A REPORTON EQUITY RESEARCH

ByG Nanda Kishore Reddy14BSP1876

LUMINANCE KNOWLEDGE CENTREA REPORTON

EQUITY RESEARCH

ByG Nanda Kishore Reddy14BSP1876LUMINANCE KNOWLEDGE CENTRE

A report submitted in partial fulfilment of the requirements of PGPM Program of Submitted under the guidance ofProf. Santhanam MuraliMr Shivanand Bhandary

FACULTY GUIDECOMPANY GUIDE

Date: 24/05/2015

AUTHORISATION

I, Mr. G Nanda Kishore Reddy of IBS Business School (Bangalore), bearing Enrolment Number: 14BSP1876, declare that the project entitled EQUITY RESEARCH conducted at LUMINANCE KNOWLEDGE CENTRE is a record of independent research work carried out by me during the academic year 2014 2016 under the true and helpful guidance of my Faculty Guide Prof. Santhanam Murali of IBS Business School (BANGALORE), and my Company Guide Mr Shivanand Bhandary (Principal Analyst LUMINANCE KNOWLEDGE CENTRE).I also declare that all the details provided in the report hold true to the best of my knowledge. This study is the result of my efforts and has not been submitted to any other University or Institution for the award of any degree, or may other similar type.

ACKNOWLEDGMENT

It has all been a great experience being at Luminance Knowledge Centre (Bangalore). Head of the Organization: I am thankful to Mr. Krishna Prasad the Head of Luminance Knowledge Centre for giving me an internship in your organisation and a good opportunity to learn and experience about the equity research analysis. Company Guide: I would like to thank Mr Shivanand Bhandary (Principal Analyst LUMINANCE KNOWLEDGE CENTRE) for his understanding and support. He made my learning and understanding process easier. Without his approval and sincere support my internship would never have been possible. Faculty Guide: I would like to thank Prof. Santhanam Murali for his understanding and support. He made my learning and understanding process easier. He also was a constant driving force during the period. . His patience and faith in my abilities always boosted my confidence.Lastly, I would like to thank all the faculty of IBS Bangalore, my friends and family for their constant support.

-G Nanda Kishore Reddy.

TABLE OF CONTENTSABSTRACT6LIST OF ILLUSTRATIONS7INTRODUCTION8MAIN TEXT10RATIO SNAPSHOT:12INCOME STATEMENT:14BALANCE SHEET:17CASH FLOW STATEMENT:20EQUITY RESEARCH REPORT:23UK ECONOMY AND LONDON STOCK EXCHANGE:33Years of Importance in the evolution of UK Economy:36Factors affecting the stock market:37FUTURE GROWTH PROJECTIONS:38Expected Real GDP Growth & Inflation:38EIC ANALYSIS39Indian Economy:44Industry Overview:45Porter's 5 Forces Analysis46SWOT Analysis:47FINDINGS48REFERENCES49EXECUTIVE SUMMARY50

ABSTRACT The internship is in the field of Finance with equity research being the basic domain. The main motive was to research global companies, analyse them and write research reports that will facilitate an investment decision in the company researched. As an understanding of the economy and the sector would be prerequisites for investment decisions, my work logically involves studying economies and sectors. The nature of work involve an extensive application of the various principles studied in my Corporate Finance classes and integrate the academic learning with an understanding of markets to build a wholesome perspective on the domain with the requisite maturity. At the end of internship, I develop the required capability to work as an equity research analyst. During this period I have worked on several global companies and wrote four equity research reports also studied about the London Stock Exchange and economy of United Kingdom. The report consists of a detailed explanation of the work and learnings during the period.

LIST OF ILLUSTRATIONS

Figure 1 Price movement of DISH since July 201026Figure 2 Index movement of FTSE100 since 198434Figure 3 GDP GROWTH SINCE 196035Figure 4 GDP Constituents-Sector wise36Figure 5 Future Growth Projections38Figure 6 Price movement of Reliance Industries Ltd since 201041

INTRODUCTIONLuminance Knowledge Centre is a firm that operates for Luminance Capital. The main activity of Luminance Knowledge Centre is providing equity/Business research support to its principal Client. P.S. Krishna Prasad is the head of the Luminance Knowledge Centre. Luminance capital is a firm that outsources investment professionals. Firm was founded in 2013 by Roshan Francis Padamadan. Roshan is currently the Chairman of Luminance Capital as well as the Fund Manager of Luminance Global Fund. Swiss-Asia Financial Services is the Investment Manager for the Luminance Global Fund

EQUITY RESEARCH:The purpose of an equity researcher is to provide insight and detailed analysis into a company, entity or sector and this information is then used by investors to decide how to allocate their funds and by Private Equity firms and investment banks to value companies for mergers, LBOs, IPOs etc. An equity research report can include varying levels of detail, and while there is no industry standard when it comes to format, there are common elements to all thorough and effective equity research reports. Some of the fundamental features and information that must be considered while writing an equity research report are:Basic information about the firm, including the companys ticker symbol, the primary exchange upon which its shares are traded, the primary sector and industry in which it operates, the investment recommendation, the current stock price, market capitalization, the target stock price, liquidity and float of the security. Investment summary including a brief description of the company, recent developments, an earnings forecast, a valuation summary and a recommended investment action. A brief description of the company, its products and services, key drivers of the revenue and expenses along with the management and governance.

A valuation analysis of the company including conventional metrics like price/sales, price/book, price/earnings or price/cash flow. Financial analysis of the company with historical performance and a forecast of the future. Potentially negative industry and company developments that could pose a risk to the investment thesis should be addressed as Investment risks which could be operational or financial in nature or related to regulatory issues or legal proceedings. An overview of the industry dynamics including a competitive analysis of the industry, a group of peer companies should be developed for the competitive analysis.

Purpose and scope of the report:The main purpose of this report is to present my views and understanding from the summer internship program in the field of Equity and business research. It summarizes the entire process of the work I have done during my internship .This report will clearly project my views and learning in Equity Research field.Limitations of the Report:1. As we are working on the secondary data available on the public domain, the research work would be limited.2. As per the requirement of the study continuous updating of information is very much needed; we can lack some of the information while analysing the companys performance.

Scope of the Study: The Objective of the internship is to research global companies, analyse them and write research reports that would facilitate an investment decision in the company researched. As an understanding of the economy and the sector would be prerequisites for investment decisions. At the end of internship gaining the capabilities required to work as an equity research analyst.Methodology:Here we are using Research as our methodology, we have to analyse the different companies annual reports and Performance, we have to collect and research required data from the different sources.

MAIN TEXT

WORKS DONE:The internship process included analysis of 7 companies and presenting four equity research reports along with the study of United Kingdom Economy and London Stock Exchange in detail. Company analysis was done in a sequential order which includes several steps. Finally, we were able to project the cash flows and the intrinsic value of the share based on the analysis which would help in understanding whether the stock is overpriced or under-priced and make an investment decision.

I. Studying the Annual Report.II. Breaking the financial statements.III. Interpreting the values in an Excel sheet for further analysis.IV. Balance sheet, Cash Flow, Income Statement, Ratio Analysis and Peer Comparison are analysed.V. Writing an Equity Research Report based on the data obtained and a detailed study of the industry and Economy.

The companies analysed are 1. CISCO-CSCO2. COCACOLA-KO3. WALMART-WMT4. TRIYARDS HOLDING LTD-SGX:RC55. SUNDANCE ENERGY LTD-SEA:ASX6. DISH NETWORK CORPORATION-DISH7. AMERICAN TOWER CORPORATION-AMT.

The process for analysing is the same for every company, so Im including the spread sheets, equity research report and the cash flow projections of one company for better understanding. DISH NETWORK CORPORATIONRATIO SNAPSHOT:Growth ratios (%)FY12FY13FY14

Revenue growth0.010.050.05

Gross profit growth-0.12-0.020.03

EBITDA growth-0.420.080.21

EBIT growth-0.570.070.35

Pre-tax growth-0.590.140.06

Net income growth-0.590.270.17

Margins (%)

EBITDA margin0.170.170.20

EBIT margin0.100.100.12

Pre-tax margin0.080.080.08

Net margin0.050.060.06

Liquidity ratios

Capex/ depreciation (x)3.112.880.91

Current ratio (x)2.312.713.06

Quick ratio (x)2.062.352.48

Working capital/ revenue (%)39%56%58%

Receivable days242524

Inventory days131312

Payable days141710

Cash operating cycle (days)232226

Returns (%)

Return on assets3.66%3.97%4.27%

Return on capital5.32%5.52%5.72%

Leverage and solvency ratios

Gearing (total debt/ total equity) (x)165.9613.677.04

Total debt/ tangible net worth (x)-96.1616.967.04

Net debt/ capitalisation (x)0.460.370.41

Current maturity/ total debt (%)5%8%5%

Total debt/ EBITDA (x)5.355.674.98

Interest coverage ratios

Interest coverage (EBIT/ interest expense) (x)-2.35-1.81-2.98

Net interest cover (EBIT/ net interest expense) (x)-2.88-2.26-3.32

EBITDA/ interest expense (x)-4.15-3.22-4.75

EBITDA/ net interest expense (x)-5.08-4.03-5.28

Debt service coverage ratio (x)0.090.060.04

Interest expense to OCF (%)-0.27-0.32-0.25

INCOME STATEMENT:

(in USDm except per share amount)FY12FY13FY14

Income Statement

Revenues13,18113,90514,643

COGS (excluding depreciation & amortization)9,50610,28810,925

Gross profit3,6753,6163,718

Litigation expense73000

General & administrative expenses722777816

Impairment of long lived assets04380

Operating expenses1,4531,214816

EBITDA2,2232,4022,902

Depreciation & amortization9641,0541,078

EBIT1,2581,3481,824

Interest income9914962

Interest expense-536-745-611

Other income (loss), net174385-69

Pre-tax profit9951,1371,206

Tax-332-300-277

Loss from discontinued operations, net of tax-37-470

Minority interest111816

Net income636.69807.49944.69

Per-share and share data schedule

Net income per common share - basic1.411.772.05

Net income per common share - diluted1.411.762.04

Dividend per share1.000.000.00

Dividend pay-out ratio0.710.000.00

Number of diluted shares453459463

Number of basic shares450456460

Growth assumptions (%)

COGS as a % of sales72.1273.9974.61

General & administration expenses as a % of sales5.485.595.57

Other operating expenses as a % of sales7.3210.737.36

Revenue by geography

All revenue from continuing operations was derived from the United States

Revenue by business segments

DISH13,18013,90314,643

% YoY change1%5%5%

WIRELESS120

% YoY change232%24%-77%

BALANCE SHEET:(In USDm except per share amount)FY12FY13FY14

Balance sheet - Company Format

Assets

Current assets

Cash & cash equivalents3,5744,7007,104

Short-term investments3631.6375,0392,132

Total cash + short term investments7,2059,7399,236

Accounts receivable, net861958951

Inventories466512.707493.754

Prepaid income taxes110.60811832

Derivative financial instruments0293383

FCC auction deposits453281,320

Current assets-Discontinued operations238680

Deferred tax assets9413026

Other current assets40167135

Total current assets9,05912,31312,578

Net property, plant & equipment4,3674,0983,774

Restricted cash and marketable investment securities1349587

FCC Authorizations3,2973,2974,968

Marketable and other investment securities119151327

Noncurrent assets-Discontinued operations39100

Other assets365393374

Total noncurrent assets8,3208,0439,530

Total assets17,38020,35622,107

Liabilities & Shareholders Equity

Current liabilities

Current debt5371,035681

Trade accounts payable511637417

Accrued programming1,0931,2421,376

Litigation accrual7100

Accrued interest224233227

Other accrued expenses484512519

Deferred revenue and other839.888843891

Other current liabilities-discontinued operations164490

Total current liabilities3,9244,5524,113

Long-term debt obligations11,35012,59713782.313

Deferred revenue347245276

Long-term liabilities-Discontinued operations11200

Deferred income taxes1,6751,9461,883

Total long term liabilities13,38414,80815,941

Total Liabilities17,30819,35920,054

Shareholder's equity

Class A common stock, $.01 par value, 1,600,000,000 shares authorized, 279,406,646 and 275,950,537 shares issued, 223,288,386 and 219,832,277 shares outstanding, respectively333

Class B common stock, $.01 par value, 800,000,000 shares authorized, 238,435,208 shares issued and outstanding222

Additional paid-in capital2,4412,5882,679

Treasury stock, at cost-1,569-1,569-1,569

Accumulated earnings (deficit)-1,028-221724

Accumulated other comprehensive income (loss)189174175

Non-controlling minority352041

Total capital, shares and earnings729972,054

Total Liabilities and shareholders equity17,38020,35622,107

Balance sheet check000

1 - Retained earnings schedule

Net income637807945

Cash dividends-45300

Cumulative effect of adoption of accounting standard000

Repurchase of shares000

Retained earnings balance at end of the year184807945

2 - Share repurchase

There was no share repurchase during the years ended December 31, 2014, 2013 and 2012

CASH FLOW STATEMENT:

(in USDm except per share amounts or otherwise statedFY12FY13FY14

Cash flow statement

Net cash provided by operating activities2,0042,3092,408

Net cash used in investing activities3,0043,035984

Net cash used in financing activities4,0041,852980

Increase (decrease) in cash and cash equivalents3,0041,1262,404

Cash and cash equivalents at beginning of period5703,5744,700

Cash and cash equivalents at end of period3,5744,7007,104

Net cash provided (used) in operating activities2,0042,3092,408

Less: Capex3,0043,035984

Less: dividends452.8900

Free cash flow-1,453-7261,424

PEER COMPARISION:

Ticker codeDISHDTYCMCSANFLX

Peer comparison table USDmDish Network CorporationDirect TVComcast Corp.Netflix Inc.

Fiscal year ending31st Dec 201431st Dec 201431st Dec 201431st Dec 2014

Revenues14,64333,26068,7755,505

Operating income1,8245,12814,904349

Operating profit margin %12.4615.4221.676.33

Net profit/ loss (+/-)9452,7758,592.00212.77

Net profit margin %6.458.3412.493.87

Cash & short term investments9,2364,6354,5121,608

Property & equipment3,7746,72130,953150

Goodwill & intangibles1584,92344,2960

Short term & long term debt14,46420,81248,234900

Equity (Net worth)2,0544,82853,0681,858

Tangible Net worth (TNW)1,8954,1678,7721,858

Cash from operations2,4086,36916,94516

Capital expenditure9843,2257,42070

Dividends002,2540

Free cash flow1,4243,1449,525-53

Ratios

Current ratio3.061.270.781.48

Debt/ Equity7.044.310.910.48

Debt/ TNW7.044.995.500.48

Return on equity0.060.570.160.11

Return on assets0.040.110.050.03

P/E ratio34.2016.1018.40145.20

Book value per share0.169.5603960412.1030.92

Earnings per share/ loss2.045.43.204.32

Share price69.8487.2458.76557.68

Market cap (in USDbn)3243.915034

No. of employees19000321501,39,0002450

EQUITY RESEARCH REPORT:

Company Name: Dish Network Corporation

Address & website: DISH Network L.L.C., 9601 S Meridian Blvd, Englewood, CO 80112 Tel: (888) 656-2461

SectorIndustryEstablishedTickerCEONext update

Communication ServicesPay TV1995DISHJoseph P. ClaytonEarnings Announcement(May6-May 11 2015)

Name of the auditor: KPMG LLPType of opinion: Unqualified.Financial statements are current/ delinquent: Current.Litigation risk: The Company is involved in a number of legal proceedings concerning matters arising in connection with the conduct of business activities. Many of these are at preliminary stages and also seek an indeterminate amount of damages. The companys litigations are with c$cast.com Inc. , California Institute of Technology, CRFD Research Inc. , Custom Media Technologies LLC, Cyberfone Systems LLC, Dragon Intellectual Property LLC, ESPN, Garnet Digital, The Hopper Litigation, Harbinger Capital Partners LLC, Norman IP Holdings, Olympic Developments AG, Personalized Media Communications Inc. , Pragmatus Telecom, Premier International Associates, Preservation Technologies, Ronald A. Katz Technology Licensing, Technology Development and Licensing, TQP Development, Tse and Voom HD Holdings. The company regularly evaluates the status of the legal proceedings to access whether a loss is probable or to determine if accruals are appropriate No. of independent directors: 5 in a board of 11.

Overview of the company- DISH Network Corp. is a holding company which operates mainly in two business segments DISH and Wireless. The Dish branded pay TV service has 14.057 million subscribers in US as on 31st Dec 2013. They market broadband services under the dishNET brand. The Dish network corp. 700 MHz wireless spectrum in 2008 for $712 million and with further acquisitions of DSBD North America & Terre Star Network with a consideration of 2.86 billion made DISH a market leader in this segment. They operate on an agenda of long-term transformation and change. The market Capitalisation of Dish Network Corp was 15.47 billion as on 20th April 2015.DISH acquired Blockbuster on 26th April 2011 and also achieved their best churn rate in 2012. . Their business strategy is to be the best provider of video services in the United States by providing high-quality products, outstanding customer service, and great value. They promote DISH branded programming packages as providing subscribers with a better price-to-value relationship than those available from other subscription television providers. Share holdings: The institutional and mutual funds owners hold up to 95% of the shares.

TOP INSTITUTIONAL HOLDERS

HOLDERSHARES% OUT

JP Morgan Chase & Company17,921,5628.02

Dodge & Cox Inc.11,501,4805.15

TOP MUTUAL FUND HOLDERS

Putnam Fds Tr-Putnam Equity Spectrum Fd11,041,8524.94

Dodge & Cox stock fund6,819,6493.05

Share price and market cap data in USD CMP 52 week High (date)52 week low (date)Shares O/S (mil)Free float (mil)Average volume 3m (mil)Market Cap (bn)

69.2280.7555.45461.83215.381,472,19015.47118

Rating Information: Rating TypeS&PMoodysFitch

Short term-SGL-1-

Long TermBB-Ba3BB-

OutlookNegativeNegativeStable

Moodys: DISH Acquisition Holding Corporation, is withdrew its tender offer to acquire all of the outstanding shares of Class A Common Stock of Clearwire Corporation (Clearwire -- Caa2 CFR) for $4.40 per share. This announcement followed the announcement on June 21, 2013, when DISH decided to abandon its efforts to acquire Sprint Nextel Corporation ("Sprint" - B1 CFR). This concluded the review for downgrade initiated on April 15, 2013, when DISH announced its bid to buy Sprint for $25.5 billion. DISH DBS's rating outlook is negative.

S&P: S&P place ratings on DISH Network Corp., including our 'BB-' corporate credit rating, on CreditWatch with negative implications given uncertainty around the company's funding plans and their impact on credit metrics. "The CreditWatch placement follows the conclusion of the AWS-3 auction, in which designated entities of DISH placed winning bids of $13.3 billion.Figure 1 Price movement of DISH since July 2010

Country risk premium (%)0Beta1.11

Equity risk premium (%)5.75Dividends in 20130

52 week change (%)16.81Dividend yield (%)-

S&P 500 index11.58Projected yield (%)-

Stock typeSlow growth

Price target summaryPEG Ratio4.87

Mean81.10EPS 20142.04

Median80.00EPS 2015E1.64

High109.00EPS 2016E1.75

Low60.00P/E 201434.2

No. of brokers21P/E 2015E39.87

Price / Book163-Yr historical growth rates

Price/ Sales2.2Sales (%)1.39

Price/ cash flow13.6Industry-

ROA TTM4.5Operating income (%)-14.59

ROE TTM63.2Net income (%)-14.58

Debt/ equity6.8EPS (%)-15.57

Pitroski score

ParametersScore

Net income1

Operating cash flow1

Return on assets0

Quality of earnings1

Long term debt vs. assets1

Current ratio1

Shares outstanding0

Gross margin0

Asset turnover0

Industry/country The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $49,800. US business firms enjoy greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products. At the same time, they face higher barriers to enter their rivals' home markets than foreign firms face entering US markets.US has a GDP of 17.46 trillion in 2014 with investment in fixed capital being 15.9% and household consumption of 68.7%.The major industries in the economy; being petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining. US economy is highly diversified, world leading, high-technology innovator and second-largest industrial output in world. The labor force of US is about 156 million. Long-term problems include stagnation of wages for lower-income families, inadequate investment in deteriorating infrastructure, rapidly rising medical and pension costs of an aging population, energy shortages, and sizable current account and budget deficits.Subscription-based or pay television has resulted in a change in what type of content is broadcast by these networks. This model has led to networks creating much more specialized types of shows to influence viewers to subscribe. Subscription networks are most concerned with providing content that will make people want to subscribe as well as renew subscriptions rather than who is watching and when this viewing is taking place. First-time ever annual industry-wide losses reflect a combination of a saturated market, an increased focus from providers on acquiring higher-value subscribers, and some consumers opting for a lower-cost mixture of over-the-air TV, Netflix and other over-the-top viewing options.

Moat rating: Dish Network Corp. has been working towards developing an economic moat through providing better price-to-value relationship to the subscribers compared to other television providers but it is yet to be achieved. Blockbuster@home and DISH anywhere are the services provided by Dish network Corp. which are major contributors in the development of DISH.

Negatives: The company has been losing its subscribers because of internet delivered videos wireless mobile videos. The company is facing lot of litigations which may affect the companys operational ability. Decrease in new subscriber activations and increase in the acquisition and retention costs. Dependence on third parties to provide programming services. With internet taking over, the number of subscribers have been reducing drastically

Positives: Addition of three AWS-4 satellites to its satellite fleet and the existing leased satellites widen their opportunity to expand. With EchoStar being their Sole supplier of new set-up boxes they can adopt to lean operations technique.

Operating performance

FY12FY13FY14

Revenues13181.33413904.86514643.387

EBITDA2222.842402.212902.39

Operating profit1258.361348.181824.45

Net profit636.69807.49944.69

DISH lost approximately 79,000 pay TV subscribers during the year ended Dec 31st 2014, a decrease of 2.4% from 2013. The broadband subscription was the main growth driver during 2014. The subscriber-related revenue increased by $ 730 million from 2013 which was due to the increase in Pay TV-ARPU. Depreciation and amortization increased by 2.4% from 2013. The net income increased by $137 million which was primarily attributable to the changes in revenue and expenses.

Liquidity: The DISH Network Corp. has a current portion of $1.5 billion aggregate principle amount to be paid from its long term debt which is due by 2016. This portion of debt can be paid using about 63 % of its operating cash flow. The company has total debt of $14.46 billion.

Competition

Peer comparison table - latest fiscalsUSDm

TICKERDISHDTYCMCSANFLX

CompanyDish Network CorporationDirect TVComcast Corp.Netflix Inc.

Fiscal year ending31st Dec 201431st Dec 201431st Dec 201431st Dec 2014

Sales14,64333,26068,7755,505

Operating profit1,8245,12814,904349

Operating profit margins %12.4615.4221.676.33

Net profit/ (loss)9452,7758,592.00212.77

Net profit margins %6.458.3412.493.87

Cash & cash equivalents9,2364,6354,5121,608

Goodwill & Intangibles1584,92344,2960

Short term & long term debt14,46420,81248,234900

Net worth2,0544,82853,0681,858

Tangible net worth1,8954,1678,7721,858

Dividends paid002,2540

Free Cash Flow1,4243,1449,525-53

EPS2.045.43.204.32

Share Price 69.8487.2458.76557.68

Market Cap(Bn) 32.343.9150.433.8

Employees19000321501,39,0002450

Outlook: They evaluate opportunities for strategic investments or acquisitions that may complement the current services and products, enhance technical capabilities, improve or sustain the companys competitive position, or otherwise offer growth opportunities.The operations at DISH are stronger, leadership is deeper, outlook is as positive as it ever has been, said Clayton the CEO of DISH. They were able to launch the Hopper, dishNet and Sling TV, navigate two spectrum auctions and deliver for the customers throughout and are looking forward for a further growth in the coming years.

Analysts view: As of April 24, 2015, the consensus forecast amongst 7 polled investment analysts covering DISH Network Corp. advises investors to hold equity in the company.

UK ECONOMY AND LONDON STOCK EXCHANGE:This included studying the historical performance of FTSE100 (the index of top 100 companies listed in LSE), downfalls of FTSE100 and its reasons. The fundamental and Technical factors that affect the market performance.

London Stock Exchange was founded in the 17th century. It operates in the Main Market, Secondary market and specialised markets. Main market operates in the Premium, Standard and High Growth Segments. Secondary Market includes Alternative Investment Market (AIM) whereas the specialised markets are the Professional Securities and Specialist Fund Markets. The premium market required to meet the UKs super-equivalent rules which are higher than the EU minimum requirements whereas the standard market comply with EU minimum requirement, the high growth segment needs to follow the EU minimum requirement and the HGS rule book issued by the London Stock Exchange. The securities available for trading in LSE are Bonds, Covered warrants, Exchange-Traded products, Exchange-Traded funds, Global Depository Receipts, Common stock and structured products. LSE also operates on electronic platforms like Stock Exchange electronic Trading Service (SETS), Stock exchange electronic Trading Service Quotes and Crosses (SETSQX) and SEAQ (for non-electronically executable quotation services). London Stock Exchange provides a service that is designed to give a detailed view of a companys past financial performance and future prospects. It is the ideal reference point for buying, selling, reviewing existing holding, conducting research and analysis which is updated once in a day. The company profile includes Contact information, price data, last ten news headlines, last ten trades, Historical price chart and Five year volume history.Figure 2 Index movement of FTSE100 since 1984

The Financial Times and London Stock Exchange together formed a joint venture called FTSE which is considered as a reference index of UK. Several indices in London includes FTSE100, FTSE250, FTSE350, FTSE All-share, FTSE Techmark etc. The market capitalisation of the London Stock Exchange on 28th Feb 2014 was US$ 4.74 trillion with 2424 countries listed in the LSE. The largest IPO on the exchange was in May 2011 by Glencor International Plc, it raised US$ 10 billion at admission which is also one of the largest IPOs in the world. The study of LSE was related to the happenings in UK during the 1st world war, 2nd world war, Big bang reforms in 1986, Dotcom Bubble and Telecom Crash. It also included the reasons for market fall in 2003 and 2008, and the necessary steps taken to steady the markets.

The UK economy is the 3rd largest in Europe after Germany and France with a GDP per capita of US$ 37,300 in 2013. Services constitute for about 79% of the GDP. The UK, a leading trading power and financial centre, is the third largest economy in Europe after Germany and France. Agriculture is intensive, highly mechanized, and efficient by European standards, producing about 60% of food needs with less than 2% of the labour force. The UK has large coal, natural gas, and oil resources, but its oil and natural gas reserves are declining and the UK became a net importer of energy in 2005. Services, particularly banking, insurance, and business services, are key drivers of British GDP growth. Manufacturing, meanwhile, has declined in importance but still accounts for about 10% of economic output. In 2008, the global financial crisis hit the economy particularly hard, due to the importance of its financial sector. Falling home prices, high consumer debt, and the global economic slowdown compounded Britain's economic problems, pushing the economy into recession in the latter half of 2008 and prompting the then BROWN (Labour) government to implement a number of measures to stimulate the economy and stabilize the financial markets. Facing burgeoning public deficits and debt levels, in 2010 the CAMERON-led coalition government (between Conservatives and Liberal Democrats) initiated an austerity program, which aimed to lower London's budget deficit from about 11% of GDP in 2010 to nearly 1% by 2015. The CAMERON government raised the value added tax from 17.5% to 20% in 2011. It has pledged to reduce the corporation tax rate to 20% by 2015. However, the deficit still remains one of the highest in the G7, standing at 5.8% in 2013. The Bank of England (BoE) implemented an asset purchase program of approximately $586 billion as of December 2014. During times of economic crisis, the BoE coordinates interest rate moves with the European Central Bank, but Britain remains outside the European Economic and Monetary Union. In 2012, weak consumer spending and subdued business investment weighed on the economy, however, in 2013 GDP grew 1.8%, accelerating unexpectedly because of greater consumer spending and a recovering housing market.

Figure 3 GDP GROWTH SINCE 1960

Figure 4 GDP Constituents-Sector wise

Years of Importance in the evolution of UK Economy:

During the 1st world war in 1914 the market prices surged due to a fear that borrowed money to be called in and foreign banks demand loans or increase rates of interest. Exchange was closed from end of July to New Year which reopened on 4th of January. As many as 1000 members quit the exchange during 1914-18. In 1939 with effect of the 2nd world war the exchange was closed for six days and trading on floor was drastically low to avoid injuries. The market recorded an all-time high of 6930 on 31st Dec 1999 as much as 108% rise during March 1995 to March 2000. In April 2000 market falls to 6000 due to amid fears of war on Iraq, tensions in North Korea, Corporate Scandals and Economic stagnation. It was known as the Dotcom bubble as the maximum Tech companies were not holding a strong base were affected even the non-tech companies also faced problems due to investors pulling out. The Telecom Crash during the same period was mainly the result of expensive 3G licenses which led the companies to sit on huge debt mountains. The stocks tumbled and FTSE 100 was down to 5314 by the end of March 2000 almost a 25% fall from its peak in 1999. The terrorist attack on 11th Sep 2001 had the market falling below 4500 points. Market reaches its lowest point of 3287 in March 2003 which is a 41.7% fall in a period of 3 years. The market reaches the 5000 barrier in Feb 2005. Again in 2008 FTSE fell by 31% in a span of 1 year which was the sharpest of all in the history, banks have been hit hard. HBOS and Royal Bank of Scotland loosing 905 while Lloyds TSB and Barclays fell about 70%. Mass selling on a global scale due to a combination of sheer panic and fear, uncertainty over the future of world economies.

Factors affecting the stock market: World events Economy Scandals Company news Hype Politics Supply & Demand Natural Disasters Expectations & Speculations War & Terrorism Inflation Economic Strength of market & peers Incidental Transactions Demographics Trends Liquidity Interest Rates

FUTURE GROWTH PROJECTIONS:Figure 5 Future Growth Projections

Expected Real GDP Growth & Inflation:

YEAR20152016

REAL GDP GROWTH2.5%2.3%

INFLATION0.3%1.8%

EIC ANALYSIS

Company Name: Reliance Industries Limited

Address & website: Maker Chambers IV, 3rd Floor, Mumbai, 400021, India. Phone: 91 22 2278 5000, Fax: 91 22 2278 5111 Website: http://www.ril.com

SectorIndustryEstablishedTickerCEO

EnergyOil & Gas Refining & Marketing1966RELIANCE.NSMukesh Ambani

Name of the auditor: Deloitte Haskins & Sells LLP Type of opinion: UnqualifiedNo. of independent directors: 7 in a board of 13.

Overview of the company- Reliance Industries Limited (RIL) is an Indian conglomerate holding company headquartered in Mumbai, Maharashtra, India. The group is present in many business sectors across India including petrochemicals, construction, communications, energy, health care, science and technology, natural resources, retail, textiles, and logistics. RIL is the second-largest publicly traded company in India by market capitalisation and is the second largest company in India by revenue after the state-run Indian Oil Corporation. The company is ranked No. 99 on the Fortune Global 500 list of the world's biggest corporations, as of 2013. RIL contributes approximately 20% of India's total exports. The company's petrochemicals, refining, and oil and gas-related operations form the core of its business; other divisions of the company include cloth, retail business, telecommunications and special economic zone (SEZ) development. Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products. Starting as a small textile company, Reliance has in its journey crossed several milestones to become a Fortune 500 company in less than 3 decades. Reliance Industries Limited operates worldclass manufacturing facilities across the country at Allahabad, Barabanki, Dahej, Dhenkanal, Hazira, Hoshiarpur, Jamnagar, Kurkumbh, Nagothane, Nagpur, Naroda, Patalganga, Silvassa and Vadodara.Reliance Industries Limited holds nearly 136 business/brands under refining and Marketing, Petrochemicals, Retail, Textiles, Media and Entertainment. Reliance has always believed in investing in India and in businesses of the future. FY 2014-15 was a landmark year for the company. RIL has invested over $ 16 billion or over 1, 00,000 crore in creating growth engines for the future. This is the highest ever in the history of the company and is a testimony to their project execution capabilities. This is also the highest by any Indian corporate in a single year and is about 0.8% of Indias GDP. RIL achieved their highest ever consolidated net profit in 2014-15 of 23,566 crores.

Share price and market cap data in INR CMP 52 week High (26-05-2014)52 week low (30-03-2015)Shares O/S (mil)Free float (mil)Average volume 3m (mil)Market Cap (bn)

896.91140796.75294016203.52643.85

Figure 6 Price movement of Reliance Industries Ltd since 2010

Country risk premium (%)3.30Beta1.00

Equity risk premium (%)9.05Dividends in 201510.00

52 week change (%)-21.32Dividend yield (%)1.11

S&P 500 index 52 week change (%)12.12Projected yield (%)N/A

Stock typeLarge ValueDividend in 20149.50

Price / Book 1.213-Yr historical growth rates

Price/ Sales 0.70Sales (%)17.79

Price/ cash flow6.1Industry N/A

ROA TTM3.46%Operating income (%)2.63

ROE TTM11.23%Net income (%)5.29

DEBT/ EQUITY0.433EPS (%)5.74

Operating performance

FY13FY14FY15

Revenues3,68,2953,99,0533,37,797

EBITDA35,74936,60737,956

Operating profit2628427,81829,468

Net profit21,00321,98422,719

Competition Peer comparison table - latest fiscalsIn crores

ParticularsReliance Industries LimitedIndian Oil CorporationHindustan PetroleumEssar Limited

31-Mar-1431-Mar-1431-Mar-1431-Mar-14

Sales3,99,04348,83,44926,44,0669,86,019

Operating profit27,81865,35548,0701,290

Operating profit margins %6.9%1.33%1.81%0.13%

Net profit/ (loss)21,98470,856391071,270

Net profit margins %5.5%1.45%1.47%0.12%

Cash & cash equivalents69,9941,10,33569,90341,265

Short term & long term debt85,4818,59,7153,27,9852,10,043

Goodwill & intangibles28,98216,1247,6844,517

Net worth1,97,0746,79,1301,94,39724,683

Tangible net worth3,17,9616,63,0091,86,71320,166

Dividends paid3,09318,5018,3170

Employees25,00033,79313,2141,722

EPS 68.0529.1854.080.88

Share price 896.9348.85782.45104.3

Market cap (bn)2920.2847 565.8151.2

Indian Economy:India is set to become the worlds fastest-growing major economy by 2016 ahead of China, the International Monetary Fund (IMF) said in its recent latest forecast. India is expected to grow at 6.3 per cent in 2015, and 6.5 per cent in 2016 by when it is likely to cross China's projected growth rate, the IMF said in the latest update of its World Economic Outlook. The government, engineering an economic rebound with a slew of reforms, has unveiled a new statistical method to calculate the national income with a broader framework that turned up a pleasant surprise: GDP in the past year 2013-14 grew 6.9 per cent instead of the earlier 4.7 per cent. India has become a promising investment destination for foreign companies looking to do business here. Mr Narendra Modi, Prime Minister of India, has launched the 'Make in India' initiative with the aim to give the Indian economy global recognition. This initiative is expected to increase the purchasing power of the common man, which would further boost demand, and hence spur development, in addition to benefiting investors. The steps taken by the government in recent times have shown positive results as India's gross domestic product (GDP) at factor cost at constant (2004-05) prices for Q1 of 2014-15 is estimated at Rs. 14.38 trillion (US$ 231.83 billion), as against Rs. 13.61 trillion (US$ 219.42 billion) in Q1 of 2013-14, registering a growth rate of 5.7 per cent. Based on the recommendations of the Foreign Investment Promotion Board, the Government of India has approved 14 proposals of FDI amounting to Rs. 1,528.38 crore approximately. Out of the 14 approved proposals, six of them belonged to the pharmaceutical sector which was the highest number of approvals for any sector. Encouraged by the greater macro-economic stability and the reformist intent and actions of the government, coupled with improved business sentiments in the country, institutions like the IMF and the World Bank have presented an optimistic growth outlook for India for the year 2015 and beyond. The possible headwinds to such promising prospects, however, emanate from factors like inadequate support from the global economy saddled with subdued demand conditions, particularly in Europe and Japan, recent slowdown in China, and, on the domestic front, from possible spill-overs of below normal agricultural growth and challenges relating to the massive requirements of skill creation and infrastructural up-gradation. The encouraging results from the Advance Estimates for 2014-15 suggest that though the global sluggishness has partly fed into the lacklustre growth in foreign trade; yet this downward pressure has been compensated by strong domestic demand, keeping the growth momentum going. The International Monetary Fund (IMF) and the World Bank in a joint report have forecasted that India will register a growth of 6.4 per cent in 2015, due to renewed confidence in the market brought about by a series of economic reforms pursued by the government. (Source: www.ibef.org)

Industry Overview:The oil and gas sector is one of the six core industries in India. It is of strategic importance and plays a pivotal role in influencing decisions across other important spheres of the economy. In 199798, the New Exploration Licensing Policy (NELP) was envisioned to deal with the ever-growing gap between demand and supply of gas in India. As per a recent report, the oil and gas industry in India is anticipated to be worth US$ 139,814.7 million by 2015. With Indias economic growth closely linked to energy demand, the need for oil and gas is projected to grow further, rendering the sector a fertile ground for investment. To cater to the increasing demand, the Government of India has adopted several policies, including allowing 100 per cent foreign direct investment (FDI) in many segments of the sector, such as natural gas, petroleum products, and refineries, among others. The governments participation has made the oil and gas sector in the country a better target of investment. Today, it attracts both domestic and foreign investment, as attested by the presence of Reliance Industries Ltd (RIL) and Cairn India. Domestic production accounts for more than three-quarters of the countrys total gas consumption. State-owned ONGC dominates the upstream segment (exploration and production), accounting for approximately 60 per cent of the countrys total oil output (FY13). IOCL operates 11,214 km network of crude, gas and product pipelines, with a capacity of 1.6 MBPD of oil and 10 million metric standard cubic metre per day of gas. This is around 30 per cent of the nations total pipeline network. IOCL is the largest company, operating 10 out of 22 Indian refineries, with a combined capacity of 1.3 MBPD. According to data released by the Department of Industrial Policy and Promotion (DIPP), the petroleum and natural gas sector attracted foreign direct investment (FDI) worth US$ 6,519.53 million between April 2000 and January 2015. By 2015-16, Indias demand for gas is set to touch 124 MTPA against a domestic supply of 33 MTPA and higher imports of 47.2 MTPA, leaving a shortage of 44 MTPA, as per projections by the Petroleum and Natural Gas Ministry of India. Moreover, Business Monitor International (BMI) predicts that India will account for 12.4 per cent of Asia-Pacific regional oil demand by 2015. (Source: www.ibef.org)Porter's 5 Forces Analysis 1. Threat of New Entrants. There are thousands of oil and oil services companies throughout the world, but the barriers to enter this industry are enough to scare away all but the serious companies. Barriers can vary depending on the area of the market in which the company is situated. For example, some types of pumping trucks needed at well sites cost more than $1 million each. Other areas of the oil business require highly specialized workers to operate the equipment and to make key drilling decisions. Companies in industries such as these have higher barriers to entry than ones that are simply offering drilling services or support services. Having ample cash is another barrier - a company had better have deep pockets to take on the existing oil companies. 2. Power of Suppliers. While there are plenty of oil companies in the world, much of the oil and gas business is dominated by a small handful of powerful companies. The large amounts of capital investment tend to weed out a lot of the suppliers of rigs, pipeline, refining, etc. There isn't a lot of cut-throat competition between them, but they do have significant power over smaller drilling and support companies. 3. Power of Buyers. The balance of power is shifting toward buyers. Oil is a commodity and one company's oil or oil drilling services are not that much different from anothers, this leads buyers to seek lower prices and better contract terms. 4. Availability of Substitutes. Substitutes for the oil industry in general include alternative fuels such as coal, gas, solar power, wind power, hydroelectricity and even nuclear energy. Remember, oil is used for more than just running our vehicles, it is also used in plastics and other materials. When analysing an energy company it is extremely important to take a close look at the specific area in which the company is operating. Also, companies offering more obscure or specialized services such as seismic drilling or directional drilling tools are much more likely to withstand the threat of substitutes. 5. Competitive Rivalry. Slow industry growth rates and high exit barriers are a particularly troublesome situation for some firms. Until quite recently, oil refineries were a particularly good example. For a period of almost 20 years, no new refineries were built in the U.S. Refinery capacity exceeded the product demands as a result of conservation efforts following the oil shocks of the 1970s. At the same time, exit barriers in the refinery business are quite high. Besides the scrap value of the equipment, a refinery that does not operate has no value-adding capability.

SWOT Analysis:SWOT ANALYSIS

Strength1.India's one of the biggest players

2.Strong brand name

3.Excellent financial position

4.One of the few Indian companies to be featured in Forbes

5.Employs over 25,000 people

Weakness1.Long term debt

2.Legal issues

3.KG D6 gas controversy

4.Accusations of being favoured by the government

Opportunity1.Growing demand for petroleum products

2.Buyout of competition

Threats1.Government regulations

2.High Competition

3.Environmental laws

4.Economic instability

FINDINGS

An understanding of the global economy and indices. Real time exposure to the equity research field. The ability to comment upon a companys performance. A good knowledge about Equity Research.

REFERENCES

www.morningstar.com www.yahoofinance.com www.bloomberg.com www.cia.gov www.project-syndicate.org www.investopedia.com www.sec.gov www.moneycontrol.com www.gurufocus.com

EXECUTIVE SUMMARYName: G Nanda Kishore ReddyRoll No: 14BSP1876IBS Campus: BangaloreMobile No: 9035887737E-mail Id: 14gnanda.kishorereddy@ibsindia.orgName of the Organization: Luminance Knowledge CentreAddress of the Organization: S3 Office 01, 7th Floor, Embassy Icon, Infantry Road, Bangalore 560001Title: EQUITY RESEARCHObjective: The internship is going to be in the field of Finance with equity research being the basic domain. I am expected to research global companies, analyze them and write research reports that would facilitate an investment decision in the company researched. As an understanding of the economy and the sector would be prerequisites for investment decisions, my work would logically involve studying economies and sectors. The nature of work would involve an extensive application of the various principles studied by me in my Corporate Finance classes and integrate the academic learning with an understanding of markets to build a wholesome perspective on the domain with the requisite maturity. At the end of internship, I develop the required capability to work as an equity research analyst Methodology: Here we are using Research as our methodology, we have to analyse the different companies annual reports and Performance, we have to collect and research required data from the different sources.

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