66.837.922.84.713.5

Operating Profit Margin(%)41.128.822.115.519.6


Gross Profit Margin(%)41.4326.6317.337.8618.66

Net Profit Margin(%)29.214.410.52.77.1

Inventory Turnover RatioN/A12.9111.7411.2211.37

Exports as % of Total SalesN/A14.0315.288.9411.22

Share Price/31-Mar(BSE)400.90383.50133.7597.65154.50

Share Price/31-Mar(NSE)401.05383.65133.7097.75122.35

FINANCIAL ANALYSIS

Financial highlights :

Topline growth in the quarter and full year FY12 were driven by higher realization as sales volumes were marginally lower on yoy basis in respective periods. The lower volumes were a result of the planned shut down of G blast furnace, which has led to an estimated production loss of about 10% during the year (~350000 tons). Higher steel prices have enabled the company to double growth in net profit in FY12.

Volumes & Realization :

The 1mn ton expansion at Jamshedpur works has been completed since the 2nd week of May. As a part of this expansion, the main G blast furnace was shut from December 3, 2012 to April 6, 2013 thereby suppressing production in Q3 and Q4 FY08 (major effect in this quarter). The G blast furnace capacity has now been enhanced from 1 mtpa to 1.8 mtpa Tiscos steel making capacity now stands increased at 5mtpa at this location. The company would further increase the capacity to 7.4mtpa by August 2013 at the cost of Rs25bn.

Ratio Analysis

In the above table, dividends are fluctuating, EPS is showing an increasing trend and BPS is not constant. Return on net worth is showing an increasing trend from 2007.Operating margin is showing an increasing trend from 2009, Total asset turnover ratio is good, and exports have increased 2012 and decreased in 2013. The margin on sales is very good. The movement of share price is good because of the high margin due to price hikes in long term contracts, which showed future prospects.

Trend Analysis

YEAR

SALESPROFITABILITY


20076275100282100

20086891110423150

20097703123553196

2010760712120573

201197931561012359

2012119211901746619

20131465823734211213

The above table explains the trend of the growth of sales and the profitability of the company for over seven years. Here TISCO stands in 10th and 13th positions in Profitability and Sales when compared to all other companies in the industry in current FY2013.

We can see an increasing trend both in sales and profitability.FINDINGS CONCLUSIONS AND SUGGESTIONSFINOLEX Industries Ltd

Net sales increase by 28.2% yoy in Q4 FY12 to Rs2.4bn

OPM in Q4 FY12 slumps by 1.25 percentage points 13.3%, driven by rise in raw materials cost, especially so of crude oil

54.9% yoy fall in other income converts into to a 51.1% yoy fall in PBT

Steel Authority of India Ltd (SAIL)

Record quarterly PAT in Q4 FY12 of Rs27bn, an increase of 164% yoy.

Better prices, product mix and productivity improve realization.

Turnover at an all time high of Rs291bn for FY12, growth of 32% .

Outlook

SAIL has laid down plans to spend about Rs250bn in stages to increase its hot metal capacity by 7mn tpa to 20mn tpa by FY12, and to take advantage of the strong expected domestic demand growth of 7-8% p.a. over the next few years. The gradual capacity expansion would translate into consistent volume growth for the company in the future years. The company's capex was Rs30bn in FY12 and it is expected to spend a similar amount in FY13 as well.

Tata Iron and Steel Co. Ltd

Revenue and profitability growth in Q4 commendable, considering 3 month planned shut down of its largest blast furnace.

15-20% price hikes on long-term contracts undertaken in March should enable company to maintain earnings growth momentum in FY12.Outlook

Original estimates for FY12 factored a 35% revenue growth driven by a 22% volume increase and a 9% rise in average realizations. We had estimated standalone profits to grow 43% yoy and an EPS of Rs83 for FY12. With the management indicating that a 15-20% price hikes take in long term contracts, we would be revising our forecasts for FY10 upwards to factor in a sharper than expected realization growth.

Calculation of Intrinsic Value

COMPANY

20132012201120102009 AVERAGE

C/Y EPS

Ave*EPSC/Y SP

Intrinsic Value(NSE)

Finolex10.17.115.584.066.056.58746.0670.7

SAIL4.875.38-8.85-1.22.830.606137.87863.25

TISCO6.478.164.9516.298.168.80662545.972401.05

The true economic worth of the share is its intrinsic value. The following formula is used to find out the intrinsic value of a share.

Intrinsic Value = (Average P/E ratio over the years) x (Present earnings per share)

The above calculation is based on the assumptions that:

The trend of the profitability of the immediate past and the present will continue to be the same.

The average P/E and the average earnings to Equity ratio remain constant over a period of time.

CONCLUSIONFINOLEX INDS

1. Net sales increase by 28.2% yoy in Q4 FY12 to Rs2.4bn

2. OPM in Q4 FY12 slumps by 1.25 percentage points 13.3%, driven by rise in raw materials cost, especially so of crude oil 54.9% yoy fall in other income converts into to a 51.1% fall in PBT

SAIL

1. Record quarterly PAT in Q4 FY12 of Rs27bn, an increase of 164% yoy.

2. Better prices, product mix and productivity improve realization.

3. Turnover at an all time high of Rs291bn for FY12, growth of 32% yoy.

TISCO

1. Revenue and profitability growth in Q4 commendable, considering 3 month planned shut down of its largest blast furnace.

2. 15-20% price hikes on long-term contracts undertaken in March should enable company to maintain earnings growth momentum in FY12.

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BIBILIOGRAPHY

WEB SITES

1.WWW.AMFIINDIA.COM

2. WWW.BSEINDIA.COM

3. WWW.YAHOO.FINANCE.COM

NEWS PAPERS

1. BUSINESS LINE

2. ECONOMICS TIMES

3. BUSINESS STANDARD

4. THE HINDU

BOOKS

1. THE SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

- DONALD.E.FISHER AND RONALD. J. JORDAN

2. FUNDAMENTALS OF STATISTICS - S.C GUPTA.

Share Holding Pattern as on :31/03/201331/12/201230/09/2012FaceValue10.0010.0010.00Share HolderNo. Of Shares% HoldingNo. Of Shares% HoldingNo. Of Shares% HoldingPROMOTER'S HOLDINGForeign Promoters00.0000.0000.00Indian Promoters14700941626.5614697149526.5514557269126.30Person Acting in Concert00.0000.0000.00Sub Total14700941626.5614697149526.5514557269126.30NON PROMOTER'S HOLDINGInstitutional InvestorsMutual Funds and UTI230419364.16285315565.16289484925.23Banks Fin. Inst. and Insurance10053548318.1610343231918.6910829048619.57FII's8499386915.367680829813.886630623811.98Sub Total20857128837.6820877217337.7220354521636.78Other InvestorsPrivate Corporate Bodies412361567.45381765646.90377567536.82NRI's/OCB's/Foreign Others22937310.4122913620.4123524790.43GDR/ADR38670.0038670.0038670.00Directors/Employees1195440.021188160.021188160.02Government00.0000.0000.00Others00.0000.0000.00Sub Total436532987.89405906097.33402319157.27General Public15423885427.8715713857928.3916412303429.65GRAND TOTAL553472856100.00553472856100.00553472856100.00

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