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A Summer Internship Project Report on

EQUITY RESEARCH

ON

PHARMA SECTOR

Submitted in partial fulfilment of the requirements for the degree of

Post Graduate Programme/ (finance)

by

ARPITA PANICKER

(Roll No.___K-11______)

A Study Conducted forINDIAS INVESTMENT SOLUTION(SUPER FRANCHISE OF PUG SECURITIES)

At

Indira School of Career Studies

Tathwade, Pune 411033


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DECLARATION

I here by declare that this Project on Equity Research submitted as per IndiraInstitute of Career Studies requirement of PGP curriculum is on original work

based on the findings during the project work.

It is not submitted to any other Institute for the reward of any other Degree,

diploma, Fellowship or other similar titles or prices. I will not submit thisproject to obtain any other degree in future and no other person will be allowedto copy from this project in any form.

If I am found to be guilty of not fulfilling the above promises our submissioncan be declared invalid and college has the right to reject this thesis.

NAME OF THE STUDENT:

Arpita Panicker

PLACE:

Pune

DATE:

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ACKNOWLEDGEMENT

Efficiency is doing things right. Effectiveness is doing the right things. Successis doing the right things, right now. And I have tried to put in the maximumefforts I can so as to bring out the best out of the topic and fulfil the objective of

the project.

Firstly, I would thank GOD for always showering his blessings on me andshowing me the path at all times.

I would like to express my heartly thanks to all the respondents for their supportand cooperation in completing my project.

I would thank my friends who have always given a helping hand to me. My

sincere thanks to my project guide Mr. Atul K who always been a motivatingforce throughout the project. I am thankful to our college and the faculties whohave provided me with this opportunity to do the training project which would

prove to be beneficial for me in the future careers.

Lastly, I would also like to mention my own name, without whose hard workand dedication this project would not have been completed.

ARPITA PANICKER

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Table of Contents

S.No. TOPIC PAGE No.

1

EXECUTIVE SUMMARY

5

2

INTRODUCTION OF THE COMPANY

7

3INTRODUCTION OF BSE & NSE

11

4

OBJECTIVE

17

5

RESEARCH METHODOLOGY

19

6

STEPS OF RESEARCH

METHODOLOGY

22

7INDUSTRY PROFILE

25

8

SWOT OF INDUSTRY ANALYSIS

27

9

COMPANY ANALYSIS

30

10

FINANCIAL ANALYSIS

37

11

SUGGESTION FOR INVESTORS

66

12

CONCLUSION

68

13

LIMITATIONS

70

14

BIBLIOGRAPHY

72

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EXECUTIVE

SUMMARY

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Proactive universal group Ltd. (PUG) is one of the top-5 stock-broking housesin India, with a dominant position in both institutional and retail broking. PUGis among the best capitalized firms in the broking industry in term of net worth.PUG head office is at Nariman Point, Mumbai. PUG has its own Research

Department at the corporate office in Mumbai. PUG is registered broker onBSE and NSE. It has developed its presence in Debt Market and also in theDerivatives Market. I had done my project in Nagpur in IIS group which issuper franchise of PUG .

Fundamental analysis is very helpful to the investor. Fundamental analysisconsists of three parts:-Economic AnalysesIndustry Analyses

Company Analyses

The main objective behind preparing this report is the proper selection ofcompanies from this sector, which were outlined with fundamental analysis.Here companies have been selected on the basis of market capitalization. Thosecompanies are highest at market capitalization have been selected and somemoderate level companies also have been selected. So that it can representindustry as a whole as much as possible.

Any investor, who goes to systematic investment, would like to know, thecomplete scenario of the industry. It is interesting to know how the fundamentalanalysis helps to forecast the price of equity. The data or information collectedis based on the information published on the information published in websites.

Here SUNPHARMA, RANBAXY, DR.REDDYS LAB., Have been selected.And after following steps will be taken:-

Ratio Analysis

Trend analysis Final conclusion according to fundamental analysis

I had to make the projection for GSTL performance for the FY2007 andFY2008, and had to make analysis that how the company would perform in thefuture on the basis of the basis of the current and future Economic Scenarioof the country as a whole and on the basis of Ratio Analysis. The reportwould help an individual and also the fund managers to make the investmentdecisions.

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INTRODUCTION

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PROACTIVE UNIVERSAL GROUP

Proactive Universal Group (PUG) started its equity broking services in2003 and has now established presence in all the major centers of thecountry.

Its parts are:-PUG SecuritiesPUG CommodityPUG Stock Broker

(Together PUGSEC)

The various entities of PUGSEC are member of:-National Stock Exchange,Bombay Stock Exchange and

Commodities and currency trading on NCDEX & MCX platforms.

PUGSEC understand that customers savings & investments are criticalto them and their families. PUG always looks at advising customers

based on their needs. The ultimate motive of the enterprise is to growwith its clients.PUG strongly believe in the philosophy that:-

SATISFIED CUSTOMERS ARE BEST FORM OF MARKETING

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COMPLETE RANGE OF FINANCIAL PRODUCT

AND SERVICES:-

EQUITY COMMODITY

CURRENCY

DERIVATIVE

DEPOSITERY

PMS

WEALTH MANAGEMENT

INSURANCE

MUTUAL FUNDS IPO

BENEFITS OF PUG:-

Speed: You can now get the feel of the actual trading terminal within thecomfort zone of your home or office.

Control: You are in control of your own transactions with full clarity andtransparency in the execution of trades and your account status.

Vision with action..

Translates dreams into Reality.

Your financial gain is our aim.

Come... partner with us and lay foundation

for a better tomorrow..

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IIS is a partner channel of PUG group. In IIS we provide differentservices like..

Demat accounts PMS services

Insurance

IPO

Mutual funds .etc.

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INTRODUCTION

OF BSE & NSE

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The Bombay Stock Exchange is known as the oldest exchange in Asia. It tracesits history to the 1850s, when stockbrokers would gather under banyan trees infront of Mumbai's Town Hall. The location of these meetings changed manytimes, as the number of brokers constantly increased. The group eventuallymoved to Dalal Street in 1874 and in 1875 became an official organizationknown as 'The Native Share & Stock Brokers Association'. In 1956, the BSE

became the first stock exchange to be recognized by the Indian Governmentunder the Securities Contracts Regulation Act.

As the first stock exchange in India, the Bombay Stock Exchange is consideredto have played a very important role in the development of the country's capitalmarkets. The Bombay Stock Exchange is the largest of 22 exchanges in India,with over 6,000 listed companies. It is also the fifth largest exchange in theworld, with market capitalization of $466 billion.

The Bombay Stock Exchange uses the BSE Sensex, an index of 30 large,developed BSE stocks. This index gives a measure of the overall performanceof the Bombay Stock Exchange, and is closely followed around the world.Based on the Sensex, the BSE equity market has grown significantly since1990.

In addition to individual stocks, the BSE also has a market in derivatives, whichwas the first to be established in India. Listed derivatives on the exchangeinclude stock futures and options, index futures and options, and weeklyoptions.

The Bombay Stock Exchange is also actively involved with the development ofthe retail debt market. The debt market in India is considered extremelyimportant, as the country continues to develop and depends on this type ofinvestment for growth. Until recently,the debt market in India was limited to awholesale market, with banks and financial institutions as the only participants.The Bombay Stock Exchange believes that a retail market will bring greatopportunities to individual investors through better diversification.

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Historically an open-cry floor trading exchange, the Bombay Stock Exchangeswitched to an electronic trading system in 1995. It took the exchange only fiftydays to make this transition.

Vision"Emerge as the premier Indian stock exchange by establishing global

benchmarks"

Bombay Stock Exchange Profile:-

ADDRESS Phiroze Jeejeebhoy Towers, Dalal Street,Mumbai 400001

TELEPHONE 022- 22721233/4

WEBSITE www.bseindia.com

TRADING HOURS Monday Friday, 9:00am 3:30pm IST

HOLIDAYS Bakri-Id, Republic Day, Good Friday,ambedkar Jayanti, Independence Day,Ganesh Chaturthi, Dusshera,Diwali( Laxmi Poojan),Diwali( Bhaubeej), Ramzan Id, Guru

Nanak Jayanti.

SECURITIES Stocks, Bonds, Derivatives

TRADING SYSTEM Electronics

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The National Stock Exchange of India Limited has genesis in the report of theHigh Powered Study Group on Establishment of New StockExchanges, which recommended promotion of a National StockExchange by financial institutions (FIs) to provide access to investors from allacross the country on an equal footing. Based on the recommendations, NSEwas promoted by leading Financial Institutions at the behest of the Governmentof India and was incorporated in November 1992 as a taxpaying companyunlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts(Regulation) Act, 1956 in April 1993, NSE commenced operations in theWholesale Debt Market (WDM) segment in June 1994. The Capital Market(Equities) segment commenced operations in November 1994 and operations inDerivatives segment commenced in June 2000.

Our Mission:-

NSE's mission is setting the agenda for change in the securities markets inIndia. The NSE was set-up with the main objectives of:

Establishing a nation-wide trading facility for equities, debtinstruments and hybrids,

Ensuring equal access to investors all over the country through anappropriate communication network,

Providing a fair, efficient and transparent securities market to investorsusing electronic trading systems,

Enabling shorter settlement cycles and book entry settlements systems,and

Meeting the current international standards of securities markets.

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The standards set by NSE in terms of market practices and technology havebecome industry benchmarks and are being emulated by other marketparticipants. NSE is more than a mere market facilitator. It's that force which isguiding the industry towards new horizons and greater opportunities.

Corporate Structure:-NSE is one of the first de-mutualised stock exchanges in the country, where theownership and management of the Exchange is completely divorced from theright to trade on it. Though the impetus for its establishment came from policymakers in the country, it has been set up as a public limited company, owned bythe leading institutional investors in the country.

From day one, NSE has adopted the form of a demutualised exchange - theownership, management and trading is in the hands of three different sets of

people. NSE is owned by a set of leading financial institutions, banks, insurancecompanies and other financial intermediaries and is managed by professionals,who do not directly or indirectly trade onthe Exchange. This has completely eliminated any conflict of interest andhelped NSE in aggressively pursuing policies and practices within a publicinterest framework.

The NSE model however, does not preclude, but in fact accommodatesinvolvement, support and contribution of trading members in a variety of ways.Its Board comprises of senior executives from promoter institutions, eminent

professionals in the fields of law, economics, accountancy, finance, taxation,etc, public representatives, nominees of SEBI and one full time executive of theExchange.

While the Board deals with broad policy issues, decisions relating to marketoperations are delegated by the Board to various committees constituted by it.Such committees includes representatives from trading members, professionals,the public and the management. The day-to-day management of the Exchangeis delegated to the ManagingDirector who is supported by a team of professional staff.

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Equity Research: -

Equity Research is the analytical research carried out to determine the intrinsicvalue of the equity after considering the future cash earning of the company. Inanother words we can say Equity Research means projection of a companysfuture performance and to make analysis that how the company would performin the near future on the basis of current and future economic scenario of thecountry, present and future industry as well as companys growth rate and the

basis of Ratio analysis.

Different things take into consideration while doing equity research, forexample economic scenario, industry growth rate, FIIs and FDI, competitorsanalysis, political system etc. There is no certain rules and regulation to equityresearch. Different firm do equity research in different methods.

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OBJECTIVE

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1. Fundamental analysis of a pharmaceutical of companies.

2. Study the present scenario of a pharmaceutical industry.

3. Analyse the information collected on sales, profit, earning per share,market price etc.

4. Ratio Analysis for the selected companies and make necessary commentson it so as to provide complete idea and core ideology of the company.

5. To conclude about the fundamental position of the selectedcompanies according to the findings.

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RESEARCH

METHODOLOGY

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Research methodology is a way to systematically solve the researchproblem. The research methodology used for finding out the solution of theresearch problem is:-

Analytical research methodology

Descriptive research methodology

The methods which can be followed to have the perfection in theprojects are:-

Primary SourcesTo solve the problems on fundamental analysis on pharmaceuticalsector:-

Data collect by discussing with my guide

Observation

Secondary Sources

Company Annual Repot

Company Internal Data

Internet Websites

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Data analysis can be done in two basis:-

Quantitative factor includes all the ratios of the company. Whereas, in non-quantitative factor includes the descriptive analysis of the company. Indescriptive analysis following points are included like:-

Age of company.CEO of company.Expansion.Capital base.

Independent Member.

It can say that in descriptive analysis all the positive as well as negative impactsare stated about the company which helps in knowing the position of thecompany in market according to which an investor can take a decision ininvesting to that particular company.

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STEPS OF

RESEARCH

METHODOLOGY

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23

Determining sample design and sample size

Organizing and conducting the field survey

Processing and analyzing the collected data

Preparing the research report

Formulating research problems

Choice of research design

Determining sources of data

Designing data collection methods


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PHARMA SECTOR

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INDUSTRY

PROFILE

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The Indian Pharmaceutical Industry today is in the front rank of Indias science-based industries with wide ranging capabilities in the complex field of drugmanufacture and technology. It ranks very high in the third world, in terms oftechnology, quality and range of medicines manufactured.

The Indian pharmaceutical industry has shown tremendous progress in terms ofinfrastructure development, technology base creation and a wide range of

production. Even while undergoing restructuring, it has established its presence

and determination to flourish in the changing environment. The industry nowproduces bulks drugs belonging to all major therapeutic groups.

The pharmaceutical industry develops, produces, and markets drugs licensed foruse as medications. Pharmaceutical companies can deal in generic and/or brandmedications. They are subject to a variety of laws and regulations regarding the

patenting, testing and marketing of drugs. Pharmaceutical companiescommonly spend a large amount on advertising and marketing. Pharmaceuticalcompanies generally employ sales people to market directly and personally to

physicians and other healthcare providers.

The Indian Pharmaceutical sector is highly fragmented with more than 20,000registered units. It has expanded drastically in the last two decades. The leading250 pharmaceutical companies control 70% of the market with market leaderholding nearly 7% of the market share. It is an extremely fragmented marketwith severe price competition and government price control.

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SWOT ANALYSIS

OF PHARMAINDUSTRY

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Strengths:-1. Low cost of production.2. Large pool of installed capacities3. Efficient technologies for large number of Generics.4. Large pool of skilled technical manpower.5. Increasing liberalization of government policies.

Opportunities:-

1. Aging of the world population.2. Growing incomes.3. Growing attention for health.4. New diagnoses and new social diseases.5. Spreading prophylactic approaches.6. Saturation point of market is far away.7. New therapy approaches.8. New delivery systems.9. Spreading attitude for soft medication (OTC drugs).10. Spreading use of Generic Drugs.11. Globalization

12. Easier international trading.13. New markets are opening.

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Weakness:-1. Fragmentation of installed capacities.2. Low technology level of Capital Goods of this section.3. Non-availability of major intermediaries for bulk drugs.4. Lack of experience to exploit efficiently the new patent regime.5. Very low key R&D.6. Low share of India in World Pharmaceutical Production7. Very low level of Biotechnology in India and also for New DrugDiscovery

Systems.

8. Lack of experience in International Trade.9. Low level of strategic planning for future and also for technology

forecasting.

Threats:-1. Containment of rising health-care cost.2. High Cost of discovering new products and fewer discoveries.3. Stricter registration procedures.4. High entry cost in newer markets.5. High cost of sales and marketing.6. Competition, particularly from generic products.7. More potential new drugs and more efficient therapies.

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COMPANY

ANALYSIS

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1. SUNPHARMA

Sun Pharmaceutical Industries LimitedType PublicFounded 1983

Headquarters Mumbai, Maharashtra, India

Website www.sunpharma.com

HISTORY:-

Sun Pharma began in 1983 with just 5 products to treat psychiatry ailments.Sales were initially limited to 2 states - West Bengal and Bihar. Sales wererolled out nationally in 1985. Products that are used in cardiology wereintroduced in 1987, and Monotrate, one of the first products launched at thattime has since become one of our largest selling products. Important products inCardiology were then added; several of these were introduced for the first timein India.

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Sun Pharma was listed on the main stock exchanges in India in 1994; and theRs. 55 crore issue of a Rs. 10 face value equity share at a premium of Rs. 140/-was oversubscribed 55 times. The minimum 25% that was required under theregulations then for listing was offered to the public, the owner family

continues to hold a majority stake in Sun Pharma. We used this money to builda Greenfield site for API manufacture, as well as for acquisitions. For theacquisitions, typically companies or assets that could be turned around and

brought on track were identified. Our first API manufacturing plant was built inPanoli in 1995, for access to high quality actives ahead of competition, and totap the vast international opportunity for specialty APIs.

Another API plant, our Ahmednagar plant, was acquired from the multinationalKnoll Pharmaceuticals in 1996, and upgraded for approvals from regulatedmarkets, with substantial capacity addition over the years. This was the first ofseveral sensibly priced acquisitions, each of which would bring important partsto the long-term strategy.

By 1997, our headquarters were shifted to Mumbai, the commercial capital ofthe country. We began on the first of our international acquisitions with aninitial $7.5 million investment in Caraco Pharma Labs, Detroit. By 2000, wehad completed 8 acquisitions, each such move adding new therapy areas oroffering an entry to important international markets. A new research center wasset up in Mumbai for generic product development for the US market. In India,

as new therapy areas were entered into post acquisition; customer attention,product selection and focused marketing helped us gain a foothold in areas likeorthopedics, gynecology, oncology, etc. From a ranking at 38th in 1994, by2000 we were ranked 5th with a leadership in 8 of the 11 therapy areas that weare present in. The year 2000 was the year of turnaround at the US subsidiary,Caraco, as it began to receive approvals after successful inspection by theUSFDA. In December 2004, a research center spread over 16 acres wasinaugurated by the President of India, with special lab space for drug discoveryand innovation. The post 2005 years have witnessed important acquisitions to

strengthen our US business.

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2. RANBAXY:-

Ranbaxy Laboratories LimitedType PublicFounded 1961Headquarters Gurgaon, Haryana, IndiaEmployees 1100 in R&D

Website www.ranbaxy.com

Ranbaxy Laboratories Limited is India's largest pharmaceutical company.Incorporated in 1961, Ranbaxy exports its products to 125 countries withground operations in 46 and manufacturing facilities in seven countries. It isranked among the top 10 generic companies worldwide. The CEO of the

company is Malvinder Mohan Singh.Ranbaxy went public in 1973.

Ranbaxy was started by Ranjit Singh and Gurbax Singh in 1937 as a distributorfor a Japanese company Shionogi. Interestingly the name Ranbaxy is a

portmanteau word from the names of its first owners Ranjit and Gurbax. BhaiMohan Singh bought the company in 1952 from his cousins Ranjit Singh andGurbax Singh. After Bhai Mohan Singh's son Parvinder Singh joined thecompany in 1967, the company saw a significant transformation in its business

and scale. His sons Malvinder Mohan Singh and Shivinder Mohan Singh soldthe company to the Japanese company Daichi in June 2008.

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In 1998, Ranbaxy entered the United States, the world's largest pharmaceuticalsmarket and now the biggest market for Ranbaxy, accounting for 28% of

Ranbaxy's sales in 2005.For the twelve months ending on 31 December 2005, the company's globalsales were at US $1,178 million with overseas markets accounting for 75% ofglobal sales (USA: 28%, Europe: 17%, Brazil, Russia, and China: 29%). For thetwelve months ending on December 31, 2006, the company's global sales wereat US $1,300 million.

Most of Ranbaxy's products are manufactured by license from foreign

pharmaceutical developers, though a significant percentage of their products areoff-patent drugs that are manufactured and distributed without licensing fromthe original manufacturer because the patents on such drugs have expired.

In December 2005, Ranbaxy's shares were hit hard by a patent rulingdisallowing production of its own version of Pfizer's cholesterol-cutting drugLipitor, which has annual sales of more than $10 billion. In June 2008, Ranbaxysettled the patent dispute with Pfizer allowing them to sell AtorvastatinCalcium, the generic version of Lipitor(R)and Atorvastatin Calcium-Amylodipine Besylate, the generic version of Pfizer's Caduet(R) in the USstarting November 30, 2011. The settlement also resolved several other disputesin other countries.

On 23 June 2006, Ranbaxy received from the United States Food & DrugAdministration a 180-day exclusivity period to sell simvastatin (Zocor) in theU.S. as a generic drug at 80 mg strength. Ranbaxy presently competes with themaker of brand-name Zocor, Merck & Co.; IVAX Corporation (which was

acquired by and merged into Teva Pharmaceutical Industries Ltd.), which has180-day exclusivity at strengths other than 80 mg; and Dr. Reddy'sLaboratories, also from India, whose authorized generic version (licensed byMerck) is exempt from exclusivity.

On 16 September 2008, the Food and Drug Administration issued two WarningLetters to Ranbaxy Laboratories Ltd. and an Import Alert for generic drugs

produced by two manufacturing plants in India.

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On 10 June 2008, Japan's Daiichi Sankyo Co. agreed to take a majority (50.1%)stake in Ranbaxy, with a deal valued at about $4.6 billion. Ranbaxy's MalvinderSingh will remain CEO after the transaction. Malvinder Singh also said that thiswas a strategical deal and not a sellout. Daiichi-Sankyo's Acquisition of

Ranbaxy.

3. DR.REDDY:-

Dr. Reddys Laboratories Ltd.Type PublicFounded 1984Headquarters Hyderabad, Andhra Pradesh, IndiaKey peopleAnji Reddy, ChairmanGV Prasad, CEO

Industry PharmaceuticalsRevenue $1.5 Billion (MAY2007)

Net income $216 Million (MAY2007)Employees 8,225

Dr. Reddys Laboratories Ltd. trading as Dr. Reddy's, founded in 1984 by Dr.

K. Anji Reddy, has become Indias biggest pharmaceutical company. Dr. AnjiReddy had worked in the publicly-owned Indian Drugs and Pharmaceuticals

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Ltd. Reddy's manufactures and markets a wide range of pharmaceuticals inIndia and overseas. The company has more than 190 medications ready for

patients to take, 60 active pharmaceutical ingredients for drug manufacture,diagnostic kits, critical care and biotechnology products.

Dr. Reddys began as a supplier to Indian drug manufacturers, but it soonstarted exporting to other less-regulated markets that had the advantage of nothaving to spend time and money on a manufacturing plant that that would gainapproval from a drug licensing body such as the USs Food and DrugAdministration. Much of Reddys early success came in those unregulatedmarkets, where process patents not product patents are

recognized. With that money in the bank, the companies could reverse engineerpatented drugs from more developed countries and sell them royalty-free inIndia and Russia. By the early 1990s, the expanded scale and profitability fromthese unregulated markets enabled the company to begin focusing on gettingapproval from drug regulators for their formulations and bulk drugmanufacturing plants in more developed economies. This allowed theirmovement into regulated markets such as the US and Europe.

By 2007, Dr. Reddys had six FDA-plants producing active pharmaceuticalingredients in India and seven FDA-inspected and ISO 9001 (quality) and ISO14001 (environmental management) certified plants making patient-readymedications five of them in India and two in the UK.

Stock Info

Market Cap(Rs cr)

25,250 16807 9377

Beta 0.46 0.65 0.4852 WeekHigh / Low

1280/886 490/300 760/501

Avg DailyVolume

49956 347991 104562

Face Value (Rs) 5 5 5BSE Code 524715 500359 500124NSE Code SUNPHARMA RANBAXY DRREDDYReuters Code SUN.BO RANB.BO REDY.BO

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BloombergCode

SUNP IN RBXY IN DRRD IN

ShareholdingPattern (%)Promoters 65.6 34.8 25.2MF / Banks /Indian FIs

8.9 28.3 19.1

FII / NRIs /OCBs

19.4 17.2 44.9

Indian Public /Others

6.3 19.7 10.9

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FINANCIALANALYSIS

RATIO ANALYSIS:-

INTRODUCTION TO THE RATIO ANANLYSIS:-

The relationship of these two figure expressed mathematically is called a ratio.The ratio refers to the numerical or quantities relationship between twovariables or times. A ratio is calculated by dividing one item of the relationshipwith the other. The ratio analysis is one of the most useful and commonmethods of analyzing financial statement. Ratio enables the mass of data to besummarized and simplified. Ratio analysis is an instrument for diagnosis of thefinancial health of an enterprise.

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MEANING OF RATIO:-

A ratio is only a comparison of the numerator with the denominator. The ternratio refers to the numerical or quantitative relationship between two figures

and obtained by dividing the former by the latter. Ratio analysis is an importantand age old technique of financial analysis. The data given in financialstatements ratio are relative form of financial data and very useful techniques tocheek upon the efficiency of a firm. Some ratio indicates the trend or progressor downfall of the firm.

IMPORTANCE OF RATIO:

Ratio analysis of firms financial statement is of interest to a number of parties

mainly. Shareholders, creditor, financial executives etc. shareholders areinterested with earning capacity of the firm: creditors are interested in knowingthe ability of firm to meet financial obligation and financial executives areconcerned with evolving analytical tools that will measures and compare costs,efficiency liquidity and profitability with a view to making intelligent decisions.

SUN PHARMA LAB LTD.

CURRENT RATIO:-

YEAR 2005 2006 2007 2008 2009

Current Ratio 4.78 5.23 5.57 2.52 2.53

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4.785.23

5.57

2.52 2.53

0

1

2

3

4

5

6

2005 2006 2007 2008 2009

Current Ratio

Current Ratio

Interpretation:-

Companys current ratio was 4.78 in year 2005 which implies that current assetsare 4.78 times the current liabilities. The interpretation is the company withhigher current ratio has better liquidity/short-term solvency. Conventionally, acurrent ratio of 2:1 is considered satisfactory. But in here, 2007 is only the yearwhere companys current ratio reached its highest position as compared to otheryears which is 5.57 and it is increasing year by year excepting year 2008.

QUICK RATIO:-

YEAR 2005 2006 2007 2008 2009

QuickRatio

5.07 5.04 5.25 2.27 2.17

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5.07 5.04 5.25

2.27 2.17

0

1

2

3

4

5

6

2005 2006 2007 2008 2009

Quick Rati

Quick Ratio

Interpretation:-

The acid test ratio is a rigorous measure of a firms ability to service short termliabilities. Generally, an acid-test ratio of 1:1 is considered satisfactory as thecompany can easily meet all current claims. But in here there was only 3 years

in which it reaches to one and more. Quick ratio of years 2004 and 2007 arematching with the satisfactory standard.

DEBT EQUITY RATIO:-

YEAR 2005 2006 2007 2008 2009Debt Equity

Ratio1.64 1.19 0.44 0.02 0.005

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1.64

1.19

0.44

0.02 0.005

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2005 2006 2007 2008 2009

Debt Equity Rati

Debt Equity Ratio

Interpretation:-

The D/E ratio is an important tool of financial analysis to appraise the financialstructure of a firm. A high ratio shows a large share of financing by thecreditors of the firm, a low ratio implies a smaller claim of creditors.Companys debt equity was 1.64 in year 2005 and then goes downward in 2006then again down and at last it reached its lowest level in year 2009 which is0.005 which shows that company is trying to decrease its debt.

RETURN ON PROPRIETORYRATIO:-

YEAR 2005 2006 2007 2008 2009

Return onProprietar

y fund

28.16 31.48 25.68 24.10 24.56

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28.1631.48

25.6824.1 24.56

0

5

10

15

20

25

30

35

2005 2006 2007 2008 2009

Return on Proprietary fu

Return on Proprietar

fund

Interpretation:-

The company is providing very good return on proprietors fund shown inchart. In year 2006, company had reached at its highest level which is 31.48%but then plummeted down in the next 2 years and reached at 25.68% in year2007 and 24.10% in 2008 and finally 24.56 in year 2009. This shows the

proprietor losing the return slightly less than previous year.

NET PROFIT RATIO:-

YEAR 2005 2006 2007 2008 2009Net ProfitRatio (%)

30 36 38 43 45

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30

3638

4345

0

10

20

30

40

50

2005 2006 2007 2008 2009

Net Profit Ratio (

Net Profit Ratio (

Interpretation:-

Companys net profit ratio is not as good in year 2004 which is slightlyless 29% but then its improving year by year till the end and reached at itshighest position in year 2008 which is 43%. This shows that company has goodstory ahead. It provides very healthy market condition in mind of investor to doinvestment.

RETURN ON CAPITALEMPLOYED:-

YEAR 2005 2006 2007 2008 2009Return On

CapitalEmployed(%)

10.96 14.53 16.83 24.21 24.57

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10.96

14.5316.83

24.21 24.57

0

5

10

15

20

25

30

2005 2006 2007 2008 2009

Return On Capital Employe

Return On Capital

Employed(%)

Interpretation:-

Companys return on capital employed is increasing year by year and reachedits highest position in year 2009 which is 24.57%. Company tries to improveits capital structure and also improve its financial condition by increase returnon capital employed.

EARNING PER SHARE:-

YEAR 2005 2006 2007 2008 2009

Earnings PerShare

16.48 24.83 32.52 48.96 61.09

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16.48

24.83

32.52

48.96

61.09

0

10

20

30

40

50

60

70

2005 2006 2007 2008 2009

Earnings Per Share

Earnings Per Share

Interpretation:-

More the earning per share, more the interest of the shareholders andinvestors in the company. Company had a EPS of Rs.16.48 in year 2005 whichis not as good as other year 2007 & 2008. But then it is increasing year by yearand reached at its highest level in year 2009 which is Rs.61.09. This shows thatcompany has good story ahead.

DIVIDEND PAY-OUT RATIO:-

YEAR 2005 2006 2007 2008 2009

DividendPayout Ratio

Cash Profit

23.31 23.24 21.96 23.79 25.16

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23.31 23.24

21.96

23.79

25.16

20

21

22

23

24

25

26

2005 2006 2007 2008 2009

Dividend Payout Ratio Cash

Dividend Payout RatiCash Prof it

Interpretation:-

It is the percentage of earnings paid to shareholders in dividends. The payoutratio provides an idea of how well earnings support the dividend payments. In2005 it is 23.31 which is decreasing in 2006 and 2007. But after that it startsincreasing and reaches its highest position in 2009 i.e 25.16.

RETENTION RATIO:-

YEAR 2005 2006 2007 2008 2009Retention 75.79 75.12 76.02 75.90 74.33

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ratio

75.79

75.12

76.02 75.9

74.33

73

73.5

74

74.5

75

75.5

76

76.5

2005 2006 2007 2008 2009

Retention rat

Retention rati

Interpretation:-

The percent of earnings credited to retained earnings. In other words, theproportion of net income is not paid out as dividends. The retention ratio is the

opposite of the dividend payout ratio. In fact, it can also be calculated as oneminus the dividend payout ratio. In 2005 it is 75.79 which decreasing in 2006but it starts increasing in year 2007 and again it starts decreasing and reaches itslowest position in 2009 that is 74.33.

RANBAXY:-CURRENT RATIO:-

YEAR 2005 2006 2007 2008 2009

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Current Ratio 0.92 0.96 0.83 1.16 1.18

0.92 0.960.83

1.16 1.18

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2005 2006 2007 2008 2009

Current Ratio

Current Ratio

Interpretation:-

Companys current ratio was 0.92 in year 2005 which implies that current assetsare 0.92 times the current liabilities. The interpretation is the company withhigher current ratio has better liquidity/short-term solvency. Conventionally, acurrent ratio of 2:1 is considered satisfactory. But in here, 2009 is only the yearwhere companys current ratio reached its highest position as compared to otheryears which is 1.18 and it is increasing year by year.

QUICK RATIO:-

YEAR 2005 2006 2007 2008 2009

Quick

Ratio0.98 1.03 0.97 0.86 0.89

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0.98

1.03

0.97

0.86

0.89

0.75

0.8

0.85

0.9

0.95

1

1.05

2005 2006 2007 2008 2009

Quick Ratio

Quick Ratio

Interpretation:-

The acid test ratio is a rigorous measure of a firms ability to service short termliabilities. Generally, an acid-test ratio of 1:1 is considered satisfactory as thecompany can easily meet all current claims. But in here there was only 3 yearsin which it reaches to one and more. Quick ratio of years 2004 and 2007 arematching with the satisfactory standard.

DEBT EQUITY RATIO:-

YEAR 2005 2006 2007 2008 2009Debt Equity

Ratio0.43 1.35 1.38 1.05 0.85

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0.43

1.351.38

1.05

0.85

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2005 2006 2007 2008 2009

Debt Equity Rati

Debt Equity Ratio

Interpretation:-

The D/E ratio is an important tool of financial analysis to appraise the financial

structure of a firm. A high ratio shows a large share of financing by thecreditors of the firm, a low ratio implies a smaller claim of creditors.Companys debt equity was 1.64 in year 2005 and then goes downward in 2006then again down and at last it reached its lowest level in year 2009 which is0.005 which shows that company is trying to decrease its debt.


YEAR 2005 2006 2007 2008 2009

Return onProprietar

y fund

11.21 6.18 4.11 - 3.56 7.23

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11.21

6.18

4.11

-3.56

7.23

-6

-4

-2

0

2

4

6

8

10

12

2005 2006 2007 2008 2009

Return on Proprietary f

Return on Proprieta

fund

Interpretation:-

The company is providing very good return on proprietors fund shown inchart. In year 2006, company had reached at its highest level which is 31.48%

but then plummeted down in the next 2 years and reached at 25.68% in year2007 and 24.10% in 2008 and finally 24.56 in year 2009. This shows the


NET PROFIT RATIO:-

YEAR 2005 2006 2007 2008 2009

Net ProfitRatio (%)

13.91 5.82 9.14 14.39 -22.45

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13.91

5.829.14

14.39

-22.45-25

-20

-15

-10

-5

0

510

15

20

2005 2006 2007 2008 2009

Net Profit Ratio (

Net Profit Ratio (

Interpretation:-


RETURN ON CAPITAL

EMPLOYED:-

YEAR 2005 2006 2007 2008 2009Return On

Capital

Employed(%)

3.07 10.05 4.93 2.52 8.03

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3.07

10.05

4.93

2.52

8.03

0

2

4

6

8

10

12

2005 2006 2007 2008 2009

Return On Capital Employe

Return On Capita

Employed(%)

Interpretation:-


EARNING PER SHARE:-

YEAR 2005 2006 2007 2008 2009

Earnings PerShare

5.69 10.21 16.56 -24.85 13.61

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5.69

10.21

16.56

-24.85

13.61

-30

-20

-10

0

10

20

2005 2006 2007 2008 2009

Earnings Per Sha

Earnings Per Shar

Interpretation:-



YEAR 2005 2006 2007 2008 2009

Dividend

Payout RatioCash Profit 115.22 74.15 50.38 -- --

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Interpretation:-

It is the percentage of earnings paid to shareholders in dividends. The payoutratio provides an idea of how well earnings support the dividend payments. In2005 it is 23.31 which is decreasing in 2006 and 2007. But after that it startsincreasing and reaches its highest position in 2009 i.e 25.16.

RETENTION RATIO:-

YEAR 2005 2006 2007 2008 2009Retention -78.86 33.28 -122.14 100.00 100.00

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ratio

-78.86

33.28

-122.14

100 100

-150

-100

-50

0

50

100

150

2005 2006 2007 2008 2009

Retention rati

Retention rati

Interpretation:-

The percent of earnings credited to retained earnings. In other words, theproportion of net income is not paid out as dividends. The retention ratio is theopposite of the dividend payout ratio. In fact, it can also be calculated as oneminus the dividend payout ratio. In 2005 it is 75.79 which decreasing in 2006

but it starts increasing in year 2007 and again it starts decreasing and reaches itslowest position in 2009 that is 74.33.

Dr. ReddyCURRENT RATIO:-

YEAR 2005 2006 2007 2008 2009

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Current Ratio 1.29 2.56 1.82 1.85 1.49

1.29

2.56

1.82 1.85

1.49

0

0.5

1

1.5

2

2.5

3

2005 2006 2007 2008 2009

Current Rati

Current Rati

Interpretation:-

Companys current ratio was 4.78 in year 2005 which implies that current assetsare 4.78 times the current liabilities. The interpretation is the company withhigher current ratio has better liquidity/short-term solvency. Conventionally, a

current ratio of 2:1 is considered satisfactory. But in here, 2007 is only the yearwhere companys current ratio reached its highest position as compared to otheryears which is 5.57 and it is increasing year by year excepting year 2008.

QUICK RATIO:-

YEAR 2005 2006 2007 2008 2009

QuickRatio

2.43 2.81 1.94 2.13 1.45

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2.43

2.81

1.942.13

1.45

0

0.5

1

1.5

2

2.5

3

2005 2006 2007 2008 2009

Quick Rati

Quick Rati

Interpretation:-

The acid test ratio is a rigorous measure of a firms ability to service short termliabilities. Generally, an acid-test ratio of 1:1 is considered satisfactory as thecompany can easily meet all current claims. But in here there was only 3 yearsin which it reaches to one and more. Quick ratio of years 2004 and 2007 arematching with the satisfactory standard.

DEBT EQUITY RATIO:-

YEAR 2005 2006 2007 2008 2009Debt Equity

Ratio0.41 0.08 0.10 0.12 0.10

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0.41

0.08 0.10.12

0.1

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

2 005 2 00 6 2 00 7 2 00 8 20 09

Debt Equity Ra

Debt Equity Ra

Interpretation:-

The D/E ratio is an important tool of financial analysis to appraise the financialstructure of a firm. A high ratio shows a large share of financing by thecreditors of the firm, a low ratio implies a smaller claim of creditors.Companys debt equity was 1.64 in year 2005 and then goes downward in 2006then again down and at last it reached its lowest level in year 2009 which is0.005 which shows that company is trying to decrease its debt.


YEAR 2005 2006 2007 2008 2009

Return on

Proprietary fund

31.56 9.33 26.91 9.88 10.67

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31.56

9.33

26.91

9.88 10.67

0

5

10

15

20

25

30

35

2005 2006 2007 2008 2009

Return on Proprietary fu

Return on Proprietar

fund

Interpretation:-

The company is providing very good return on proprietors fund shown inchart. In year 2006, company had reached at its highest level which is 31.48%

but then plummeted down in the next 2 years and reached at 25.68% in year2007 and 24.10% in 2008 and finally 24.56 in year 2009. This shows the


NET PROFIT RATIO:-

YEAR 2005 2006 2007 2008 2009Net ProfitRatio (%)

4.23 10.54 31.11 14.21 14.02

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4.23

10.54

31.11

14.21 14.02

0

5

10

15

20

2530

35

2005 2006 2007 2008 2009

Net Profit Ratio (

Net Profit Ratio (

Interpretation:-


RETURN ON CAPITAL

EMPLOYED:-

YEAR 2005 2006 2007 2008 2009Return On

CapitalEmployed

8.90 30.79 10.55 13.46 15.87

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(%)

8.9

30.79

10.55

13.4615.87

0

5

10

15

20

25

30

35

2005 2006 2007 2008 2009

Return On Capital Employed

Return On Capital

Employed (%)

Interpretation:-


EARNING PER SHARE:-

YEAR 2005 2006 2007 2008 2009Earnings Per 27.53 70.09 28.26 33.29 50.11

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Share

27.53

70.09

28.26

33.29

50.11

0

10

20

30

40

50

60

70

80

2005 2006 2007 2008 2009

Earnings Per Sh

Earnings Per Sha

Interpretation:-


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YEAR 2005 2006 2007 2008 2009

DividendPayout RatioCash Profit

13.02 5.54 11.21 15.90 20.37

13.02

5.54

11.21

15.9

20.37

0

5

10

15

20

25

2005 2006 2007 2008 2009

Dividend Payout Ratio Cash

Dividend Payout RaCash Pr ofit

Interpretation:-

It is the percentage of earnings paid to shareholders in dividends. The payoutratio provides an idea of how well earnings support the dividend payments. In2005 it is 23.31 which is decreasing in 2006 and 2007. But after that it starts

increasing and reaches its highest position in 2009 i.e 25.16.

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RETENTION RATIO:-

YEAR 2005 2006 2007 2008 2009

Retentionratio

86.79 94.58 88.02 84.84 78.17

86.7994.58

88.02 84.8478.17

0

20

40

60

80

100

2005 2006 2007 2008 2009

Retention rati

Retention ratio

Interpretation:-

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The percent of earnings credited to retained earnings. In other words, theproportion of net income is not paid out as dividends. The retention ratio is theopposite of the dividend payout ratio. In fact, it can also be calculated as oneminus the dividend payout ratio. In 2005 it is 75.79 which decreasing in 2006

but it starts increasing in year 2007 and again it starts decreasing and reaches itslowest position in 2009 that is 74.33.

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SUGGESTIONS

FOR INVESTORS

Pharmaceutical companies have lots of room to grow; so invest in thesetypes of industries helps the investors at long time.

Buy shares of reputed companies backed by top class management.

Do not invest in inactive shares generally it is difficult to encash them.

Before investing we should undertake a deeps study on the net sales, netprofits in relations to equity capital employed & should attempt toforecast for the coming years.

From the company point of view, the company should allow the

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investors to take part in board of directors meeting & givesmaximum dividend to the shareholders.

Do not over pay for growth.

Do not invest in unlisted shares.

The investors should become cautious while investing for very long time.

The investors should analyze the price movement.

Economic performance is greatly affected to the performance of theIndustries of the country, so investors should know economic

performance of the country while investing.

Before investing in any company, this is required to implement all thedata and financial results and decision also taken himself.

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CONCLUSION

This is the final and most important stage of the entire project. The mainobjective of my project ends with this stage. This part will indicate to the

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investor, creditors, and shareholders each of the companys overall operatingefficiency and performance that will help them to make the most efficientinvestment decision.

The final investment decision is not only give on the basis of ratio analysis but it is also given on the basis of common size statement and trend analysis.Thus, it will highly affect the investment decision.

From the analysis of pharmaceutical company, I found that the financial

position and the capital structure of the sunpharma is stronger andcomparatively higher than other four companies. Earning per share of theGlaxoSmithKline is also on the first position. So it is also good company for theearning per share for investors.

But after that according to me it is not advisable for the investing money in dr.reddy lab and cipla ltd. On the base of overall analysis. compare to the otherfour companies this companies are not stronger and capable.

And lastly I conclude that ratio analysis is the most important yardstick that provides measure of comparison between different companies. It would beeasier for the investor to make the profitable decision so that they can earnmuch profit as possible out of their investment.

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LIMITATION

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1. As the data available here has been taken from the secondary sources(like internet). It is not sure that collected data are accurate and complete.

2. Due to lack of experience and knowledge of the pharmaceutical industryit cant be said that the projection has been made totally correct andaccurate.

3. Todays stock market is totally running on the investors perception so

the conclusion derived on the basis if fundamental analysis would notviable in long run.

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BIBLIOGRAPHY

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www.economywatch.comwww.moneycontrol.comwww.rediff.comwww.bseindia.comwww.nseindia.com

www.bloomberg.com

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http://www.nseindia.com/http://www.bloomberg.com/http://www.nseindia.com/http://www.bloomberg.com/


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www.plclient.com

arpita project 2

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