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Fundamental Analysis: Security Analysis & Portfolio Management

This document provides an overview of fundamental analysis for security analysis and portfolio management. It discusses analyzing the economy, industry, and company. For company analysis, it examines qualitative factors like management and business model, and quantitative factors by studying financial statements. The goal of fundamental analysis is to estimate a company's intrinsic value and predict its future stock price and business performance. It also discusses tools for analysis like P/E ratio, dividend yield, and interpreting economic indicators and their impact on companies.

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sameer prasad
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87 views15 pages

Fundamental Analysis: Security Analysis & Portfolio Management

This document provides an overview of fundamental analysis for security analysis and portfolio management. It discusses analyzing the economy, industry, and company. For company analysis, it examines qualitative factors like management and business model, and quantitative factors by studying financial statements. The goal of fundamental analysis is to estimate a company's intrinsic value and predict its future stock price and business performance. It also discusses tools for analysis like P/E ratio, dividend yield, and interpreting economic indicators and their impact on companies.

Uploaded by

sameer prasad
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Security Analysis & Portfolio Management

FUNDAMENTAL
Presentation on

ANALYSIS
Nam Roll No.
e
 SAMEER PRASAD 82
 SANKET JAIN 79
 SAMSON NAIDU 84
 RUPALI YADAV 78
 RAVINDRA KHANDARE 72
 YASMEEN SIDDQUE 117
 AMAL NAIR 14
 ASMITA BIRAJDAR 27
 ADITYA SAHANE 05

Under the guidance of – Prof. Prasad Akolkar


2
Fundamental
Analysis
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.
It is 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.
Fundamental analysis of a business involves analyzing its Financial statement and
health, Its management and competitive advantage, and its competitors and markets.
When applied to futures and forex, it focuses on the overall state of the economy,
interested, production, earning and management.
1) To conduct a company stock valuation and predict its probable price evolution
2) To make a projection on its business performance, to evaluate its
management and make internal business decisions, to calculate its credit risk
INTERPRETATI
ON
 Economic Analysis:The economy is studied to
determine if overall conditions are good for the stock
market.

 Industry Analysis:The company's industry obviously


influences the outlook for the company.

 Company Analysis: This is usually done by studying


the company's financial statements.
FUNDAMENTAL ANALYSIS OF STOCKS IN
INDIA
The process of fundamental analysis involves examining the
economic, financial & other qualitative as well as quantitative
factors related to a security so as to determine its intrinsic value.
Two approaches in fundamental analysis

Top-down approach: In this approach, an analyst investigates


both national and international economic indicators, like energy
prices, GDP growth rates, inflation and interest rates.

Bottom-up approach: In this method, an analyst starts the


search with specific businesses, irrespective of the industry or
region.
FUNDAMENTAL ANALYSIS

The Analysis of economy,


industry and company Company Analysis
constitute the main activity in
the fundamental approach to
security analysis. Industry analysis
And can be viewed as
different stages in investment
decision making process. Economy Analysis

Three tier analysis depict that


company performance
dependent not only on its own
effort but also on the general
industry and economy factor.
ECONOMY
ANALYSIS

Boom Economy:
Income rise and demand for goods will increase the industries
and companies in general tend to be prosperous.

Recession Economy:
Income decline and demand for goods will decrease the industries
and companies in general tend to be bad performance
FUNDAMENTAL ANALYSIS TOOL

 Earning per share


 Price earnings ratio (P/E ratio)
 Dividend payout ratio
 Dividend yield ratio
 Price to book ratio
 Book value
 price to sale
INFLATION
Inflation prevailing significant impact on
company performance. High inflation
upset company plan. Demand goes down
because purchasing power fall, high
inflation impact company performance
adversely. Inflation is measured both in
WPI (Wholesale price index)
CPI (Consumer price index)
INTEREST
RATE
Interest rates determine the cost and availability
of credit for companies operating in an
economy.
Low interest rate => easily and cheaply available credit.
=> lower cost of finance
=> high profitability
High interest rate => higher cost of production
=>lower profitability
=>Lower demand
EXCHANGE RATE
• The balance of trade in import and export
determine the rate of exchange rate.
• Depreciation of local currency improve the
competitive position in foreign market the
performance of exported product but it would also
make the imported product more expensive.
• A foreign Exchange reserves is needed to meet several
commitments such as payment for import and servicing
of foreign depts.
INFRASTRUCTURE
• Development of a economy depends very much on the
infrastructure available. Industry needs electricity for its
manufacturing activities road and railways to transport
raw material and finished good. Communication
channels help supplier and customers.
• Good infrastructure is symptoms of development.
• Bad infrastructure lead to inefficiencies, low
productivity wastages and delay.
• Investors should analysis the infrastructure of any
economy.
FUNDAMENTAL ANALYSIS
QUALITATIVE FACTOR- THE
COMPANY
 Business Model
 Competitive Advantage

 Management

 Corporate Governance

a)Financial and Information


Transparency
b) Stakeholder Rights
FUNDAMENTAL ANALYSIS
QUALITATIVE FACTORS - THE
INDUSTRY
 Customers

 Market Share

 Industry Growth

 Competition

 Regulation
FUNDAMENTAL ANALYSIS
INTRODUCTION TO FINANCIAL
STATEMENTS
 The Major Statements
A)The Balance Sheet
B)The Income Statement

 Statement of Cash Flows

 10-K and 10-Q


Thank You

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