wipro and infosy

8/10/2019 Wipro and Infosy

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A PROJECT REPORT

ON

A COMPRATIVE STUDY OF WIPRO AND INFOSY

Submitted in partial fulfillment of requirement for the degree of

MBA-III SEM.

IN

UNDER THE SUPERVISION OF SUBMITTED BY

MISS PRIYANKA CHOURASIA ANURITA PARIHAR

TO

DEPARTMENT OF MANAGEMENT STUDIES

SWAMI VIVEKANAND UNIVERSITY, SAGAR (M.P.)

DECEMBER 201


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CERTIFICATE

This is to certify that Report entitled STUDY ON PERFORMANCE OF

EQUITY SHARE OF BANKING SECTOR IN NATIONAL STOCKEXCHANGE (NSE) which is submitted ! ANURITA PARIHAT in partial

fulfillment of the requirement for the award of degree MBA. from SVN ni!ersity

Sagar is a record of the candidate own wor" carried out my Super!ision. The

matter embodied in this report is original has not been submitted for the award of

any other degree

#ate M"#$o% N&'"

(MISS PRIYANKA CHOURASIA$


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DEC!ARATION

This is to certify that Report "#$$"*STUDY ON PERFORMANCE OF

EQUITY SHARE OF BANKING SECTOR IN NATIONAL STOCK

EXCHANGE (NSE) which is submitted by me in partial fulfillment of

the requirement for the award of degree MBA from SVN ni!ersity Sagar

%omprises only my original wor" and due ac"nowledgement has been made

in the te&t to all other material used.

NAM' () T*' ST#'NT

A++R(V,'# B- ( ANURITA PARIHAT)

............................................

*.(.# / #'AN $

S0AM, V,V'1ANAN# N,V'RS,T- SA2AR


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PREFACE

+reparing a pro3ect of this nature is an arduous tas" and , was

fortunate enough to get support from a large number o persons. , wish to

e&press my deep sense of gratitude to all those who generously helped in

successful completion of this report by sharing their in!aluable time and

"nowledge.

,t is my proud and pri!ilege to e&press my deep regards to Respected

*(# #r. +ramesh 2autam4 *ead of #epartment of Business Management4

S0AM, V,V'1ANAN# N,V'RS,T- SA2AR for allowing me to

underta"e this pro3ect.

, feel e&tremely e&hilarated to ha!e completed this pro3ect under the

able and inspiring guidance of Miss +riyan"a chourasia he rendered me all

possible help me guidance while re!iewing the manuscript in finali5ing the

report.

, also e&tend my deep regards to my teachers4 family members4

friends and all those whose encouragement has infused courage in me to

complete to wor" successfully.

ANURITA PARIHAR

MBA III SEM.


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ACKNOW!EDGEMENT

+reparing a pro3ect of this nature is an arduous tas" and , was

fortunate enough to get support from a large number o persons. , wish toe&press my deep sense of gratitude to all those who generously helped in

successful completion of this report by sharing their in!aluable time and

"nowledge.

,t is my proud and pri!ilege to e&press my deep regards to Respected4

*ead of #epartment #r.+ramesh 2autam4 #epartment of Business

Management 4 S0AM, V,V'1ANAN# N,V'RS,T- SA2AR for

allowing me to underta"e this pro3ect.

, feel e&tremely e&hilarated to ha!e completed this pro3ect under the

able and inspiring guidance of *e rendered me all possible help me guidance

while re!iewing the manuscript in finali5ing the report.

, also e&tend my deep regards to my teachers4 family members 4

friends and all those whose encouragement has infused courage in me to

complete to wor" successfully.

ANURITA PARIHAT

MBA III SEM.


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CONTENTS

S.NO. PAGE

1 COVER PAGE

2 PREFACE" DEC!ARATION

CERTIFICATE

# INTRODUCTION

$ RATIONA!E OF THE STUDY

% OBJECTIVE OF THE STUDY

& !ITERATUVE REVIEW

' SCOPE OF THE STUDY

10 RESEARCH METHODO!OGY11 DATA INTERPRETATIONS

12 RESU!TS AND FINDINGS

1" !IMITATION

1 SUGGESTIONS

1# CONC!USIONS

1$ BIB!IOGRAPHY

INTRODUCTION

W*+ !

0ipro 6td. is the flagship company of the A5im * +rem3i group. 0ipro was incorporatedin the year 789:. The company started off originally as a manufacturer of !egetableghee;!anaspati hydrogenated !egetable oils$4 refined edible oils etc. 2radually4 ,tdi!ersified into !arious other businesses. The group forayed into information technologybusiness in 78


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pac"age implementation4 software application de!elopment and maintenance4 andresearch and de!elopment ser!ices to corporations. The company mainly operates in theS. ,t is headquartered in 1arnata"a4 ,ndia and employs more than 7>?7 peopleworldwide as of March =>7>. ,t has interests !arying from information technology4consumer care4 lighting4 engineering and healthcare businesses.

S0(T Analysis e&amines the company@s "ey business structure and operations4 historyand products4 and pro!ides summary analysis of its "ey re!enue lines and strategy.

S*/3

2lobal R/# facility.

Retention of the manpower is the best in the industry.

,mpressi!e list of clientele.

Relati!ely lower recei!able compared to the industry a!erage.

#i!ersified s"ill base across ser!ice lines

#eli!ery capabilities / client satisfaction %ommitment to go the e&tra mile

Technological partnership with other software companies 6ow cost ad!antage

M'2A +artnership %isco4 'M%4 Microsoft4 (racle and SA+

W/45/33/3

6ow operating margin of the other group companies.

)ree floating stoc" is !ery less.

#omestic mar"et was huge but was underde!eloped

Small player in global mar"et 6imited domain

%lients not trusting the capabilities of ,ndian Software %os.

O+*6/3

,n the branded product category.

,n the consultancy area.

,n the emerging technology areas li"e Blue Tooth4 0A+ etc.

*uge global mar"et

The %ompany has entered into the global mar"et so now it@s the biggest

opportunity a!ailable to the company. *uge potential in domestic mar"et

T*/43

,ncreasing cost of human capital.

Slowdown in the S economy.

0ill face fierce competition in the areas of ebusiness and AS+ ser!ices.


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%ompetition by ,ndian companies in domestic mar"et

+resence of big companies in global mar"et

'&change rate C This can be a threat to the company as the company is ma"ing

profits due to the high e&change rate and if this rate comes down in future it canlead to a ma3or problem for the company.

*igh e&posure to the telecom;tech sectors DEF$ Slowdown in the ban"ing4 financial ser!ices and insurance B)S,$ sector

R/7+88/4+3

Adopt the #ynamic *igh Technology Strategy

,ncrease 2lobal +resence

More collaborations with other playersG reduce dependence on only few players

6e!eraging the huge in!estments in R/# to gain competiti!e ad!antage with

respect to other players #i!ersify into !arious Sectors

2o for quality certification

C+7963+

Till today 0ipro has been "nown for being !ery process oriented with a focus on qualityand cost sa!ings.0ipro long term strategy should be to create a brand image and be"nown for inno!ation.0ipro should in!est in R/# and Mar"et research4 so that ,t is ableto inno!ate new solutions for clients to cut costs or reduce time to mar"et or impro!ereliability.

I:+3;3 !

,nfosys was started in 78. Many of the world@s mostsuccessful organi5ations rely on ,nfosys to deli!er measurable business !alue. ,nfosyspro!ides business consulting4 technology4 engineering and outsourcing ser!ices to helpclients in o!er D> countries build tomorrow@s enterprise. ,nfosys 6abs and itsbrea"through intellectual property can be le!eraged as a cocreation engine to accelerateinno!ation across the enterprise.
http://www.infosys.com/about/who-we-are/Pages/history.aspxhttp://www.infosys.com/about/who-we-are/Pages/history.aspx


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,nfosys pioneered the2lobal #eli!ery Model2#M$4 based on the principle of ta"ingwor" to the location where the best talent is a!ailable4 where it ma"es the best economicsense4 with the least amount of acceptable ris". %ontinued leadership around 2#Menables ,nfosys to dri!e e&traordinary efficiencies and free up clients@ resources forstrategic transformation or inno!ation initiati!es.

,nfosys has a global footprintwith E< offices and ?> de!elopment centers in S4 ,ndia4%hina4 Australia4 Iapan4 Middle 'ast4 14 2ermany4 )rance4 Swit5erland4 Netherlands4+oland4 %anada and many other countries. ,nfosys and its subsidiaries ha!e 7:747:7employees as on Iune D>4 =>7=.

,nfosys ta"es pride in building strategic longterm client relationships. 88.7F of ourre!enues come from e&isting customers J7 )- 7D$.

,nfosys gi!es bac" to the community through the ,nfosys )oundation that funds learningand education.

SWOT A49;33 I:+3;3

,nfosys is one of the largest businesses in ,ndia with a turno!er in e&cess of H9 billion in=>>>> ,T professionals and was famously rated KBest 'mployer in,ndia. ,t operates in a number of business sectors from ban"ing to retail4 and its ser!icestend to encompass endtoend ,T solutions which includes a whole bundle of added!aluesolutions from infrastructure to software engineering.

S*/3

Since the company is based in ,ndia its competiti!e ad!antage is enhanced. The

,ndian economy4 despite wea" economic indicators such as relati!ely high rates ofinflation4 has low labor costs. The wor"force has relati!ely high s"ills le!els in,nformation Technology. %ouple these two elementstogether and you ha!e anoperational basis that offers lowcost based4 highly s"illed competiti!e ad!antage.Trained ,ndian personnel often spea" !ery good 'nglish and are sensiti!e to0estern culture4 underpinned by ,ndiaKs colonial past.

,nfosys is in a strong financial position. The business turned o!er more than H9

billion in =>>


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W/45/33/3

,nfosys on occasion struggles in the S mar"ets4 and has particular problems in

securing nited States )ederal 2o!ernment contracts in North America. Sincethese contracts are highly profitable and tend to run for long periods of time4

,nfosys is missing out on lucrati!e business. Added to this is the fact that itscompetitors do well in terms of securing the same )ederal business and oneshould also ta"e into account that many of its competitors are domiciled in the Sand there could be political pressure on the S 2o!ernment to award contracts todomestic organi5ations$.

#espite being a huge ,T company in relation to its ,ndian competitors4 ,nfosys ismuch smaller than its global competitors. As discussed abo!e4 ,nfosys generatedH9 billion in =>>


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%ustomers may switch to other offshore ser!ice companies in other countries such

as %hina or 1orea. (ther global players ha!e realised that ,ndia has the benefit of lowcost4 highly

s"illed labor that often spea"s 'nglish and is culturally sensiti!e to 0esternpractices. As with all global ,T players4 ,nfosys has to compete for s"illed labor

and this may ha!e the effect of dri!ing up wage le!els4 and ma"ing it moredifficult to recruit and retain staff.

1. A77+6 A49;33

+,+ Q-&$! of E&%##./

W*+ !.


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0ipro uses straight line method of depreciation and the method has not been changed

for the past two years. *ence there is no effect on the profit on the basis of change in

depreciation method

,n!entories are !alued at lower of cost and net reali5able !alue4 including necessary

pro!ision for obsolescence. %ost is determined using the weighted a!erage method.

%ost of wor"inprogress and finished goods include material cost and appropriate

share of manufacturing o!erheads. *ence there is no effect on the profit on the basis

of change of in!entory !aluation method

The sales increased from Rs =ED4>>: millions in =>7>77 to Rs D7E4777= while other income increased from Rs E4? millions to Rs 7=4=?9 millions.

0ipro had a cash balance of Rs. :=4>DD millions on D7stMar =>7= as against Rs.

E=4D=< millions on D7stMar =>77. *ence cash is not a problem for 0ipro.

The change of useful life of some assets was due to the assets undergoing changes

due to reno!ation and moderni5ation. ,ntangible assets are amorti5ed o!er their

estimated useful

life on a straight line basis.

The pro!ision for bad debts has changed by Rs. ==: million in =>777=.

Ta"ing the abo!e factors into consideration it can be safely concluded that the quality of

earnings for 0ipro 6td. is quite high.

I:+3;3 ,nfosys uses straight line method of depreciation and the method has not been

changed for the past two years. *ence there is no effect on the profit on the basis of

change in depreciation method

The companies does not hold any physical in!entories.


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The sales increased from Rs =E4:D= crores in =>7>77 to Rs DD4>777=

while other income increased from Rs 7479? crores to Rs 747= as against Rs.

7:47E? millions on D7stMar =>77. *ence cash is not a problem for ,nfosys.

The pro!ision for bad debts has reduced by Rs. 8 crores in =>777=.

Ta"ing the abo!e factors into consideration it can be safely concluded that the quality of

earnings for ,nfosys is quite high.

0,0 Ho%1o#$& A#&!//

2.2.1 S+6*7/3 +: F63

0ipro 6tdThere was marginal change of >.7< in the share capital between =>7>77 and =>777=.

*owe!er the total liabilities increased by 7D.?7F indicating that the firm has been

le!eraging. The R(, howe!er is almost comparable to the borrowing cost so the

le!eraging should not pose any problems.

,nfosys

There was no change in the share capital between =>7>77 and =>777=. *owe!er the

total liabilities increased by =9.7=F indicating that the firm has increased its dependence


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on debts. Thus4 the debt ratio of the firm has increased and the firm has become more

ris"y.

2.2.2 A33/3

0ipro 6tdThe assets of the firm ha!e increased by 7DF in =>777= as compared to =>7>77. Thisindicates that 0ipro had good cash flows in the pre!ious year. Also4 the fi&ed assetsdisposed off during the year were not substantial and therefore do not affect the goingconcern assumption.

,nfosysThe assets of the firm ha!e increased by =9F in =>777= as compared to =>7>77. Thisindicates that ,nfosys had good cash flows in the pre!ious year and thus in!ested highly

in assets to increase the o!erall equity of the firm.As compared to 0ipro4 ,nfosys had huge in!estment in assets in =>77 as compared topre!ious year.

2.2." P*+: 4 !+33

0ipro 6tdThe company@s (perating +rofits ha!e declined from =7.E:F in =>7>77 to 78. in=>777= by 7. percent. The reason that the operating profits ha!e gone down is thatthe operating e&penses ha!e gone up.This can be accounted by the followingC'mployee benefits e&pense increased from 7>84D?9 mn to 7DD477: mn%hanges in in!entories of finished goods4 wor" in progress and stoc"intrade increasedfrom D7E$ mn to 998 mnThis has ensured that the profit after ta& has gone up by 7>.?< percent. *owe!er there is aca!eat that the (perating e&penses are increasing at an alarming rate when compared tothe increase in (perating profits. Thus4 they do not earn sufficient operating profits in theyr. =>777= as a result4 the company end up ma"ing operating losses since they didn@tha!e sufficient non operating incomes e!ery year.

,nfosysThe company@s (perating +rofits ha!e increased by =>.?> percent in =>777=. Thus4 thecompany has en3oyed good cash flows throughout the pre!ious year and good margins.As compared to 0ipro4 the profits of ,nfosys were huge and thus ,nfosys showed asignificantly good performance than 0ipro.


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2.2. !+ T/*8 !+4 4 A7>77 to849>9 mn in =>777= by =.D= percent. This shows that 0ipro has reco!ered the dues

from its debtors and there are few debtors as compared to pre!ious year. This is also beinterpreted as the fact that 0ipro has earned its income from ma3ority of its debtors in theyear =>777=.

,nfosysThe long term loans and ad!ances of ,nfosys ha!e increased from 74=99 cr in =>7>77 to749D7 cr in =>777= by 7: percent. This shows that ,nfosys has not reco!ered enoughdues from its debtors and there are e&ists a large number of debtors as compared topre!ious year.Thus4 ,nfosys has yet to earn the income from its debtors and the delay in earnings from

debtors has lead to significant opportunity cost on the income.

2.2.# C6**/ I mn in =>7>77to 9>49>8 mn in =>777= by 7:.?D percent. This can be attributed to the fact thatcompany had a fall in operating profits during the year =>777=. Thus4 it seems thatcompany has retained its earningsalthough small$ thereby a!oiding the ris" in!ol!ed incapital in!estments.

,nfosysThe current in!estments of ,nfosys ha!e significantly increased from 778 cr in =>7>77 toD97 cr in =>777= by 7777=.Thus4 ,nfosys as compared to 0ipro4 has made huge return on in!estmentse!ident fromincrease in operating profits$ as a result of large amount of in!estment e&penditure .


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0,2 V"%$3& A#&!//

2.2.$ S+6*7/3 +: F63

0ipro 6tdThere was small change of 9.78 percent in the share capital between =>7>77 and =>77

7= as per the !ertical analysis. The share capital increase can be attributed to the fact that

company has issued new shares to public.

,nfosys

There was no change in the share capital between =>7>77 and =>777=. The company

has not raised any equity by selling shares to public during the fiscal year =>777=.

2.2.1 A33/3

0ipro 6tdThe current assets of the firm ha!e increased by E:.8EF in =>777= as compared to =>7>77. This indicates that 0ipro had good cash flows in the pre!ious year. The company isha!ing good amount of liquidity to pay off its debts.

,nfosysThe current assets of the firm ha!e increased by ?8.9777= as compared to =>7>

77. This indicates that ,nfosys had good cash flows in the pre!ious year and thus in!estedhighly in assets to increase the o!erall equity of the firm. The company is ha!ing highliquidity and it will greatly help the firm in paying off its liabilities.As compared to 0ipro4 ,nfosys has higher liquidity in =>77 as per !ertical analysis.

2.2.2 P*+: 4 !+33

0ipro 6td

The company@s (perating +rofits ha!e increased by 79.: percent. ,t should be noted thatalthough the sales in the last year ha!e increased by 7.:D percent. The operating profitsha!e increased by good amount indicating that company is e&periencing smooth andgood operations.

,nfosysThe company@s (perating +rofits ha!e increased by ==.D percent in =>777=. Thus4 thecompany has en3oyed good cash flows throughout the pre!ious year and good margins.


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As compared to 0ipro4 the profits of ,nfosys were huge and thus ,nfosys showed asignificantly good performance than 0ipro.

2.2." !+ T/*8 !+4 4 A777=.

,nfosysThe long term loans and ad!ances of ,nfosys ha!e increased by 9 percent. This showsthat ,nfosys has not reco!ered enough dues from its debtors and there are e&ists a large

number of debtors as compared to pre!ious year. Thus4 ,nfosys has large number ofdebtors and the delay in earnings from debtors has lead to significant opportunity cost onthe income.

2.2. C6**/ I.9? percent. This can be

attributed to the fact that as per !ertical analysis4 the company is ha!ing high liquidity.Thus4 the company is in!esting high in order to ha!e more return on in!estments.

,nfosysThe current in!estments of ,nfosys ha!e significantly increased from >.8: percent.Although4 the liquidity of ,nfosys is quite high as per !ertical analysis4 but it seems thatthe company is playing safe by "eeping the high liquidity and not in!esting much4thereby reducing ris".Thus4 0ipro as compared to ,nfosys has made huge significant in!estments while boththe companies had high liquidity.


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0,2 T%"#* A#&!//

0,2,+ S&"/ T-%#o4"%

As per the Trend analysis, it can be seen that sales turnover of Wipro has increased

considerably as compared to Infosys even though both companies are followingincreasing trend in sales from 200!"2#

0,2,0 C-%%"#$ I#4"/$'"#$/

As per the Trend analysis, it can be seen that current investments of Wipro have increased

in 200!"", but decreases in 20""!"2# $oreover, the current investments of Infosysare on increasing trend from 200!"2#


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0,2,2 C-%%"#$ L&$"/

As per the Trend analysis, it can be seen that current liabilities of Wipro have increased

throughout 200!"2# $oreover, the current liabilities of Infosys have also increasedduring 200!"2#

0,2,5 Lo#. T"%' Lo * A*4"/

As per the Trend analysis, it can be seen that current liabilities of Wipro have increasedthroughout 200!"2# $oreover, the current liabilities of Infosys have also increased

during 200!"2#


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0,2,6 S7&%" C&8$&

As per the Trend analysis, it can be seen that share capital of Wipro has declined a bit

during 20""!"2 and share capital of Infosys has remained almost constant over200!"2

" F4749 A49;33

2,+ R&$o A#&!//

2,+,+ L9-*$! R&$o/

2,+,+,+ C-%%"#$ R&$o

,t is also "nown as L0or"ing %apital Ratio@4 LSol!ency Ratio@. This Ratio indicates therelationship between %urrent Assets and %urrent 6iabilities. ,deally4 the %urrent Assetsshould be more than %urrent 6iabilities. ,f %urrent Ratio 7 then the current assets are


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said to be enough to pay current obligations. Analysts consider current ratio of =C7 to beideal.

-ear;%ompany 0ipro ,nfosys

=>777= =.?> 9.E7>77 7.9: :.77

T/ 76**/ *4+ +: =+ W*+ 4 I:+3;3 3 >/99 4=++*5 7449 4 63 74 8// 3 76**/ 94=9/3 /439;. T3 493+

74/3 4 433/3 4777= >.7=E >.=:E

=>7>77 >.7 >.=9D

T/ N/ P*+: M4* +: =+ / 7+84/3 3 =/9+> 1. M+*/+


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2,+,0,0 G%o// P%of$ M&%.#

The gross profit margin loo"s at cost of goods sold as a percentage of sales. This ratioloo"s at how well a company controls the cost of its in!entoryand manufacturing of itsproducts and subsequently pass on the costs to its customers. The larger the gross profit

margin4 the better for the company. The calculation isC 2ross +rofit;Net Sales. Both termsof the equation come from the companyKs income statement.

-ear;%ompany 0ipro ,nfosys

=>777= >.=8D >.=8E:

=>7>77 >.78E= >.D>=D

T/ G*+33 P*+: M4* +: =+ / 7+84/3 3 =/9+> 1 4 498+3 348/.

M+*/+


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obligations the firm intends to pay off in one year or less. The debt to equity ratio iscalculated by di!iding the firm@s total debt by the firm@s equity. #ebt includes shorttermdebt current liabilities on the balance sheet$ and longterm debt. 'quity includes thecombination of shareholder@s equity the cash paid in by the in!estors when the companysold its stoc"$ and the company@s retained earnings. D/=E6; T+49

D/=S4*/+9/*3 E6;.-ear;%ompany 0ipro ,nfosys

=>777= >.=>E

=>7>77 >.==>

T/ D/= E6; R4+ +: W*+ 43 */67/ ++ ;/4*3, 63 74

4 /*/ */94


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/7/ 9/33 8+/; 3 */6*/ :+* 7>77 9.


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T/ /= /6; *4+ 43 */67/ 6* 2011-12 4 96; *4+3 4+69 36/3 / 4; ++ 9+> 43

7+84*/ 3 7+8/+*3. S+, I 5 / *+3/73 4*/ *8 4 63 =453 4

+/* :4749 36+3 3+69 45/ 4 7499 =/:+*/


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HIGH!IGHTS OF ACCOUNTING PO!ICIES

B433 +: P*/4*4+

These financial statements ha!e been prepared in accordance with the generally accepted

accounting principles in ,ndia under the historical cost con!ention on accrual basis. Thesefinancial statements ha!e been prepared to comply in all material aspects with theaccounting standards notified under Section =77D%$ %ompanies Accounting Standards$Rules4 =>>E4 as amendedO and the other rele!ant pro!isions of the %ompanies Act4 78:E. All assets and liabilities ha!e been classified as current or noncurrent as per the%ompanyKKs normal operating cycle and other criteria set out in the Schedule V, to the%ompanies Act478:E. Based on the nature of products and the time between theacquisition of assets for processing and their realisation in cash and cash equi!alents4 the%ompany has ascertained its operating cycle as 7= months for the purpose of current non current classification of assets and liabilities.

R/


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#epreciation on fi&ed assets is pro!ided on the straight line method which is estimated bythe management. ,ndi!idual low costs pro3ect less than Rs. :>>>$ are depreciated o!er aperiod of one year. ,ntangible assets are amorti5ed on straight line basis. 6easeholdimpro!ements are written off o!er the lower of remaining lease period or life of the asset.

I


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RATIONALE OF THE STUDY

The study is global in scope4 since many of the ris"s in!ol!ed are global or regional in

nature.

)or this study4 stress is defined as a situation where pri!ate sector proponents ha!e e&ited4

or are contemplating e&it from a pro3ect. ,nformation on stress was deri!ed from the

0orld Ban"Ks +ri!ate +articipation in ,nfrastructure ++,$ dataset4 which was used as the

source for much of the data used in the estimation. This global dataset contains pro3ect

specific information on a large number of pro3ects classifiable as +++4 including the total

!alue of in!estment4 sector4 subsector4 type of transaction4 and multilateral participation.

,t co!ers pro3ects which achie!ed financial closure from 78


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The main ob3ecti!es of the +ro3ect study areC

#etailed analysis of ,T industry which is gearing towards international standards

Analy5e the impact of qualitati!e factors on industry@s and company@s prospects

%omparati!e analysis of three tough competitors 0ipro and ,nfosy through

fundamental analysis.

Suggesting as to which company@s shares would be best for an in!estor to in!est.


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!ITERATURE REVIEW

SECURITY ANA!YSIS

,n!estment success is pretty much a matter of careful selection and timing of stoc"

purchases coupled with perfect matching to an indi!iduals ris" tolerance. ,n order to carry

out selection4 timing and matching actions an in!estor must conduct deep security

analysis.

,n!estors purchase equity shares with two basic ob3ecti!esG

7. To ma"e capital profits by selling shares at higher prices.

=. To earn di!idend income.

These two factors are affected by a host of factors. An in!estor has to carefully

understand and analy5e all these factors. There are basically two approaches to study

security prices and !aluation i.e. fundamental analysis and technical analysis

The !alue of common stoc" is determined in large measure by the performance of the

firm that issued the stoc". ,f the company is healthy and can demonstrate strength and

growth4 the !alue of the stoc" will increase. 0hen !alues increase then prices follow and

returns on an in!estment will increase. *owe!er4 3ust to "eep the sa!!y in!estor on their

toes4 the mi& is complicated by the ris" factors in!ol!ed. )undamental analysis e&amines

all the dimensions of ris" e&posure and the probabilities of return4 and merges them with

broader economic analysis and greater industry analysis to formulate the !aluation of a

stoc".


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FUNDAMENTA! ANA!YSIS

)undamental analysis is a method of forecasting the future price mo!ements of a financial

instrument based on economic4 political4 en!ironmental and other rele!ant factors and

statistics that will affect the basic supply and demand of whate!er underlies the financial

instrument. ,t is the study of economic4 industry and company conditions in an effort to

determine the !alue of a company@s stoc". )undamental analysis typically focuses on "ey

statistics in company@s financial statements to determine if the stoc" price is correctly !alued.

The term simply refers to the analysis of the economic wellbeing of a financial entity as

opposed to only its price mo!ements.

)undamental analysis is the cornerstone of in!esting. The basic philosophy underlying the

fundamental analysis is that if an in!estor in!ests re.7 in buying a share of a company4 how

much e&pected returns from this in!estment he has.

The fundamental analysis is to appraise the intrinsic !alue of a security. ,t insists that no one

should purchase or sell a share on the basis of tips and rumors. The fundamental approach

calls upon the in!estors to ma"e his buy or sell decision on the basis of a detailed analysis of

the information about the company4 about the industry4 and the economy. ,t is also "nown as

Qtopdown approach. This approach attempts to study the economic scenario4 industry

position and the company e&pectations and is also "nown as /7++87-63*;-7+84;

4*+47 (EIC 4*+47).
http://www.investopedia.com/terms/f/fundamentalanalysis.asphttp://www.investopedia.com/terms/f/fundamentalanalysis.asp


32/42

SCOPE OF THE STUDY

The scope of the study is identified after and during the study is conducted. The pro3ect is

based on tools li"e fundamental analysis and ratio analysis. )urther4 the study is based on

information of last fi!e years.

The analysis is made by ta"ing into consideration fi!e companies i.e. 0ipro and

,fosy.

The scope of the study is limited for a period of fi!e years.

The scope is limited to only the fundamental analysis of the chosen stoc"s.


33/42

RESEARCH METHODO!OGY

According to 2reen and Tall QA research design is the specification of the

methods and procedures for acquiring the information needed. ,t is the o!erall

operational pattern or framewor" of the pro3ect that stipulates which

information is to be collected4 from where it is to be collected and by what

procedures

This research process based on primary data analysis and secondary dataanalysis will be clearly defined to meet the ob3ecti!es of the study.

, chose the primary sources to get the data. A questionnaire was designed

in accordance with our mentor in Shirts. , chose a sample of about D>

corporate customers

, collected some data from the secondary sources li"e published%ompany documents4 internet etc.

R/3/4*7 D/3

QA research design is the arrangement of conditions for collections and analysis

of data in a manner that aims to combine rele!ance to the research purpose with

economy in procedures. ,t is a descripti!e cross sectional design .,t is the

conceptual structure with in which research is conductedG it constitutes theblueprint for the collection4 measurement and analysis of data.

,t is needed because it facilitates the smooth sailing of the !arious research

operations4 thereby ma"ing research as efficient as possible yielding ma&imal

information with minimal e&penditure of effort4 time and money.

,n the preliminary stage4 my research stage constituted of e&ploratory study by

which it is clear that the e&istence of the problem is ob!ious .So4 , can directly

head for the conclusi!e research.


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S489 P94

QSampling plan is a distinct phase of research process. ,n this stage , ha!e to

determine who is to be sampled4 how large should be the needed sample and

how sampling unit is to be selected.

P+694+

,n my research4 , ha!e defined my population as a complete set of customers of

Sagar %ity.

S489/ S6*


35/42

Research is totally based on primary data. Secondary data can be used only

for the reference. Research has been done by primary data collection4 and

primary data has been collected by interacting with !arious people. The

secondary data has been collected through !arious 3ournals and websites and

some special publications of B,R6A.

SAMP!ING

. S489 P*+7/6*/

The sample is selected in a random way4 irrespecti!e of them being in!estor

or not or a!ailing the ser!ices or not. ,t was collected through mails and

personal !isits to the "nown persons4 by formal and informal tal"s and

through filling up the questionnaire prepared. The data has been analy5ed by

using the measures of central tendencies li"e mean4 median4 mode. The

group has been selected and the analysis has been done on the basis

statistical tools a!ailable.

. S489/ S/

The sample si5e of my pro3ect is limited to =: only. (ut of which only 7D:

people attempted all the questions. (ther E: not in!esting in M)s attempted

only = questions.

. S489/ D/3

#ata has been presented with the help of bar graph4 pie charts4 line graphs

etc.


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SHARE PRICE ANA!YSIS OF WIPRO AND INFOSYS FOR 2011-12

WIPRO

SourceCwww.nseindia.com

Technically4 the abo!e chart has followed following trendsC

)rom Ianuary =>77 to Iune =>774 the share price has remain in a consolidated range

bound$ trend with 9:> being an important support and resistance le!el.

,n the period from midIuly to August =>77 the share price has seen a ma3or fall in its

price from 979. to D=>.D:.

)rom end of August there has been a bullish trend with higher tops and higher

bottoms till mid )eb =>7= when it again reached is resistance at 9:>$ and since then

the share price is in consolidated trend till end of March =>7=.

INFOSYS
http://www.nseindia.com/http://www.nseindia.com/


37/42

SourceC

www.nseindia.com


)rom Iuly =>77 midAugust =>77 mid4 the share price of ,nfosys has seen a ma3or

fall.

)rom August end till (ctober the share price has seen reco!ery was in bullish trend$.

Since No!ember =>77 till March =>7= the share price is in a range bound trend

between =::> and D>>>.

COMPARATIVE CHART OF WIPRO AND INFOSYS FOR 2011-12


38/42

SourceC

www.nseindia.com


)rom Iuly =>77 midAugust =>77 mid4 the share prices of both 0ipro and ,nfosys has

seen a ma3or fall.

)rom August end till (ctober the share prices were reco!ering was in bullish trend$.

Since No!ember =>77 till March =>7= the growth in share price of 0ipro was more

than ,nfosys.

6astly4 post Ianuary =>7=4 the share price of 0ipro has shown more growth as

compared to ,nfosys in the same quarter J9$.

FINDINGS


39/42

The three companies were performing well till =>>< with a positi!e trend in the

earnings per share. But there was a downward trend in =>>8. 'specially4 0ipro has

witnessed a steep fall in the year =>>8.

The sales trend has been upward and positi!e in case of all the three companies. The

sales growth loo"s positi!e but in the year =>>84 0ipro sales ha!e declined whereas

,nfosy ha!e maintained the same upward positi!e trend.

,n case of di!idend per share4 there were fluctuations during the period =>>:=>>8.

#ue to recession4 the di!idends per share ha!e declined in all the three companies.

0ipro di!idend has fallen drastically while Maruti stic" to below : per share. ,nfosy

has made a slight reduction from rs.77.: per share in =>>< to rs.7> per share this year.

The return on in!estment has been fluctuating since =>>: and the year =>>8 witnessed

low returns in case of all the companies amongst which 0ipro has the least rate of

return. %ompared to the three companies4 ,nfosy has the highest R(, in =>>8.

Maruti had a stable di!idend payout ratio since =>>:. 0,+R( and ,nfosy ha!e

increased their payout ratio in which ,nfosy shows a higher payout ratio.

The three companies ha!e witnessed a low price earnings ratio in =>>< compared to

the pre!ious years. But the ratio increased in =>>8 in three companies. 0,+R( has

the highest +;' ratio in =>>8 which indicates that it is o!er!alued and ,nfosy @s +;'

ratio is the lowest in =>>8 which indicates that it is under!alued and there is a scope

for growth in the future.


40/42

C+7963+

K/; I8*+777=.

The company should resort to efficient wor"ing capital management techniques as

return on wor"ing capital has decreased during =>777=.

#ebtors turno!er ratio has decreased which shows that debtors are now ma"ing

payments more frequently.

,n!entory turno!er ratio has increased4 thus the company is e&hibiting good sales.

INFOSYS

The company has unnecessarily "ept its capital in assets as current ratio is :.77. So4

,nfosys should ma"e proper utili5ation of its assets.

Mar"et sentiments are negati!e4 thus the company@s management should ta"e

appropriate steps to re!i!e the company before it starts ma"ing losses.

The company doesn@t ha!e any debt as all in!estment is through equity capital.

Being a software firm4 ,nfosys doesn@t ha!e any in!entories.

The company should ta"e steps to earn its recei!ables from debtors as debtors

turno!er ratio has increased during =>777=.

I 5 4 W*+ 3+69 =/


41/42

=O www.wipro.com

DO www.infosys.com

9O www.wi"ipedia.org

BIB!IOGRAPHY

T/? B++53

Security Analysis and +ortfolio Management ! +unitha!athy +andian4 Vi"as

+ublications.

Security analysis and portfolio management !V.A. A!adhani

)inancial Mar"ets and Ser!ices !2ordon and Natara3an4 *imalaya +ublications.

)inancial Management !Shashi 1 2upta and R. 1 Sharma4 1alyani +ublications.

N/>34/*3

'conomic times

Business line

W/=3/3

www.nseindia.com

www.bseindia.com

www.investopedia.com

www.moneycontrol.com

www.indiainfoline.com

www.sebi.gov.in
http://www.nseindia.com/http://www.bseindia.com/http://www.investopedia.com/http://www.moneycontrol.com/http://www.indiainfoline.com/http://www.sebi.gov.in/http://www.nseindia.com/http://www.bseindia.com/http://www.investopedia.com/http://www.moneycontrol.com/http://www.indiainfoline.com/http://www.sebi.gov.in/


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www.Wipromotors.com

www.marutisuzuki.com

www.Infosy .com

www.yahoofinance.com

CNBC TV1& The ,nformed ,n!estor /-88o%$"* !S'B, and8%"/"#$"* !
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