A STUDY ON

FUNDAMENTAL ANALYSIS OF SELECTED SECURITIES OF IT

INDUSTRY
With reference to

KARVY STOCK BROCKING LIMITED, BHIMAVARAM

A project report submitted in partial fulfilment for the award of the degree of

“MASTER OF BUSINESS ADMINISTRATION”

Submitted By

K. LAKSHMI SRINIVAS
(Regd. No: 118200202124)
Under the guidance of

PROF. M. SARADA DEVI

DEPARTMENT OF COMMERCE AND MANAGEMENT

ANDHRA UNIVERSITY
VISHAKAPATNAM
ANDHRA PRADESH
2018-2020
 DECLARATION

I, K LAKSHMI SRINIVAS, student of ANDHRA UNIVERSITY, hereby declare

that the project work entitled “A Study on Fundamental Analysis” with reference
to Karvy Stock Broking Limited, Bhimavaram is submitted by me during the
course of project work which is a partial fulfilment for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION under the guidance of PROF.
M. SARADA DEVI. I further declare that it is not duplicate study undergone by
any other student of any other university or published any time before.

Place: Visakhapatnam
Date:

(K. Lakshmi Srinivas)

REGD.NO 118200202124
 CERTIFICATE

This is to certify that a project entitled “A Study on Fundamental Analysis” with

reference to KARVY STOCK BROKING LIMITED, Bhimavaram being
submitted by K. Lakshmi Srinivas bearing Regd.No.118200202124 respectively
in
partial fulfilment of the requirement for the award of the degree of Master of
Business Administration from ANDHRA UNIVERSITY is a record of bona fide
work done by him/her under my/our supervision during the academic year 2018-
2020.

Place:
Date:
 ACKNOWLEDGEMENT

I would like to take this opportunity to express my sincere thanks to my guide Sri
M. Sarada Devi madam, Professor, Department of Commerce and Management,
Andhra University for her valuable guidance and assistance, without whom the
accomplishment of the task would have ever been possible.
I also express my sincere gratitude to MR. D.V.Srinivas, Manager, Karvy Stock
Broking Ltd., Bhimavaram for his support and encouragement to the work.
I consider it as a privilege to express my deepest gratitude to Professor
G.Satyanarayana , Principal of Arts College for extending his support and
cooperation in providing all the requirements for successful completion of the
project.
I take this opportunity to extend my profound thanks and deep sense of gratitude
to the authorities of KARVY stock broking limited. For giving me the
opportunities to undertake this project work in their esteemed organization.

I also thank all other teaching and non-teaching staff of Department of Commerce
and Management of the institution for their direct or indirect support throughout
the project.

By,

K. Lakshmi srinivas
(118200202124)
 Contents
Page. No

Chapter-1
 Introduction
 Need for the Study
 Scope of the Study
 Objectives of the Study
 Methodology of the Study
 Limitations of the Study
Chapter-2
 Industry Profile
Chapter-3
 Profile of Karvy Stock Broking Limited
Chapter-4
 Theoretical Framework
Chapter-5
 Data Analysis and Interpretation
Chapter-6
 Summary
 Findings
 Suggestions
Conclusion
Bibliography
Chapter-1

Introduction
 Introduction
An investor who would like to be rational and scientific in his investment activity has to
evaluate a lot of information about the past performance and the expected future performance of
companies, industries and the economy as a whole before taking the investment decision. Such
evaluation or analysis is called fundamental analysis.

Fundamental analysis is a method of evaluating a security in an attempt to measure its

intrinsic value, by examining related economic, financial and other qualitative and quantitative
factors. Fundamental analysts study anything that can affect the security's value, including
macroeconomic factors such as the overall economy and industry conditions, and
microeconomic factors such as financial conditions and company management. The end goal
of fundamental analysis is to produce a quantitative value that an investor can compare with a
security's current price.

Fundamental analysis uses real, public data in the evaluation a security's value. Although
most analysts use fundamental analysis to value stocks, this method of valuation can be used
any security.

The tools required for fundamental analysis are extremely basic, most of which are available for
free. You would need the following things specifically:

1. Annual report of the company

2. Industry related data

3. Access to news

Investing in securities such as shares, debentures and bonds is profitable as well as

exciting. It is indeed rewarding, but involves a great deal of risk and calls for scientific
knowledge as well as artistic skill. In such investments, both rational as well as emotional
responses are involved. Investing in financial securities is now considered to be one of the best
avenues for investing ones savings while it is acknowledged to be one of the most risky avenues
of investment. It is rare to find investors investing their entire savings in a single security. Instead
they tend to invest in a group of securities. Such a group of securities is called a portfolio.
 Portfolio management is a process encompassing many activities aimed at optimizing
the investment of one’s funds. Five cases can be identified in this process, they are security
analysis, portfolio analysis, portfolio selection, portfolio revision, portfolio evaluation.

The securities available to an investor for investment are numerous and of various
types. The shares of over 7000 companies are listed in the stock exchanges of the country.
Traditionally, the securities were classified into ownership securities such as equity shares and
preference shares and creditorship securities such as debentures and bonds.

A portfolio is a group of securities held together as investment. Investors invest their

funds in a portfolio of securities rather than a single security because they are risk averse. By
constructing a portfolio, investors attempt to spread risk by not pulling all their eggs in to one
basket. Thus, diversification of one’s holdings is intended to reduce risk in investment.

Portfolio analysis provides the input for next phase in portfolio management which is
portfolio selection. The goal of portfolio construction is to generate a portfolio that provides the
highest returns at a given level of risk. A portfolio having this characteristic is known as an
efficient portfolio.

Having constructed the optimal portfolio, the investor has to constantly monitor the
portfolio to ensure that it continues to be optimal. As the time passes, securities which were once
attractive may cease to be so. New securities with promises of high returns and low risk may
emerge. The investor now has to revise his portfolio in the light of the developments in the
market.

The objective of constructing a portfolio and revising it periodically is to earn

maximum returns with minimum risk. Portfolio evaluation is the process which is concerned
with assessing the performance of the portfolio over a selected period of time in terms of returns
and risk. This involves quantitative measurement of actual return realized and the risk born by
the portfolio over the period of investment. These have to be compared with objective norms to
assess the relative performance of the portfolio.
Need of the study

Every investor wants to buy shares at low price and sell at higher prices so that he receives the
maximum return in the form of future dividends and price changes. An investor studies the stock
price movements to know the future dividend price of the share. The dividend price of every
company depends upon the performance of the particular companies directly or indirectly
influenced by the performance of industry and performance of economy as well.

The fundamental analysis is a systematic approach to estimate future dividends and share prices
of IT sector being considered as growing sector in the economy. Many investors are interested to
invest their funds in this sector because of huge market capitalization exist in this sector. The
present project on fundamental analysis helps to evaluating performance of the companies and
their stock rate movements for estimating future returns by analysis and forecasting which helps
the investors in taking required investment decisions.

It helps to Predicting future price movement. It determines the fair value of the share price. It
helps to find out Management evaluation. Determining Companies ability to beat its competitor.
To analyse the Companies financial strength. To find out the intrinsic value of the share.

Fundamental analysis involves three steps:

1. Economy analysis
2. Industry analysis
3. Company analysis
 Scope of the Study
Scope of the study is limited to predict the future dividend and price of the selected securities of
IT Industry using fundamental analysis and equity valuation models, securities used for the study
are: Infosys, TCS, Mind Tree. The majority of investors who want to evaluate long-term
investment decisions start with fundamental analysis of a company, an individual stock or the
market as a whole. Fundamental analysis is the process of measuring a security’s intrinsic value
by evaluating all aspects of a business or market. Investors use the comparison to determine
whether a long-term investment is worth buying because it is underpriced or if it is worth selling
because it is overpriced. Data used to achieve the above said purpose is confirmed to 5years i.e.,
2013-2017.
 Objectives of the Study
• To study the growth and operation of capital markets in India.
• To study the organizational profile of KARVY Stock broking company.
• To understand the theoretical concept of fundamental analysis to estimate the
performance of the companies.
• To analyse the financial performance of the selected securities of IT Industry using equity
valuation models.
• To suggest profitable strategies to traders.
• It also involves a detailed examination of the company’s competitors, the industry or
sector it is a member of and the broader economy.
 Methodology

Present study is based on secondary data only. The data required to evaluate the performance of
selected IT companies has been collected from official website of BSE and NSE
(www.bseindia.com , www.nseindia.com)

Selection of samples:

Information technology industry has been chosen to conduct fundamental analysis to evaluate
financial performance and to predict the future dividend and prices of selected stock in this
industry. As IT industry is being considered as a growing industry most of the people are
interested to invest in this growing industry .That is why this industry was chosen for the project.

The following companies have been considered for analysis:

1.INFOSYS

2.TCS

3.MINDTREE

Period of the study:

Present study is conducted using 5years of data i.e May 2012 to May 2017.

Tools used:

1.EIC model

2.Ratio analysis has been used to analyze the financial performance

3.One year holding period model has been used to calculate intrinsic value of the security.
 Limitations of the Study
• The lack of information sources for the analysis part and the companies are selected on
the basis of the performance of SENSEX and NIFTY.
• The observations drawn are of past 5years only.
• Detailed study on the topic was not possible due to limited size of the project.
• The available financial information from the websites is not completely accurate.
 Chapter-2

Industry Profile
Structure of Financial Market:
India Financial market is one of the oldest in the world and is considered to be the fastest
growing and best among all the markets of the emerging economies. The history of Indian capital
markets dates back 200 years toward the end of the 18th century when India was under the rule
of the East India Company.

The development of the capital market in India concentrated around Mumbai where no less than
200 to 250 securities brokers were active during the second half of the 19th century. The
financial market in India today is more developed than many other sectors because it was
organized long before with the securities exchanges of Mumbai, Ahmedabad and Kolkata were
established as early as the 19th century.

By the early 1960s the total number of securities exchanges in India rose to eight, including
Mumbai, Ahmedabad and Kolkata apart from Madras, Kanpur, Delhi, Bangalore and Pune.

Today there are 21 regional securities exchanges in India in addition to the centralized NSE
(National Stock Exchange) and OTCEI (Over the Counter Exchange of India). However the
stock markets in India remained stagnant due to stringent controls on the market economy that
allowed only a handful of monopolies to dominate their respective sectors.
The corporate sector wasn’t allowed into many industry segments, which were dominated by the
state controlled public sector resulting in stagnation of the economy right up to the early 1990s.

Thereafter when the Indian economy began liberalizing and the controls began to be dismantled
or eased out, the securities markets witnessed a flurry of IPOs that were launched. This resulted
in many new companies across different industry segments to come up with newer products and
services.

A financial market may be defined as the market in which financial assets are created or
transferred. Financial assets represent claims to the payment of money sometimes in future or
periodic payment of interest/dividend. In other words they refer to the institutional arrangements
for dealing in financial assets and credit instruments of different types such as currency, cheques,
bank deposits, bills, bonds, commercial paper, etc. The financial markets in a nut shell are credit
markets catering to the various credit needs of individuals, firms and institutions.
The main functions of financial markets are
a. To facilitate creation and allocation of credit and liquidity.
b. To serve as intermediaries for mobilization of savings.
c. To assist the process of economic development and
d. To provide finance to various credit needs of business.
The financial markets have two major components:

 Money market
 Capital market.

Money Market

The money market is a market for short-term funds, which deals in financial assets whose period
of maturity is up to one year. It should be noted that money market does not deal in cash or
money as such but simply provides a market for credit instruments such as bills of exchange,
promissory notes, commercial paper, treasury bills, etc. These financial instruments are close
substitute of money. These instruments help the business units, other organizations and the
Government to borrow the funds to meet their short-term requirement. Money market does not
imply to any specific market place. Rather it refers to the whole networks of financial institutions
dealing in short-term funds, which provides an outlet to lenders and a source of supply for such
funds to borrowers. Most of the money market transactions are taken place on telephone, fax or
Internet. The Indian money market consists of Reserve Bank of India, Commercial banks,
Cooperative banks, and other specialized financial institutions. The Reserve Bank of India is the
leader of the money market in India. Some Non-Banking Financial Companies (NBFCs) and
financial institutions like LIC, GIC, UTI, etc. also operate in the Indian money market.

Following are some of the important money market instruments or securities:

(a) Call Money: Call money is mainly used by the banks to meet their temporary requirement of
cash. They borrow and lend money from each other normally on a daily basis. It is repayable on
demand and its maturity period varies in between one day to a fortnight. The rate of interest paid
on call money loan is known as call rate.

(b) Treasury Bill: A treasury bill is a promissory note issued by the RBI to meet the short-term
requirement of funds. Treasury bills are highly liquid instruments that mean, at any time the
holder of treasury bills can transfer of or get it discounted from RBI. These bills are normally
issued at a price less than their face value; and redeemed at face value. So the difference between
the issue price and the face value of the Treasury bill represents the interest on the investment.
These bills are secured instruments and are issued for a period of not exceeding 364 days. Banks,
Financial institutions and corporations normally play major role in the Treasury bill market.

(c) Commercial Paper: Commercial paper (CP) is a popular instrument for financing working
capital requirements of companies. The CP is an unsecured instrument issued in the form of
promissory note. This instrument was introduced in 1990 to enable the corporate borrowers to
raise short-term funds. It can be issued for period ranging from 15 days to one year. Commercial
papers are transferable by endorsement and delivery. The highly reputed companies (Blue Chip
companies) are the major player of commercial paper market.

(d) Certificate of Deposit: Certificate of Deposit (CDs) is short-term instruments issued by

Commercial Banks and Special Financial Institutions (SFIs), which are freely transferable from
one party to another. The maturity period of CDs ranges from 91 days to one year. These can be
issued to individuals, co-operatives and companies.

(e) Trade Bill: Normally the traders buy goods from the wholesalers or manufactures on credit.
The sellers get payment after the end of the credit period. But if any seller does not want to wait
or in immediate need of money he/she can draw a bill of exchange in favor of the buyer. When
buyer accepts the bill it becomes a negotiable instrument and is termed as bill of exchange or
trade bill. This trade bill can now be discounted with a bank before its maturity. On maturity the
bank gets the payment from the drawee i.e., the buyer of goods. When trade bills are accepted by
Commercial Banks it is known as Commercial Bills. So trade bill is an instrument, which enables
the drawer of the bill to get funds for short period to meet the working capital needs.

Capital Market

Capital Market may be defined as a market dealing in medium and long-term funds. It is an
institutional arrangement for borrowing medium and long-term funds and which provides
facilities for marketing and trading of securities. So it constitutes all long-term borrowings from
banks and financial institutions, borrowings from foreign markets and raising of capital by issue
various securities such as shares debentures, bonds, etc. The market where securities are traded
known as Securities market.
It consists of two different segments namely primary and secondary market. The primary market
deals with new or fresh issue of securities and is, therefore, also known as new issue market;
whereas the secondary market provides a place for purchase and sale of existing securities and is
often termed as stock market or stock exchange.

PRIMARY MARKET:

The Primary Market consists of arrangements, which facilitate the procurement of long-term
funds by companies by making fresh issue of shares and debentures. You know that companies
make fresh issue of shares and/or debentures at their formation stage and, if necessary,
subsequently for the expansion of business. It is usually done through private placement to
friends, relatives and financial institutions or by making public issue. In any case, the companies
have to follow a well-established legal procedure and involve a number of intermediaries such as
underwriters, brokers, etc. who form an integral part of the primary market. You must have learnt
about many initial public offers (IPOs) made recently by a number of public sector undertakings
such as ONGC, GAIL, NTPC and the private sector companies like Tata Consultancy Services
(TCS), Biocon, Jet-Airways and so on.

SECONDARY MARKET:

The secondary market known as stock market or stock exchange plays an equally important role
in mobilizing long-term funds by providing the necessary liquidity to holdings in shares and
debentures. It provides a place where these securities can be encashed without any difficulty and
delay. It is an organized market where shares and debentures are traded regularly with high
degree of transparency and security. In fact, an active secondary market facilitates the growth of
primary market as the investors in the primary market are assured of a continuous market for
liquidity of their holdings. The major players in the primary market are merchant bankers,
mutual funds, financial institutions, and the individual investors; and in the secondary market
you have all these and the stockbrokers who are members of the stock exchange who facilitate
the trading.
Reforms in Financial Market
1. Establishment of SEBI

The Securities and Exchange Board of India (SEBI) was established in 1988. It got a legal status
in 1992. SEBI was primarily set up to regulate the activities of the merchant banks, to control the
operations of mutual funds, to work as a promoter of the stock exchange activities and to act as a
regulatory authority of new issue activities of companies. The SEBI was set up with the
fundamental objective, “to protect the interest of investors in securities market and for matters
connected therewith or incidental thereto.

The main functions of SEBI are :-

1) To regulate the business of the stock market and other securities market.
2) To promote and regulate the self-regulatory organizations.
3) To prohibit fraudulent and unfair trade practices in securities market.
4) To promote awareness among investors and training of intermediaries about safety of
market.
5) To prohibit insider trading in securities market.
6) To regulate huge acquisition of shares and takeover of companies.

2. Establishment of Creditors Rating Agencies

Three creditors rating agencies viz. The Credit Rating Information Services of India Limited
(CRISIL - 1988), The Investment Information and Credit Rating Agency of India Limited (ICRA
-1991) and Credit Analysis and Research Limited (CARE) were set up in order to assess the
financial health of different financial institutions and agencies related to the stock market
activities. It is a guide for the investors also in evaluating the risk of their investments.
3. Increasing of Merchant Banking Activities

Many Indian and foreign commercial banks have set up their merchant banking divisions in the
last few years. These divisions provide financial services such as underwriting facilities, issue
organizing, consultancy services, etc. It has proved as a helping hand to factors related to the
capital market.

4.Candid Performance of Indian Economy

In the last few years, Indian economy is growing at a good speed. It has attracted a huge inflow
of Foreign Institutional Investments (FII). The massive entry of FIIs in the Indian capital market
has given good appreciation for the Indian investors in recent times. Similarly, many new
companies are emerging on the horizon of the Indian capital market to raise capital for their
expansions.

5.Rising Electronic Transactions

Due to technological development in the last few years. The physical transaction with more
paperwork is reduced. Now paperless transactions are increasing at a rapid rate. It saves money,
time and energy of investors. Thus, it has made investing safer and hassle free encouraging more
people to joins the capital market.

6.Growing Mutual Fund Industry

The growing of mutual funds in India has certainly helped the capital market to grow. Public
sector banks, foreign banks, financial institutions and joint mutual funds between the Indian and
foreign firms have launched many new funds. A big diversification in terms of schemes, maturity
etc. has taken place in mutual funds in India. It has given a wide choice for the common
investors to enter the capital market.

7.Growing Stock Exchanges

The numbers of various Stock Exchanges in India are increasing. Initially the BSE was the main
exchange, but now after the setting up of the NSE and the OTCEI, stock exchanges have spread
across the country. Recently a new Inter-connected Stock Exchange of India has joined the
existing stock exchanges.
8.Investor's Protection

Under the purview of the SEBI the Central Government of India has set up the Investors
Education and Protection Fund (IEPF) in 2001. It works in educating and guiding investors. It
tries to protect the interest of the small investors from frauds and malpractices in the capital
market.

9. Growth of Derivative Transactions

Since June 2000, the NSE has introduced the derivatives trading in the equities. In
November2001 it also introduced the future and options transactions. These innovative products
have given variety for the investment leading to the expansion of the capital market.

10. Insurance Sector Reforms

Indian insurance sector has also witnessed massive reforms in last few years. The Insurance
Regulatory and Development Authority (IRDA) was set up in 2000. It paved the entry of the
private insurance firms in India. As many insurance companies invest their money in the capital
market.

11. Commodity Trading

Along with the trading of ordinary securities, the trading in commodities is also recently
encouraged. The Multi Commodity Exchange (MCX) is set up. The volume of such transactions
is growing at a splendid rate. Apart from these reforms the setting up of Clearing Corporation of
India Limited (CCIL), Venture Funds, etc., have resulted into the tremendous growth of Indian
capital market.
Growth of Financial Market
Financial Market Growth deals with the evolution of the financial market over the passage of
time and how it has grown as one of the key markets of any country in the world. The financial
market performance is often considered as a barometer for the economy and with the current
globalization and integration in the world financial markets, the effect from one part of the world
gets rapidly translated into stock market changes in other parts of the globe. Based on this
feature, financial market growth can also predict the future of financial market performance
worldwide.

Financial market growth can also be directly associated with the growth in money markets of the
world. Money has evolved from the days of the barter economy to facilitate ready exchange of
goods and services and has developed into a general medium of exchange in the modern world.
Banking has emerged as one of the central institutions in today’s world and banking services
have become more diversified with the creation of mortgage banking and investment banking
coexisting with the general mode of banking services. Financial market growth can also be traced
to the growth of the insurance and derivatives markets which have gained tremendous
importance in the recent years.

The key stock markets of the world are the New York Stock Exchange (NYSE), the London
Stock Exchange (LSE), the Tokyo Stock Exchange (TSE) and the Hong Kong Stock Exchange
(HKSE). The two important stock exchanges in India are the Bombay Stock Exchange (BSE)
and the National Stock Exchange (NSE). Over the past ten years, the total value of stocks listed
in all of the world’s stock markets increased from $ 4.7 trillion to $ 15.2 trillion while the share
of the emerging markets in the total world capitalization increased from less than 4% to 13%.

In the developing world, stock markets have shown to give a fillip to the overall economic
development of a country by increasing the liquidity in the economy. Although this sometimes
effects in a spiraling inflation, but it promotes the savers to save more and acquire company
shares and equities by making investments less risky and more attractive. The investors can
realize capital gains or can sell cheap if they want to access their savings or alter their investment
portfolio.
 SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

Securities Exchange Board of India (SEBI) was set up in 1988 to regulate the functions of
securities market. SEBI promotes orderly and healthy development in the stock market but
initially SEBI was not able to exercise complete control over the stock market transactions.

It was left as a watch dog to observe the activities but was found ineffective in regulating and
controlling them. As a result in May 1992, SEBI was granted legal status. SEBI is a body
corporate having a separate legal existence and perpetual succession.

With the growth in the dealings of stock markets, lot of malpractices also started in stock markets
such as price rigging, ‘unofficial premium on new issue, and delay in delivery of shares,
violation of rules and regulations of stock exchange and listing requirements. Due to these
malpractices the customers started losing confidence and faith in the stock exchange. So
government of India decided to set up an agency or regulatory body known as Securities
Exchange Board of India (SEBI).

A major step in the liberalization process was the repeal of the Capital Issues (Control) Act, 1947
in May 1992. With this, Government's control over issue of capital, pricing of the issues, fixing
of premia and rates of interest on debentures, etc., ceased. The office, which administered the
Act, was abolished and the market was allowed to allocate resources to competing uses and
users. Indian companies were allowed access to international capital market through issue of
American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). However, to
ensure effective regulation of the market, SEBI Act, 1992 was enacted to empower SEBI with
statutory powers for (a) protecting the interests of investors in securities (b) promoting the
development of the securities market and (c) regulating the securities market. Its regulatory
jurisdiction extends over corporates in the issuance of capital and transfer of securities, in
addition to all intermediaries and persons associated with securities market. SEBI can specify the
matters to be disclosed and the standards of disclosure required for the protection of investors in
respect of issues. It can issue directions to all intermediaries and other persons associated with
the securities market in the interest of investors or of orderly development of the securities
market; and can conduct inquiries, audits and inspection of all concerned and adjudicate offences
under the Act. In short, it has been given necessary autonomy and authority to regulate and
develop an orderly securities market.

There were several statutes regulating different aspects of the securities market and jurisdiction
over the securities market was split among various agencies, whose roles overlapped and which
at times worked at cross-purposes. As a result, there was no coherent policy direction for market
participants to follow and no single supervisory agency had an overview of the securities
business. Enactment of SEBI Act was the first such attempt towards integrated regulation of the
securities market. SEBI was given full authority and jurisdiction over the securities market under
the Act, and was given concurrent/delegated powers for various provisions under the Companies
Act and the SC(R)A. The Depositories Act, 1996 is also administered by SEBI. A high level
committee on capital markets has been set up to ensure co-ordination among the regulatory
agencies in financial markets.

In the interest of investors, SEBI issued Disclosure and Investor Protection (DIP) Guidelines.

Issuers are now required to comply with these Guidelines before accessing the market. The
guidelines contain a substantial body of requirements for issuers/intermediaries. The main
objective is to ensure that all concerned observe high standards of integrity and fair dealing,
comply with all the requirements with due skill, diligence and care, and disclose the truth, the
whole truth and nothing but the truth. The Guidelines aim to secure fuller disclosure of relevant
information about the issuer and the nature of the securities to be issued so that investor can take
an informed decision. For example, issuers are required to disclose any material 'risk factors' in
their prospectus and the justification for the pricing of the securities has to be given.

SEBI has placed a responsibility on the lead managers to give a due diligence certificate, stating
that they have examined the prospectus, that they find it in order and that it brings out all the
facts and does not contain anything wrong or misleading. Though the requirement of vetting has
now been dispensed with, SEBI has raised standards of disclosures in public issues to enhance
the level of investor protection.
Improved disclosures by listed companies: The norms for continued disclosure by listed
companies have also improved the availability of timely information. The information
technology helped in easy dissemination of information about listed companies and market
intermediaries.

Equity research and analysis and credit rating has improved the quality of information. SEBI has
recently started a system for Electronic Data Information Filing and Retrieval System (EDIFAR)
to facilitate electronic filing of public domain information by companies.

Objectives of SEBI:

The overall objectives of SEBI are to protect the interest of investors and to promote the
development of stock exchange and to regulate the activities of stock market. The objectives of
SEBI are:

1. To regulate the activities of stock exchange.

2. To protect the rights of investors and ensuring safety to their investment.

3. To prevent fraudulent and malpractices by having balance between self-regulation of business

and its statutory regulations.

4. To regulate and develop a code of conduct for intermediaries such as brokers, underwriters,
etc.

Functions of SEBI:
The SEBI performs functions to meet its objectives. To meet three objectives SEBI has three
important functions. These are:

i. Protective functions

ii. Developmental functions

iii. Regulatory functions.

1. Protective Functions:

These functions are performed by SEBI to protect the interest of investor and provide safety of
investment.

As protective functions SEBI performs following functions:

(i) It Checks Price Rigging:

Price rigging refers to manipulating the prices of securities with the main objective of inflating or
depressing the market price of securities. SEBI prohibits such practice because this can defraud
and cheat the investors.

(ii) It Prohibits Insider trading:

Insider is any person connected with the company such as directors, promoters etc. These
insiders have sensitive information which affects the prices of the securities. This information is
not available to people at large but the insiders get this privileged information by working inside
the company and if they use this information to make profit, then it is known as insider trading,
e.g., the directors of a company may know that company will issue Bonus shares to its
shareholders at the end of year and they purchase shares from market to make profit with bonus
issue. This is known as insider trading. SEBI keeps a strict check when insiders are buying
securities of the company and takes strict action on insider trading.

(iii) SEBI prohibits fraudulent and Unfair Trade Practices:

SEBI does not allow the companies to make misleading statements which are likely to induce the
sale or purchase of securities by any other person.

(iv) SEBI undertakes steps to educate investors so that they are able to evaluate the securities of
various companies and select the most profitable securities.

(v) SEBI promotes fair practices and code of conduct in security market by taking following
steps:
(a) SEBI has issued guidelines to protect the interest of debenture-holders wherein companies
cannot change terms in midterm.

(b) SEBI is empowered to investigate cases of insider trading and has provisions for stiff fine
and imprisonment.

(c) SEBI has stopped the practice of making preferential allotment of shares unrelated to market
prices.

2. Developmental Functions:

These functions are performed by the SEBI to promote and develop activities in stock exchange
and increase the business in stock exchange. Under developmental categories following
functions are performed by SEBI:

(i) SEBI promotes training of intermediaries of the securities market.

(ii) SEBI tries to promote activities of stock exchange by adopting flexible and adoptable
approach in following way:

(a) SEBI has permitted internet trading through registered stock brokers.

(b) SEBI has made underwriting optional to reduce the cost of issue.

(c) Even initial public offer of primary market is permitted through stock exchange.

3. Regulatory Functions:

These functions are performed by SEBI to regulate the business in stock exchange. To regulate
the activities of stock exchange following functions are performed:

(i) SEBI has framed rules and regulations and a code of conduct to regulate the intermediaries
such as merchant bankers, brokers, underwriters, etc.

(ii) These intermediaries have been brought under the regulatory purview and private placement
has been made more restrictive.
(iii) SEBI registers and regulates the working of stock brokers, sub-brokers, share transfer agents,
trustees, merchant bankers and all those who are associated with stock exchange in any
manner.

(iv) SEBI registers and regulates the working of mutual funds etc.

(v) SEBI regulates takeover of the companies.

(vi) SEBI conducts inquiries and audit of stock exchanges.

STOCK MARKETS IN INDIA

Stock exchange is the term commonly used for a secondary market, which provide a place where
different types of existing securities such as shares, debentures and bonds, government securities
can be bought and sold on a regular basis. A stock exchange is generally organized as an
association, a society or a company with a limited number of members. It is open only to these
members who act as brokers for the buyers and sellers. The Securities Contract (Regulation) Act
has defined stock exchange as an “association, organization or body of individuals, whether
incorporated or not, established for the purpose of assisting, regulating and controlling business
of buying, selling and dealing in securities”.

The main characteristics of a stock exchange are:

1. It is an organized market.

2. It provides a place where existing and approved securities can be bought and sold easily.

3. In a stock exchange, transactions take place between its members or their authorized agents.

4. All transactions are regulated by rules and by laws of the concerned stock exchange.

5. It makes complete information available to public in regard to prices and volume of

transactions taking place every day.

It may be noted that all securities are not permitted to be traded on a recognized stock exchange.
It is allowed only in those securities (called listed securities) that have been duly approved for
the purpose by the stock exchange authorities. The method of trading now-a-days, however, is
quite simple on account of the availability of on-line trading facility with the help of computers.
It is also quite fast as it takes just a few minutes to strike a deal through the brokers who may be
available close by. Similarly, on account of the system of scrip-less trading and rolling
settlement, the delivery of securities and the payment of amount involved also take very little
time, say, 2 days.

NATIONAL STOCK EXCHANGE (NSE)

NSE was incorporated in 1992 but started its operations in 1994 with trading in the wholesale
debt market segment. In November 1994, it launched the capital market segment as a trading
platform for equities. Further, in June 2000, it entered futures and options segment for various
derivative instruments. A nationwide fully automated screen based trading system has since been
set up at NSE. In a nutshell, we can say that it’s the latest, most modern and technology driven
exchange.

The NSE was established by banks, insurance companies, financial institutions and other
financial intermediaries. The board of members of NSE consists of senior executives from
promoter institutions and professionals who do not directly or indirectly trade on the exchange.

Objectives of NSE:

Following are the main objectives of NSEI:

(i) To ensure equal access for investors all over the country with the help of appropriate
communication network.

(ii) To provide fair, efficient and transparent trading of securities through electronic system.

(iii) To set up a nationwide trading facility for all types of securities.

(iv) To enable book entry settlement and short settlement cycles.

(v) To meet international benchmarks and standards.

Market Segments of NSE:

NSEI trades in the following two segments:

1. Whole Sale Debt Market Segment:

This segment refers to the trading platform for a wide range of fixed income securities like
central government securities, bonds issued by public sector undertakings, zero coupon bonds,
treasury bills, commercial papers, certificates of deposit, mutual funds, corporate debentures etc.

2. Capital Market System:

This segment of NSEI provides a platform for transparent and fair trading of equity, preference
shares, debentures, exchange traded funds as well as retail Government securities.

BOMBAY STOCK EXCHANGE (BSE)

The Bombay Stock Exchange (BSE) is an Indian stock exchange located at Dalal Street, Kala
Ghoda, Mumbai, Maharashtra, India. Established in 1875, the BSE is Asia’s first stock exchange
and the world's fastest stock exchange with a median trade speed of 6 microseconds. The BSE is
the world's 11th largest stock exchange with an overall market capitalization of $1.7 trillion as of
January 23rd, 2015. More than 5500 companies are publicly listed on the BSE.

BSE is the first stock exchange in the country which obtained permanent recognition (in 1956)
from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE's
pivotal and pre-eminent role in the development of the Indian capital market is widely
recognized. It migrated from the open outcry system to an online screen-based order driven
trading system in 1995. Earlier an Association of Persons (AOP), BSE is now a corporatized and
demutualized entity incorporated under the provisions of the Companies Act, 1956, pursuant to
the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securities and
Exchange Board of India (SEBI). With demutualization, BSE has two of world's best exchanges,
Deutsche Börse and Singapore Exchange, as its strategic partners.
BSE also provides a host of other services to capital market participants including risk
management, clearing, settlement, market data services and education. It has a global reach with
customers around the world and a nation-wide presence. BSE systems and processes are
designed to safeguard market integrity, drive the growth of the Indian capital market and
stimulate innovation and competition across all market segments. BSE is the first exchange in
India and second in the world to obtain an ISO 9001:2000 certifications. It is also the first
Exchange in the country and second in the world to receive Information Security Management
System Standard BS 7799-2-2002 certification for its On-Line trading System (BOLT).

It operates one of the most respected capital market educational institutes in the country (the
BSE Institute Ltd.). BSE also provides depository services through its Central Depository
Services Ltd. (CDSL) arm.

BSE’s popular equity index - the SENSEX - is India's most widely tracked stock market
benchmark index. It is traded internationally on the EUREX as well as leading exchanges of the
BRCS nations (Brazil, Russia, China and South Africa).

The strategic objectives of BSE are as follows:

 To promote, develop and maintain a well regulated market for dealings in securities.
 To safeguard the interest of members and the investing public having dealings on the
exchange.
 To promote industrial development in the country through efficient resource mobilization by
way of investment in corporate securities.
 To establish and promote honourable and fair practices in securities transactions.

Management of BSE:

The exchange is professionally managed under the overall direction of the Board of Directors,
Governing Body, or Executive Committee. The Board comprises of eminent professionals,
representatives of trading members and the Managing Director of the Exchange. The day-to-day
operations of the exchange are managed by the managing Director and CEO and an expert
Management Team of Professionals.
ANGEL BROKING

Angel Broking is a leading stock broking and wealth management firm, headquartered in India.
We operate on a unique retail focused stock trading model that provides revolutionary trading
platforms and expertise to a diversified client base. Founded in 1987, we have expanded across
all major cities in India.

The Angel Group is a member of the Bombay Stock Exchange (BSE), National Stock Exchange
(NSE) and the two leading Commodity Exchanges in the country: NCDEX & MCX. We are also
registered as a Depository Participant with CDSL.

Offerings of the Angel Broking

• Equity Trading

• Commodities

• Portfolio Management Services

• Mutual Funds

• Life Insurance

• Initial Public Offerings

• Depository Services

• Investment Advisory

Angel Broking Analysis on SEBI Announcements

The SEBI board meeting on February 11th had some important takeaways for the Indian capital
markets. SEBI’s detailed plan of action for 2017-18 is critical as it could have long term positive
repercussions for the Indian capital markets. More importantly, the SEBI Board laid out the
broad regulatory agenda for the capital markets for the financial year 2017-18. Here are some of
the key points of discussion and how they could impact the capital markets positively.
Over the last few years, the rapid strides in technology have helped SEBI to compress the listing
period (the period between closure of an IPO/NFO and its actual listing on bourses) to just 6
days. Since IPOs and NFOs anyway happen through the demat route, SEBI sees the potential to
compress this listing gap further to 3-4 days to begin with. The seamless integration between
banking, trading and dematerialization should make it possible to compress it further. In the past,
collection and payment through banks in smaller towns was the hassle. However, that is not the
constraint any longer.

From an investor’s perspective, this will assist in shorter lock-in periods for their funds.
Especially, in case of HNIs who use the funding route to apply in IPOs, this could substantially
reduce their cost of funds.

This idea was first proposed in 2014, but due to different regulators, institutional participation in
commodity derivatives could not take off. With the integration of the erstwhile FMC into SEBI
in 2016, it is now possible to bring commodity markets also within the ambit of product offering
for institutional investors. As an additional step towards making the commodity markets
attractive for institutional investors, SEBI has also proposed to bring about closer integration
between commodity spot and futures market as well as strengthen risk management and
surveillance of commodity brokers.

This move will offer institutional investors like FIIs, banks and mutual funds an additional asset
class to invest in. Apart from diversifying their risk, the integration of spot and futures market
will also trigger the development of the spot-futures arbitrage for institutional, which is a
multibillion dollar business on the equities front.

SEBI also proposes to allow the listing and trading of securitized receivables of Asset
Reconstruction Companies. Here is how it will work. Securitization is the process by which
future cash flows are securitized into a receivable and sold as a security to investors. Asset
reconstruction companies (ARCs) typically take over the doubtful loans of a bank at a discount.
In the interim, they can use the securitization route to finance the future receivables.

This is likely to be a big boost for the banks and ARCs as they can use the securitization route to
monetize these assets in their books. Creating secondary market securities and listing them on the
exchange will help create a wider market for such securities and reduce the cost in the process.
These changes will be more in case of institutional customers where the KYC process is still
quite cumbersome. Under the proposed SEBI plan, Foreign Portfolio Investors (FPIs) will be
able to use a common application form for registration, opening of bank account, opening of
demat account and application for Income Tax PAN. SEBI also proposes to set up an online
facility wherein financial intermediaries can register themselves online without physical
intervention. Today there are multiple layers of KYC that needs to be done for different
businesses. SEBI also proposes a centralized KYC which will cover trading in equities,
derivatives, commodities and forex so that the hassles of multiple registrations can be avoided.
This will go a long way in nurturing the “Ease of Doing Business” in the Indian capital markets.

SEBI plans to give a big boost to research and investor education during the financial year
201718. SEBI proposes to expand quality research inputs into commodity markets as well as
work on the inter-linkages between the equity, commodity and forex markets. Currently, there is
limited research being done into the interplay between these markets. Research into this area will
not only give SEBI more quality inputs but also help better estimation of risks and focused risk
management in these markets.

This has been on the anvil for quite some time. Typically, laws and rules tend to get reviewed on
a regular basis to ensure that they are aligned with the changing demands of the market. SEBI
proposes to review the Securities Contracts Regulation (Stock Exchanges & Clearing
Corporations) 2012 and the SEBI (Depositories and Participants) Regulations, 1996. Both these
Acts need to be changed to reflect the shifts that have taken place over the last few years in the
capital markets. SEBI proposes to put up the proposed changes for public comments before
taking them up for further discussions.

In a nutshell, the SEBI Board meet on Feb 11th has highlighted some of the key imperatives for
capital markets. Tangible progress on these subjects during the financial year 2017-18 will go a
long way in widening and deepening the Indian capital markets.
KOTAK SECURITIES

Established in 1985, Kotak Mahindra Group is one of India's leading financial services
conglomerates. In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the Group's flagship
company, received banking license from the Reserve Bank of India (RBI), becoming the first
non-banking finance company in India to convert into a bank - Kotak Mahindra Bank Ltd.

As on June 30, 2016, Kotak Mahindra Bank Ltd, has a significant national footprint of 1,333
branches spread across 674 locations and 2,034 ATMs, affording it the capacity and means to
serve its customers through its wide presence.

The consolidated net worth of the Group stands at 34,443 cr as on June 30, 2016. The Group
offers a wide range of financial services that encompass every sphere of life. From commercial
banking, to stock broking, mutual funds, life insurance and investment banking, the Group caters
to the diverse financial needs of individuals and the corporate sector. The Group has a wide
distribution network through branches and franchisees across India, an International Business
Unit at GIFT city, Gujarat, and international offices in London, New York, Dubai, Abu Dhabi,
Mauritius and Singapore.

Effective from April 1, 2015, ING Vysya Bank Ltd has merged with Kotak Mahindra Bank Ltd
creating a Rs 2 trillion institution (consolidated). The merged entity – Kotak Mahindra Bank Ltd.
will have a significant national footprint, affording it the capacity and means to serve even better.

For more information, please visit the company’s website at www.kotak.com

Kotak Group Products & Services:
• Bank

• Life Insurance
• Mutual Fund
• Car Finance
• Securities
• Institutional Equities
• Investment Banking
• Kotak Mahindra International
• Kotak Private Equity
ZEN SECURITIES:
Zen Securities Limited (ZSL) is one of the leading financial services company -providing
Financial and Investment related Services and Products.
The Company commenced as a proprietary concern of M/s K. Ravindra Babu in 1986 was
converted to a Limited company in February 1995 as Zen Securities Ltd. Zen has the distinction
of being the First Corporate Member from Hyderabad and also the first A.P. based broking firm
to start trading on the National Stock Exchange (NSE).

ZEN is a registered Member on the Capital Market Segment and Futures & Options segment of
both NSE and BSE.

ZEN is also a Depository Participant (DP) with National Securities Depository Ltd. (NSDL)
and also with Central Depositories Services Ltd. (CDSL). ZEN is also a SEBI Registered
Portfolio Manager offering Portfolio Management Services to clients.

Zen Comtrade Pvt. Limited a 100% subsidiary of ZSL and is a member of National
Commodities & Derivatives Exchange Limited (NCDEX) and Multi Commodity Exchange
(MCX).
ZEN operates from Hyderabad as it head office and has branches and associates in Andhra
Pradesh, Tamil Nadu, Maharashtra, Karnataka, West Bengal and Orissa. The Company
operates from over 140 locations with over 500 trading terminals

Securities offered by Zen securities:

• Trading in cash market of NSE and BSE

• Trading in Futures and Options on NSE and BSE
• Internet Trading in Stocks, futures and Options both NSE and BSE
• Mutual Funds advisory service
• Depository Services in Both NSDL and CDSL
• Trading in Commodities on MCX and NCDEX
• Portfolio Management Services
• NRI Investor Services
• PAN Application Service
Steel city securities
Since 1995 Steel City Securities Limited is leading in retail stock broking in Southern India. We
are the pioneers and prime leaders in introducing the Franchisee model to extend our business
potential in urban and rural areas of Andhra Pradesh. We also have business operations in Tamil
Nadu, Karnataka, Orissa, Chattisgarh and Maharashtra (Mumbai). In 1998 the company has
achieved phenomenal growth in all aspects. The workforce has been given top priority to meet
and enhance our endless support and services. In 2004 Steel City Commodities (P) Ltd. has
become the subsidiary of parent company to provide a business platform to trade in Commodity
market segment. The working nature of this company is with full of dedication and trustworthy.

Services of Steel city:

We are providing a trading platform of Capital Market, Futures & Options, Commodities and
Currency Derivatives of NSE, BSE, MCX, MSE (Formerly known as MCX-SX), and NCDEX.
We are also a depository participant of NDSL and CDSL having our own trading clients more
than 2 lakhs to serve more transparently. We have distribution of Mutual funds and IPO with
smart advisory team members to reach every potential investor and to encourage their
investments and growth plans. We promote pension schemes through PFRDA for the retirement
benefits of both employees and business people. We are also a corporate Agent with SBI Life
Insurance and channel partner with other leading insurance companies. We have NBFC services
to provide Personal loans, Gold loans and Loans against securities. We also serve e-governance
products like PAN, TAN, e-TDS, AIR, Form 24G, change requests of PAN, TAN, through
TINFC locations across the country. We have Our Research and Analysis team to focus on
market movements for investment opportunities towards business growth and also to minimize
the risk. Our online Back-office application is available on 24/7 basis to get the required
information instantly.

Future plan:
We are planning to start our business operations in North and Western parts of India to spread
our brand and services. We also wanted to come up with more financial products like Wealth
Management and Merchant Banking Services. We are looking for tie-ups with leading corporate
to execute software development projects and e-governance. Our aim is to attract more retail
business to gain substantial growth in the upcoming years.

Research and advisory:

We have very competitive analysts to focus on the market trends of all Exchanges/Segments in
both fundamental and technical. Since we have very large scale of retail investors, we understand
their portfolios, investment plans and return of investments (ROI). Our Advisory team will keep
posting the analysis reports to the respective clients based on their requirements. We also post
regular news, reports and other important financial statements of companies as required by the
investors.
 Chapter-3

Profile

Of

KARVY STOCK BROKING LIMITED

 ABOUT KARVY

One fateful evening in the summer of 1982, 5 young men who worked for a renowned chartered
accountancy firm decided that it was time they struck out on their own to create an enterprise that
would someday become an iconic name in the financial services space.

They came from an ordinary middle class backgrounds. They had two assets; one was their
education and the other an unquenchable desire to succeed. They had a lot stacked against them:
the environment was not conducive to entrepreneurship; technology was not fully supportive,
financial markets were largely unregulated, they were based out of Hyderabad while most key
players in the financial world were in Mumbai or other metros and the wolf was at the door. The
odds seemed insurmountable.

These remarkable young men’s “Never say die” approach held them in good stead over the years.
They stuck to their dreams, burnt the midnight oil, embraced technology and made it work for
them and through sheer dint of determination, eventually overcame all obstacles.

First came the registry business, followed by broking, and the rest became a lesson for every
young individual to emulate.

VISION STATEMENT:
Strive to be the leaders and experts through our processes, people and technology offering the
unique blend that delivers superior value by establishing and maintaining the highest levels of
services and professionalism.

MISSION STATEMENT:
To be the leading and preferred service provider to our customers, and we aim to achieve this
leadership position by building an innovative, enterprising and technology driven organization
which will set the highest standards of service and business ethics.
PROMOTERS & MANAGEMENT TEAM

Mr. C. Parthasarathy

Chairman & Managing Director

Mr. C. Parthasarathy is the Chairman and Managing Director of the diversified financial services
Karvy group. C Parthasarathy (CP as he is better known in the Industry), has the uncanny knack
of staying ahead of the curve and the foresight to spot opportunities that seem invisible on the
horizon for the others. Karvy’s entire history is a case study of turning adversity into
opportunity. CP is a chartered accountant by qualification, whose entrepreneurial energy drove
him to co-found Karvy in 1983 with a less-than-modest capital of Rs 150,000.

Over the years CP’s vision and leadership skills have helped the group navigate through the
turbulent times with a strong sense of purpose and clarity of thought.

CP is one of the pioneers of financial inclusion. Under his leadership Karvy has won numerous
industry awards and accolades. He also is an independent Director in many listed companies.
Mr. M. Yugandhar

Managing Director

Mr. M Yugandhar, Managing Director is a founder member of the KARVY Group. He is a

Fellow Member of the Institute of Chartered Accountants of India and has varied experience in
the field of financial services spanning over 30 odd years.

Yugandhar has helped position and build a strong brand for the group in the registry and other
financial services businesses. The registry business of Karvy is one of its flagship businesses and
with the collaboration with Computershare has grown to become the largest registrar in India for
over two decades. Yugandhar has played a key role in building strong relationships with public
sector banks and other PSUs which has helped Karvy win some important mandates from some
of India’s renowned companies.
Karvy under his guidance has helped create the equity cult and substantially built retail investor
wealth. He is an Independent Director on the board of several reputed companies.
Mr. M. S. Ramakrishna

Director

Mr. M S Ramakrishna, Director, founder member of KARVY GROUP, he is the orchestrator of

technology initiatives such as the call center in the service of the customer.

Mr. Ramakrishna was a member of the Hyderabad Stock Exchange and has more than 30 years
of experience in the financial services arena. He has helped KARVY diversify into the field of
medical transcription leveraging on the company's core competency of transaction processing.

He is an Independent Director on the board of several reputed companies.

WHO WE ARE

The Karvy Group today is a well-diversified conglomerate. Its businesses straddle the entire
financial services spectrum as well as data processing and managing segments. Since most of its
financial services were retail focused, the need to build scale and skill in the transaction
processing domain became imperative. Also, during stressed environment in the financial
services segment, the non-financial businesses bring in a lot of stability to the group’s businesses.

Karvy’s financial services business is ranked among the top-5 in the country across its business
segments. The Group services over 70 million individual investors in various capacities, and
provides investor services to over 600 corporate houses, comprising the best of Corporate India.

The Group offers stock broking, depository participant, distribution of financial products
(including mutual funds, bonds and fixed deposits), commodities broking, personal finance
advisory services, merchant banking & corporate finance, wealth management, NBFC (loans to
individuals, micro and small businesses), Data management, Forex& currencies, Registrar &
Transfer agents, Data Analytics, Market Research among others.

Karvy prides itself on remaining customer centric as all times through a combination of bleading
edge technology, Professional management and a wide network of offices across India.

Karvy is committed to its quest as an Equal Opportunity Employer and believes in the rights for
differently-abled persons. We have over 12% employees who are challenged in some form in one
of our prominent businesses.
WHY KARVY

Karvy’s business entities address a heterogeneous swathe of population from the super rich, to
the nouveau riche, the ubiquitous middle class, the lower classes (the SEC E3 according to the
new Social Economic Classification), urban and the rural folks. All of whom either make a living
through large business (corporate world), SMEs, professional services, traders, farmers, labour,
blue and white collar jobs and the government.

Another key feature of Karvy has been its ability to offer leading edge advice based on incisive
ideas that are strongly rooted in high quality research on every conceivable aspect of investments
be it equities, forex, commodities, bonds, fixed returns, debt instruments or any other investment
grade asset class.

The customer has always been at the centre of every Karvy initiative.
KARVY GROUP
The Karvy Group is a premier integrated financial services provider, ranked among the top-5 in
the country across its business segments. The Group services over 70 million individual investors
in various capacities, and provides investor services to over 600 corporate houses. Karvy Group
established its presence through a wide network of over 450 branches, (or 900 offices) covering
in excess of 400 cities and towns.

Karvy covers the entire spectrum of financial services, viz stock broking, depository participant,
distribution of financial products (including mutual funds, bonds and fixed deposits),
commodities broking, personal finance advisory services, merchant banking & corporate finance,
wealth management, NBFC, among others.

The Group is professionally managed and ranks among the best in technology, operations and
research across the financial industry. The Karvy Group has evolved over the last three decades
and today it assumes many avatars. Broadly the group pursues two lines of businesses and can be
graphically represented as follows.

OUR COMPANIES

Karvy Stock Broking LTD

Equity Broking, Depository Participant, Distribution of Financial Products (Mutual Funds, FD
and Bonds), Wealth Management Services, Currency Derivatives, Portfolio Management
Services
KarvyComtrade LTD
Commodities Broking
Karvy Capital LTD (Formerly Karvy Capital Private LTD)
NBFC & Portfolio Manager
Karvy Investment Advisory Services LTD (Formerly known as Karvy Insurance Broking LTD)
Investment Advisory Services
Karvy Holdings LTD
Core Investment Company
Karvy Middle East LLC
Wealth Management Products for NRI's
Karvy Realty (India) LTD Realty
Services
Karvy Financial Services LTD Non-
Banking Financial Services
Karvy Insurance Repository LTD Insurance
Repository services
KarvyForex& Currencies Private LTD
Currency and forex services
Karvy Consultants LTD
Consultancy and Advisory Services, Publications
Karvy Computershare Private LTD
Registrar and Share Transfer agent
Karvy Computershare W.L.L(Formerly known as Fakhro Karvy Computershare W.L.L. )
Agent for Custody & Registration of Securities, Registered Administrator
Karvy Data Management Services LTD
Data Management Services
Karvy Investor Services LTD
Merchant Banking and Corporate Finance
Karvy Insights LTD Market
Research
Karvy Analytics LTD Analytics
Karvy Solar Power LTD Power
Generation
Karvy Global Services LTD Business
Process Outsourcing
Karvy Global Services Inc, USA
Business Process Outsourcing
KarvyInc, USA
Institutional Broking
Karvy Stock Broking Limited

2014
Won the prestigious "NSDL Star Performer Award 2014 for Highest Asset Value".
Organized by the National Securities Depository, the NSDL Star Performers Awards recognize
the best performers in the securities and depositories space. The award ceremony was organized
on Saturday, December 20, 2014, at Taj Coromadel, Chennai. Karvy has won this award
consecutively for last two years.

2010
"Largest E-Broking House in India" at BSE Equity Broking Awards 2010 by Dun &
Bradstreet held in ITC Grand Maratha, Mumbai. This award is based on the study carried out by
the world’s leading provider of business information, knowledge and insight, Dun & Bradstreet
in association with the oldest stock exchange in India, the Bombay Stock Exchange.

The BSE-D&B Equity Broking Awards recognizes the brokerage firms based on the number of
online accounts, volume of online trade, and service delivery of their online trading platform.
Karvy Stock Broking Limited has won this prestigious award for its state of the art, in-house
developed KarvyOnline, a comprehensive online investment platform that enables investors to
invest, anytime from anywhere.

2007
Bagged ace award by receiving the coveted Annual Award for 2006 for "Best CEO, Initiating
HR Practices”, by, the Uttar Pradesh Chapter of National Institute of Personnel Management
(NIPM). The Award has been conferred to Mr. C Parthasarathy, CMD, Karvy Group, for his
contribution to HR practices in Lucknow, organized by UP chapter of NIPM.

2007
"Amity Corporate Excellence" award at the 9th International Business Summit and Research
Conference-INBUSH (International Business Horizon) which was held at a glittering function in
Noida. This award was conferred by Amity International Business School, Noida.
2006
ISTD – "Vivekananda National Award" for Excellence in HRD & Training

2004
"Best Depository Participant in the country" award

KarvyComtrade Limited

2014
Won the prestigious ZEE Business Award for the "Best Agri. Analyst" 2014 in the fifth
edition of India’s Best Market Analyst Awards on Saturday, 13th Dec. 2014 at The LaLit in
Mumbai.

2011
Awarded the "Broker with Best Corporate Desk for Commodity Broking" at the prestigious
Bloomberg UTV Financial Leadership Awards 2011 held in Hotel TajLandsend,
Mumbai.Hon’ble Finance Minister of India then, Shri.PranabMukerjee was the Chief Guest. The
awards have been decided by eminent jury consisting of reputed economists, management &
financial consultants.

Bloomberg UTV Financial Leadership Awards have been instituted to acknowledge the
contribution of the country’s financial champions for extraordinary work done in financial sector.
This award is a reflection of KarvyComtrade - Corporate Desk’s unparalleled strengths in
providing unique risk management strategies and hedging calculators for Corporates.
KarvyComtrade’s ability to handle large volumes of trade.efficiently with prompt, accurate and
tailor-made services by a talented pool of professionals ensures that Karvy remains relevant to
client at all times.
ABOUT US

Karvy Stock Broking Limited (KSBL) which is the broking arm of Karvy Group, a well
diversified conglomerate whose business encompasses the entire financial services spectrum
along with data processing and managing segments.

Karvy’s financial services business is ranked among the top-five in the country across its
business segments. The Group services over 70 million individual investors in various
capacities and provides investor services to more than 600 corporate houses, comprising the best
of Corporate India.

Karvy prides itself on being extremely customer centric at all times providing leading edge
technology combined with professional management and servicing through a wide network of
offices across India.

Karvy Stock Broking Limited (KSBL) is among the country’s leading financial services
organizations renowned for its quality of investment and advice. KSBL through its wide network
of offices across India offers customized investment solutions to corporate, institutions and
individual investors.

KSBL helps investors construct a portfolio by factoring in their risk profile and future financial
needs so that their investments achieve an optimal balance between risk and returns.

Our comprehensive trading account helps clients approach various investment avenues in an
integrated fashion, providing them the facility to transact with ease. We have a combined account
facility that caters to all investment opportunities such as trade in Equities, Derivatives, Currency
and also investing in IPOs, Mutual funds and NCDs.

KSBL was awarded BSE Order of Merit award and the SKOCH – BSE Aspiring Nation award in
recognition to its efforts to educate, empower and help create financial markets literacy among
investors. It has received the NSDL Star Performer Award 2014 for highest asset value
generated.
 OUR ACCOLADES

• Winners of SKOCH-BSE Order of Merit award 2015

• Winners of SKOCH-BSE Aspiring Nation award 2015

• Won ‘NSDL Star Performer Award 2014 for Highest Asset Value’

• Won ‘Largest E-Broking House in India by Dun & Bradstreet 2010

• Won ‘Broker with Best corporate desk for commodity broking 2011’

• India’s no I registrar and securities transfer agent

• ISO 9002 Certified Operations by DNV

• Largest Independent Distributor

• Most of India’s 500 fortune companies are serviced by Karvy

• Every 20th trade in stock market is done on the Karvy platform

• Every 6th investor in India invests through Karvy

• Amongst top 10 stock brokers in India

• Amongst top 3 depository participants

• Amongst top 10 investment bankers

The Karvy Group is a premier integrated financial services provider, ranked among the top-5 in
the country across its business segments. The Group services over 70 million individual investors
in various capacities, and provides investor services to over 600 corporate houses. Karvy Group
established its presence through a wide network of over 450 branches, (or 900 offices) covering
in excess of 400 cities and towns.

Karvy covers the entire spectrum of financial services, viz stock broking, depository participant,
distribution of financial products (including mutual funds, bonds and fixed deposits),
commodities broking, personal finance advisory services, merchant banking & corporate finance,
wealth management, NBFC, among others.

The Group is professionally managed and ranks among the best in technology, operations and
research across the financial industry. The Karvy Group has evolved over the last three decades
and today it assumes many avatars. Broadly the group pursues two lines of businesses and can be
graphically represented as follows:
 Financial Services
 Equity Broking

 Depository Participant

 Wealth Management

 Commodities Broking

 Currency Derivatives

 Non-banking Financial Services

 Distribution of Financial Products

 Realty

 Registry services for Corporate

and Mutual funds

 Investment Banking

 Insurance Repository

 The Finapolis

 Forex& Currencies

Non-Financial Services
 Data Management Services

 International BPO

 Alternate Energy

 Data Analytics
 FINANCIAL SERVICES

EQUITY BROKING SERVICES

Stock markets are considered unpredictable, but they reflect the mood of the economy. Over the
years, investment in equities is considered to be the best long-term wealth maximization option.
The gap between unpredictability and a safety anchor in the market is bridged by the in-depth
knowledge of market functioning and changing trends, planning with foresight and choosing
one’s options with care. From that perspective, our equity broking and advisory services are
beyond just a medium for buying and selling stocks and shares. Instead, we provide services
which are multi-dimensional and multi-focused in its scope.

Karvy can boast of the largest-owned network among financial-services companies in India. This
has ensured that wherever a potential customer is located, it is never too far from a Karvy office.
Given the wide network, there are a number of trading terminals that provide retail stock-broking
facilities. Our services have increasingly offered customer-oriented convenience which we
provide to a spectrum of investors—high net-worth or otherwise—with equal dedication and
competence.

We offer online trading on both key platforms—National Stock Exchange and Bombay Stock
Exchange. More importantly, we make trading safe to the maximum possible extent by
accounting for several risk factors and planning accordingly. We have created a very robust
trading platform that facilitates customers to trade online not only in equities, but also buy fixed
deposits, mutual funds, commodities, currencies and also participate in a public issue. Our online
platform enables customers to view their portfolio online and also access our various research
reports and views on stocks. It also provides them with a facility to communicate with our
research/advisory teams online.
We are assisted by our in-depth research, constant feedback and sound advisory capabilities. Our
highly skilled research team—comprising technical analysts and fundamental specialists—
secure result-oriented information on market trends, market analysis and market predictions.

This crucial information is provided as a constant feedback to our customers, through daily
reports delivered twice —the Morning moves, which predicts the market scenario for the day; the
Daily Wrap up, the final report for the day, where the market and the report itself is reviewed.

To add to this repository of information, we publish a monthly magazine, The Finapolis, which
analyses personal finance and offers share market tips and takes a close look at various
investment options and products available in the market. Moreover, our weekly newsletter,
Karvy Bazaar Baatein, keeps you informed on key trends in personal finance and stock market
trends. We cover a wide range of sectors and companies which are categorised as large cap, mid
cap and small cap. We also provide periodic macroeconomic reports. Above all, we also offer
special portfolio analysis packages and provide customized advisory services to help you make
the right financial moves to specifically suit your portfolio

DEPOSITORY PARTICIPANT SERVICES

The onset of the technology revolution in the financial-services industry saw the emergence of
KSBL as an electronic custodian registered with the National Securities Depository Ltd (NSDL)
and Central Securities Depository Ltd (CSDL) in 1998. We set standards enabling further
comfort to the investor by promoting paperless trading across the country, emerging as the top-3
depository participant in India, in terms of customer serviced.

Offering a wide trading platform with dual membership of NSDL and CDSL, KSBL is a
powerful medium for trading and settlement of dematerialized shares. We have established live
DPMs, internet access to demat accounts, and an easier transaction process in order to offer
greater convenience to individuals and corporate investors. A professionally managed team and
the latest technological expertise have been allocated exclusively to our demat division,
including technological enhancements like SPEED-e. This makes our response time quick and
our delivery impeccable. Moreover, a wide national network makes our efficiencies accessible to
all.
DISTRIBUTION OF FINANCIAL PRODUCTS
The paradigm shift from pure selling to knowledge-based selling drives the business today. With
our wide portfolio offerings, we occupy all segments in the retail financial services industry. A
highly qualified and dedicated team of professionals, drawn from the best of academic and
professional backgrounds, are committed to maintaining high levels of client service delivery.
This has propelled us to become one of the top distribution houses for equity and debt issues,
with an estimated market share of 15% in terms of applications and amount mobilized.

To further tap the immense growth potential in the capital markets, we enhanced the scope of our
retail arm, now providing planning and advisory services to the mass affluent. Here, we
understand customer needs and lifestyle in the context of current earnings and provide adequate
advisory services that will facilitate wealth creation in the long run. Both market-savvy and the
less knowledgeable investors find this service quite satisfactory. The edge that we have over our
competitors is the sheer depth of our portfolio of offerings and our professional expertise. The
investment planning for each customer is done with an unbiased attitude so that the service is
truly customized.

CURRENCY DERIVATIVES
Karvy Currency Derivatives Segment, a specialized group vertical within Karvy stock broking
limited, has been established in 2008 to cater to the growing needs of corporate houses to
manage currency exchange rate risk. With the changing dynamics and increasing volatility of
exchange rates across the globe, companies exposed to currency risk face the challenge of
maintaining continued profit margins. Currency Derivatives would be one of the best options to
manage any related exchange rate risk and be free from the worries of market uncertainties.

At Karvy Currency derivatives segment (CDS), we provide customized hedging strategies for
importers, exporters and companies with foreign exchange exposure. We offer forex advisory
and brokerage service for the Indian currency derivative market, and provide a robust and
reliable online trading platform. Currency Derivatives Segment - Karvy Stock Broking Limited
is an active member of the National Stock Exchange (NSE), MCX Stock Exchange (MCX-SX)
and Bombay Stock Exchange (BSE).
WEALTH MANAGEMENT SERVICES
Karvy, with over 25 years’ expertise in the financial markets, is offering comprehensive wealth
management solutions for its customers through Karvy Private Wealth (KPW). Our wealth
managers provide direction to a client’s financial decisions, enabling him achieve his financial
and life goals. As a wealth manager, we collate the relevant financial information and life goals
of the client, assess his risk tolerance level, examine his current financial status, and identify a
strategy to fulfil his goals.

Wealth management is an all-encompassing service, providing comprehensive research-based

advisory along with convenient and personalized investment execution. KPW offers an
unmatched product basket, ranging from debt, equity, mutual funds, insurance, derivatives,
commodities, structured products, international funds, art funds and real estate. It is a unique
service aimed at transforming clients’ dreams into reality.

KPW was set up to cater to HNIs, keeping in mind that they require a different kind of financial
planning and management. Our services include planning and protection of finances, planning of
business and retirement needs, and a host of other services, which will help augment their
existing as well as future finances and lifestyle. We combine a hard-nosed business approach
with a soft touch of personalized attention and dedicated customer care.

Our research reports have been widely appreciated by the HNI segment. The delivery and
support modules have been fine-tuned by giving our clients access to online portfolio
information, constant updates on their portfolios as well as value-added advice on portfolio
churning, sector switches, etc. Moreover, the investment recommendations given by our research
team in the cash market have enjoyed a high success rate.

To tap NRIs, we commenced operations in the Middle East, Dubai to cater to a significant Indian
population that resides there and is keen on participating in India’s growth story. We have a
strong team that specialises in offering not only Indian investment products but also local
investment products to these customers
PORTFOLIO MANAGEMENT SERVICES
Portfolio management services are meant for high net worth individuals or institutions who want
a personalized management of their finances. A team of expert professionals conduct extensive
research on markets to provide a customized solution to achieve unique investment objectives.
This ensures best selection of investment opportunity within an asset class and active monitoring
for optimized results. Investors are provided with an all time access to track their portfolios. Our
PMS offerings range across two asset classes – Equity and Debt, with multiple options for each
asset class...

KARVY FORTUNE
KarvyFortune, helps individuals and small organizations forge a partnership with Karvy which is
one of the largest financial services group serving over 60 million investors and provides
investor services to over 400 corporate houses in the country. Karvy Fortune already has a huge
network of franchisees, with presence in 330 cities, and a total of 787 business associates all over
India.

Karvy Fortune is constantly on the lookout for hard working, ambitious individuals who would
like to build a robust business without the usual hassles associated with starting an enterprise. As
a business partner of Karvy Fortune you get to be a part of an established broking house, which
is hugely successful in providing financial services to millions of customers. The risk reward
ratio for the individual/ enterprise becoming a franchisee is also very low considering this is an
already established business model and a brand name that has great value in the financial markets
in India.

In addition, as a franchisee owner one can focus on your core skills in running a business,
without the need to assemble a team of specialists from scratch, as the company provides them
with the technical and fundamental support and training.

The burgeoning stock market is offering a never before opportunity for the broking business and
a franchisee could use this opportunity to establish a profitable business.
INVESTMENT BANKING
Recognized as a leading merchant banker in the country, we are registered with SEBI as a
Category I merchant banker. We have built up a reputation as an able merchant banker over the
years by capitalizing on opportunities in corporate consolidation, mergers & acquisitions,
corporate restructuring and capital raising (including raising resources for corporates or the
government). Our success over the past two decades has given us the confidence to focus in this
sector with renewed vigor.

The high-quality professional team and our work-oriented dedication have propelled us to offer
value-added corporate financial services and serve as a professional navigator for the long-term
growth of our clients which include leading corporates, state governments, foreign institutional
investors, and public and private sector companies and banks in Indian and global markets.

Our advisory and consultancy roles in restructuring, divestitures, acquisitions, de-mergers,

spinoffs, joint ventures, privatization and takeover defence mechanisms have elevated our
relationship with the client to one based on unshakable trust and confidence.

COMMODITIES BROKING
An ISO 9001:2008 certified company, KarvyComtrade Limited (KCTL) is India’s leading
commodities brokerage house. We have membership of Multi Commodity Exchange of India
(MCX), National Commodity and Derivatives Exchange (NCDEX), National Multi-Commodity
Exchange of India (NMCE), National Spot Exchange (NSEL), NCDEX Spot Exchange
(NSPOT), Ace Commodity Exchange (ACE) and Indian Commodity Exchange (ICEX). We are
one of the early players in this business and have built a very strong research which is widely
acknowledged across our customer base be it the corporates or the traders who comprise our
prime customer segment. We are by far the only commodity trading entity who have a presence
in the wholesale markets where the commodities are auctioned purely to get a very strong sense
on the demand supply for most of the agricultural products...
 NON - BANKING FINANCIAL SERVICE
Karvy Finance, an NBFC established in 2009, is primarily focused on Micro & Small Enterprise
Secured Business Loans with Loan against Property, Loan against Gold & Loan for Small
Commercial Vehicles. Karvy Finance believes in serving the underserved business customers in
India’s market for all their loan needs with a network of 75 neighbourhood lending branches in
35 locations. Karvy Finance aims to provide Fast, Friendly & Flexible loan services to its target
audience

Keeping in line with Karvy credo to be a leading and preferred financial services provider, our
focus at Karvy Finance is to provide the complete spectrum of financial services products to our
customers and build a strong nationwide distribution footprint to emerge as the leader in Micro,
Small & Medium Enterprise segments in India. At Karvy Finance, we recognize your self-worth
and help in growing your net worth and achieving your dreams on your own terms.

REALTY SERVICES
Karvy’s Realty services is engaged in the business of value-added real estate and property
services. We offer individuals and corporates myriad options across investments, financing and
advisory services in the realty sector. Building on the Karvy brand as a leading industry
benchmark for world-class customer servicing and quality standards, we bring forth a reputation
for reliability, dependability and honesty.

We have a deep understanding of the sector, and, therefore, the needs and preferences of our
clients. Our team of qualified realty professionals facilitates long-term relationships with buyers
and sellers of properties alike across the country, thus enabling clients to put their money in
genuine properties for a decent value appreciation at the right place and at the right price.

REGISTRY SERVICES
Karvy Computershare is a 50:50 joint venture between Karvy and Australia-based
Computershare – the world’s largest transfer agent. Karvy Computershare is the largest registrar
in India, servicing over 70 million investor accounts spread over 1,300 issuers including banks,
PSUs and mutual funds. Karvy Computershare has a workforce of around 4,000 experienced
professionals drawn from various disciplines. The worldwide network of Computershare will
hold us in good stead by keeping us abreast of the international standards, in addition to letting
us leverage the best technologies from around the world.

• Issue registry

Karvy Computershare (KCPL) has emerged as the largest transaction-processing house in the
Indian corporate sector, mobilising funds for numerous companies. Our ability to execute
voluminous transactions and our hardcore expertise in technology applications has gained us the
No.1 slot in our field of business. We are India’s first registry to receive ISO 9002 certification
and have now migrated to the ISO 9001:2008 standard for quality management systems, certified
by Norwegian company DNV . We have also been awarded ISO 27001:2013 certification by
DNV, for high standards with respect to information security and management systems, which
stands testimony to our insistence on customer service excellence. In addition to our unique
investor servicing presence across all phases of a public issue, we at KCPL are actively
coordinating with both depositories (NSDL and CDSL) to develop special models that enable
customers to access depository services during an IPO.

• Corporate Shareholder Services

KCPL has been a customer-centric company since inception. We offer a single platform to
service multiple financial instruments, in our bid to satisfy the varying needs of both corporates
and their retail investors. In that regard, our volume-management capability is legendary. Today,
we are recognised as a company that exceeds customer expectations, which is a prime reason for
the strong customer loyalty we generate. An opinion poll commissioned by The Merchant
Banker Update and conducted by the reputed market research agency MARG found KCPL the
“Most Admired” registrar among financial-services companies.

• Mutual Fund Services

KCPL has attained a position of immense strength as a provider of across-the-board transfer

agency services to asset management companies (AMCs), distributors and investors. Nearly 40%
of India’s AMCs leverage our range of high-quality services. Besides providing the entire
backoffice processing, we are an interface between the AMC and the investor.
Carrying our ‘limitless’ ideology forward, we have explored new dimensions in every aspect
of mutual fund servicing, from volume management, cost-effective pricing, delivery in the least
turnaround time and efficient back-office and front-office operations, to strong customised
service. KCPL has been with AMCs every step of the way, helping them to serve investors better
by offering a diverse range of customised services. Our ‘first-to-market’ approach has earned us
the reputation of an innovative service provider with a visionary bent of mind

FOREX & CURRENCIES

Forex and currencies are another business vertical of the Karvy group to venture into Trade and
Corporate Finance Segment, Forex Corporate Advisory Services. The company has been
registered with FEDAI. We offer syndication services to the Indian clients in the area of Buyers
and Suppliers Credit Services. External Commercial Borrowings, Working capital arrangement,
Bill Discounting & Short-term Investment options etc. Intermediary services in Forex interbank
broking and help companies/corporates/individuals to explore extra-ordinary opportunities,
manage and sustain growth, and maximize their revenue by minimizing the risks in Forex
transactions.

INSURANCE REPOSITORY
Karvy Insurance Repository (Kinrep) is a licensed Insurance Repository in India. Kinrep has
been offering various life and general insurance companies since 2008. Kinrep has completely
home grown mature business applications to cater to the in house team as well as clients.

Karvy Insurance Repository is a leader in transforming and managing business processes using a
blend of cutting-edge technology and refined practices. Kinrep has wide network of 500
branches across the length and breadth of the country. Kinrep is the first insurance repository to
offer full suite of services to insurers, policy holders and agents of life insurance on a variety of
mobile / tablet platforms including the conventional ones. Kinrep brings over 2000 man-years of
pooled BPO experience with over 100 man-years in the Insurance industry. Kinrep offers the
best in class security to insurers with ISO 27001 certified processes, fully owned branch network
and fortified IT and operational controls.
NON-FINANCIAL SERVICES

DATA MANAGEMENT SERVICES

Data Management Services offers services in the areas of E-governance processing, insurance
back office processing, record keeping, back office for BFSI clientele and telecom, data
management requirements of large corporations.

• E- Governance

In today’s world where governments are gearing up to the ever growing needs of the citizens and
scaling to reach their mission, we offer a unique value proposition and present our bouquet of
services... More

• Telecom

At a time when telecom companies are looking to grow beyond the boundaries with minimum
input costs, with our pedigree and footprint in the country we are offering solutions to help them
grow. The service offerings spectrum has been designed in such a way so that an end to end
model is offered... More

• Banking

Banks and financial services companies are looking to penetrate into deeper untapped markets.
We are helping these companies to reach the potential markets with our wide array of services.
Here we have designed our service spectrum in such a way that it is focused for for each product
category in order to help you ascertaining the services you need... More

• KYC Registrations

With a view to bring uniformity and remove duplication efforts in the KYC requirements for the
securities markets, SEBI has introduced the SEBI KYC Registration Agency (KRA)
Regulations, 2011...
INTERNATIONAL BUSINESS
Karvy Global is a leading Business Process and Knowledge Services Company, focuses on
delivering knowledge based business solutions for its clients and provides an innovative
framework of solutions that are directly tied to improving bottom line results.

We serve investment banks, insurance providers, brokerages, hedge funds, research agencies, and
life settlement providers across the United States, Middle East, and Europe. Our clients have
found their cost advantage, ability to scale efforts, and specialist knowledge regarding emerging
markets to be a strong advantage in the new, fast, and unpredictable world.

Our areas of focus include equity research, investment banking support, commodity research,
business research and specialized transaction processing services in BFSI & Healthcare verticals.

MARKET RESEARCH
Karvy Insights (KI, pronounced ‘key’), is the market research arm of the Karvy Group. It is a
full-service market research and insights organization, offering both Qualitative and Quantitative
research solutions across sectors like CPG, Automotive, Finance, Retail/e-comm, Telecom,
Infrastructure, Social research to name a few. KI is all about discovering different facets of life in
all its nuances, detail and complexities. Its vision is to offer 'operative' intelligence to facilitate
growth in every sphere, person and business. So whether it is about shopping behaviour/ touch
point audits, education choices, healthcare practices, high value spends on luxury items or about
regular day-to-day choices of products, KI can support you.

ANALYTICS
Karvy Analytics is building world-class solutions for the global analytics universe. Its solutions
bring immediate business benefits to global customers interested in leveraging big data,
statistical and mathematical modelling techniques, social analytics, and mobile descriptive
analytics for new business insights. Karvy Analytics is focused on multi-industry use cases for
companies that need technology and professional services for their functional and operational
analytics projects. It has partnerships with the world’s leading brands to ensure a strong and
supportive ecosystem.
 Chapter-4
Theoretical Framework
EQUITY MARKET
In financial markets, stock is the capital raised by a corporation through the issuance and
distribution of shares. A person or organization which holds shares of stocks is called a
shareholder. The aggregate value of a corporation's issued shares is its market capitalization.
When one buys a share of a company, he becomes a shareholder in that company. Shares are also
known as Equities. Equities have the potential to increase in value over time. It also provides the
portfolio with the growth necessary to reach the long-term investment goals. Research studies
have proved that the equities have outperformed than most other forms of investments in the long
term. Equities are considered the most challenging and the rewarding, when compared to other
investment options.

Research studies have proved that investments in some shares with a longer tenure of investment
have yielded far superior returns than any other investment. However, this does not mean all
equity investments would guarantee similar high returns. Equities are high-risk investments.
One needs to study them carefully before investing. Since 1990 till date, Indian stock market has
returned about 17% to investors on an average in terms of increase in share prices or capital
appreciation annually. Besides that, on average stocks have paid 1.5 % dividend annually.
Dividend is a percentage of the face value of a share that a company returns to its shareholders
from its annual profits. Compared to most other forms of investments, investing in equity shares
offers the highest rate of return, if invested over a longer duration.

The first company to issue shares of stock was the Dutch East India Company, in 1602. The
innovation of joint ownership made a great deal of Europe's economic growth possible following
the Middle Ages. The technique of pooling capital to finance the building of ships, for
example, made the Netherlands a maritime superpower. Before adoption of the joint-stock
corporation, an expensive venture such as the building of a merchant ship could only be
undertaken by governments or by very wealthy individuals or families.
Equity markets, the world over, grew at a great speed in the decade of the nineties. After the bear
markets of the late eighties, the world markets saw one of the largest ever bull markets of more
than ten years. The opening up of Indian economy in the 1990's led to a series of financial
sector reforms, prominent being the capital market reforms. These reforms have led to the
development of the Indian equity markets to t standards of the major global equity markets. All
this started with the abolition of Controller of Capital Issues and subsequent free pricing of
shares.

The introduction of dematerialization of shares, leading to faster and cheaper transactions

and introduction of derivative products and compulsory rolling settlement has followed
subsequently. Despite a series of stock market scams and crises beginning from 1992 Harshad
Mehta's scam to the Ketan Parekh's 2001 scam, the Indian equity markets have transformed
themselves from a broker dominated market to a mass market. The introduction of online trading
has given a much-needed impetus to the Indian equity markets. However, over the years, reforms
in the equity markets have brought the country on par with many developed markets on several
counts. Today, India boasts of a variety of products, including stock futures, an instrument
launched only by select markets.

The introduction of rolling settlement is the latest step in the direction of overhauling the stock
market. The equity market of the country will most likely be comparable with the world's
most advanced secondary markets with regard to international best practices. The market
moved to compulsory rolling settlement and now all settlements are executed on T+2 basis and
market is gearing up for moving to T+1 settlement in 2004 while the Straight Through
Processing (STP) is in place from December 2002.

The importance of equity market is increasing. Rightly, realizing the advantages of resource
allocation through market, Government of India and Reserve Bank of India have been pushing
reforms in equity markets. Series of steps are being taken to remove hurdles, increase market
efficiency and to make it attractive for the retail investors to take part in the equity market. It
may not be an exaggeration to say that the Indian markets are resourceful to put themselves on
par with the markets of the developed countries. The Indian markets have assimilated in a
relatively lesser time, many a development that took long time in the developed markets.
EQUITY ASAN INVESTMENT

Equity is:
1. Stock or any other security representing an ownership interest.

2. On the balance sheet, the amount of the funds contributed by the owners (the
stockholders) plus the retained earnings (or losses), also referred to as "shareholder's equity".

3. In the context of margin trading, the value of securities in a margin account minus what has
been borrowed from the brokerage.

Equity is a term whose meaning depends very much on the context. In general, one can think of
equity as ownership in any asset after all debts associated with that asset are paid off. For
example, a car or house with no outstanding debt is considered the owner's equity since he
or she can readily sell the items for cash. Stocks are equity because they represent
ownership of a company, whereas bonds are classified as debt because they represent an
obligation to pay and not ownership of assets.

The ability of equities to deliver over longer time frames and even outperform other
investment avenues like gold, property and bonds is an often chronicled fact. However, over
shorter time frames, equities also hold the potential to be a very risky asset class and expose the
portfolio to high levels of volatility. This is the primary reason why any fund manager worth his
salt always recommends a sufficiently long (at least 3 years) time frame for an equity-oriented
investment. Similarly, financial planners advocate pruning of the equity holdings with
advancement in the investor’s age, when the investor is typically closer to retirement (shorter
investment horizon) and has a lower risk appetite as well.
FUNDAMENTALANALYSIS
The investor while buying stock has the primary purpose of gain. If he invests for a short period
of time it is speculative but when he holds it for a fairly long period of time the anticipation is
that he would receive some return on his investment. Fundamental analysis is a method of
finding out the future price of a stock, which an investor wishes to buy. The method for
forecasting the future behaviour of investments and the rate of return on them is clearly through
an analyse of the broad economic forces in which they operate. The kind of industry to which
they belong and the analysis of the company's internal working through statements like
income statement, balance sheet and statement of changes of income.

ECONOMY ANALYSIS

Investors are concerned with those forces in the economy, which affect the performance of
organizations in which they wish to participate, through purchase of stock. A study of the
economic forces would give an idea about future corporate earnings and the payment of
dividends and interest to investors. Some of the broad forces within which the factors of
investment operate are:

1.POPULATION: -

Population gives an idea of the kind of labour force in a country. In some countries the
population growth has slowed down whereas in India and some other third world
countries there has been a population explosion. Population explosion will give demand
for more industries like hotels, residences, service industries like health, consumer
demand like refrigerators and cars. Likewise, investors should prefer to invest in
industries, which have a large amount of labour force because in the future such
industries will bring better rates of return.
2.RESEARCH AND TECHNOLOGICAL DEVELOPMENTS: -
The economic forces relating to investments would be depending on the amount of
resources spent by the government on the particular technological development
affecting the future. Broadly, the investor should invest in those industries which
are getting a large amount of share in the funds of the development of the
country. For example, in India in the present context automobile industries and spaces
technology are receiving a greater attention. These may be areas, which the investor may
consider for investments.

3.CAPITALFORMATION: -
Another consideration of the investor should be the kind of investment that a
company makes in capital goods and the capital it invests in modernization and
replacement of assets. A particular industry or a particular company which an investor
would like to invest can also be viewed at with the help of the economic indicators such
as the place, value and property position of the industry, group to which it 110ngs and the
year-to-year returns through corporate profits.

4.NATURAL RESOURCES ANDRAW MATERIALS:-

The natural resources are to a large extent responsible for a country’s economic
development and overall improvement in the condition of corporate growth. In India,
technological discoveries recycling of materials, nuclear and solar energy and new
synthetics should give the investor an opportunity to invest in untapped or
recently tapped resources which would also produce higher investment opportunity.
INDUSTRYANALYSIS
The industry has been defined as homogeneous groups of people doing a similar kind of activity
or similar work. In India, the broad classification of industry is made according to stock
exchange list, which is published. This gives a distinct classification to industry to industry in
different forms such as:

(A) Engineering,

(B) Banking and Insurance,

(C) Textiles,

(D) Cement,

(E) Steel Mills and Alloys,

(F) Chemicals and Pharmaceuticals,

(G) Retail,

(H) Sugar,

(I) Information Technology,

(J) Automobiles and Ancillary,

(K) Telecommunications,

(L) FMCG,

(M)Miscellaneous.
COMPANY ANALYSIS
Company analysis is a study of the variables that influence the future of a firm both qualitatively
and quantitatively. It is a method of assessing the competitive position of a firm earning and
profitability, the efficiency with which it operates its financial position and its ful1l with
respect to the earning of its shareholders. The fundamental nature of this analysis is that each
share of a company has an intrinsic value, which is dependent on the company's financial
performance, quality of management and record of its earnings and dividend. They believe that
the market price of share in a period of time will move towards its intrinsic value. If the market
price of a share is lower than the intrinsic value, as evaluated by the fundamental analysis, then
the share is supposed to be undervalued and it should be purchased but if the current market price
shows that it is more than intrinsic value then according to the theory the share should be sold.
This basic approach is analyzed through the financial statements of an organization. The
basic financial statements, which are required as tools of the fundamental analyst, are the
income statement, the balance sheet, and the statement of changes in financial position. These
statements are useful for investors, creditors as well as internal management of a firm and on the
basis these statements the future course of action may be taken by the investors of the firm.
While evaluating a company, its statement must be carefully judged to find out that they are:

(a) Correct

(b) Complete

(c) Consistent and

(d) Comparable
Ratio analysis:
A ratio analysis is a quantitative analysis of information contained in a company’s financial
statements. Ratio analysis is based on line items in financial statements like the balance sheet,
income statement and cash flow statement; the ratios of one item – or a combination of items - to
another item or combination are then calculated. Ratio analysis is used to evaluate various
aspects of a company’s operating and financial performance such as its efficiency, liquidity,
profitability and solvency. The trend of these ratios over time is studied to check whether they
are improving or deteriorating. Ratios are also compared across different companies in the same
sector to see how they stack up, and to get an idea of comparative valuations. Ratio analysis is a
cornerstone of fundamental analysis.

Current Ratio: The Current Ratio is one of the best known measures of short term solvency. It
is the most common measure of short-term liquidity.

Current Ratio = Current Assets

Current Liabilities

Where,

Current Assets = Inventories + Sundry Debtors + Cash and Bank Balances + Receivables/
Accruals + Loans and Advances + Disposable Investments + Any other current assets.
Current Liabilities = Creditors for goods and services + Short-term Loans + Bank Overdraft +
Cash Credit + Outstanding Expenses + Provision for Taxation + Proposed Dividend + Unclaimed
Dividend + Any other current liabilities

A generally acceptable current ratio is 2 to 1. But whether or not a specific ratio is satisfactory
depends on the nature of the business and the characteristics of its current assets and liabilities.

Quick Ratios: The Quick Ratio is sometimes called the "acid-test" ratio and is one of the best
measures of liquidity.
Quick Ratio or Acid Test Ratio = Quick Asset

Current Liabilities

Where,
Quick Assets = Current Assets - Inventories
Current Liabilities = = Creditors for goods and services + Short-term Loans + Bank Overdraft
+ Cash Credit + Outstanding Expenses + Provision for Taxation + Proposed Dividend +
Unclaimed Dividend + Any other current liabilities

An acid-test of 1:1 is considered satisfactory unless the majority of "quick assets" are in accounts
receivable, and the pattern of accounts receivable collection lags behind the schedule for paying
current liabilities.

Debt to Equity Ratio:

Debt to Equity Ratio = Total Outside Liabilities

Shareholders' Equity

The shareholders’ equity is equity and preference share capital + post accumulated profits
(excluding fictitious assets etc).

Gross Profit (G.P) Ratio/ Gross Profit Margin: It measures the percentage of each sale in
rupees remaining after payment for the goods sold.

Gross Profit Ratio = Gross Profit ×100

Sales

Gross profit margin depends on the relationship between price/ sales, volume and costs. A high
Gross Profit Margin is a favourable sign of good management.

Operating Profit Ratio:

Operating profit ratio is also calculated to evaluate operating performance of business

Operating profit ratio= Operating Profit × 100
Sales

Net Profit Ratio/ Net Profit Margin: It measures the relationship between net profit and sales
of the business. Depending on the concept of net profit it can be calculated as:

(i) Net Profit Ratio = Net Profit× 100

Sales

or Earnings after taxes (EAT)× 100

Sales

Return on Capital Employed (ROCE): It is another variation of ROI.

The ROCE is calculated as follows:
ROCE (Pre-tax) = Earnings before interest and taxes (EBIT) × 100
Capital Employed

ROCE should always be higher than the rate at which the company borrows.

Return on Equity (ROE): Return on Equity measures the profitability of equity funds invested
in the firm. This ratio reveals how profitably of the owners’ funds have been utilised by the firm.
It also measures the percentage return generated to equity shareholders.

This ratio is computed as:

ROE = Net Profit after taxes- Preference dividend (if any) × 100

Net worth / equity/ shareholders' fund

Return on equity is one of the most important indicators of a firm’s profitability and potential
growth.

Inventory/ Stock Turnover Ratio: This ratio also known as stock turnover ratio establishes the
relationship between the cost of goods sold during the year and average inventory held during the
year. It measures the efficiency with which a firm utilizes or manages its inventory. It is
calculated as follows:
Inventory Turnover Ratio = Cost of Goods Sold (or) Sales

Average Inventory *

*Average Inventory = Opening Stock +Closing Stock

2

Receivables (Debtors) Turnover Ratio: In case firm sells goods on credit, the realization of
sales revenue is delayed and the receivables are created. The cash is realized from these
receivables later on.
The speed with which these receivables are collected affects the liquidity position of the firm.
The debtor’s turnover ratio throws light on the collection and credit policies of the firm. It
measures the efficiency with which management is managing its accounts receivables. It is
calculated as follows:

Receivable (Debtor) Turnover Ratio = Credit Sales

Average Accounts Receivable

Fixed Assets Turnover Ratio: It measures the efficiency with which the firm uses its fixed
assets.

Fixed Assets Turnover Ratio = Sales (or)Cost of Goods Sold

Fixed Assets

A high fixed assets turnover ratio indicates efficient utilization of fixed assets in generating sales.
A firm whose plant and machinery are old may show a higher fixed assets turnover ratio than the
firm which has purchased them recently.

Earnings per Share (EPS): The profitability of a firm from the point of view of ordinary
shareholders can be measured in terms of number of equity shares. This is known as Earnings per
share. It is calculated as follows:

Earnings per Share (EPS) = Net profit available to equity shareholders

 Number of equity shares outstanding

Dividend per Share (DPS): Earnings per share as stated above reflects the profitability of a
firm per share; it does not reflect how much profit is paid as dividend and how much is retained
by the business. Dividend per share ratio indicates the amount of profit distributed to equity
shareholders per share. It is calculated as:

Dividend per Share (DPS) = Total Dividend paid to equity shareholders

Number of equity shares outstanding

Dividend Payout Ratio (DP): This ratio measures the dividend paid in relation to net earnings.
It is determined to see to how much extent earnings per share have been retained by the
management for the business. It is computed as:

Dividend payout Ratio = Dividend per equity share (DPS)

Earnings per Share (EPS)

Chapter-5

Data Analysis
 COMPANYANALYSIS
INFOSYS
History
Established in 1981, Infosys is a NYSE listed global consulting and IT services company with
more than 198,000 employees. From a capital of US$ 250, we have grown to become a US$ 10.4
billion (LTM Q1 FY 18 revenues) company with a market capitalization of approximately US$
34.50 billion.

In our journey of over 35 years, we have catalyzed some of the major changes that have led to
India's emergence as the global destination for software services talent. We pioneered the Global
Delivery Model and became the first IT Company from India to be listed on NASDAQ. Our
employee stock options program created some of India's first salaried millionaires.

Read more about the defining moments in the history of Infosys.

Milestones

2018
• Infosys completed 25 years of listing on Indian Stock exchanges

• Infosys signed the “Advance Pricing Agreement” with the US IRS to enhance
predictability of the Company’s tax obligations in respect of its US operations

2017
• Board revised the capital allocation policy and decided to pay-out up to 70% of the free
cash flow (net cash provided by operating activities less capital expenditure as per the
consolidated statement of cash flows prepared under IFRS) as dividend.

2016
• Touches revenues of US$ 10 billion on an LTM basis

• Infosys launches Infosys Mana (now part of Infosys Nia), a platform that brings machine
learning together with the deep knowledge of an organization, to drive automation and
innovation
 • Infosys Foundation USA partners with the National Science Foundation and
DonorsChoose.org to pioneer a new model of public-private-community collaboration for
computer science education

• Infosys Launches Skava Commerce, a new standard for modern, mobile-first and
modular e-commerce platforms

• Infosys invests in Waterline Data, provider of data discovery and data governance
software; Stellaris Venture Partners, an early-stage venture fund; UNSILO, an A.I.
startup focused on advanced text analysis; TidalScale, a provider of Software-Defined
Servers

2015
• Infosys acquired Noah Consulting LLC, a leading provider of advanced information
management consulting services for the oil and gas industry.

• Board decides to increase the dividend pay-out ratio to up to 50% of post-tax profits

• Infosys acquired Skava, a Leading Provider of Digital Experience Solutions for the Retail
Industry

• Infosys acquired Panaya, Inc., a leading provider of automation technology for large
scale enterprise software management

• Infosys announces USD 250 million ‘Innovate in India Fund’ to support Indian start-ups

2014
• Dr. Vishal Sikka takes over as the CEO and MD from S.D. Shibulal

• Revenue crosses 50,000 crore in rupee terms

• Board decides to increase the dividend pay-out ratio to up to 40% of post-tax profits

• Cash and cash equivalents (including Available-for-sale financial assets and certificates
of deposit) cross 5 billion in dollar terms
2013
• Infosys Board appoints N. R. Narayana Murthy as Executive Chairman of the Board

• Infosys begins trading on NYSE Euronext London and Paris markets

• Infosys Edge™ wins the NASSCOM Business Innovation Award for 2013

• Infosys presented with ‘2013 Environmental Tracking Carbon Ranking Leader’ award

2012
• Listed on the NYSE market

• Infosys acquires Lodestone Holding AG, a leading management consultancy based in

Switzerland

• Forbes ranks Infosys among the world's most innovative companies

• Infosys among top 25 performers in Caring for Climate Initiative

2011
• N. R. Narayana Murthy hands over chairmanship to K.V. Kamath

• S.D. Shibulal, COO, takes over as the CEO and MD from Kris Gopalakrishnan

• Infosys crosses US$ 6 billion revenue mark, employee strength grows to over 125,000

2010
• Infosys crosses the US$ 5 billion revenue mark

2009
• Infosys selected as a member of The Global Dow

• Employee strength grows to over 100,000

2008
• Infosys crosses revenues of US$ $ 4 billion
• Annual net profits cross US$ 1 billion 2007
 • Kris Gopalakrishnan, COO, takes over as CEO. Nandan M. Nilekani is appointed
CoChairman of the Board of Directors

• Quarterly revenues cross US$ 1billion

2006
• Infosys celebrates 25 years. Employees grow to 50,000+

• Annual revenues double to $ 2 billion. It took 23 years to reach first billion, only 23
months to reach next billion in revenues

• N. R. Narayana Murthy retires from the services of the company on turning 60. The
Board of Directors appoints him as an Additional Director. He continues as Chairman
and Chief Mentor of Infosys

2005

• Records the largest international equity offering of US$ 1 billion from India

• Selected to the Global MAKE Hall of Fame

2004

• Annual Revenues reach US$ 1 billion

• Infosys Consulting Inc. is launched

2003

• Establishes subsidiaries in China and Australia

• Expands operations in Pune and China, and sets up a development center in

Thiruvananthapuram

2002

• Touches revenues of US$ 500 million

 • Nandan M. Nilekani takes over as CEO from N.R. Narayana Murthy, who is appointed
Chairman and Chief Mentor

• Opens offices in the Netherlands, Singapore and Switzerland

• Sponsors secondary ADS offering

• Infosys and the Wharton School of the University of Pennsylvania set up The Wharton
Infosys Business Transformation Awards (WIBTA)

• Launches Progeon, offering business process outsourcing services

2001

• Touches revenues of US$ 400 million. Opens offices in UAE and Argentina, and a
development center in Japan

• N. R. Narayana Murthy is rated among Time Magazine/CNN's 25 most influential

businessmen in the world

• Infosys is rated as the Best Employer by Business World/Hewitt

BOARD OF
DIRECTORS :
R. Seshasayee Chairman and Independent director
Ravi Venkatesan Co-Chairman and Independent director
Dr. Vishal Sikka Chief Executive Officer and Managing
Director
U.B.Pravin Rao Chief Operating Officer and Whole-time
Director
Prof. Jeffrey S. Lehman Independent Director
Prof. John W. Etchemendy Independent Director

Kiran Mazumdar-Shaw Independent Director

D. N. Prahlad Independent Director
Dr. Punita Kumar-Sinh Independent Director
Roopa Kudva Independent Director

MARKET CAPITALIZATION:
The market capitalization of INFOSYS is Rs.339983 cr.

Table: 5.1 Share holding pattern of INFOSYS:

Share Holders Percentage
Promoters 13.15%
Foreign Institutions 31.76%
Financial institutions 10.62%
General Public 9.90%
National banks and Mutual funds 13.36%
GDR 0.44%
Others 20.76%
 Graph: 5.1 Share Holding Pattern
Promoters
Others 13%
21%
Promoters
Foreign Institutions
GDR Financial Institutions
0%
General Public
National
banks and Foreign Insti- National banks and Mutual funds
Mutual funds tutions GDR
13% 32% Others

General Pub-
lic
10% Financial
Institutions
11%

Interpretation:
The shareholders pattern of INFOSYS consists of foreign institutions with 32% and promoters
has a share of 13% and financial institutions contribute towards 11% and general public consists
of 10% and mutual funds has 13% and others with 21% respectively.

Table : 5.2 Statement of profit and loss account of INFOSYS(in Cr):

Mar '19 Mar '18 Mar '17 Mar '16 Mar '15
12 mths 12 mths 12 mths 12 mths 12 mths

Income
Sales Turnover 73,107.00 61,941.00 59,289.00 53,983.00 47,300.00
Net Sales 73,107.00 61,941.00 59,289.00 53,983.00 47,300.00
Other Income 2,852.00 4,019.00 3,062.00 6,045.00 3,749.00
Total Income 75,959.00 65,960.00 62,351.00 60,028.00 51,049.00
Expenditure
Raw Materials 0 0 0 0 0
Power & Fuel 171 162 180 179 185
Cost
Employee Cost 38,296.00 32,472.00 30,944.00 28,206.00 25,115.00
Other 12,633.00 9,399.00 8,592.00 5,466.00 4,284.00
Manufacturing
Expenses
Miscellaneous 3,333.00 2,611.00 2,366.00 4,422.00 3,715.00
Expenses
Total Expenses 54,433.00 44,644.00 42,082.00 38,274.00 33,338.00
Mar '19 Mar '18 Mar '17 Mar '16 Mar '15
12 mths 12 mths 12 mths 12 mths 12 mths

Operating 18,674.00 17,297.00 17,207.00 15,709.00 13,962.00

Profit
PBDIT 21,526.00 21,316.00 20,269.00 18,715.00 17,711.00
PBDT 21,526.00 21,316.00 20,269.00 18,715.00 17,711.00
Depreciation 1,599.00 1,408.00 1,331.00 1,115.00 913
Profit Before Tax 18,938.00 20,693.00 18,938.00 20,693.00 16,798.00
PB (Post Extraord 19,927.00 19,908.00 18,938.00 17,600.00 16,798.00
Items)

Tax 5,225.00 3,753.00 5,120.00 4,907.00 4,634.00

Reported Net 14,702.00 16,155.00 13,818.00 12,693.00 12,164.00
Profit
Total Value 54,433.00 44,644.00 42,082.00 38,274.00 33,299.00
Addition
Equity Dividend 13,768.00 7,500.00 6,980.00 5,570.00 5,111.00
Corporate 0 0 0 1,273.00 1,034.00
Dividend Tax
Per share data (annualised)
Shares in issue 43,562.79 21,841.14 22,969.45 22,969.45 11,484.72
(lakhs)
Earning Per 33.75 73.97 60.16 55.26 105.91
Share (Rs)
Equity Dividend 430 870 515 485 1,190.00
(%)
Book Value (Rs) 143.96 290.74 296.12 265.93 418.54

Interpretation:
It is observed that the net sales of INFOSYS are gradually increased from year 2015 to 2019. The
gross profit also increased from 2015 to 2019. By these two, we can assume that the company
has a growth.

Table: 5.3 Balance sheet of INFOSYS Limited(in Cr):

19-Mar 18-Mar 17-Mar 16-Mar 15-Mar

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS

Equity Share Capital 2,178 1,092 1,148 1,148 574

Total Share Capital 2,178 1,092 1,148 1,148 574

Reserves and Surplus 60,533.00 62,410.00 66,869.00 59,934.00 47,494.00

Total Reserves and

Surplus 60,533.00 62,410.00 66,869.00 59,934.00 47,494.00
Total Shareholders
Funds 62,711.00 63,502.00 68,017.00 61,082.00 48,068.00
NON-CURRENT
LIABILITIES
Deferred Tax
Liabilities [Net] 541.00 505.00 0 0 0
Other Long Term
Liabilities 248.00 208.00 82.00 62.00 30.00
Total Non-Current
Liabilities 789.00 713.00 82.00 62.00 30.00
CURRENT
LIABILITIES
Trade Payables 1,604.00 738.00 269.00 623.00 124.00

Other Current
Liabilities 13,321.00 10,488.00 11,167.00 10,529.00 5,546.00

Short Term
Provisions 505.00 436.00 350.00 436.00 8,045.00
Total Current
Liabilities 15,430.00 11,662.00 11,786.00 11,588.00 13,715.00

Total Capital And

Liabilities 78,930.00 75,877.00 79,855.00 72,732.00 61,813.00
ASSETS
NON-CURRENT
ASSETS
Tangible Assets 10,394.00 9,027.00 8,605.00 8,248.00 7,347.00

Intangible Assets 103.00 130.00 0 0 0

Capital Work-In-
Progress 1,212.00 1,442.00 1,247.00 934.00 769.00
Fixed Assets 11,709.00 10,599.00 9,852.00 9,182.00 8,116.00

Non-Current
Investments 12,062.00 11,993.00 15,334.00 11,076.00 6,108.00
Deferred Tax Assets
[Net] 1,114 1,128 346 405 433
Long Term Loans
And Advances 16.00 19.00 5.00 5.00 4,378.00
Other Non-Current
Assets 7,806.00 8,048.00 6,666.00 5967.00 26.00
Total Non-Current
Assets 32,707.00 31,787.00 32,203.00 26,635.00 19,061.00
CURRENT
ASSETS

Current Investments 6,077.00 5,906.00 9,643.00 2.00 749.00

Trade Receivables 13,370.00 12,151.00 10,960.00 9,798.00 8,627.00

Cash And Cash

Equivalents 15,551.00 16,770.00 19,153.00 29,176.00 27,722.00
Short Term Loans
And Advances 1,048.00 393.00 310.00 355.00 3,231.00
OtherCurrentAssets 10,177.00 8,870.00 7,616.00 6,766.00 2,423.00

Total Current
Assets 46,223.00 44,090.00 47,682.00 46,097.00 42,752.00
Total Assets 78,930.00 75,877.00 79,885.00 72,732.00 61,813.00

Interpretation: The equity of Infosys was increased from 2015 to 2019 i.e., 574Cr to 2,178Cr.
It means the number of shares of a company is increased. The capital employed of Infosys is
increased gradually that indicates the growth in the company with reduction costs, increasing
sales and paying off debts. The Fixed Assets also increased gradually from 2015 to 2019. It tells
about increasing of physical resources of a company.
 Table: 5.4 NSE STOCK INDICES:
Year NSE closing indices INFOSYS stock prices
2015 7946.35 577.88
2016 8185.8 501.34
2017 10530.7 516.94
2018 10862.55 655.33
2019 12168.45 731.15

Interpretation:
Table shows the closing price indexes of INFOYS and NSE. The INFOSYS closing price index
is increased in 2016 and starts decreasing from 2017. The NSE closing price index is increased
from 2015 to 2019.

Table: 5.5 Financial ratios of INFOSYS:

Particulars 2019 2018 2017 2016 2015

Current ratio 3.03 3.83 3.80 4.50 3.41
Quick ratio 2.96 3.74 3.77 4.47 3.38
Debt equity - - - - -
ratio

Gross profit 23.35 25.65 26.77 27.03 25.98

ratio
Operating profit 25.54 27.92 29.02 29.09 27.89
ratio (%)

Net profit ratio 20.11 26.08 23.30 23.51 25.71

(%)

Return on capital 31.77 31.35 27.84 28.81 34.06

employed (%)

Return on equity 23.44 25.44 20.31 20.78 26.98

Inventory Na Na Na Na Na
turnover ratio

Debtor turnover 5.73 5.36 5.71 5.86 5.93

ratio

Fixed assets 3.57 3.45 3.66 3.67 3.78

turnover ratio

DPS 21.50 43.50 25.75 24.25 59.50

EPS 33.75 36.98 30.09 27.64 26.49
Dividend payout 84.46 42.70 46.07 40.33 39.08
ratio

Retention ratio 15.54 57.30 53.93 59.67 59.65

Interpretation:
Table shows the various financial ratio of INFOSYS. From the above table it is observed that
quick ratios of the firm are satisfactory during the period under study. Firm maintains more
current assets than required. It shows that the liquidity position of the organization is satisfactory.
It means that the firm is able to meet its short-term needs.

Net profit ratio of the firm is more or less stable during the period under study. It fluctuated
around 21%.

DPS indicates profitability of the firm on a per share basis. It was decreased throughout the
study from Rs 59.50 in 2015 to Rs 21.50 in 2019. It was varied from a minimum of (Rs. 21.50)
in 2019 and (Rs. 59.50) in 2015. DPS is increased in 2018 and again decreased in 2019. At the
same time retention ratio was maintaining constant position from 2015 to 2018 but decreased
drastically in 2019.
Intrinsic value of INFOSYS:
Actual value of the share is known as intrinsic value. It is the present value of all future amounts
to be received of the ownership of that share, compared at an approximate discount rate. The
major receipts that come from the ownership of a share are the annual dividends and the sale
proceeds of the share at the end of the holding period. In this project it is assumed that shares
will be held for one year. Following formula will be used for calculating intrinsic value. The
following formula will be used to calculate the intrinsic value.

PV of the future cash flows = D/(1+r)+S1/(1+r)

D= Amount of dividend expected to receive at the end of one year.

S1= Selling price expected to be realized on sale of the share at the end of one year

R= Rate of return required by investor

According to the above formula calculation of intrinsic value of the scrip will have 4 steps. They
are

Step 1: Determination of required rate of return to investor

Step 2: Determination of expected market price at the end of the year i.e. 2019

Step 3: Determination of dividend expected to receive at the end of the year i.e. 2019 dividend.

Step 4: Determination of intrinsic value of the share using above formula.

Step 1: Determination of required rate of return for investor:

Average required rate of return + (market risk premium*beta of the stock)

Market risk premium = Expected return of the stock market-Risk free rate

=7.13-1.13

=6
Beta of Infosys = 0.79

Average required rate of return = 1.13 + (6*0.79)

=5.87 %

Step 2: Calculation of expected market price for 2020

Expected market price = Expected EPS * Expected P/E

Expected EPS = Expected profit available to equity shareholders / Existing no of shareholders

= 17010.76 Cr/ 436,17,33,444

= Rs 39

Expected P/E = Average payout ratio / (average required rate of return-growth rate of dividend)

Average Payout ratio = 182.03/5

= 36.406%

Expected P/E = Average payout ratio / (average required rate of return-growth rate of dividend)

Average Payout ratio = 307.84 /5

= 61.568%

Average return on equity = 124.83/ 5

= 24.97%

Growth rate of dividend = 61.568 * 24.97

= 15.37%

Expected P/E = 36.406/ (15.37-11.745)

= 10.04

Expected market price = 65.57 * 10.04

= Rs 741.05

Step 3: Calculation of expected dividend in the year 2020

Expected dividend in the next year = 25.75+ (25.75*0.1537)

= Rs 29.7
Step 4: Calculation of intrinsic value using single year holding period

PV of the future cash flows = D/(1+r)+MV/(1+r)

= 29.7 / (1+0.0587) + 658.32(1+0.0587)

= Rs. 647.46

Current market price of the Infosys is Rs. 731.15

Interpretation:
From the above analysis it is observed that required rate of return is 5.87 %, expected market
price of INFOSYS for 2020 is Rs. 741.05 and expected dividend for next year is Rs. 29.7. Here
intrinsic value of the share is Rs. 647.46 is less than the current market price (Rs. 731.15). It
indicates over valuation.
 TCS

Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT)
service consulting and business solutions company Headquartered in Mumbai, Maharashtra. It is
a subsidiary of the Tata Group and operates in 46 countries.

TCS is one of the largest Indian companies by market capitalization ($80 billion). TCS is now
placed among the most valuable IT services brands worldwide. TCS alone generates 70%
dividends of its parent company, Tata Sons. In 2015, TCS is ranked 64th overall in the Forbes
World's Most Innovative Companies ranking, making it both the highest-ranked IT services
company and the top Indian company. It is the world's 9th largest IT services provider by
revenue. As of December 2015, it is ranked 10th on the Fortune India 500 list.

Talent of TCS:
We operate on a global scale, with diverse talent base of over 389,200 associates (including
subsidiaries) representing 133 nationalities, across 45 countries as of 30-Sep-2019. We are one of
the largest employers of women with 35% women employees.

We have been recognized as a Global Top Employer by the Top Employers Institute - one of
eight organizations worldwide to have achieved this status. In its assessment of 1,072 companies
worldwide in 2016, the Top Employers Institute rated TCS as an exceptional performer across
nine core Human Resources (HR) areas: talent strategy, workforce planning, on-boarding,
learning and development, performance management, leadership development, career and
succession management, compensation and benefits and company culture.

Today, we are building a hyper-connected organization using internal social platforms to ensure
extensive collaboration and engagement among our employees. This acts as a critical driver of
competitive advantage among the 82% digital natives in our employee base. Our ability to
provide holistic long-term careers based on continuous learning driven by our anytime,
anywhere, any device digital learning ecosystem helps us attract and develop the best talent. Our
ability to create an ‘experience’ for our employees have helped us consistently have the highest
retention rates in our industry globally. Learn more about careers and opportunities at TCS.

Heritage and Values of TCS:

Established in 1968, Tata Consultancy Services has grown to its current position as the #1 most
powerful IT services brand based on our outstanding track record, long-term partnerships,
collaborative innovation and corporate responsibility. We are proud of our heritage as part of the
diversified Tata Group, which founded by Jamsetji Tata in 1868, is one of India’s most respected
institutions today. The Tata Group is a global enterprise today, headquartered in India,
comprising over 100 independent operating companies. The group operates in more than 100
countries across six continents, with a mission 'To improve the quality of life of the communities
we serve globally, through long-term stakeholder value creation based on Leadership with Trust'.
Tata Sons is the principal investment holding company and promoter of Tata companies. About
66 percent of the equity capital of Tata Sons is held by philanthropic trusts endowed by members
of the Tata family.

Our mission reflects the Tata Group's longstanding commitment to providing excellence:

To help customers achieve their business objectives by providing innovative, best-in-class

consulting, IT solutions and services. And to make it a joy for all stakeholder to work with us.

Values:
Leading change

Integrity

Respect for the individual

Excellence

Learning and sharing

First set out in 2003, these Values continue to be as relevant as when they were first articulated
and are lived everyday by our employees across the world in multiple ways. Our Employees are
signatories of the Tata Code of Conduct is a set of principles that guide and govern the conduct
of Tata companies and their employees in all matters relating to business. Introduced in 1998, the
Code lays down the ethical standards that Tata employees have to observe in their professional
lives, and it defines the value system at the heart of the Tata group and its many business entities.

The Code is a dynamic document that reinforces the Tata canon of honourable behavior in
business. The Code has been modified down the years to keep it in step with changing regulatory
norms in the different parts of the world that Tata companies now do business. These
modifications have reinforced the Code, and enable it to reflect the diverse business, cultural and
other factors that have a bearing on the health of the Tata brand.

Achievements and Leadership:

Business Leadership:
• Rated as the world's most powerful brand in IT Services by Brand finance, the world’s
leading brand valuation firm.

• Ranked on the Forbes list of World’s Most Innovative Companies

• American Business Awards 2015 o Gold Stevie for Human Resource Executive of the

Year

o Two Silver Stevies for Corporate Social Responsibility Program and HR

Department of the year

o Bronze Stevie award for the HR team of the

year

• Ranked 57 among Top 100 US Brands by Brand Finance

• Dun & Bradstreet Corporate Award 2015

• Retained #1 ranking for customer satisfaction in a survey conducted by Whitelane

Research

• Recognised as a Global Top Employer by the Top Employers Institute

 o Top Employer certification for TCS in 24 countries - UK, Europe, North
America, Canada, South America, Africa, Asia, Australia, Latin America and the
Middle East.

• Ranked Number One on the 2015 IDC Financial Insights FinTech Rankings Top 100

• TCS UK & Ireland wins ‘Company of the Year’ and ‘Social Responsibility project of the
Year’ at the Employee Engagement Awards 2016

• Golden Peacock National Training Award 2015

• TCS’ Passport Seva Project was awarded Triple ISO Certification

• Ranked No. 1 in Dataquest's Top 20 list of Indian IT companies – 2015

• Winner 'Make In India Awards for Excellence' 2015

Sustainability:

• Dow Jones Sustainability Index 2015

Partner:

• 2015 SAP® Pinnacle award

• Red Hat's 'System Integrator Partner of the Year' for North America

• Hitachi Data System's Global System Integrator Partner of the Year 2015 award

• Won ‘Fastest Growing SI Partner of the Year' award at Expericon 2015

• Won the Business Transformation Award from the Pegasystems Partner Excellence
Awards

• Oracle Excellence Award for Specialized Partner of the Year:

o Asia Pacific in Telecommunications Industry

o North America and Asia-Pacific in Engineered Systems Solution

 o FY16 GSI Partner of the Year Award at Dell World 2015

• Winner, IBM Mobile App Throwdown Contest 2015 for Business Partners

Leadership
N Chandrasekaran:

• Ranked 'Best CEO' in the Technology/ IT Services & Software sector in Institutional
Investor's 2015 All-Asia Executive Team rankings

• Qimpro Platinum Standard Award 2015 (Business)

• Business Today’s Best CEO 2015 (IT & ITEs)

• Appointed part-time non-official director on the central board of the RBI

Vision:
"TCS’ vision is to decouple business growth and ecological footprint from its operations to
address the environment bottom-line. The green approach is embedded in our internal processes
and services offerings...... From green buildings to green IT to a green supply chain, our mantra
is to grow sustainably and help our customers achieve sustainable growth through our green
solutions and service offerings"

Mission:
Our mission reflects the Tata Group's longstanding commitment to providing excellence:

To help customers achieve their business objectives by providing innovative, best-in-class

consulting, IT solutions and services. To make it a joy for all stakeholders to work with us.

Board of Directors:
Executive board members:

Rajesh Gopinathan (Chief Executive Officer and Managing Director)

N Ganapathy Subramaniam (Chief Executive Officer and Managing)

Non-Executive Board Members:

N Chandrasekaran (Chairman)

Prof. Clayton M Christensen (Director)

Dr Ron Sommer (Director)

OP Bhatt (Director)

Aman Mehta (Director)

Venkatraman Thyagarajan (Director)

Aarthi Subramanian (Director)

MARKET CAPITALIZATION:
The market capitalization of TCS is 750,439.42 Cr.

Table : 5.7 Shareholding pattern of TCS:

Shareholders Percentage
Promoters 72.05%
Foreign Institutions 15.90%
Financial Institutions 5.33%
General Public 3.48%
 National banks and mutual funds 2.70%
Others 0.47%
Central government 0.06%

Graph:5.7 Share Holding Pattern

Promoters

National banks
Others
Foreign Institutions
General
Financial Public
Insti-
and mutual
tutions 3%3% 0% funds
5%
Foreign Insti-
Financial Institutions
tutions
16% General Public

Promoters National banks and mutual

72% funds

Others

Interpretation:
Table shows share holding pattern of TCS. The promoters hold 72.05% of shares. The foreign
institutions hold 15.90%, the financial institutions hold 5.33%, General public holds 3.48%,
National banks and Mutual funds holds 2.70%, Central Government holds 0.06% and other
holds
0.47% of shares.

Table: 5.8 Statement of Profit and Loss account: (in Cr)

Particulars Mar '19 Mar '18 Mar '17 Mar '16 Mar '15

12 mths 12 mths 12 mths 12 mths 12 mths

Income
Sales Turnover 146,463.00 123,104.00 177,966.0 108,646.00 94,652.50
0
Excise Duty 0 0 0 0 4.09
Net Sales 146,463.00 123,104.00 177,966.0 108,646.00 94,648.41
0
Other Income 4,311.00 3,642.00 4,221.00 3,084.00 2,229.91
Total Income 150,774.00 126,746.00 122,187.0 111,730.00 97,878.32
0
Expenditure
Raw Materials 0 86.00 94.00 0 0
Operatig & Direct Expenses 2,270.00 2,614.00 2,714.00 0 23,419.99
Employee Benefit Expenses 78,246.00 66,396.00 61,621.00 55,348.00 38,701.15
Finance Costs 198.00 52.00 32.00 33.00 104.19
Depreciation & 2,056.00 2,014.00 1,987.00 1,888.00 1,798.69
Ammortisation
Other Expenses 26,441.00 21,492.00 21,226.00 22,621.00 8,045.56
Total Expenses 109,211.00 92,654.00 87,674.00 79,890.00 72,069.58
Mar '19 Mar '18 Mar '17 Mar '16 Mar '15
Particulars 12 mths 12 mths 12 mths 12 mths 12 mths
Profit before tax 41,563.00 34,092.00 34,513.00 31,840.00 26,298.49
Current tax 9,502.00 8,265.00 8,235.00 7,508.00 6,275.65
Deferred tax 499.00 -53.00 -79.00 -6.00 -28.18
Other Direct taxes 0 0 0 0 0.37
Profit after Tax 31,562.00 25,880.00 26,357.00 24,338.00 20,059.70
Interest 90.00 54.00 68.00 68.00 207.52
Reported Net Profit 31,472.00 25,826.70 26,289.00 24,270.00 19,852.18
Dividend 0 0 3,842.00 7,993.00 15,473.87
Preference Dividend 0 0 0 0 0
Equity Dividend 3,000.00 5,000.00 4,700.00 4,350.00 7,900.00
Earnings per Share 80.17 132.15 111.01 109.59 85.08
Book value 209.71 397.30 393.32 329.74 231.87
Interpretation:
Table shows the P&L account of TCS. The Net Sales of TCS is gradually increasing from year
2015 to 2019 i.e. from Rs 94,648.41 Cr to Rs 146,463.00 Cr., It shows that the company is in a
growth stage. The EPS of TCS is also increased from 2015 to 2018 but decreased drastically in
2019. Growth in EPS is an important measure of management performance because it shows
how much money the company is making for its shareholders, not only due to changes in profit,
but also after all the effects of issuance of new shares.

Table: 5.9 Balance Sheet of TCS: (in Cr)

Particulars Mar '19 Mar '18 Mar '17 Mar '16 Mar '15
12 mths 12 mths 12 mths 12 mths 12 mths
Sources of Funds
Total Share Capital 375.00 191.00 197.00 197.00 195.87
Equity Share Capital 375.00 191.00 197.00 197.00 195.87
Preference Share Capital 0 0 0 0 0
Reserves 78,523.00 75,675.00 77,825.00 64,816.00 45,220.57
Total Shareholders funds 78,898.00 75,866.00 78,022.00 65,013.00 45,416.44
NON-CURRENT LIABILITIES

Long term borrowings 33.00 39.00 44.00 50.00 64.71

Deferred Tax liabilities 339.00 424.00 314.00 366.00 271.46
Other long-term liabilities 1,334.00 643.00 638.00 639.00 722.15
Long term Provisions 0 26.00 39.00 40.00 126.91
Total non-current liabilities 1,706.00 1,132.00 1,305.00 1,095.00 1,185.23
Current Liabilities
Short term borrowings 0 181.00 200.00 113.00 185.56
Trade Payables 7,692.00 4,775.00 4,190.00 5,370.00 6,767.25
Other current liabilities 11,030.00 8,931.00 6,245.00 5,711.00 2,491.47
Short term provisions 174.00 171.00 66.00 115.00 7,019.35
Total Current Liabilities 9,467.00 7,649.80 6,098.75 5,290.92 4,048.04
Total Capital & Liabilities 99,500.00 91,056.00 89,758.00 77,417.00 63,065.30
ASSETS
Non-Current Assets
Tangible assets 9,522.00 9,430.00 9,214.00 9,056.00 7,964.88
Intangible assets 139.00 10.00 17.00 24.00 31.41
Capital WIP 834.00 1,238.00 1,477.00 1,640.00 2,706.94
Fixed Assets 10,495.00 10,678.00 10,708.00 10,720.00 10,703.23
Non-Current Investments 2,189.00 2,186.00 2,201.00 2,229.00 2,651.23
Deferred Tax Assets 2,097.00 3,051.00 2,447.00 2,530.00 303,47.00
Long term loans & Advances 2.00 1,503.00 6.00 2,432.00 8,452.55
Others 5,685.00 5,416.00 5,954.00 6,129.00 524.68
Total CL & Provisions 11,492.00 18,638.66 17,398.59 13,462.62 10,286.77
Total Non-Current Assets 20,468.00 22,834.00 21,316.00 24,040.00 22,635.16
Current Assets
Current Investments 28,280.00 35,073.00 40,729.00 21,930.00 747.47
Inventories 10.00 25.00 21.00 9.00 12.34
Trade Receivables 24,029.00 18,882.00 16,582.00 19,058.00 17,036.76
Cash & Cash equivalents 8,900.00 3,487.00 1,316.00 4,806.00 16,502.50
Short term loans & Advances 7,018.00 2,793.00 2,704.00 2,523.00 3,352.18
Others 10,795.00 7,962.00 7,090.00 5,051.00 2,778.89
Total Current Assets 79,032.00 68,222.00 68,442.00 53,377.00 40,430.14
Total Assets 99,500.00 91,056.00 89,758.00 77,417.00 63,065.30

Interpretation:
Table shows the balance sheet of TCS. The Equity capital of TCS was maintaining constantly
from 2015 to 2018 and then increased to Rs. 375 Cr. in 2019. It indicates that there is constant
number of shares in the company and then increased. The Capital Employed of TCS is increased
gradually that indicates the growth in the company with reduction costs, increasing sales and
paying off debts. The Total Assets also increased gradually from 2015 to 2019 which tells about
increasing of physical resources of the company.

Table: 5.10Performance of stock with its index: 2

Year NSE Index TCS Index
2015 7946.35 1184.58
2016 8185.8 1159.66
2017 10530.7 1324.20
2018 10862.55 1865.61
2019 12168.45 2167.60

Interpretation:
Table shows the closing price indices of TCS and NSE. The NSE has been increasing from 2015
to 2019 exponentially. But the price indices of TCS are decreased slightly in 2016 but has been
gradually increasing till 2019. Both closing price indices are convergent.

Table: 5.11 Financial ratios of TCS:

Particulars 2019 2018 2017 2016 2015
INVESTMENT
VALUATION RATIOS
Face Value 1.00 1.00 1.00 1.00 1.00

Basic EPS 79.34 131.15 120.04 117.11 98.31

(Rs.)
Cash EPS 84.75 140.77 128.06 124.54 105.43
(Rs.)
Dividend Per 30.00 50.00 47.00 43.50 79.00
 Share
Operating 93.18 145.25 137.48 137.30 107.36
Profit Per
Share (Rs)
Net Operating 328.24 508.58 470.42 435.76 375.64
Profit Per
Share (Rs)
Free Reserves -- -- -- -- --
Per Share (Rs)

Bonus in 91.35 79.13 79.13 79.13 79.59

Equity Capital

PROFITABILITY
RATIOS

Operating 28.38 28.56 29.22 31.50 28.57

Profit
Margin(%)
Profit Before 25.41 25.35 26.23 28.55 25.15
Interest And
Tax Margin(%)
Gross Profit 26.99 26.86 27.52 29.80 26.68
Margin(%)

Cash Profit 24.29 26.06 25.93 27.37 25.78

Margin(%)

Adjusted Cash 24.29 26.06 25.93 27.37 25.78

Margin(%)
Net Profit 24.40 25.92 25.51 26.87 26.17
Margin(%)
Adjusted Net 22.98 24.46 24.31 25.74 24.67
Profit
Margin(%)
Return On 51.78 42.00 38.43 45.03 52.77
Capital
Employed(%)
Return On Net 38.10 33.27 30.31 35.49 42.40
Worth(%)

Adjusted 38.10 33.27 30.31 35.49 41.23

Return on Net
Worth(%)
 Return on 210.26 396.31 395.96 329.94 231.87
Assets
Excluding
Revaluations
Return on 210.26 396.31 395.96 329.94 231.87
Assets
Including
Revaluations
Return on 51.78 42.10 38.53 45.11 52.99
Long Term
Funds(%)
LIQUIDITY
AND
SOLVENCY
RATIOS
Current Ratio 2.85 2.85 3.09 3.41 2.78

Quick Ratio 2.74 2.67 2.93 3.27 2.80

Debt Equity -- -- -- -- 0.01

Ratio

DEBT
COVERAGE
RATIOS
Interest Cover 240.44 1,065.37 1,880.13 2,257.85 302.89

Total Debt to 0.00 0.00 0.00 0.00 0.01

Owners Fund

Financial 250.54 1,120.27 1,978.56 2,370.08 320.41

Charges
Coverage
Ratio
Financial 187.95 897.27 1,577.75 1,888.23 260.53
Charges
Coverage
Ratio Post Tax
MANAGEMEN
T
EFFICIENCY
RATIOS
Inventory 12,317.00 3,894.24 4,413.95 9,540.44 5,962.90
Turnover Ratio
 Debtors 5.74 5.49 5.20 4.76 4.67
Turnover Ratio

Investments 12,317.00 3,894.24 4,413.95 9,540.44 5,962.90

Turnover Ratio

Fixed Assets 5.67 4.79 4.96 9.48 5.23

Turnover Ratio

Total Assets 1.56 1.28 1.18 1.32 1.61

Turnover Ratio

Asset Turnover 1.59 1.26 1.29 1.55 1.64

Ratio

CASH FLOW
INDICATOR
RATIOS
Dividend 33.54 36.78 38.73 34.63 80.35
Payout Ratio
Net Profit
Dividend 31.73 34.52 36.31 32.57 74.93
Payout Ratio
Cash Profit
Earning 66.46 63.22 61.27 65.37 17.38
Retention
Ratio
Cash Earning 68.27 65.48 63.69 67.43 23.11
Retention
Ratio

Interpretation:
Table shows various financial ratios of TCS. From the above table it is observed that quick ratios
of the firm are satisfactory during the period under study. Firm maintained more current assets
than required. It shows that the liquidity position of the organization is satisfactory.

Net profit ratio of the firm is more or less stable during the period under study. It fluctuated
around 25%. This net profit ratio is very high. It indicates that the firm is in advantageous
position to survive in the face of selling price, Cost of production or declining demand for the
products.
EPS indicates profitability of the firm on a per share basis. It was increased from 2015 to 2018
thoroughly but has decreased in 2019. It was varied from a minimum of Rs. 79.34 to a maximum
of Rs. 131.15 (2018). Dividend payout ratio is also fluctuating every year during the period
under study. At the same time retention ratio also increased except in 2016. Increase in retention
shows growth in equity.

Return on Equity shows how well the firm has used the resources of owners. This ratio is
fluctuating throughout the period under study. It varied from a minimum of Rs. 30.31 (2017) to a
Rs.42.40 in (2015).

Intrinsic value of TCS:

Actual value of the share is known as intrinsic value. It is the present value of all future amounts
to be received of the ownership of that share, compared at an approximate discount rate. The
major receipts that come from the ownership of a share are the annual dividends and the sale
proceeds of the share at the end of the holding period. In this project it is assumed that shares
will be held for one year. Following formula will be used for calculating intrinsic value. The
following formula will be used to calculate the intrinsic value.

PV of the future cash flows = D/(1+r)+S1/(1+r)

D= Amount of dividend expected to receive at the end of one year.

S1= Selling price expected to be realized on sale of the share at the end of one year

R= Rate of return required by investor

According to the above formula calculation of intrinsic value of the scrip will have 4 steps. They
are

Step 1: Determination of required rate of return to investor

Step 2: Determination of expected market price at the end of one year i.e. 2020

Step 3: Determination of dividend expected to receive at the end of one year i.e. 2020 dividend.

Step 4: Determination of intrinsic value of the share using above formula.

Step 1: Determination of required rate of return for investor:

Average required rate of return + (market risk premium*beta of the stock)

Market risk premium = Expected return of the stock market-Risk free rate

= 7.13 - 1.13

=6

Beta of TCS = 0.51

Average required rate of return = 1.13 + (6*0.51)

= 4.19%

Step 2: Calculation of expected market price for 2020

Expected market price = Expected EPS * Expected P/E

Expected EPS = Expected profit available to equity shareholders / Existing no of shareholders

= 33223Cr/1970427941

= Rs. 168.60

Expected P/E = Average payout ratio / (average required rate of return-growth rate of dividend)

Average Payout ratio = 224.22/5

=44.84%

Growth rate of dividend= Average retention ratio * Average return on equity

Average retention ratio = 273.51/5

=54.70

Average return on equity = 211.05/5

= 42.21
Growth rate of dividend = 54.70 * 42.21

=23.09%

Expected P/E = 44.84/(23.09-9.42)

= 3.28

Expected market price = Rs. 2001.30

Step 3: Calculation of expected dividend in the year 2020

Expected dividend in the next year = 38.30 + (38.30*0.2309)

= Rs. 47.14

Step 4: Calculation of intrinsic value using single year holding period

PV of the future cash flows = D/(1+r)+MV/(1+r)

= 47.14/(1+0.0419)+2239/(1+0.0419)

=Rs.1784.23

Current market price of TCS is Rs. 2,161.70

Interpretation:
From the above analysis it is observed that required rate of return is 4.19%, expected market
price of TCS for 2020 is Rs.2,001.30 and expected dividend for next year is Rs. 47.14. Here
intrinsic value of the share (Rs. 1784.23) is less than the current market price (Rs. 2161.70). It
indicates over valuation.
 MINDTREE
We were incorporated as MindTree Consulting Private Limited on August 5, 1999 by a group of
ten individual promoters of which three of them invested through an entity incorporated in
Mauritius.

In January 2000, an investment of Rs. 169 million was made by way of subscription to Equity
Shares of our Company in our first round of funding by LSO Investment (P) Limited, a Promoter
company promoted by three of our Promoters, and Walden Software Investments Limited
(managed by Walden International), Amalgamated Holdings Limited and Vaitarna Holdings
Private Limited. Shares held by Amalgamated Holdings and Vaitarna Holdings Private Limited
were transferred to Global Technology Ventures Limited by Board meeting held on April 25,
2000.

In August 2001, Capital International Global Emerging Markets Private Equity Fund LP, Global
Technology Ventures Limited and certain of our Promoters invested a further Rs. 590 million in
our Company in a second round of funding by subscribing to convertible preference shares of our

In October 2001, Franklin Templeton Holding Limited invested a sum of Rs 75.5 million into
our Company by subscribing to our preference shares. Subsequently, AIG Offshore Systems
Service Inc., one of our clients also subscribed to Equity Shares and warrants in our Company.

We are structured into two business units that focus on software development " IT Services and
R&D Services. We have clients that range from Fortune 10 companies to enterprise software
organizations. We have offices across USA, United Kingdom, Germany, Switzerland, United
Arab Emirates, India, Singapore, Australia and Japan.
History:
In august 1999, Mindtree consulting private limited was founded by 10 IT professionals of which
three of them invested through an entry incorporated in Mauritius. It was funded by the venture
capital firms Walden International and Sivan securities and later in 2001 from the Capital group
and Franklin Templeton. It became a public company on 12 December 2006 and was listed on
the BSE and NSE.

Vision:
• Collaborative Spirit
• Unrelenting Dedication

• Expert Thinking

Mission:
We engineer meaningful technology solutions to help businesses and societies flourish.

First issue of Share:

Issue Open: Feb 9,2007- Feb 14,2007

Issue type: Book Build issue IPO

Issue Size: 5593300 Equity shares of Rs 10 aggregating up to Rs.237.72 Cr

Face value: Rs 10 per Equity Share

Issue Price: Rs.365- Rs.425 Per Equity share

Listing at :BSE , NSE

Market capitalization :
The market capitalization of Mindtree is Rs. 16296.12 Cr

Table: 5.13 Share holding pattern:

Shareholders Percentage
Promoters 73.64%
Foreign Institutions 10.46%
General Public 9.66%
National banks and mutual funds 4.25%
Others 1.99%

Graph: 5.13 Shareholding pattern

National banks
and mutual
funds Others
4% 2%
General Public
13%

Foreign In-
stitutions
10%

Promoters
71%

Interpretation:
Above table shows the shareholding pattern of Mindtree. The promoters hold 73.64% of the
shares. The Foreign institutions hold 10.46%, the financial institutions holds 0.33%, General
Public holds 9.66%, National banks and Mutual funds holds 4.25% and others holds 1.99% of
shares.

Table: 5.14 Statement of Profit and Loss account of Mindtree:(Rs in Crores):

Particulars Mar '19 Mar '18 Mar '17 Mar '16 Mar '15
INCOME

Sales Turnover 7,021.50 5,325.00 5,039.60 4,356.50 3,547.40

 Net Sales 7,021.50 5,325.00 5,039.60 4,356.50 3,547.40

Other Income 89.30 190.10 55.30 93.90 83.10

TOTAL INCOME 7,110.80 5,515.10 5,094.90 4,450.40 3,630.50

EXPENDITURE

Raw Materials 0.00 0.00 0.00 0.00 0.00

Power & Fuel Cost 30.20 28.90 31.30 0.00 0.00

Employee Cost 4,421.10 3,394.90 3,243.80 2,576.60 2,064.60

Other Manufacturing 0.00 0.00 0.00 0.00 0.00

Expenses
Miscellaneous Expenses 1,505.80 1,125.00 1,046.00 969.10 776.40

TOTAL EXPENSES 5,957.10 4,548.80 4,321.10 3,545.70 2,841.00

OPERATING PROFIT 1,064.40 776.20 718.50 810.80 706.40

PBDIT 1,153.70 966.30 773.80 904.70 789.50

PBDT 1,150.80 949.50 754.70 904.40 789.40

Depreciation 164.10 155.20 170.30 130.90 101.70

Profit Before Tax 986.70 794.30 584.40 773.50 687.70

PBT (Post Extra-ord Items) 986.70 794.30 584.40 773.50 687.70

Tax 232.70 169.40 138.40 168.60 153.40

REPORTED NET PROFIT 754.00 624.90 446.00 604.90 534.30

Total Value Addition 5,957.10 4,548.80 4,321.10 3,545.70 2,841.00

Equity Dividend 180.50 148.80 167.90 176.20 142.40

Corporate Dividend Tax 37.80 25.40 32.60 32.50 29.10

PER SHARE DATA

(ANNUALISED)
Shares in issue (lakhs) 1,642.14 1,639.26 1,680.26 1,677.86 837.32

EARNING PER SHARE 45.92 38.12 26.54 36.05 63.81

(RS)
Equity Dividend (%) 330.00 110.00 100.00 160.00 170.00

Book Value (Rs) 201.32 173.13 155.93 144.02 240.15

Interpretation:

Table shows the P&L account of Mindtree. The Net sales of Mindtree is gradually increased
from year 2015 to 2019 i.e., from Rs. 3547.40 Cr to Rs. 7021.50 Cr. By this we assume that the
company has a growth. The EPS of Mindtree is has only been increasing in the last three years
i.e., from 2017 to 2019.

Table: 5.15 Balance sheet of Mindtree: ( Rs in Crores)

Mar-19 Mar-18 Mar-17 Mar-16 Mar-15
12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 164.20 163.90 168.00 167.80 83.70

TOTAL SHARE CAPITAL 164.20 163.90 168.00 167.80 83.70

Reserves and Surplus 3,141.80 2,674.20 2,452.10 2,248.60 1,927.10

TOTAL RESERVES AND 3,141.80 2,674.20 2,452.10 2,248.60 1,927.10

SURPLUS
TOTAL SHAREHOLDERS 3,306.00 2,838.10 2,620.10 2,416.40 2,010.80
FUNDS
NON-CURRENT
LIABILITIES
Long Term Borrowings 0.50 0.90 1.30 1.80 2.30

Deferred Tax Liabilities [Net] 0.00 0.00 0.00 0.00 0.00

Other Long Term Liabilities 17.40 7.90 26.60 107.20 33.40

Long Term Provisions 0.00 0.00 0.00 0.00 0.00

TOTAL NON-CURRENT 17.90 8.80 27.90 109.00 35.70

LIABILITIES
CURRENT LIABILITIES

Short Term Borrowings 0.00 300.00 94.20 40.00 0.00

Trade Payables 213.10 169.00 155.70 124.60 50.30

Other Current Liabilities 502.10 370.40 388.10 371.20 344.30

Short Term Provisions 139.90 119.10 110.50 215.30 204.60

TOTAL CURRENT 855.10 958.50 748.50 751.10 599.20

LIABILITIES
TOTAL CAPITAL AND 4,179.00 3,805.40 3,396.50 3,276.50 2,646.10
LIABILITIES
ASSETS

NON-CURRENT ASSETS

Tangible Assets 375.70 346.70 377.10 430.40 450.70

Intangible Assets 591.00 368.70 391.70 9.20 11.90

 Capital Work-In-Progress 29.70 9.20 19.20 23.20 35.40

Other Assets 0.00 0.00 0.00 0.00 0.00

FIXED ASSETS 996.40 724.60 788.00 462.80 498.00

Non-Current Investments 121.60 353.20 303.60 905.20 111.30

Deferred Tax Assets [Net] 38.80 32.70 60.50 59.30 44.90

Long Term Loans And 67.50 74.60 66.70 184.20 65.30

Advances
Other Non-Current Assets 188.90 154.80 153.50 27.60 100.30

TOTAL NON-CURRENT 1,413.20 1,339.90 1,372.30 1,639.10 819.80

ASSETS
CURRENT ASSETS

Current Investments 683.60 720.60 586.90 210.10 534.30

Inventories 0.00 0.00 0.00 0.00 0.00

Trade Receivables 1,335.60 989.10 871.50 882.50 679.80

Cash And Cash Equivalents 254.70 324.30 246.80 192.40 366.90

Short Term Loans And 12.30 1.70 1.20 147.60 83.60

Advances
OtherCurrentAssets 479.60 429.80 317.80 204.80 161.70

TOTAL CURRENT ASSETS 2,765.80 2,465.50 2,024.20 1,637.40 1,826.30

TOTAL ASSETS 4,179.00 3,805.40 3,396.50 3,276.50 2,646.10

Interpretation:
From the above table it is observed that the Equity capital of Mindtree is increased. It indicates
that there was increase in number of shares in the company. The capital employed of Mindtree is
increased gradually which indicates the growth in the company with reduction in costs,
increasing sales and paying off debts. The Fixed assets also increased gradually from 2015 to
2019.

Table: 5.16 Performance of stock with its index:

Year NSE Index Mindtree Index
2015 7946.35 716.88
2016 8185.8 521.65
2017 10530.7 612.40
2018 10862.55 864.50
2019 12168.45 800.15

100
00
90 Performen
Performance of stock with its index
1000
80 10000
00
ce
0900
9000
00
70 0800
8000
00
60 0700
Title

7000 Ye
600
50 0
Title

00 6000 Yea
500 ar
NSE closing Year
Axis

0 rNSE
00
40 0 5000
Axis

400 indices
INFOSYS stock NSE Index
00 4000 Index
TCS
30 0300 prices
00 3000
200 Index Mindtree Index
20 0
2000
100
0
00
10 1000
0 0
000 0 1 2 3 4 5
1 2 1 3 42 5 3 4 5

Interpretation:
Table shows the closing price of Mindtree and NSE. The Mindtree closing price index has been
decreasing in the first three years but steadily increasing in the later years. The NSE closing price
index is increased drastically from year 2015 to 2019.

Table: 5.17 Financial ratios of Mindtree:

Particulars 2019 2018 2017 2016 2015
PER SHARE RATIOS

Basic EPS (Rs.) 45.94 37.69 26.56 36.08 63.90

 Diluted EPS (Rs.) 45.94 37.58 26.51 35.99 63.62

Cash EPS (Rs.) 55.91 47.60 36.68 43.85 75.99

Book Value 201.34 173.16 155.96 144.00 240.24

[ExclRevalReserve]/Shar
e (Rs.)
Book Value 201.34 173.16 155.96 144.00 240.24
[InclRevalReserve]/Shar
e (Rs.)

Dividend / Share(Rs.) 33.00 11.00 10.00 16.00 17.00

Revenue from 427.62 324.89 299.98 259.62 423.82

Operations/Share (Rs.)
PBDIT/Share (Rs.) 70.26 58.96 46.06 53.92 94.32

PBIT/Share (Rs.) 60.27 49.49 35.92 46.11 82.17

PBT/Share (Rs.) 60.09 48.46 34.79 46.10 82.16

Net Profit/Share (Rs.) 45.92 38.13 26.55 36.05 63.84

Debtors turnover ratio 5.60 5.58 5.54 5.77 5.50

PROFITABILITY RATIOS

PBDIT Margin (%) 16.43 18.14 15.35 20.76 22.25

PBIT Margin (%) 14.09 15.23 11.97 17.76 19.38

PBT Margin (%) 14.05 14.91 11.59 17.75 19.38

 Net Profit Margin (%) 10.73 11.73 8.84 13.88 15.06

Return on Networth / 22.80 22.01 17.02 25.03 26.57

Equity (%)

Return on Capital 29.77 21.95 16.84 23.95 26.10

Employed (%)

Return on Assets (%) 18.04 16.42 13.13 18.46 20.19

Total Debt/Equity (X) 0.00 0.11 0.04 0.02 0.00

Asset Turnover Ratio (%) 168.01 139.93 148.37 132.96 134.06

LIQUIDITY RATIOS

Current Ratio (X) 3.23 2.57 2.70 2.18 3.05

Quick Ratio (X) 3.23 2.57 2.70 2.18 3.05

Inventory Turnover Ratio 0.00 0.00 0.00 0.00 0.00

(X)

Dividend Payout Ratio 23.93 23.81 37.64 29.12 26.65

(NP) (%)

Dividend Payout Ratio 19.66 19.07 27.24 23.94 22.38

(CP) (%)

Earnings Retention Ratio 76.07 76.19 62.36 70.88 73.35

(%)

Cash Earnings Retention 80.34 80.93 72.76 76.06 77.62

Ratio (%)

VALUATION RATIOS
 Enterprise Value (Cr.) 15,245.46 12,662.46 7,449.02 10,790.80 10,552.81

EV/Net Operating 2.17 2.38 1.48 2.48 2.97

Revenue (X)

EV/EBITDA (X) 13.21 13.10 9.63 11.93 13.37

MarketCap/Net 2.21 2.38 1.51 2.51 3.08

Operating Revenue (X)

Retention Ratios (%) 76.06 76.18 62.35 70.87 73.34

Price/BV (X) 4.69 4.47 2.90 4.53 5.43

Price/Net Operating 2.21 2.38 1.51 2.51 3.08

Revenue

Earnings Yield 0.05 0.05 0.06 0.06 0.05

Interpretation:
Above table shows the financial ratios of Mindtree. From the above table it is observed that
Quick ratios of the firm are satisfactory during the period under study. Firm maintained more
current assets than required. It shows that the liquidity position of the organization is satisfactory.

Net profit ratio of the firm is more or less stable during the period under study. It fluctuated
around 14% from 2015 to 2016 and in 2019 it comes to 10%. The net profit ratio is normal. It
indicates that the firm is in advantageous position to survive in the face of falling selling price,
cost of production or declining demand for the products.

DPS indicates profitability of the firm on a per share basis. It was decreased in the starting years
from 2015 and 2017 and then it starts increasing from 2017 to 2019 (Rs. 33 to Rs. 10). At the
same time retention ratio also increased from 2015 to 2019. Increase in retention shows that there
is growth in equity.
Return on equity shows how well the firm has used the resources of owners. This ratio is
fluctuating from 2015 to 2019 and only starts increasing in later years.

Intrinsic value of Mindtree:

Actual value of the share is known as intrinsic value .It is present value of all future amounts to
be received of the ownership of that share, compared at an approximate discount rate. The major
receipts that come from the ownership of a share are the annual dividends and the sale proceeds
of the share at the end of the holding period. In this project it is assumed that shares will be held
for one year. Following formula will be used for calculating intrinsic value. The following
formula will be used to calculate the intrinsic value.

PV of the future cash flows = D/(1+r)+S1/(1+r)

D= Amount of dividend expected to receive at the end of one year.

S1= Selling price expected to be realized on sale of the share at the end of one year

R= Rate of return required by investor

According to the above formula calculation of intrinsic value of the scrip will have 4 steps. They
are

Step 1: Determination of required rate of return to investor

Step 2: Determination of expected market price at the end of one year i.e. 2020

Step 3: Determination of dividend expected to receive at the end of one year i.e. 2020 dividend.

Step 4: Determination of intrinsic value of the share using above formula.

Step 1: Determination of required rate of return for investor:
Average required rate of return + (market risk premium*beta of the stock)

Market risk premium = Expected return of the stock market-Risk free rate

= 7.13 – 1.13

=6

Beta of Mindtree = 0.76

Average required rate of return = 1.13 + (6 * 0.76)

= 5.69 %

Step 2: Calculation of expected market price for 2020

Expected market price = Expected EPS * Expected P/E

Expected EPS = Expected profit available to E.S / Existing no of shareholders

= 4958m/167649773

= Rs. 29.57

Expected P/E = Average payout ratio / (average required rate of return – growth rate of dividend)

Average payout ratio = 25.76%

Growth rate of dividend = Average retention ratio * average return on equity

Average return on Equity =24.73%

Average retention ratio = 74.24%

Growth rate of dividend = 74.24 * 24.73

= 18.35%
Expected P/E = 25.76/( 22.63 – 18.35 )

= 6.02

Expected market price = 29.57 * 6.02

= Rs 800.15

Step 3: Calculation of expected dividend in the year 2020

Expected dividend in the next year = 7.9 + (7.9*0.1835)

= Rs 90.34

Step 4: Calculation of intrinsic value using single year holding period

PV of the future cash flows = D/(1+r)+MV/(1+r)

=90.34/ (1+0.0569) + 178.01/ (1+0.0569)

Rs. 862.54

Current market price of Mindtree is = Rs. 989.05

Interpretation:
From the above analysis it is observed that, required rate of return is 5.69 %, expected market
price of Mindtree for 2020 is Rs 800.15 and expected dividend for next year is Rs 90.34. Here
intrinsic value of the share (Rs.862.54) is less than the current market price ( Rs.989.05). It
indicates overvaluation.
SUMMARY:
Investment may be defined as an activity that commits funds in any financial form in the present
with an exception of receiving additional return in the future. The exceptions bring with it a
probability that the quantum of return may vary from a minimum to a maximum. This is
possibility of variation in the actual return is known as investment risk. Thus, every investment
involves a return and risk. Investment is an activity that is undertaken by those who have
savings. Savings can be defined as the excess of income over expenditure. An investor
earns/expects to earn additional monetary value from the mode of investment that could be in the
form of financial assets.

The three important characteristics of any financial asset are:

• Return-the potential return possible from an asset.

• Risk – the variability in returns of the asset from the chances of its value going
down/up.

• Liquidity – the ease with which an asset can be converted in to cash.

Investors tend to look at these three characteristics while deciding on their individual
preference pattern of investments. Each financial asset will have a certain level of each of
these characteristics. For these financial market plays a vital role for one who invests their
money and for one whom that money is used. The financial system is the nerve centre of
the economy. A well-developed financial system greatly facilitates economic development
leading to increase in national income and living standards.

Fundamental analysis is really a logical and systematic approach to

estimating the future dividends and share price. It is based on the basic premise that share
price is determined by a number of fundamental factors relating to the economy, Industry
and company. Hence the economy fundamentals, Industry fundamentals and company
fundamentals have to be considered while analyzing a security for investment purpose.
Fundamental analysis is in other words, a detailed analysis of the fundamental factors
affecting the performance of companies.
 Each share is assumed to have an economic worth based on its present and
future earning capacity. This is called its intrinsic value or fundamental value. The purpose
of fundamental analysis is to evaluate the present and future earning capacity of a share
based on the economy, industry and company fundamentals and there by assess the
intrinsic value of the share. The investor can then compare the intrinsic value of the share
with the prevailing market price to arrive at am investment decision. If the market price of
the share is lower than its intrinsic value, the investor would decide to buy the share as it is
underpriced. The price of such a share is expected to move up in future to match with its
intrinsic value.

On the contrary, when the market price of a share is higher than its intrinsic
value, it is perceived to be overpriced. The market price of a share is expected to come
down in future and hence, the investor would decide to sell such a share is expected to
come down ion future and hence, the investor would decide to sell such a share.
Fundamental analysis thus provides an analytical framework for rational investment
decision making. This analytical framework is known as EIC framework, or economy-
industry-company analysis. The fundamental approach calls upon the investor to make his
buy or sell decision on the basis of a detailed analysis of the information about the
company, the industry to which the company belongs, and the economy. This results in
informed investing. For this, a fundamental analysis makes use of the EIC framework of
analysis.

FINDINGS:
Economic analysis:

• The GDP of the economy in 2013-2014 is 6.9% and at present the GDP for 2017 is 6.8%,
and based upon forecasted GDP rate there may be a chance of increasing in 4 th quarter.
The increase in GDP indicates prosperity of the economy.
• The foreign exchange reserves are necessary to pay for import and service debt. As per
the RBI the total foreign exchange reserves of India is US $ 398.76billions and India is in
 8th position in foreign exchange reserves as per latest statistics (sep2019.)

• There is a weak monsoon existed in the economy which effect on consumer durables in
the economy and also indicates lower investment growth in the economy.
• The unemployment rate in India is decreasing during the period of study which leads to a
faster economic growth in the economy.
• There is an increase in the foreign debt in the economy which impacts on the lower
economic growth in the economy.

Industry analysis
• India is the world's largest sourcing destination, accounting for approximately 55 per cent
of the US$ 177 billion market in 2018-19.
• The Indian IT sector is expected to grow at rate of 22 % for FY 2020 in constant currency
terms. The sector is also expected to triple its current annual revenue to reach US$ 350
billion by 2025, as per NAASCOM.
• India has nearly 51 million businesses of which 12 million have a high degree of
technology influence and are looking to adopt newer IT products as per a report from
market research from Zinnov.

Company analysis:
• The company TCS’s net sales are gradually increased from past five years. Net profit of
the firm is very high. It indicates that the firm is in advantageous position to survive.
There is a small amount of decreasing in retention ratio. It indicates the growth in equity.
The liquidity ratios of TCS is satisfactory and able to meet its short term needs of the
company. Overall the position of the company is in good position.
• The company INFOSYS net sales are increased from 2015 to 2019. Net profit is
fluctuated from past five years. It is very high. It indicates that the firm can survive in any
position. Retention ratio of the firm is also fluctuated. Overall the company Infosys has a
medium growth rate.
• The company MINDTREE has increased net sales from past five years. The retention
ratio stays stable in for the past five years. It indicates that there is a study growth in
equity shares.
 Security analysis:
• The Intrinsic value of the share of TCS is Rs. 1784.23 and the current market price is
Rs.2161.70. The intrinsic value is less than the current market price. It indicates the
security is in over valuation.
• The Intrinsic value of the share of INFOSYS is Rs.647.46 and the current market price is
Rs.731.15. The intrinsic value is less than the current market price. It indicates the
security is in over valuation.
• The Intrinsic value of the share of MINDTREE is Rs.862.54 and the current market price
is Rs.989.05. The intrinsic value is less than the current market price. It indicates the
security is in over valuation.

SUGGESTIONS:

• Inspite of all securities being in over valuation, it is recommended to investors to invest

in these companies. The reason is good financial performance of the organization as well
as favourable economic and industry conditions.
• It is recommended to invest for a long period of time, atleast for 5 years. As they would
yield better returns.
• If a choice has to be made among the three it would be better to choose TCS has the
option as it is fundamentally very strong. And it has higher value in the market.
• Investors are advised to go through fundamentals of company before investment. And
avoid investment based on market sentiments. They may mislead the investors.
 CONCLUSION

The investor wants to increase their funds on different investment plans. The investor wants
higher returns on their investments. Some of them invest in physical assets like lands, buildings
etc. Some of them are interested to invest in financial assets like equities, insurance, bonds etc.
The financial assets will help in economic growth rather than the physical assets.

If the investor wants higher returns he must invest for a long time. Long-term investments give
more returns. A short-term investment gives less return. For gaining more returns the investors
invest their funds in securities. The investor predicts the future value of the security by
fundamental analysis. The fundamental analysis consists of economic analysis, industry analysis,
and company analysis.
BIBILOGRAPHY

Books referred:

1. S. Kevin, security analysis and portfolio management, PHI learning Private Limited, New
Delhi.
2. Punithavathy pandian, Security Analysis and Portfolio Management, VIKAS Publishing
House Pvt Ltd, New Delhi.
3. Donald E.Fidcher &Ronald Jordan, Security Analysis and Portfolio Management.
4. V.A.Avadhani, Mrs. Meena Pandey, Security Analysis and Portfolio Management.
Himalayan Publishing House, Mumbai.

Websites:
1. http://www.bseindia.com
2. http://www.karvyonline.com
3. http://www.moneycontrol.com
4. http://www.tcs.com
5. http://www,infosys.com
6. http://www.mindtree.com