Adithya RAj Ballal CIA-2

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CIA-2

Introduction
Fundamental analysis in stock market terms involves evaluating a company's financial health
and performance by examining various factors related to its business operations, industry,
and economic environment. The key components of fundamental analysis:
Financial Statements: Start by analysing a company's financial statements, which include the
balance sheet, income statement, and cash flow statement. These documents provide
detailed information about the company's assets, liabilities, revenue, expenses, and cash
flows over a specific period.
Revenue and Earnings: Assess the company's revenue growth and earnings performance
over time. Look for consistent revenue growth and increasing profitability, as these are
indicators of a healthy business.
Profitability Ratios: Calculate and analyse profitability ratios such as gross profit margin,
operating profit margin, and net profit margin. These ratios help evaluate how efficiently the
company is generating profits from its operations.
Financial Health: Evaluate the company's financial health by examining its liquidity, solvency,
and leverage ratios. Liquidity ratios, such as the current ratio and quick ratio, assess the
company's ability to meet short-term obligations. Solvency ratios, like the debt-to-equity
ratio, measure the company's long-term debt obligations relative to its equity. Leverage
ratios indicate the extent to which the company is using debt to finance its operations.
Valuation Metrics: Determine whether the stock is undervalued or overvalued by comparing
its current market price to various valuation metrics such as price-to-earnings (P/E) ratio,
price-to-book (P/B) ratio, and price-to-sales (P/S) ratio. These ratios help investors assess
whether a stock is trading at a reasonable price relative to its earnings, book value, or
revenue.
Dividend Policy: Consider the company's dividend policy and dividend history, especially if
you are interested in income investing. Analyse the dividend yield, payout ratio, and
dividend growth rate to assess the sustainability and attractiveness of the dividends.
Industry and Market Analysis: Understand the company's industry dynamics, competitive
position, and market trends. Evaluate factors such as market share, competitive advantage,
barriers to entry, technological advancements, regulatory environment, and macroeconomic
conditions that could impact the company's future growth prospects.
Management Quality: Assess the quality and competence of the company's management
team. Look for transparency, integrity, strategic vision, and past performance in executing
business strategies.
Brief of companies:

Nestle India Ltd:


Business Overview: Nestle India is a leading FMCG (Fast Moving Consumer Goods) company
engaged in the production and marketing of food and beverage products.
Financial Performance: Historically, Nestle India has demonstrated strong revenue growth
and profitability. The company has a robust product portfolio and enjoys a strong brand
presence in the Indian market.
Key Metrics: Investors may want to look at revenue growth, profit margins, return on equity
(ROE), and cash flow generation. Additionally, factors such as brand strength, distribution
network, and innovation capabilities are important considerations.
Industry Outlook: The FMCG sector in India is highly competitive but offers significant
growth opportunities due to increasing consumer demand, urbanization, and changing
lifestyles.
Wipro Ltd:
Business Overview: Wipro is a global IT services company providing software development,
IT consulting, and outsourcing services to clients worldwide.
Financial Performance: Wipro has maintained steady revenue growth over the years,
although its profitability margins have fluctuated. The company has diversified its service
offerings and expanded its presence in key markets.
Key Metrics: Investors should analyse revenue growth, operating margins, order backlog,
client retention rates, and the company's ability to adapt to technological advancements.
Industry Outlook: The IT services industry is evolving rapidly, driven by digital
transformation, cloud computing, and automation. Wipro faces competition from both
established players and emerging startups but has opportunities for growth in emerging
technologies and global markets.
Adani Wilmar Ltd:
Business Overview: Adani Wilmar is a leading player in the edible oil and food processing
industry, with a diverse product portfolio including cooking oils, rice, pulses, and other food
products.
Financial Performance: Adani Wilmar has shown consistent revenue growth and profitability.
The company benefits from a strong distribution network and brand recognition in the
edible oil segment.
Key Metrics: Investors may focus on revenue growth, profit margins, market share in the
edible oil segment, and the company's ability to innovate and expand its product offerings.
Industry Outlook: The edible oil industry in India is highly competitive, with factors such as
changing consumer preferences, input cost volatility, and regulatory developments
influencing market dynamics.
Gujarat Gas Ltd:
Business Overview: Gujarat Gas is a leading gas distribution company operating in Gujarat,
India. The company distributes natural gas to industrial, commercial, and residential
customers.
Financial Performance: Gujarat Gas has demonstrated strong revenue growth and
profitability, driven by increasing demand for natural gas in Gujarat. The company benefits
from a well-established infrastructure and favorable regulatory environment.
Key Metrics: Investors should analyze revenue growth, operating margins, gas volumes sold,
customer retention rates, and regulatory developments affecting the natural gas sector.
Industry Outlook: The natural gas industry in India is expected to grow rapidly due to
environmental concerns, government initiatives to promote clean energy, and the expansion
of gas infrastructure.
Alok Industries Ltd:
Business Overview: Alok Industries is a textile manufacturing company with operations in
India and abroad. The company produces a wide range of textile products, including yarns,
fabrics, and garments.
Financial Performance: Alok Industries has faced challenges in recent years, including
financial restructuring and debt resolution processes. The company's performance has been
impacted by factors such as cyclicality in the textile industry, competition from low-cost
producers, and fluctuations in raw material prices.
Key Metrics: Investors may want to closely monitor the company's debt levels, liquidity
position, capacity utilization rates, and efforts to improve operational efficiency.
Industry Outlook: The textile industry in India is characterized by intense competition,
margin pressures, and changing consumer preferences. Alok Industries faces challenges in
managing costs, improving productivity, and differentiating its products in the market.
Brief on the Metrics
P/E Ratio (Price-to-Earnings Ratio):
The P/E ratio is calculated by dividing the current market price of a stock by its earnings per
share (EPS).
It indicates how much investors are willing to pay for each unit of the company's earnings.
A high P/E ratio may suggest that the stock is overvalued, while a low P/E ratio may indicate
undervaluation. However, it's essential to compare P/E ratios within the same industry or
against historical values for the company to gain meaningful insights.
Quarterly Profits:
Quarterly profits refer to the net income earned by a company during a particular quarter.
Analyzing quarterly profits helps investors understand the company's financial performance
in the short term and assess its ability to generate profits consistently.
Investors often compare current quarterly profits with those of previous quarters or with
analysts' expectations to gauge the company's growth trajectory and financial health.
ROCE (Return on Capital Employed):
ROCE measures a company's efficiency in generating profits from its capital investments,
including debt and equity.
It is calculated by dividing the company's operating profit by its capital employed (total
assets minus current liabilities).
ROCE indicates how effectively the company is utilizing its capital to generate returns. A
higher ROCE suggests better capital efficiency.
ROE (Return on Equity):
ROE measures a company's profitability relative to its shareholders' equity.
It is calculated by dividing net income by shareholders' equity.
ROE reflects how well the company is utilizing shareholders' funds to generate profits. A
higher ROE indicates better profitability and efficiency.
Debt-to-Equity Ratio:
The debt-to-equity ratio measures the proportion of debt financing relative to equity
financing used by a company.
It is calculated by dividing total debt by shareholders' equity.
A high debt-to-equity ratio may indicate that a company relies heavily on debt financing,
which can increase financial risk. Conversely, a lower ratio suggests a lower level of financial
risk.
Profit Growth:
Profit growth refers to the percentage increase in a company's net income over a specific
period, typically annually or quarterly.
Analyzing profit growth helps investors assess the company's ability to expand its earnings
over time.
Consistent and sustainable profit growth is a positive sign of a company's competitiveness
and financial strength.
1-Year Return:
The 1-year return, also known as the total return, measures the percentage change in a
stock's price over the past year, including dividends and capital appreciation.
It provides investors with insights into the stock's performance over a specific period.
Comparing a stock's 1-year return with benchmark indices or industry peers helps investors
evaluate its relative performance.
Promoters Holdings:
Promoters holdings refer to the percentage of shares held by the company's promoters or
founding members.
It reflects the level of ownership and commitment of the company's management to its
success.
High promoters holdings suggest confidence in the company's prospects, while declining
holdings may raise concerns among investors about management's alignment with
shareholders' interests.
Calculation and Interpretation.
S. Name CM P/ Mar Qt RO Prof RO No D Sal 1Yr Pro Debt
N PR E Cap r CE it E . e es retu m. Rs.C
o. s. Rs.C Pr % gro % Eq bt Var rn Hol r.
r. ofi wth . / 5Y % d.
t % Sh E rs %
Va are q %
r s
% PY
Cr.

1. Alok 29. 1459 7. - - 49 4.7 163 75. 2389


Industr 40 7.79 97 6.8 52.2 6.5 0 .68 00 9.91
ies 6 9 2

2. Gujara 551 34. 3799 - 31. - 24. 68. 0. 22. 10. 60. 154.
t Gas .95 39 5.71 40 22 31.5 19 84 0 11 40 89 54
.5 0 2
2

3. Adani 374 35 4862 - 15. - 7.4 12 0. - 87. 3834


Wilma .10 2.1 0.96 18 01 80.9 1 9.9 4 14. 87 .01
r 1 .3 0 7 8 74
9

4. Nestle 253 81. 2439 17 135 25.8 10 96. 0. 11. 33. 62. 341.
India 0.0 20 36.5 .0 .09 6 8.1 42 1 11 52 76 50
5 9 2 8 1

5. Wipro 533 24. 2788 - 17. - 15. 54 0. 10. 31. 72. 1791
.75 66 81.2 11 70 0.56 87 8.2 2 68 67 90 7.50
0 .7 1 6
5
57. - 17.7 - 12 0. 10. 72. 3834.
533 8 4862 11. 31.5 20. 9.9 1 89 31. 9 01
Media .75 0.96 75 03 7 8 67
n: 5
Co.

Interpretation.
We are using the return the company produces to its shareholders, The number of equity
shares also plays an important as it shows us how much diluted the shares are and the
returns we will receive on the shares. Another factor is promoter Holdings shows us whether
the company is aligning with promoters and the direction the company is moving forward.
WE can conclude from the above take the Ranking is as follows:
1. Nestle India LTD
2. Wipro
3. Adani Wilmar LTD
4. Gujarat Gas
5. Alok Industries.

Part-B
S. Name CM P/ Mar Qtr RO Prof RO No D Sa 1Yr Pro Debt
N PR E Cap Pro CE it E . eb les ret m. Rs.C
o. s. Rs. fit % gro % Eq t / Va urn Hol r.
Cr. Var wth . E r % d.
% % Sh q 5Y %
ar rs
es %
PY
Cr.

1. Addicti 335 21 533. 552. 604 34 0.0 0. 66. 0.16


ve .55 6. 84 49 .08 0.6 0 13 07
Learn 13 9

2. Moder 24. 15 33.7 - 202. - 35 1.3 0. 56. 65. 1.27


n 50 .7 2 10 86 97. 8.1 8 10 71 53
Steels 7 0.3 78 0
3

3. TRF 463 10 509. 12. 188. - 1.1 1. - 167 34. 89.5


.00 .9 30 53 39 54. 0 83 16. .85 12 0
3 60 33

4. Basilic 436 36 101 171. 298 15 0.1 0. 59. 3.31


Fly .20 .5 3.74 51 2.2 5.8 0 03 90
Stud 3 2 0

5. Nestle 253 81 244 17. 135. 25. 10 96. 0. 11. 33. 62. 341.
India 5.0 .3 413. 02 09 86 8.1 42 11 11 52 76 50
0 7 85 8

6. Rajka 25. 10 16.3 - 120. 850 0.6 22 - - 26. 0.22


mal 07 8. 0 12 00 .00 5 .0 9.1 19. 18
Synth. 67 5.0 0 9 05
0

7. Remed 679 25 137 29 102. 400 70. 2.0 0. 32 166 1.1 1.18
ium .85 .9 0.52 14. 61 .19 98 2 05 9.2 5.1 1
Life 1 47 1 1

8. Exhico 403 40 478. 100. 54. 79. 0.0 0. 62. 0.66


n .00 .4 59 72 57 38 0 01 25
Events 2

9. IEL 8.9 42 29.6 - 96.3 - 15 3.3 0. 51. 11. 44. 0.90


0 4. 9 88. 0 97. 4.7 4 92 90 55 97
35 04 50 5

10 Infroni 71. 28 56.4 30 95.0 607 0.7 0. - 44. 53. 0.08


. cs Sys. 17 .4 1 00. 0 .14 9 07 5.7 84 55
9 00 7

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