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1. Analytical Study Dr. Ashish Siddiqui Gujarat University

2. Introduction To determine the intrinsic value of an equity share, the security analyst must forecast the earnings and dividends expected from the stock and choose a discount rate that reflects the stock's risk. This is involved in fundamental analysis, the most popular method investment professionals use. A firm's earnings potential and risk are linked to the prospects of the industry to which it belongs. The prospects of various sectors, in turn, are primarily influenced by the developments in the macroeconomy.

3. Introduction Researchers have found that stock price changes can be attributed to the following factors: • Economy-wide factors: 30-35 percent • Industry factors: 15-20 percent • Company factors: 30-35 percent • Other factors: 15-25 per cent

4. Macroeconomic Analysis Macroeconomic analysis involves examining the overall economy's performance and the various factors that influence its behavior . The primary areas of focus include: Gross Domestic Product (GDP): Measures the total value of goods and services produced in an economy. Indicates economic health and growth rates. Inflation: Measures the rate at which the general level of prices for goods and services is rising. Affects purchasing power and cost of living. Unemployment Rate: The percentage of the labor force that is jobless and actively seeking employment. Reflects the economy's ability to create jobs.

5. Macroeconomic Analysis GDP : India’s nominal GDP is estimated to be around $3.9 trillion USD. This figure is subject to revisions and adjustments as more data becomes available. Inflation : With an inflation rate of approximately 5.3%, if you’re considering a hypothetical scenario where the Consumer Price Index (CPI) basket costs $1,000, it would have increased by about $53 over the past year. Unemployment : With an unemployment rate of around 7.1%, if India’s labor force is approximately 500 million people, this would mean roughly 35.5 million individuals are unemployed.

6. Macroeconomic Analysis Interest Rates: 6.5% Set by central banks (RBI.). Influence borrowing, spending, and investment activities. Fiscal Policy: Government spending and tax policies. Used to influence economic conditions. Monetary Policy: Central bank actions to control money supply and interest rates. Aims to achieve economic objectives like controlling inflation and promoting employment.

7. Macroeconomic Analysis

8. Macroeconomic Analysis Trade Balance: Difference between a country's exports and imports. Affects currency value and economic relationships with other countries. India: India has experienced trade deficits, particularly in oil imports. The deficit impacts the value of the Indian rupee and influences India's economic policies, including efforts to increase exports and control imports. For the fiscal year 2024 (April 2023 to March 2024), India's trade deficit is projected to be around $280 billion to $300 billion. This projection is based on ongoing trends in imports and exports up to mid-2024. For instance, in the initial months of 2024, India’s trade deficit has remained substantial, reflecting a continuation of high import volumes compared to export growth.

9. Company analysis Company analysis involves thoroughly examining a specific company to assess its overall health, performance, and strategic positioning. Here's a structured approach to conducting a comprehensive company analysis:

10. Company analysis 1. Company Overview History and Background: Founding date, key milestones, and significant events. Evolution and major transformations over the years. Business Model: Description of how the company generates revenue. Key products or services offered. Mission, Vision, and Values: The company’s core purpose and long-term aspirations. Ethical principles and cultural values guiding operations.

11. Company analysis History and Background Example: Infosys Founding Date: Infosys was founded on July 2, 1981. Key Milestones and Significant Events: 1981: Infosys was established by Narayana Murthy and six other co-founders with an initial investment of $250. 1993: Infosys became the first Indian IT company to be listed on NASDAQ. 2000: The company launched its own software development model, which became popular in the industry. 2004: Infosys reached the milestone of achieving $1 billion in annual revenue. 2020: Infosys committed to achieving net-zero carbon emissions by 2040.

12. Company analysis History and Background Example: Infosys Evolution and Major Transformations: Early Years: Initially focused on providing IT consulting and services. 2000s: Expanded globally and diversified into various IT services including software development, maintenance, and independent validation services. 2010s-2020s: Shifted focus towards digital transformation, AI, and cloud services, reflecting changes in technology and client needs.

13. Company analysis Business Model Example: Reliance Industries Description of How the Company Generates Revenue: Diversified Business Model: Reliance Industries has a diverse revenue stream from its core sectors including petrochemicals, refining, oil & gas exploration, retail, and telecommunications. Key Revenue Sources: Oil and Gas: Revenue from refining and petrochemical products. Retail: Income from operating a vast network of retail stores across India. Telecommunications: Revenue from its telecom arm, Jio, which offers mobile services, data, and digital services.

14. Company analysis Business Model Example: Reliance Industries Key Products or Services Offered: Petrochemicals: Production of various chemicals and polymers used in everyday products. Retail: Consumer goods, electronics, and apparel through brands like Reliance Fresh and Reliance Digital. Telecommunications: Mobile connectivity, broadband services, and digital content through Jio.

15. Company analysis Mission, Vision, and Values Example: Tata Group Mission: Core Purpose: The Tata Group aims to improve the quality of life of the communities it serves globally, through long-term stakeholder value creation. Vision: Long-Term Aspirations: The Tata Group envisions to be a global leader in every sector they operate in, driven by a commitment to excellence and ethical practices. Values: Ethical Principles: The Tata Group adheres to principles of integrity, fairness, and respect for all stakeholders. Cultural Values: Emphasis on corporate social responsibility, respect for individual dignity, and a commitment to sustainability.

16. Company analysis 2. Financial Analysis Income Statement: Revenue, cost of goods sold (COGS), gross profit. Operating expenses, operating income, net income. Key ratios: gross margin, operating margin, net profit margin. Balance Sheet: Assets: current assets, non-current assets. Liabilities: current liabilities, long-term liabilities. Equity: shareholders' equity. Key ratios: current ratio, quick ratio, debt-to-equity ratio.

17. Company analysis 2. Financial Analysis Cash Flow Statement: Operating activities, investing activities, financing activities. Net change in cash and cash equivalents. Key metrics: free cash flow, cash flow from operations. Financial Ratios: Liquidity ratios, solvency ratios, profitability ratios, efficiency ratios. Trends over time and comparison with industry benchmarks.

18. Company analysis 3. Operational Analysis Business Segments: Breakdown of revenue and profitability by business unit or geographic region. Performance of each segment and growth potential. Supply Chain and Production: Overview of the supply chain, production processes, and key suppliers. Efficiency, cost management, and potential vulnerabilities. Research and Development (R&D): Investment in R&D, key projects, and innovation pipeline. Impact on competitive positioning and future growth.

19. Company analysis 4. Market and Competitive Analysis Market Position: Market share, target market, and customer segments. Brand strength and customer loyalty. Competitive Landscape: Key competitors and their market positioning. Competitive advantages and weaknesses. SWOT Analysis: Strengths: internal attributes that give an advantage. Weaknesses: internal attributes that pose challenges. Opportunities: external factors that the company can capitalize on. Threats: external factors that could jeopardize the company’s success.

20. Company analysis 5. Strategic Analysis Corporate Strategy: Long-term strategic goals and objectives. Growth strategies: organic growth, mergers and acquisitions, market expansion. Strategic Initiatives: Key initiatives and projects aimed at achieving strategic goals. Progress and impact of these initiatives. Management and Governance: Leadership team and their experience. Corporate governance practices and board composition .

21. Company analysis 5. Strategic Analysis Corporate Strategy Example: Tata Consultancy Services (TCS) Long-Term Strategic Goals and Objectives: Goal: TCS aims to be a global leader in IT services and consulting, driving technological innovation and creating value for clients and stakeholders. Objective: To achieve sustained revenue growth, market leadership in digital and cloud services, and enhance operational efficiency through automation and innovation.

22. Company analysis 5. Strategic Analysis Growth Strategies: Organic Growth: TCS focuses on expanding its service offerings in emerging technologies like artificial intelligence, machine learning, and cybersecurity. The company invests significantly in research and development (R&D) and upskilling its workforce. Mergers and Acquisitions: TCS strategically acquires companies that enhance its capabilities and market reach. For instance, its acquisition of Postbank Systems AG in 2012 expanded its presence in the European banking sector. Market Expansion: TCS continues to enter new geographical markets and industry verticals. It has increased its footprint in regions like Latin America and Asia-Pacific and diversified into sectors such as healthcare and finance.

23. Company analysis 5. Strategic Analysis Strategic Initiatives Example: Reliance Jio Key Initiatives and Projects Aimed at Achieving Strategic Goals: Digital Ecosystem Development: Reliance Jio has launched a series of initiatives to build a comprehensive digital ecosystem, including JioFiber (broadband services), JioTV , JioCinema , and JioMeet (video conferencing). 5G Rollout: Jio has been at the forefront of developing and deploying 5G technology in India. The company aims to provide high-speed internet and advanced digital services across the country.

24. Company analysis 5. Strategic Analysis Progress and Impact of These Initiatives: Digital Ecosystem: Jio’s integrated digital services have significantly disrupted the telecommunications market in India, leading to increased internet penetration and a boost in digital consumption. 5G Rollout: Jio’s investment in 5G infrastructure is expected to enhance connectivity, drive innovation, and support the development of smart cities and other technological advancements.

25. Company analysis 5. Strategic Analysis Management and Governance Example: Infosys Leadership Team and Their Experience: CEO and Managing Director: Salil Parekh, who has extensive experience in global consulting and technology, having previously served as CEO of Capgemini. Key Executives: Infosys’ leadership includes professionals with deep expertise in technology, consulting, and business management. This diverse experience helps drive strategic initiatives and operational excellence.

26. Company analysis 5. Strategic Analysis Corporate Governance Practices and Board Composition: Board Composition: Infosys has a well-balanced board comprising independent directors, executive members, and non-executive members. This structure ensures diverse perspectives and effective oversight. Governance Practices: Infosys adheres to high standards of corporate governance, focusing on transparency, accountability, and ethical business practices. The company has robust mechanisms for risk management, compliance, and stakeholder engagement, and it regularly updates its policies to align with best practices and regulatory requirements.

27. Company analysis 6. Risk Analysis Operational Risks: Risks associated with daily operations, supply chain, and production. Mitigation strategies and contingency plans. Financial Risks: Credit risk, liquidity risk, market risk. Risk management practices and financial hedging. Regulatory and Legal Risks: Compliance with industry regulations and potential legal issues. Impact of regulatory changes on operations and profitability

28. Company analysis 7. Environmental, Social, and Governance (ESG) Analysis Environmental Impact: Sustainability practices and environmental footprint. Initiatives to reduce carbon emissions and waste. Social Responsibility: Employee relations, community engagement, and social impact. Diversity, equity, and inclusion (DEI) initiatives. Governance: Ethical business practices and corporate governance structure.

29. Company analysis Environmental Impact Sustainability Practices and Environmental Footprint : Sustainability Practices : Many Indian companies are increasingly adopting sustainable practices to mitigate their environmental footprint. For instance, Tata Group has been recognized for its efforts in integrating sustainability into its business model across various sectors. Companies like Infosys and Wipro are investing in green technology and energy-efficient data centers. Environmental Footprint : Indian firms are also working on measuring and reducing their carbon footprint. The Reliance Industries Limited (RIL) has committed to reducing its carbon footprint by investing in renewable energy projects and improving energy efficiency in its operations.

30. Company analysis Initiatives to Reduce Carbon Emissions and Waste : Carbon Emissions : Companies such as Larsen & Toubro (L&T) are focusing on reducing carbon emissions through the adoption of cleaner technologies and practices. For example, they have implemented energy-efficient systems and are investing in green infrastructure projects. Waste Management : Firms like ITC have launched comprehensive waste management programs. ITC's “Waste Management Initiative” focuses on minimizing waste generation and enhancing recycling processes in its manufacturing units.

31. Company analysis Social Responsibility Employee Relations, Community Engagement, and Social Impact : Employee Relations : Indian companies like Infosys are known for their progressive employee relations policies, including competitive compensation, training programs, and career development opportunities. Community Engagement : The Tata Group’s Tata Trusts are heavily involved in community development projects, including healthcare, education, and rural development. Similarly, the Aditya Birla Group invests in various social initiatives to improve community welfare.

32. Company analysis Diversity, Equity, and Inclusion (DEI) Initiatives : Diversity : Companies such as HCL Technologies and Wipro have significantly promoted workplace diversity. HCL has implemented policies to ensure gender diversity and inclusivity in its hiring practices. Equity and Inclusion : Indian firms increasingly recognize the importance of equity and inclusion. For example, Tech Mahindra has various programs aimed at creating an inclusive work environment and supporting underrepresented groups

33. Company analysis 8. Future Outlook and Valuation Growth Prospects: Market trends and growth opportunities. Company’s strategic positioning to leverage these opportunities. Valuation: Intrinsic valuation methods (Discounted Cash Flow analysis). Relative valuation methods (Price/Earnings ratio, EV/EBITDA). Comparison with peers and industry benchmarks.

34. Company analysis Conclusion Combining insights from financial, operational, market, strategic, risk, and ESG analyses provides a holistic view of a company's current status and future prospects. This comprehensive approach helps stakeholders make informed decisions regarding investments, partnerships, and strategic initiatives.