Financial Analysis of Selected Companies in It Sector: Literature Riview
Financial Analysis of Selected Companies in It Sector: Literature Riview
Financial Analysis of Selected Companies in It Sector: Literature Riview
REPORT ON
Submitted to,
The principal;
Affiliated to:
MS.KHUSHBOO JARIWALA
Prepared By:
T.Y.BBA (FINANCE)
Student’s declaration
I hereby declare that the winter internship project report titled “FINANCIAL ANALYSIS
OF SELECTED COMPANIES IN IT SECTOR” is a result of my own work and my
indebtedness to other work publications, references, if I have been duly acknowledged.
If I am found guilty of coping from any other report or published information and showing
as original work, or extending plagiarism limit, I will understand that I shall be liable and
punishable by the university, which may include ‘fail’ in examination or any other
punishment that university may decide.
Acknowledgement
The successful completion of any task would be incomplete without the mention of the
leaders, whose constant guidance and encouragement crown all the efforts with
success. I am highly obliged to the veer Narmad south Gujarat university for arranging
the programmed of practical in bachelor of business administration in such a manner.
Finally, I would like to express my deep sense of gratitude to all those who are always a
source of inspiration for me, their involvement, unconditional co-operation and support
in the successful and timely preparation of this report.
4
The Information Technology (IT) industry has become one of the fastest growing
industries in India because of which it has caught world attention. India is now being
identified as powerhouse for incremental development of computer software. It has
grown from USD 4 billion industry to USD 58.8 billion industry in2008-09 employing over
2 million people. IT-BPO Industry has become growth engine for the economy
contributing substantially to increases in GDP, urban employment and exports to
achieve vision of ‘young and resilient India’. The key segments that have contributed
significantly to industry’s exports include-Software and services and IT enabled
services. In the face of current recession though the mood is that of cautious optimism
but Industry is expected to witness sustainable growth over period of two years. But at
the same time while industry has significant headroom for growth, as the competition is
increasing with China emerging as major threat, all the stakeholders of Indian IT
industry must give concentrated efforts to ensure that India realizes its potential and
maintains its leadership position in future also.
5
The IT industry is heavily influenced by factors like the global market and sustenance of
its rate of growth. The recession in the United States also impacted the IT community in
India negatively. This segment is promising and has vast potential, but there are
concerns regarding the demand-supply gap, which is widening. Some challenges which
the industry is facing are inadequate infrastructure, tax issues and limited preferential
access for local firms. China and Taiwan are examples of low-cost destinations, and
India needs to change its current tax structure so that it can outdo competition from
other countries.
The IT industry is one which is not limited to software development alone. Technology
can be applied in libraries, hospitals, banks, shops, prisons, hotels, airports, train
stations and many other places through database management systems, or through
custom-made software as seen fit.
The IT sector in India has been driving growth for the last decade and more, and has
the potential to continue doing so for the next couple of years if shortcomings are met
and challenges are faced.
India's IT industry is expected to grow at a rate of 12 - 14% during 2016 - 2017 as per a
report by India's software industry body National Association of Software and Services
Companies (NASSCOM.) This clearly shows that information technology is a sector
which will likely be one of the emerging markets in the days to come as India's economy
requires more hardware, software and other IT services. In a NASSCOM-McKinsey
report, India's position in the global offshore IT industry is based on five factors -
abundant talent, creation of urban infrastructure, operational excellence, conducive
business environment and finally, continued growth in the domestic IT sector.
People are the most important asset of any service-base organization. People
Management, therefore, attains special importance in services companies. The IT
industry typically suffers from high attrition rates across the segments. The attrition rates
are more pronounced in small scale IT service companies. High attrition adversely
impacts the continuity of project staffing and project deliveries, consistency of quality
and productivity. Uncertain and unpredictable schedules and quality of delivery makes
customers wary of doing business with these companies.
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The global sourcing market in India continues to grow at a higher pace compared to the
IT industry. India is the leading sourcing destination across the world, accounting for
approximately 55 per cent market share of the US$ 185-190 billion global services
sourcing business in 2017-18. Indian IT &IT’S companies have set up over 1,000 global
delivery centre’s in about 80 countries across the world, India has become the digital
capabilities hub of the world with around 75 per cent of global digital talent present in
the country.
Some of the major developments in the Indian IT and IT ’S sector are as follows:
Total export revenue of the industry is expected to grow 8.3 per cent year-on-
year to US$ 136 billion in FY19.
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Market Size
The IT-BPM sector in India stood at US$177 billion in 2019 witnessing a growth of 6.1
per cent year-on-year and is estimated that the size of the industry will grow to US$ 350
billion by 2025. India’s IT & ITeS industry grew to US$ 181 billion in 2018-19. Exports
from the industry increased to US$ 137 billion in FY19 while domestic revenues
(including hardware) advanced to US$ 44 billion. IT industry employees 4.1 million
people as of FY19.
Highest ever revenue was generated by Indian IT firms at US$ 181 billion in
2018-19.
Road Ahead
India is the topmost off shoring destination for IT companies across the world.
Having proven its capabilities in delivering both on-shore and off-shore services to
global clients, emerging technologies now offer an entire new gamut of opportunities
for top IT firms in India. Export revenue of the industry is expected to grow 7-9 per
cent year-on-year to US$ 135-137 billion in FY19. The industry is expected to grow
to US$ 350 billion by 2025 and BPM is expected to account for US$ 50-55 billion out
of the total revenue.
1. IT services.
2. Engineering services.
3. ITES-BPO services.
4. E-business.
The Indian information technology industry has played a key role in putting indian on
global map. Thanks to the success of the IT industry, India is now a power to reckon
with. According to the national association of software and service companies
(NASSCOM) , THE apex body India’s IT growth in the world is primarily dominated
by it software and service such as custom application development and
maintenances (CADM), SYSTEM INTERGRATION, IT consultancy, application
management, infrastructure management services, software testing, service-
oriented architecture and web services.
Information Technology is
fragmented industry and
10
Information technology
industry is a
fragmented industry,
which emphasis on free
entry and exit of firms into
the sector. Even though
such a
situation prevails in the
market, the major role is
played by the big giant
corporate like IBM, Infosys,
TCS,
Inforte, Wipro and others
Information Technology is
fragmented industry and
15
Information technology
industry is a
fragmented industry,
which emphasis on free
entry and exit of firms into
the sector. Even though
such a
situation prevails in the
market, the major role is
played by the big giant
corporate like IBM, Infosys,
TCS,
Inforte, Wipro and others
Information Technology is
fragmented industry and
20
Information technology
industry is a
fragmented industry,
which emphasis on free
entry and exit of firms into
the sector. Even though
such a
situation prevails in the
market, the major role is
played by the big giant
corporate like IBM, Infosys,
TCS,
Inforte, Wipro and others.
Government can make
their interference into the
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Tata Consultancy Services Limited was founded in 1968 by division of Tata Sons
Limited. Its early contracts included punched card services to sister company TISCO
(now Tata Steel), working on an Inter-Branch Reconciliation System for the Central
Bank of India, and providing bureau services to Unit Trust of India.
In 1980, TCS established India's first dedicated software research and development
center, the Tata Research Development and Design Centre (TRDDC) in Pune. In 1981,
it established India's first client-dedicated offshore development Centre, set up for
clients Tandem. TCS later (1993) partnered with Canada-based software factory
Integrity Software Corporation which TCS later acquired.
TCS entered the small and medium enterprises market for the first time in 2011,
with cloud-based offerings. On the last trading day of 2011, it overtook RIL to achieve
the highest market capitalization of any India-based company. In the 2011/12 fiscal
year, TCS achieved annual revenues of over US$10 billion for the first time.
In May 2013, TCS was awarded a six-year contract worth over 1100 crore to provide
services to the Indian Department of Posts. In 2013, the firm moved from the 13th
position to 10th position in the League of top 10 global IT services companies and in
July 2014, it became the first Indian company with over Rs 5 lakh crore market
capitalizations.
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In Jan 2015, TCS ends RIL's 23-year run as most profitable firm
In Jan 2017, the company announced a partnership with Auras, Inc., a payments
technology company, to deliver payment solutions for retailers using TCS Omni Store, a
first of its kind unified store commerce platform.
TCS Honored with Four Stevie’s at the 2019 American Business Awards.
Tata Consultancy Services has 285 offices across 46 countries and 147 delivery
centers in 21 countries. At the same date TCS had a total of 58 subsidiary companies.
Service lines
TCS services are currently organized into the following service lines:
TCS established the first software research center in India, the Tata Research
Development and Design Centre, in Pune, India in 1981. Tata research development
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2. INFOSYS:
The company changed its name to Infosys Technologies Private Limited in April 1992
and to Infosys Technologies Limited when it became a public limited company in June
1992. It was later renamed to Infosys Limited in June 2011.
An initial public offer (IPO) in February 1993 with an offer price of 95 (equivalent to 510
or US$7.20 in 2018) per share against book value of 20 (equivalent to 110 or US$1.50
in 2018) per share was undersubscribed but it was "bailed out" by US investment
bank Morgan Stanley, which picked up 13% of equity at the offer price. Its shares were
listed in stock exchanges in June 1993 with trading opening at 145 (equivalent to 790 or
US$11 in 2018) per share. Its annual revenue reached US$100 million in 1999,
US$1 billion in 2004 and US$10 billion in 2017.
In July 2014, Infosys started a product subsidiary called Edge Verve Systems, focusing
on enterprise software products for business operations, customer service, procurement
and commerce network domains. In August 2015, the Finacle Global Banking Solutions
assets were officially transferred from Infosys and became part of the product
company Edge Verve Systems product portfolio.
One of its known products is Finacle which is a universal banking solution with various
modules for retail & corporate banking
Infosys has 82 sales and marketing offices and 123 development centers across the
world as of March 31, 2018, with major presence in India, United States, China,
Australia, Japan, Middle East and Europe.
In 2019, 60%, 24% and 3% of its revenues were derived from projects in North America,
Europe and India, respectively. Remaining 13% of revenues were derived from rest of
the world.
Over a period of time, the shareholding of its promoters has gradually reduced, starting
from June 1993 when its shares were first listed. The promoters' holdings reduced
further when Infosys became the first Indian-registered company to list Employees
Stock Options Schemes and ADRs on NASDAQ on 11 March 1999. The promoter
holding on 31 March 2002 was 28.72% and at 30 June 2017 it dropped to 12.75% as
they gradually sold their shares and reduced involvement in active management of the
company.
Infosys had a total of 243,454 employees at the end of December 2019, out of which
37.8% were women. Out of its total workforce, 229,658 are software professionals and
remaining 13,796 works for support and sales. In 2016, 89% of its employees were
based in India.
During financial year 2019, Infosys received 2,333,420 applications from prospective
employees, interviewed 180,225 candidates and had a gross addition of 94,324
employees, a 4% hiring rate. These numbers do not include its subsidiaries.
The attrition rate of Infosys Ltd. including its subsidiaries, for financial year 2019 was
21.5%.
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As the world's largest corporate university, the Infosys global education Centre in the
337acrecampus has 400 instructors and 200+ classrooms, with international
benchmarks at its core. Established in 2002, it had trained around 1,25,000 engineering
graduates by June 2015. It can train 14,000 employees at a given point of time on
various technologies.
The Infosys Leadership Institute (ILI), based in Mysore, has 96 rooms and trains about
400 trainees (called Infoscions) annually. Its purpose is to prepare and develop the
senior leaders in Infosys for current and future executive leadership roles. The Infosys
Training Centre in Mysore also provides a number of extracurricular facilities like tennis,
badminton, basketball, swimming pool and gym.
In 2019, Infosys was ranked as the 3rd Best Regarded Company in the World by
Forbes.
3. WIPRO:
maintenance to clients such as Cisco Systems, Thomas Cooke, and NEC. Wipro's IT
efforts are so reliable that in 1998 the company became the first in the world to have
been awarded the Software Engineering Institute's (SEI) coveted Level 5 Certification
for quality. After an impressive debut on the New York Stock Exchange in 2000, Premji,
who owns 75 percent of Wipro, became one of the top billionaires in the world.
The company's first departure from its main cooking oil business came about in 1975.
Drawing Azim Premji’s his engineering background, and at the suggestion of one of the
new IIM recruits, M. Cenesthopathy Rao, Premji launched Wipro Fluid Power, an
operation that manufactured hydraulic and pneumatic cylinders. And under the direction
of P.S. Pai, Wipro's consumer care division expanded beyond oil in 1979, establishing
operations in soaps, toiletries, and baby care products. Along with major expansions in
distribution, Wipro's consumer care division gained so much financial strength for the
company that the company was able to further diversify into IT and healthcare
instruments.
Wipro would diversify into computers almost as soon as India's computer industry
began to develop in the mid-1970s. At the time, the Indian government was the largest
purchaser of computers sold in India, and was standardized on the Unix-based platform,
which helped Indian companies build a solid reputation in Unix-based software
development. The growing IT industry in India attracted multinationals such as IBM,
Motorola, and Texas Instruments, who took advantage of India's wealth of low-cost
engineering labor.
In 1980 Wipro launched information technology services for the domestic market,
setting up in Bangalore a crack-team of R&D and marketing managers, headed by
Ashok Narasimhan. Their professionalism, innovation and insistence on quality were to
make Wipro the No. 1 listed information Technology Company in the country within the
next 15 years. By 1984 the company diversified into software, which it would
discontinue by 1990, but it led to Wipro's foray into its growth business, software
services. Wipro began manufacturing PCs and workstations in 1985, quickly building
brand recognition and securing the enviable position of commanding a premium price
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over the competitions' cheap clones. Wipro assembled and redistributed hardware for
U.S. companies like Nortel, Sun Microsystems, and Cisco Systems.
Wipro began to shift its IT business away from costly on-site development projects in
the United States, to more profitable offshore development closer to home. To help
keep its competitive edge, the company replicated the development labs of some of its
major clients, including AT&T, IBM, and Intel Corporation. And while Wipro continued to
offer a range of programming services, including hardware design, networking, and
communications and operating system support—it continued to diversify into other lines
of business.
In 1992 the company established a new lighting business, offering a range of lighting
solutions for domestic, commercial, industrial, and pharmaceutical lab environments.
Wipro discarded its PC brand in 1995 when it formed a joint venture with Acer, a
Taiwan-based computer and peripherals manufacturer and distributor.
By 1998, Bangalore became one of the many IT centers in India, with about 250 high-
tech firms, plus about 100 just outside the city's limits. And Wipro became the center of
this Indian "Silicon Valley," as India's second-biggest software exporter. Both software
and hardware businesses generated 57 percent of the company's sales, and 75 percent
of its profits, with software employees numbering over 5,600 of the company's 9,000
total. Still, Premji saw continued value in keeping Wipro's non-IT businesses, which he
was always quick to point out were the best in their niche markets.
Along with diversifying its customer base, Wipro set out to expand and deepen its IT
service offerings and become a global tech powerhouse that directly competes with
giants such as IBM Global Consulting, Accenture, and Electronic Data Service. Even
though Wipro came out of 2000 quite well, India's IT industry quickly became flanked
with growing competition from countries such as Ireland, China, Vietnam, and the
Philippines. And even though 60 percent of Indian software exports were absorbed by
businesses in the U.S. in 1999 , which accounted for only 2 percent of the global total.
Wipro decided to go beyond the unglamorous back-office code-writing on contract, and
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In 2004 Wipro joined the Billion Dollar club. It also partnered with Intel for I-Shiksha.
In 2007, Wipro signed a deal with Lockheed Martin. It also agreed to acquire Oki
Techno Centre Singapore Pte Ltd (OTCS) and signed an R&D partnership contract with
Nokia Siemens Networks in Germany.
In 2008, Wipro's entered the clean energy business with Wipro Eco Energy.
In 2014, Wipro signed a 10-year $1.2 billion contract with ATCO, a Canadian Energy
and Utilities corporation based in Calgary, Alberta. This was the largest deal in Wipro's
history. In October 2016, Wipro announced that it was buying Appirio, an Indianapolis-
based cloud services company for $500 million. In 2017, the company expanded its
operations in London.
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In 2018, the company began building software to help with the General Data Protection
Regulation (GDPR) in Europe
In 2019, Wipro Consumer Care and the Ang-Hortaleza Corporation signed a share
purchase agreement for the sale of 100% of the latter's stake in the personal care
business of Splash Corporation, the companies announced on Monday, April 29.
Wipro has been ranked 1st in the 2010 Asian Sustainability Rating (ASR) of Indian
companies and is a member of the NASDAQ Global Sustainability Index as well as
the Dow Jones Sustainability Index.
4. HCL:
In 1976, a group of six engineers, all former employees of Delhi Cloth & General Mills,
led by Shiv Nader, started a company that would make personal computers. Initially
floated as Micro comp Limited, Nader and his team (which also included Arjun Malhotra,
37
Ajay Chowdary, D.S.Puri, Yogesh Vaidya and Sub hash Arora) started selling tele
digital calculators to gather capital for their main product. On 11 August 1976, the
company was renamed Hindustan Computers Limited (HCL).
HCL Technologies is one of the four companies under HCL Corporation, the second
company being HCL Info systems. In February 2014 HCL launched HCL
Healthcare. HCL Talent Care is the fourth and latest venture of HCL Corporation.
HCL Technologies began as the R&D Division of HCL Enterprise, a company which
was a contributor to the development and growth of the IT and computer industry in
India. HCL Enterprise developed an indigenous microcomputer in 1978, and a
networking OS and client-server architecture in 1983. On 12 November 1991, HCL
Technologies was spun off as a separate unit to provide software services.
HCL Technologies was originally incorporated as HCL Overseas Limited. The name
was changed to HCL Consulting Limited on 14 July 1994. On 6 October 1999, the
company was renamed 'HCL Technologies Limited' for "a better reflection of its
activities." Between 1991 and 1999, the company expanded its software development
capacities to the US, European and APAC markets.
In 1976, a group of six engineers, all former employees of Delhi Cloth & General Mills,
led by Shiv Nader, started a company that would make personal computers. Initially
floated as Micro comp Limited, Nader and his team started selling tele-digital calculators
to gather capital for their main product.
On 11 August 1976, the company was renamed Hindustan Computers Limited (HCL).
38
In July 1994, the company name was changed to HCL Consulting Limited and
eventually to HCL Technologies Limited in October 1999.
HCL Technologies is one of the four companies under HCL Corporation, the second
company being HCL Info systems. In February 2014 HCL launched HCL Healthcare.
HCL Talent Care is the fourth and latest venture of HCL Corporation.
HCL Technologies began as the R&D Division of HCL Enterprise, a company which
was a contributor to the development and growth of the IT and computer industry in
India. HCL Enterprise developed an indigenous microcomputer in 1978, and a
networking OS and client-server architecture in 1983. On 12 November 1991, HCL
Technologies was spun off as a separate unit to provide software services.
Business lines
5. TECH MAHENDRA:
The name of the company was changed from Mahindra-British Telecom Limited to the
present name Tech Mahindra Limited on 3rd February of the year 2006.British Telecom
was initially a partner of 30% with Mahindra but later on gradually sold its entire share to
investors by the year 2012. The Tech Mahindra bought Satyam Computer Services
through a subsidiary and doubled its number of employees. Tech Mahindra then finally
merged with Mahindra Satyam in the year 2012 and thus created a $2.5 billion company
IT Company.
Tech Mahindra bid for Satyam Computer Services, and emerged as a top bidder with an
offer of Rs 58.90 a share for a 31 per cent stake in the company, beating a strong
rival Larsen & Toubro. After evaluating the bids, the government-appointed board of
Satyam Computer announced on 13 April 2009: "its Board of Directors has selected
Ventura Consultants Private Limited, a subsidiary controlled by Tech Mahindra Limited
as the highest bidder to acquire a controlling stake in the Company, subject to the
approval of the Humble Company Law Board.
Tech Mahindra announced the completion of its merger with Mahindra Satyam to create
the nation's fifth largest software services company.
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Vision Statement
“We will Rise to be among the top three leaders in each of our chosen market segments
while fostering innovation and inclusion.
Tech Mahindra's digital and design experience, innovative platforms and reusable
assets bring together a number of technologies together to deliver a tangible business
value and experience to their clients. Tech Mahindra provides a wide range of
information technology related products and services such as
Nabhi Kumar Jain6 (1992) specified certain tips for buying shares for holding and
also for selling shares. He advised the investors to buy shares of a growing company
of a growing industry. Buy shares by diversifying in a number of growth companies
operating in a different but equally fast-growing sector of the economy. He suggested
selling the shares the moment company has or almost reached the peak of its growth.
43
Also, sell the shares the moment you realize you have made a mistake in the initial
selection of the shares. The only option to decide when to buy and sell high priced
shares is to identify the individual merit or demerit of each of the shares in the portfolio
and arrive at a decision.
John Colnan (1994), senior Research Analyst from SHAN Stock broking’s
Research Department provides some briefs pointers on what information to look for
and how to make sense of what is available.
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Jim Berg (1999) conducted a study – “Fundamental Analysis Using Internet”. This
study examined that fundamental analysis looks at the fundamental issues that drive the
value of the particular company. These issues include its financial position, its industry
sector, and the current economic environment. The objective was to identify companies
that may be considered undervalued in the market with a view to investing when the
time is right.
main methodologies used namely, fundamental analysis and technical analysis. This
paper examines the practice of fundamental analysis and demonstrates how neural
networks can be practically employed to enhance the fundamentalist selection process.
reference to
pharmaceutical companies
listed in NSE” stated that
an investor should analyze
the
market fundamentally and
technically before
investing in shares. They
also noticed growth in the
pharmaceutical industry in
India.
•(2009) Hemraj Verma
and Prakash
(2011) Venkatesh C K
and Madhu Tyagi in their
49
is designed to capture short term changes in firms operating efficiency, Profitability and
Financial policy. Investigating accounting information and stock returns is a method
adopted in Fundamental analysis .The score values and market Returns as provided by
the companies were correlated to investigate the relationship between the score and the
market adjusted returns.
Shakti Prasanna D. & Ashish Kumar P.(2013),this paper presents the market
technical charts and their correlation to demonstrate the profitability pattern in
stock, future, commodities and currencies market. The empirical literature is
categorized into two groups „Early‟ and „Modern‟ studies. Early studies indicate that
technical trading strategies are profitable in foreign exchange markets and futures
market, but not in stock markets. Modern studies indicate that technical trading
strategies consistently generate economic profits in a variety of speculative markets.
Dr. Pooja Taraji (2014), in this paper exponential moving average is used to
predict future share prices. The study is conducted on taking five years historical data
sample on daily bases of Indian stock market. As a result, they found out the trends in
different stocks which are going upward or downward. It increases the chances for the
54
investors to predict the prices more accurately and hence increased profit in share
markets.
C. Boobalan (2014), the objective of this paper is to carry out technical analysis of
the securities of the selected companies and to assist investment decisions in
the Indian market. The five Indian companies, Wipro, SBI, GAIL, ONGC and ITC are
taken for the study. The different patterns of stock prices of these companies give an
idea of future trend of these companies.
Dr. K. Ramesh, Dr. V. Devendra (2017), the study focused 13 Indian listed Equities
from each sector in NSE Nifty for the period of one year. The aim of the study is to
predict the future price and to interpret on whether to buy or sell the selected equities.
The Purposive Sampling Technique is used and the Research Design is Descriptive in
nature. MACD and RSI tools are used to identify the Buy and Sell signals in the
Candlestick Chart. Strong Buy signal for Bharti Airtel Ltd, ITC Ltd, Adani Ports and
Special Economic Zone Ltd, Ambuja Cements Ltd, Sun Pharmaceutical Industries Ltd
and Zee Entertainment Enterprises Ltd. And Strong Sell signal for Infosys Ltd.
55
pharmaceutical industry in
India.
•(2009) Hemraj Verma
and Praka George j., Saranya D., Amrudha R. (2015), the study on
the formation of candlestick pattern was done to find out the different candlestick
patterns and identify its accuracy. This study is conducted based on the past five years
Nifty index. Candlesticks are one of the most powerful technical analysis tools. The
advantage of using candlestick charting in place of Bar charts is that you have the ability
to use same techniques and analysis that bar charts offer plus the diversity and unique
signals that candlesticks generate. .The main findings from this study are candlestick
patterns are not 100% accurate as per the past five year Nifty index
The chapter focuses on the methodology and the techniques used for the collection,
classification and tabulation of the data.
all research design, population under study, sampling procedure, the data collection
method, analysis procedure, limitations of the work and scope for future studies.
RESEARCH DESIGN
Descriptive design is those designs which are concerned with describing the
characteristics of particular individual or the group. In descriptive and diagnostics study,
the researcher must be able to define clearly what he wants to measures and must find
adequate method for measuring it.
POPUALATION:
SAMPLING:
Sampling is a method of studying from a few selected items, instead of entire big
number of units the small selection is called sample. The large number of items of units
of particular characteristic is called population. Some of the types of sampling are:
(1) Simple random sampling: it is mostly used for the type of population which is
homogeneous.
(2) Stratified sampling: strata’s help us classify the population hen the population is
heterogeneous and take simple random samples from each class.
58
The next step was to select the source of data. There are mainly two types of data are:
Secondary data
Primary data
SECONDARY DATA:
Secondary data are originally collected by someone else for same, similar of different
purpose. They economical can be collected faster. It is advisable to check Compatibility,
Correctness and obsolescence risk for secondary data. There is an abundance of data
available in these sources about your research area in business studies, almost
regardless of the nature of the research area. Therefore, application of appropriate set
of criteria to be selected for secondary data .The sources of secondary data are as
follows:
PRIMARY DATA
Primary data are collected by researcher for the purpose of same research. Primary
data are tailor made data collected exclusively for the purpose of research. The
methods for primary data Collection are as follows:
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1. Field Survey
2. Observation method
3. Experiments
SAMPLING TECHNIQUES:
There are mainly two sample techniques classified into one of two categories:
PROBABILTY SAMPLING:
NON PROBANILITY:
1. Convenience sampling
2. Judgmental sampling
3. Quota sampling
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4. Snowball sampling
OBJECTIVES:
1. To carry out the financial analysis of IT sector in order to suggest the script for
the investment.
2. To study the financial performance of selected IT companies.
3. To study the growth of the IT sector in order to invest.
DATA COLLECTION:
This study is based on secondary data and shall be drawn from the published annual
report of the IT companies.
The data is collected from the balance sheet and profit and loss statement of selected
companies.
A. Qualitative data
B. Quantitative data
1. Continuous data: The variable can be in theory is any value within a certain
range can be measured.
2. Discrete: The variable can only have certain values, usually can be counted.
DATA ANALYISIS:
The project contains secondary data and it is analysis using the statistical tools. The
tools used for analysis the data are:
1. Ratio analysis
2. ANOVA
3. Comparative statement
JUSTIFICATION OF TITLE:
LIMITATIONS:
The researcher method is used in this study are secondary, which have some
limitations:
There are different methods of analyzing the data apart from the methods used in
this study.
Technical analysis is also used for calculating the intrinsic value which is not
considered.
As the data sources are Secondary, the data collected cannot be accurate and
complete.
There are also some inherent disadvantages in ratio analysis, which is not
considered.
1) RATIO ANALYSIS:
Ration analysis involves evaluating the performance and financial health of a company
by using data from the current and historical financial statements. The data retrieved
from the statements is used to compare a company’s performance over time to assess
whether the company’s is improving or deteriorating.
1. CURRENT RATIO:
The current ratio is a liquidity ratio that measures a company’s ability to pay
short- term and long-term obligations. To gauge this ability, the current ratio
considers the current total assets of a company relative to that company’s
current total Liabilities. The formula for calculating a company’s current ratio is:
ANOVA
Source of Variation SS df MS F P-value F crit
2.86608
Between Groups 13.8839 4 3.470976 25.12651 1.48E-07 1
Within Groups 2.7628 20 0.13814
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Total 16.6467 24
INTERPRETATION:
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 1.48E-07 which is greater than the significant level of
0.05; we can accept the null hypothesis. So there is no significant difference in ratio of
different companies in different years.
2. QUICK RATIO
The quick ratio is a measurement of how well a company can meet its short-
term finance liabilities. Also known as the acid test ratio, it can be calculated as
follows:
ANOVA
Source of Variation SS df MS F P-value F crit
Between Groups 7.914584 4 1.978646 13.62103 1.62E-05 2.866081
Within Groups 2.90528 20 0.145264
Total 10.81986 24
INTERPRETATION:
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 1.62E-05 which is greater than the significant level of
0.05; we can accept the null hypothesis. So there is no significant difference in ratio of
different companies in different years.
66
3. OPERATING PROFIT:
The operating profit margin ratio indicates how much profit a company makes
after paying for variables costs of production such as wages, raw material, etc. it
is also expressed as a percentage of sales and then shows the efficiency of a
company controlling the costs and expenses associated with business
operations. The formula calculated is as follows:
ANOVA
Source of Variation SS df MS F P-value F crit
Between Groups 10767.22 4 2691.806 14.21383 1.2E-05 2.866081
67
Total 14554.81 24
INTERPRETATION:
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 1.2E-05 which is greater than the significant level of
0.05; we can accept the null hypothesis. So there is no significant difference in ratio of
different companies in different years.
Ho: there is no significant difference in gross profit margin of companies for different
year.
68
ANOVA
Source of Variation SS df MS F P-value F crit
Between Groups 1619.195 4 404.7986 14.23737 1.18E-05 2.866081
Within Groups 568.6423 20 28.43211
Total 2187.837 24
INTERPRETATION:
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 1.18E-05 which is greater than the significant level of
0.05; we can accept the null hypothesis. So there is no significant difference in ratio of
different companies in different years.
ANOVA
Source of Variation SS df MS F P-value F crit
1183.3053
Between Groups 8 4 295.82635 82.8447513 3.72E-12 2.866081
Within Groups 71.41704 20 3.570852
1254.7224
Total 2 24
INTERPRETATION:
70
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 3.72E-12 which is greater than the significant level of
0.05; we can accept the null hypothesis. So there is no significant difference in ratio of
different companies in different years.
ANOVA
Source of Variation SS df MS F P-value F crit
0.06981
Between Groups 6 4 0.017454 89.05102 1.89E-12 2.866081
Within Groups 0.00392 20 0.000196
0.07373
Total 6 24
INTERPRETATION:
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 1.89E-12 which is greater than the significant level of
0.05; we can accept the null hypothesis. So there is no significant difference in ratio of
different companies in different years.
ANOVA
Source of Variation SS df MS F P-value F crit
Between Groups 1968.099 4 492.0248 9.691662 0.000158 2.866081
Within Groups 1015.357 20 50.76784
Total 2983.456 24
73
INTERPRETATION:
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 0.000158 which is less than the significant level of 0.05;
we can reject the null hypothesis. So there is the significant difference in ratio of
different companies in different years
Anova:SingleFacto
r
Groups Count Sum Average Variance
TCS 5 179.57 35.914 21.35553
INFOYSES 5 89.97 17.994 105.5029
WIPRO 5 94.7 18.94 9.5629
HCL 5 134.69 26.938 14.59232
TECH MAHINDRA 5 103.65 20.73 4.3256
ANOVA
Source of Variation SS df MS F P-value F crit
0.00025
Between Groups 1114.453 4 278.6132 8.967894 6 2.866081
Within Groups 621.3569 20 31.06785
Total 1735.81 24
INTERPRETATION:
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 0.000256 which is less than the significant level of 0.05;
we can reject the null hypothesis. So there is the significant difference in ratio of
different companies in different years.
company’s earnings expenses for the same period. The lower the ratio, the more
the company is burdened by debt expense.
Anova:SingleFacto
r
Groups Count Sum Average Variance
TCS 5 5746.68 1149.336 828119.1
INFOYSES 5 0 0 0
WIPRO 5 121.11 24.222 19.52307
HCL 5 1426.03 285.206 48368.09
TECH MAHINDRA 5 668.25 133.65 13275.26
ANOVA
Source of Variation SS df MS F P-value F crit
2.86608
Between Groups 4568041 4 1142010 6.417361 0.001718 1
76
Total 8127169 24
INTERPRETATION:
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 0.001718 which is less than the significant level of 0.05;
we can reject the null hypothesis. So there is the significant difference in ratio of
different companies in different years.
MAHENDERA
2015 1.64 1.05 1.11 0.97 1.72
2016 1.55 0.99 1.01 0.66 1.53
2017 1.29 0.92 0,91 0.81 1.39
2018 1.26 0.94 0.90 0.82 1.21
2019 1.59 1.16 0.95 0.90 1.27
Anova:SingleFacto
r
Groups Count Sum Average Variance
TCS 5 7.33 1.466 0.03153
INFOYSES 5 5.06 1.012 0.00937
WIPRO 5 4.88 0.976 0.00748
HCL 5 4.16 0.832 0.01347
TECH MAHENDERA 5 7.12 1.424 0.04238
ANOVA
Source of Variation SS df MS F P-value F crit
Between Groups 1.62528 4 0.40632 19.49151 1.13E-06 2.866081
Within Groups 0.41692 20 0.020846
Total 2.0422 24
INTERPRETATION:
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 1.13E-06 which is greater than the significant level of
78
0.05; we can accept the null hypothesis. So there is no significant difference in ratio of
different companies in different years.
ANOVA
Source of Variation SS df MS F P-value F crit
1171.45
Between Groups 4 4 292.8636 1.216646 0.334966 2.866081
4814.27
Within Groups 6 20 240.7138
Total 5985.73 24
INTERPRETATION:
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 0.334966 which is greater than the significant level of
0.05; we can accept the null hypothesis. So there is no significant difference in ratio of
different companies in different years.
DPS = D – SD / S
Whereas; D = sum of dividend over a period
SD = special, one Time dividend
S = share outstanding for the period
ANOVA
81
9607.16
Total 5 24
INTERPRETATION:
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 3.49E-05 which is greater than the significant level of
0.05; we can accept the null hypothesis. So there is no significant difference in ratio of
different companies in different years.
ANOVA
Source of Variation SS df MS F P-value F crit
8348.03
Between Groups 6 4 2087.009 0.772971 0.555555 2.866081
53999.6
Within Groups 9 20 2699.984
62347.7
Total 2 24
INTERPRETATION:
The null hypothesis states that the mean hardness values of five different companies
are not different. The P value is 0.555555 which is greater than the significant level of
83
0.05; we can accept the null hypothesis. So there is no significant difference in ratio of
different companies in different years.
2) COMPARATIVE SATEMENT:
APPLICATION OF FUNDS
Gross block 26,401.00 24,477.00 31,924 130.42
Less depreciation 14,111.00 12,504.00 1,607 12.85
Net Block 12,290.00 11,973.00 317 2.65
Capital work in progress 963.00 1,278.00 -342 -26,76
Investments 29,330.00 36,008.00 -6,678 -18.54
Inventories 10.00 26.00 -16 -61.54
Sundry debtors 27,346.00 24,943.00 2,403 9.63
Cash and bank balance 12,848.00 7,161.00 5,687 79.42
TOTAL CURRENT ASSETS 12,848.00 32,130.00 -19,282 -60.01
Loans and advances 32,156.00 24,907.00 7,249 29.10
Total ca, loans & advances 72,360.00 57,037.00 15,323 26.86
Current liabilities 24,761.00 20,265.00 4,496 22.18
Provisions 239.00 266.00 -27 -10.15
Total CL and provisions 25,000.00 20,531.00 4,469 21.76
Net current assets 47,360.00 36,506.00 10,854 29.73
Total assets 89,943.00 85,765.00 4,178 4.87
85
expenses
Other expenses 12,633 9,399 3,234 34.41
Total expenditure 51,100 42,033 9,067 21.57
Operating profit 18,674 17,297 1,377 7.96
EBITDA 18,674 17,297 1,377 7.96
(+)Exceptional item 0.00 0.00 0.00 0.00
(-)Interest 0.00 0.00 0.00 0.00
EBIT 18,674.00 17,297.00 1,377 7.96
(-)Depreciation 1,599.00 1,408.00 191 13.56
EBT 17075.00 15889.00 1186.00 7.46
(-)Taxes 5,225.00 3,753.00 1472.00 39.22
Profit and loss of the year 11850.00 12136.00 -286 -2.356
COMPARATIVE STATEMENT OF BALANCE SHEET OF WIPRO:
PARTICULARS 2019 2018 Absolute % change
change
SOURCES OF FUNDS
Total share capital 1,206.80 904.80 -302.00 -33.37
Equity share capital 1,206.80 904.80 -302.00 33.37
APPLICATION OF FUNDS
Gross block 11,721.20 11,237.80 -483.40 -33.37
Less depreciation 7,320.20 6,870.80 -449.40 -33.37
Net Block 4,401.00 4,367.00 -34.00 16.86
89
FINDINGS:
By considering the average of current ratio, the financial services ltd has more
assets to pay off the short term and long term obligation which is followed by
Infosys and HCL. The current ratio of various companies has significant
difference in different years. They are not equal in different years.
96
In the quick ratio, the Infosys has the capability to meet the short term financial
requirement. Wipro, TCS, tech Mahindra has also ability to pay the short term
financial requirement. The quick ratio of five companies does not have significant
difference in their ratio as they are equal in any terms.
In operating profit margin, in this HCL and TCS has the efficiency in controlling
the cost and expenses associated with business operations. The operating profit
among the different companies does not differ significantly.
In gross profit margin, HCL and TCS have the ability of proportion of the
revenues after the cost of goods sold. The gross profit does not differ with the
different companies.
In net profit margin the remaining income is calculated after deducting operation
expenses, interest, taxes and dividend. The companies like HCL and TCS have
more net profit margin as compared to other companies which is financial
sounded company. The net profit margin of various companies does not have
any significant difference among them.
Infosys and HCL Company do not have debt. They may possess the all equity
firm. Wipro have the long term financial soundness. The debt to equity posses
that the total equity, how much debt is there. The debt to equity has not any
significant difference among various years.
The return on capital employed i9ndicates how effectively a firm generates
revenues from capital employed. TCS can effectively generate capital from it,
whereas Infosys cannot take into consideration. There is no significant difference
in ratio of different company.
The return on net or return on equity of various companies does not differ
significantly. The TCS and HCL have high return on equity in compare to other
companies. They have the capability to make the high return on money invested
by the shareholders.
TCS, tech Mahindra and HCL have high Interest coverage ratio which indicates
that they have the ability to pay the interest and the outstanding debt. The
interest coverage ratio of various companies may differ significantly.
97
The assets turnover ratio among different companies does not differ significantly.
TCS and WIPRO have high assets turnover ratio which indicates how much
revenue is generated by using the assets of the company.
The high EPS indicates the high profitability of the company. The companies like
Infosys and TCS have high EPS among the different years.
The P/E ratio indicates valuing a company that measures its current share price
relative to it’s per share earnings.
TCS shows the increasing trend in profit after interest and taxes which indicates
the high growth of the firm. The company is overall good from the paying of
interest, generating more return on the shareholders money, to pay off the
liabilities, high profitability to generate more return etc.
Infosys may be the all equity firm has the high return on equity and also it shows
that the same or decreasing trend in the profit. But the firm has maintained the
profit.
Wipro has the ability to pay the short term requirement and the long term
obligations and also have the financial soundness of the company. As the
Infosys, Wipro also have the same trend in the profit.
HCL is also overall good firm as it is efficiently in controlling cost, ability to meet
short term obligations, generates revenues from the assets, high profitability, etc.
It has the high trend of increasing profit and performing well from the previous
years.
CONCLUSION:
Here by it is concluded from the financial results, ANOVA and ratio analysis that
the companies like TCS and HCL has better performance than the other
companies.
The investor should invest their money in these companies in order to make the
high return out of it.
98
From the above findings, HCL, TCS, Infosys are showing the beast liquidity,
efficiently, profitability position and the best option available to investor to make
their investment decision in the it industry.
SUGGESTIONS:
Apart from this analysis the investor should analysis the market by the other
methods also.
The market functions from the demand and supply of the shares, so sometime it
is not possible to predict accurately.
While investing the investor has to take the other factors into the consideration
BIBLIOGRAPHY:
Https://www.ibef.org/industry/information-technology-india.aspx
https://www.tcs.com/
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BOOKS:
STATISTICAL MANAGEMENT
MY KHAN AND JAIN
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