Kasi Original Project On 06-03-2011

CHAPTER-I
(INTRODUCTION)
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1.1 Introduction for the Study
The exciting world of stock markets will pay way to fortune, money and
professional challenge. In a world that is shrinking in size due to
information technology and blurring boundaries between nations, the
stock market (or the equities market) is all set to grow in size.
A quick overview of the roots
The "company" form of organization changed the way the world did
business. The company raised the capital required to do business by
issuing financial instruments (or assets) called "equity shares" to the
general public. Such a purchase of shares from the company itself is a
"primary market" activity. Such a purchase did not tie the investor to the
company forever because they could sell these shares in the "secondary
market" (or in other words, the stock exchange) unlock their
investments. Purchase of equity shares in the market offered high returns
to the investors. Apart from the dividend income that they received, the
investors also made capital gains when the share prices shot up due to
various reasons.
• The emergence of professional research
Common man could not understand the nuances of stock market and
equity valuation. Also, the concept of pooled funds like insurance funds,
retirement funds and mutual funds required professional investment
management. Consequently, the field of market analysis emerged and
gave rise to finance professionals who excelled at valuation of such
financial assets. Market analysis (research analysis or equity research)
work will be done for various organizations like:
• Investment Banks
• Mutual funds
• Financial Institutions
• Stock Brokers
• Financial newspapers
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• Financial websites
In a market analysis one has to use various financial models, tools and
techniques to arrive at simple decisions like buying or selling or standing
still regarding the particular stock. If the research and analysis show that
the stock price of a particular company may rise, you "go long" (buy it). If
you have already bought it, you "hold" it. Alternatively, if the research
indicates a possible downtrend in the stock price, you would immediately
"go short" (sell it) so that you don't incur a loss (or reduced profit) at a
later date. When once the decision is taken, there is absolutely no time to
spare in implementing it.
INTRODUCTION TO EQUITIES:
Stocks, also known as Equities, are shares in a company. It is the
certificate of ownership of a corporation. In simple terms, when you invest
in a company’s stock or buy its shares, you own part of a company. Thus,
as a stockholder, you share a portion of the profit the company may make,
as well as a portion of the loss a company make take. As the company
keeps doing better, your stocks will increase in value and yield higher
dividends.
Some basic terms and meanings
• Dividend:
A sum of money, determined by a company’s directors, paid to

shareholders of a corporation out of its earnings.
• Equity:
Equity of a company is the property of the ordinary shareholder, hence

these shares are popularly known as equities.
• Equity markets:
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A market where investors buy and sell securities providing ownership of a
company’s shares.
• Equities:
Types of securities that represent ownership in a corporation stock is

equities.
• STOCK MARKET:
A stock market is a market for the trading of publicly held company stock
and associated financial instruments ( including stock, options,
convertibles and stock index futures).
Financial Markets
• Money market
• Capital Market
Further Capital Market is divided in to two types
• Primary Market
• Secondary Market
• Bull Market: A market in which prices are rising. A “bull” is a

person who expects that the market or the price of a particular
security will rise.
• Bear Market: A market in which prices are declining. A “bear” is a
person who expects that the market or the price of a particular
security will decline.
1.2 Nature of Equity Shares:
Equity shares represent an ownership of a corporation. It is true that the

equity shares must bear first impact of any adversity, but it is also true
that the equity shares is the only class of securities privileged to enjoy
maximum participation in an extensive growth of the company. The risk of
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the one may be regarded as commensurate with the opportunity of the
other. There is nothing certain about earnings on equity shares, and the
investor can lose as well as earn a profit.
1. Evidence of Ownership
2. Maturity of Equity Shares
3. Par Value
4. Net Asset Value and Book Value
5. Financial Analysis and Accounting Data
1.3 Need for the Study
• The main need of the study is to describe the techniques and

planning in today’s environment.
• Apart from this the objective of this project study is to keenly
understand issues, and examinee all the essential analysis.
• It incorporates sections on fundamental analysis and technical
analysis in the contexts of companies and markets.
• The purpose of this study is to supply, information suitable for
guidance to retail investor.
• For the purpose of study, for Five different Companies of Pharma
Industry.
• For the study the data collected are balance sheet, income
statement, ratio analysis and market price of shares of the
companies of past years.
1.4 Objectives of the Study
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• To study the concept of equity analysis of selected companies of
Pharma Industry are: Dr.Reddy, Aurobindo, Sun Pharmacy, Ran Baxy,
NATCO.
• To analyze and interpret the trend of equity and share price
movement of selected above said companies.
• To evaluate performance of the above said companies.
1.5 Scope of the Study
• The study is restricted only to Five Companies of Pharma Industry

Dr.Reddy, Aurobindo, Sun Pharmacy, Cipla, NATCO.
• The performance evaluated only on the equity and share price
movement.
• The study may provide exact status and position of the companies
in the industries.
• It may vary from time to time and situation to situation.
1.6 Methodology & Data base

• The study is purely based on the secondary source of data which
has been collected from the records of ISE.
• Part of the information is collected from the journals, text books and
websites.
• The project is presented by using tables, graphs and with other
interpretations.
1.7 Limitations of the Study
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Due to time constraint, a comprehensive and meticulous study was not
possible. As a result, there might be change of errors creeping in.
• Owing to the busy schedule of the executives and the staff in the
company, exhaustive primary data couldn’t be collected. Which
might affect the result of the study?
• Recommendations of the study are only personal options.
• Hence judgments may not be considered as ultimate and standard
solution.
CHAPTER-II
(EQUITY ANALYSIS AN OVERVIEW)
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2.1 A Theoretical Back Ground of Equity Analysis
Equity represents an ownership position in a corporation. It is residual

claim in the sense that creditors and preference shareholders must be paid
as scheduled before equity shareholders can receive payment. In
bankruptcy equity holders are principle entitled only to assets remaining
after all prior claimants has been satisfied. Thus risk is highest with equity
shares and so must be its expected return. When investors buy equity
shares, they receive certificates of ownership as proof of their being part
owners of the company. The certificate states the number of shares
purchased and their par value. The attitude towards equity shares varied
from extreme pessimism to optimism from time to time.
The main advantages of equity shares are listed below:
• Potential for Profit: The potential for profit is greater in equity shares
than in any other investment security. Current dividends yield may be
low but potential of capital gains is great. The total yield or yields to
maturity may be substantial over a period of time.
• Limited Liability: In corporate form of organization, its owners have,

generally, limited liability. Equity shares is usually fully paid.
Shareholders may lose their investments, but no more. They are not
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further liable for any failure in the part of corporation of meet its
obligation.
• Hedge against Inflation: The equity share is good hedge against

inflation though it does not fully compensate for the declining
purchasing power as it is subject to money-rate risk. But when interest
rates are high, shares tend to be less attractive, and prices tend to be
depressed.
• Share in Growth: The major advantage of investment in equity shares

is its ability to increase in value by sharing in the growth of company
profits over the long run.
• Tax Advantage: Equity shares also offers tax advantage to the

investors. The larger yield on equity shares results from an increase in
principal of capital gains, which are taxed at lower rate than other
incomes in most of the countries.
EQUITY CAPITAL TERMINOLOGY:
The important terms used in equity capital are listed below:
• Authorized Capital: The authorized capital is the maximum

number of shares of each type that may be issued by the company.
To change this number, or provision of any class of shares, the
company requires the formal approval of shareholders.
• Issued Capital: Issued capital is the part of the authorized capital

that has been issued for cash, property, or service.
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• Paid up Capital: Fully paid shares are those shares for which the
corporation has received full payment up to the par-value, or up to
the amount established as the selling price of no-par-shares. Partly
paid shares are those shares that have been issued for less than par-
value or the agreed subscription.
FUNDAMENTAL ANALYSIS
The analysis of movement of share prices is known as equity analysis.
Equity analysis has two approaches, which are used in the analysis of
share.
1. Fundamental Analysis
2. Technical Analysis
MEANING OF FUNDAMENTAL ANALYSIS

It’s a logical and systematic approach to estimating the future dividends &
share price, as these two constitute the return from investing in shares.
According to this approach, the share price of a company is determined by
the fundamental factors affecting the Economy/Industry/Company such as
Earnings Per Share, D/P ratio, Competition, Market Share, Quality of
Management etc. it calculates the true worth of the share based on it’s
present and future earning capacity and compares it with the current
market price to identify the miss-priced securities. Fundamental Analysis
helps to identify fundamentally strong companies, whose shares are
worthy to be included in the investor’s portfolio, by providing an analytical
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framework, known as Economy Industry Company framework, for rational
investment decision making.
Economic Analysis:
Economic factors play major role in any investment decisional, which is
made for making a gain and better returns. Economic analysis and
forecasting company performance and of returns is necessary for making
investments.
Any investment is risky and as such investment decision is difficult to

make. Investment decision is based on availability of money and
information on the economy. Companies are a part of the industrial and
business sector, which in return is a part of overall economy.
Thus the performance of a company depends recession or stagnation, the

performance of the companies will be bed in general, with sum exceptions
however, on the other hand, if the economy is booming, incomes are
raising and the demand is good, then the industries and the companies is
general may be prosperous, with some exceptions however.
In the Indian economy, the matters to be considered in the first place all
the behavior of the monsoon and the performance of agriculture. India has
a mixed economy, where the public sector plays a vital role. The
government being the biggest investor and spender, the trends in public
investment and expenditure would indicate the likely performance of the
Indian economy. Concomitant with this, the government budget policy,
tone levies and government borrowing program along with the extent of
deficit financing will have a major influence on the performance of the
Indian economy. The monitory situation along with the budgetary policy
influences the movement in price inflation do have a major influence on
the economy.
The economy and political stability in the form of stable and long term
economic policies and a stable political with no uncertainty would also be
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necessary for a good performance of the economy in general and of
companies in particular.
All the above factor of the economy influences the corporate performance
and the industry in general. In the investment analysis, a broad picture of
their factor and a forecast of the growth of the economy and of industry
would be necessary to decide when to invest and what to invest in.
Industry Analysis:
On the economic analysis is made and the forecast of the economy is
known the investor will then have some ides of the likely growth of the
economy and its trend. After that, the analyst would look into the industry
groups that are promising in the coming year or years and then only he
will be able to choose the companies in those industry groups.
At any point of time, there may be industries, which are on the up swing of
the cycle called sunshine industries and those, which are on the decline
called sunset industries. In India, there are some growth industries like
electronics and Tele communications, which are the key industries. The
engineering, petrol chemicals and capital goods industries are in the core
sector. A few industries like diamonds, engineering etc. are in the export
sector. Jute and cotton textiles are the decedent industries. At present,
Tele communications, energy etc., are some examples of sunrise
industries.
The key characteristics that are to be considered in the analysis, which

have a bearing on the prospects of the company are: -
• Demand – Supply Gap.

• Competitive conditions in the industry.
• Permanence.
• Growth Rate of the Industry.
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• Attitude of Government towards the industry.
• Labors Conditions.
• Supply of Raw Materials.
• Cost Structure.
• Past Sales & Earnings Performance.
• Growth Rate of the Industry etc.
The gap between Demand and Supply in an industry is a fairly good
indicator of its short-term or medium-term prospects. Excess supply
reduces the profitability of the industry through a decline in the unit-price
realization. On the contrary, insufficient supply tends to improve the
profitability through higher unit-price realization. In an industry where
supply exceeds Demand and there are many competing firms, the
increased rivalry among the firms leads to price cuts and heavy
advertising. In such a situation, the companies lose their competitive edge
and their profitability gets erode.
In this age or rapid technological change, the important factor to be

considered is the permanence of an industry, which is related to the
products and the technology used by the industry. Another factor to be
observed is the Cost structure of the Industry i.e., the proportion of the
fixed costs to the
Variable costs that determines the level of Break-even point. The industry
with lower break-even point is to be given more importance.
Company Analysis:
Company Analysis is the final stage of the Fundamental Analysis, which is
to be done to decide the company in which the investor should invest. The
Economy Analysis provides the investor a broad out line of the prospects
of growth in the economy. The industry analysis helps the investor to
select the industry in which the investment would be rewarding. Company
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Analysis deals with the estimation of the Risks and Returns associated with
individual shares.
The stock price has been found on depend on the intrinsic value of the
company’s share to the extent of about 50% as per many research
studies. Graham and Dodd in their book on “security analysis” have
defined the intrinsic value as “that value which is justified by the facts of
assets, earnings and dividends”. These facts are reflected in the earnings
potentials of the company. The analyst has to project the expected future
earnings per share and discount them to the present time, which gives the
intrinsic value of the share. Another method to use is to take the expected
earnings per share and multiplying it by the industry average price earning
multiple.
By this method, let the analyst estimate the intrinsic value or fair value of
share and compare it with the market price to know whether the stock is
over valued or under valued. The investment decision is to buy under
valued stock and sell over valued stock.
Financial Analysis:
Share price depends partly on its intrinsic worth for which financial
analysis for a company is necessary to help the investor to decide whether
to buy or not the shares of the company. The soundness and intrinsic
worth of a company is known only by such analysis. An investor needs to
know the performance of the company, its intrinsic worth as indicated by
some parameters like book value, EPS, P/E multiple etc., and come to a
conclusion whether the share is rightly priced for purchase or not. This, in
short is the importance of financial analysis of a company to the investor.
Financial analysis is analysis of financial statement of a company to assess

its financial health and soundness of its management. “Financial
statement analysis” involves a study of the financial statement of the
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company to ascertain its prevailing state of affairs and the reasons there
of. Such a study would enable the public and investors to ascertain
whether one company is more profitable than the other and also to state
the cause and factors that are probably responsible for this.
Method or devices of Financial Analysis:

The term “Financial statement” is used in modern business refers to the
balance sheet, or the statement of financial position of the company at a
point of time and income and expenditure statement or the profit and loss
statement over a period.
Interpret the financial statement; it is necessary to analyze them with the

object of formation of an opinion with respect to the financial condition of
the company.
The following methods of analysis are generally used.
1. Comparative statement
2. Trend analysis
3. Common size statement
4. Fund flow analysis
5. Cash flow analysis
6. Ratio analysis
Fundamental Analysis has a very broad scope. One aspect looks at the
general (qualitative) factors of a company. The other side considers
tangible and measurable factors (quantitative). This means crunching
and analyzing numbers from the financial statements. If used in
conjunction with other methods, quantitative analysis can produce
excellent results.
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Ratio analysis isn't just comparing different numbers from the balance
sheet, income statement, and cash flow statement. It's comparing the
number against previous years, other companies, the industry, or even the
economy in general. Ratios look at the relationships between individual
values and relate them to how a company has performed in the past, and
might perform in the future. For example current assets alone don't
tell us a whole lot, but when we divide them by current liabilities
we are able to determine whether the company has enough money
to cover short-term debts.
Efficient Market Hypothesis
This theory presupposes that the Stock Markets are so competitive and
efficient in processing all the available information about the securities
that there is “immediate price adjustment” to the changes in the
economy, industry and company. The Efficient Market Hypothesis model is
actually concerned with the speed with which information is incorporated
into the security prices.
The Efficient Market Hypothesis has three Sub-hypothesis:
• Weakly Efficient: This form of Efficient Market Hypothesis states

that the current prices already fully reflect all the information
contained in the past price movements and any new price change is
the result of a new piece of information and is not
related/independent of historical data. This form is a direct
repudiation of technical analysis.
• Semi-Strongly Efficient: This form of Efficient Market Hypothesis

states that the stock prices not only reflect all historical information
but also reflect all publicly available information about the company
as soon as it is received. So, it repudiates the fundamental analysis
buy implying that there is no time gap for the fundamental analyst in
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which he can trade for superior gains, as there is an immediate price
adjustment.
• Strongly Efficient: This form of Efficient Market Hypothesis states

that using both publicly available information as well as private or
insider information cannot beat the market.
But even though the Efficient Market Hypothesis repudiates both
Fundamental and Technical analysis, the market is efficient precisely
because of the organized and systematic efforts of thousands of analysts
undertaking Fundamental and Technical analysis.
Technical Analysis
Introduction
It is process of identifying trend reversals at earlier stage to formulate the
buying and selling strategy. With the help of several indicators they
analyzed the relationship between price volume and supply demand for
the overall market and the individual stock. Volume is favorable on the
upswing i.e., the number of share traded is greater than before and on the
downside the number of shares traded dwindles. If it is the other way
round, tread reversals can be expected.
There are two major types of analysis for predicting the performance of a
company's stock - fundamental and technical. The latter looks for peaks,
bottoms, trends, patterns, and other factors affecting a stock's price
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movement and then making a buy/sell decision based on those factors. It
is a technique many people attempt; though very few are truly successful.
Today, the world of technical analysis is huge. There are literally hundreds
of different patterns and indicators investors claim to be successful. There
are different types of stock charts and the various technical analysis tools.
What is Technical Analysis?

There are two major types of analysis for predicting the performance of a
company’s stock – fundamental and technical. The latter looks for peaks,
bottoms, trends, patterns, and other factors affecting a stock’s price
movement and then making a buy/sell decision based on those factors. It
is a technique many people attempt; though very few are truly successful.
Today the world of technical analysis is huge. There are literally hundreds
of different patterns and indicators investors claim to be successful. There
are different types of stock charts and the various technical analysis tools.
Technical analysis is a method of evaluating securities by analyzing

statistics generated by market activity, past prices, and volume. Technical
analysts do not attempt to measure a security's intrinsic value; instead
they look for patterns and indicators on stock charts that will determine a
stocks future performance.
Technical analysis has become popular over the past several years, as
more and more people believe that the historical performance of a stock is
a strong indication of future performance. The use of past performance
should not come as a big surprise. People using fundamental analysis have
always looked at the past performance by comparing fiscal data from
previous quarters and years to determine future growth. The difference
lies in the
technical analyst’s belief that securities move with very predictable trends
and patterns. These trends continue until something happens to change
the trend, and until this change occurs, price levels are predictable.
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Technical analyst believes that share prices are determined by the
demand and supply forces operating in the market. These demand and
supply forces in turn are influenced by a number of fundamental factors as
well as certain psychological or emotional factors. The combined impact of
this entire factor is reflected in the share price movement.
A technical analyst concentrates on the movement of share prices. He

claims that by examining past share price movements, future share prices
can be accurately predicted.
Technical analysis is the name given to forecasting techniques that

utilize historical share price data.
Although past shares prices are the major data used by the technical
analysts, other statistics such as volume of trading and stock market
indices are also utilized to some extent. A technical analyst, therefore,
analyses the price and volume movements of individual securities as well
as the market index. Thus technical analysis is really a study of past or
historical price and volume movements so as to predict the future stock
price behavior.
Basic principles of the technical analysis:
The basic principles on which technical analysis is based are as follows:
• The market value of a security is related to demand and supply

factors operating in the market.
• There are both rational and irrational factors which surround the
supply and demand factors of a security.
• Security prices behave in a manner that their movement is
continuous in a particular direction for some length of time.
• Trends in stock prices have been to change when there is shift in
demand and supply factors
• The shifts in demand and supply can be detected through charts
prepared specially to show market action
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• Patterns which are projected by charts record price movement and
these recorded patterns are use by analysts to make forecasts about
the movement of prices in future.
Mathematical Indicators:
Share prices do rise or fall in straight lines. The movements are

erratic. This makes it difficult for the analyst to gauge the underlying
trend. He can use the mathematical tool of
• Moving averages are the mathematical indicators of the

underlying trend of the price movement.
Two types of moving average are commonly used by the analysts are as
follows:
• Simple Moving Average calculates a set of averages for a specific
number of days, each average being calculated be including a new price
and excluding an old price.
• Exponential Moving Average(EMA) is calculated by using the
following formula:
EMA = (Current closing price-Previous
EMA)* Factor+Previous EMA
Note: Factor =
• Oscillators are calculated with the help of closing price data which
helps to identify overbought and oversold conditions and also the
possibility of trend reversals. These indicators are called oscillators
because they move across a reference point. They are of two types:
• Relative Strength Index is a powerful indicator that signals buying

and selling opportunities ahead of the market. RSI for a share is
calculated by using the following formula:
RSI =100-[100/ (1+RS)]
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Note: RS =
2.1 Review of literature
Title : How Stocks Trade & How Price Movement

take Place
Author : Abhishek Parka
Journal : Fundamental of stock market
Keywords : Articles, BSE, EP knowledge center, Indian
stock.
market, NSE
Abstract :
At the most fundamental level, supply and demand in the market

determines stock prices. Price times the number of shares outstanding
(market capitalization) is the value of a company, comparing just the share
price of two companies is meaningless. Theoretically, earnings are what
affect investor’s valuation of a company, but there are other indicators
that investors use to predict stock price. Remember, it is investor’s
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sentiments, attitudes and expectations that ultimately affect stock prices.
There are many theories that try to explain the way stock prices move the
way they do. Unfortunately, there is no one theory that can explain
everything.
Title : Effect of Mergers on the Share Price

Movement of the Acquiring
Firms: A UK study
Author : J.C Dodds*, J.P. Quek*
Journal : journal of business finance & accounting
Abstract :
The profitability of mergers in Britain has not received the same attention
as in the USA. This study examines mergers for the UK industrial sector as
a whole for a period (1974-76) when merger activity was relatively slack. A
standard methodology is used, but the size effects and the activeness of
acquirers as well as the financing of the acquisition are examined. The
conclusions contradict to some extent those found by other researchers in
that the evidence was incenses-tent with the efficient markets hypothesis.
The effect of taking firm size into account was found to reduce the
standard deviations of the sample and it would appear that the cash
mergers were viewed as less desirable by the market compared to equity
exchange. For the separation of merger active Hon active firms it was
found that there was less dispersion of the residuals for non-merger active
firms.
ARTICLE
EQUITY ANALYSIS: A PROFESSIONAL APPLICATION
Article from:
Academy of Accounting and Financial Studies Journal

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Article date:
January 1, 2006
Author:
Ricks, Robber; Witcher, Chad; Mattson, Kyle
ABSTRACT:
An exercise to link senior-level investment courses with real world, equities

analysis is described. Whereas many students fulfill the academic
requirements during their course work in investment analysis, few truly
grasp the real world application of the theories and thus fail to fully
develop the skills being taught. The result is that students often gain only
a basic-level, academic knowledge of securities analysis and their research
product is of inferior quality.
Recognizing this, a proposed senior-level investments course syllabus is

described in detail. In essence, rather than focusing solely upon studying
and discussing the principles of investing, the focus.
Title : Equity valuation and corporate control
Author : Deangelo, Linda Elizabeth
Journal : Accounting review
Publisher : American accounting association
Last updated: 1990
Abstract :
The difference between open-market share prices and equity exchange

value is illustrated by the large premiums offered for large public
corporations during takeover battles. Equity valuations, independent
appraisals of equity value, are usually demanded by shareholders in
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takeover fights. The use of accounting to estimate equity exchange values
rather than justifying values to public stakeholders and interests indicates
that accounting information plays a broad role in corporate governance
and equity valuation. equity valuations demand a type of accounting
information that is distinct from information typically demanded by
management. Accounting information used for equity valuations affects
shareholder wealth by affecting real source allocations during assertions of
corporate control.
CHAPTER-III
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(PROFILE OF THE ORGANIZATION)
3.1 COMPANY PROFILE
INTER-CONNECTED STOCK EXCHANGE OF INDIA

LTD.
CONCEPT:
Inter-connected stock exchange of India limited [ISE] has been
promoted by 14 Regional stock exchanges to provide cost-effective trading
linkage/connectivity to all the members of the participating Exchanges,
with the objective of widening the market for the securities listed on these
Exchanges. ISE aims to address the needs of small companies and retail
investors with the guiding principle of optimizing the existing
infrastructure and harnessing the potential of regional markets, so as to
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transform these into a liquid and vibrant market through the use of state-
of-the-art technology and networking.
The participating Exchanges of ISE in all about 4500 stock brokers,
out of which more than 200 have been currently registered as traders on
ISE. In order to leverage its infrastructure and to expand its nationwide
reach, ISE has also appointed around 450 Dealers across 70 cities other
than the participating Exchange centers. These dealers are
administratively supported through the regional offices of ISE at Delhi
[north], Kolkata [east],Coimbatore and Hyderabad [south] and Nagpur
[central], besides Mumbai.
ISE has also floated a wholly-owned subsidiary, ISE securities and
services limited [ISS], which has taken up corporate membership of the
National Stock Exchange of India Ltd. [NSE] in both the Capital Market and
Futures and Options segments and The Stock Exchange, Mumbai In the
Equities segment, so that the traders and dealers of ISE can access other
markets in addition to the ISE markets and their local market. ISE thus
provides the investors in smaller cities a one-stop solution for cost-
effective and efficient trading and settlement in securities.
With the objective of broad basing the range of its services, ISE has started
offering the full suite of DP facilities to its Traders, Dealers and their
clients.
OBJECTIVES
• Create a single integrated national level solution with access to

multiple markets for providing high cost-effective service to millions
of investors across the country.
• Create a liquid and vibrant national level market for all listed
companies in general and small capital companies in particular.
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• Optimally utilize the existing infrastructure and other resources of
participating Stock Exchanges, which are understated now.
• Provide a level playing field to small Traders and Dealers by offering
an opportunity to participate in a national markets having
investment-oriented business.
• Reduce transaction cost.
• Provide clearing and settlement facilities to the Traders and Dealers
across the Country at their doorstep in a decentralized mode.
• Spread demat trading across the country.
3.2 SAILENT FEATURES
Network of intermediaries:
As at the beginning of the financial year 2003-04, 548 intermediaries (207

Traders and 341 Dealers) are registered on ISE. A broad of members forms
the bedrock for any Exchange, and in this respect, ISE has a large pool of
registered intermediaries who can be tapped for any new line of business.
Robust Operational Systems:
The trading, settlement and funds transfer operations of ISE and ISS
are completely automated and state-of-the-art systems have been
deployed. The communication network of ISE, which has connectivity with
over 400 trading members and is spread across46 cities, is also used for
supporting the operations of ISS. The trading software and settlement
software, as well as the electronic funds transfer arrangement established
with HDFC Bank and ICICI Bank, gives ISE and ISS the required operational
efficiency and flexibility to not only handle the secondary market functions
effectively, but also by leveraging them for new ventures.
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Skilled and experienced manpower:
ISE and ISS have experienced and professional staff, who have wide
experience in Stock Exchanges/ capital market institutions, with in some
cases, the experience going up to nearly twenty years in this industry. The
staff has the skill-set required to perform a wide range of functions,
depending upon the requirements from time to time.
Aggressive pricing policy:
The philosophy of ISE is to have an aggressive pricing policy for the

various products and services offered by it. The aim is to penetrate the
retail market and strengthen the position, so that a wide variety of
products and services having appeal for the retail market can be offered
using a common distribution channel. The aggressive pricing policy also
ensures that the intermediaries have sufficient financial incentives for
offering these products and services to the end-clients.
Trading, Risk Management and Settlement Software

Systems:
The ORBIT (Online Regional Bourses Inter-connected Trading) and AXIS

(Automated Exchange Integrated Settlement) software developed on the
Microsoft NT platform, with consultancy assistance from Microsoft, are the
most contemporary of the trading and settlement software’s introduced in
the country. The applications have been built on a technology platform,
which offers low cost of ownership, facilitates simple maintenance and
supports easy up gradation and enhancement. The software’s are so
designed that the transaction processing capacity depends on the
hardware used; capacity can be added by just adding inexpensive
hardware, without any additional software work.
Vibrant Subsidiary Operations:
ISS, the wholly owned subsidiary of ISE, is one of the biggest Exchange
subsidiaries in the country. On any given day, more than 250 registered
28
intermediaries of ISS traded from 46 cities across the length and breadth
of the country.
MISSION
ISE shall endeavor to provide flexible and cost-effective access to multiple

markets to its intermediaries across the country using the latest
technology.
BOARD OF DIRECTORS
• Shri K. Rajendran Nair - Chairman, Public Interest

Director
• Shri P. J. Mathew - Managing Director
• Shri S. Ravi - Public Interest Director
• Shri K. V. Thomas - Shareholder Director
• Shri K. D. Gupta - Shareholder Director
• ShriManinder Singh Grewal - Shareholder Director
• ShriSanjeevPuri - Shareholder Director
• Shri T. N. T. Nayar - Shareholder Director
• Shri P. Sivakumar - Shareholder Director
• ShriSurendraHolani - Trading Member Director
• Shri Rajiv Vohra – Trading Member Director
3.3 MILESTONES
July 6, 1996 A report on Inter-connected Market System (ICMS) submitted
to the Federation of Indian Stock Exchange (FISE).
October 26, 1996 Steering Committee was constituted by FISE at Hyderabad.
January 4, 1997 Price water House Coopers, the management consultancy

firm, submitted a feasibility report and recommended the
establishment of ICMS.
January 22, 1998 ISE incorporated as a company limited by guarantee.
29
November 18, 1998 SEBI grants recognition to ISE.
February 26, 1999 Commencement of trading on ISE.
December 31, 1999 Induction of 450 Dealers commences.
January 18, 2000 Incorporation of ISS as a company limited by share capital.
February 24, 2000 SEBI registers ISS for the Capital Market segment of NSE.
May 3, 2000 Commencement of trading by ISS in the Capital Market

segment of NSE.
January 10 , 2001 Turnover in the Capital Market segment of NSE crosses Rs.
1000 million per day.
February 28, 2001 Turnover of Rs. 1508.80 million recorded by ISS in the Capital
Market segment of NSE.
May 4, 2001 Internet trading for clients started by ISS for the NSE
segment through Dot Ex Plaza.
May 19, 2001 ISE’s website, www.iseindia.com, launched
February 13, 2002 SEBI registers ISS for the Futures & Options segment of NSE.
May 6, 2002 ISS commences trading in the Futures & Options segment of
NSE.
March 12, 2003 ISS admitted as a member of the Equities segment of BSE.
June 21, 2003 First Investor Education Program under the Securities Market
Awareness Campaign (SMAC) of SEBI conducted at Vashi.
January 9, 2004 Peak turnover of Rs.3034.90 million recorded by ISS in the

Capital Market segment of NSE.
May 17, 2004 First DP branch office opened at Coimbatore by ISE.
July 24, 2004 Second DP branch opened at New Delhi by ISE.
September 3, 2004 Third DP branch opened at Kolkata by ISE
December 27, 2004 Trading in the BSE equities segment started by ISS.
September 15, 2005 Approval of ISE’s Corporatisation and Demutualization

Scheme by SEBI.
October 20, 2005 Switchover to Direct Client Dealing commences in ISS.

30
3.4 INDUSTRY PROFILE
The Indian pharmaceutical industry is the world's second-largest by

volume and is likely to lead the manufacturing sector of India. India's bio-
tech industry clocked a 17 percent growth with revenues of Rs.137 billion
($3 billion) in the 2009-10 financial year over the previous fiscal. Bio-
pharma was the biggest contributor generating 60 percent of the
industry's growth at Rs.8,829 corer, followed by bio-services at Rs.2,639
corer and bio-agri at Rs.1,936 corer. The first pharmaceutical company
are Bengal Chemicals and Pharmaceutical Works, which still exists today
as one of 5 government-owned drug manufacturers, appeared
in Calcutta in 1930. For the next 60 years, most of the drugs in India were
imported by multinationals either in fully-formulated or bulk form.
The government started to encourage the growth of drug manufacturing
by Indian companies in the early 1960s, and with the Patents Act in 1970,
enabled the industry to become what it is today. This patent act removed
composition patents from food and drugs, and though it kept process
patents, these were shortened to a period of five to seven years. The lack
of patent protection made the Indian market undesirable to the
31
multinational companies that had dominated the market, and while they
streamed out, Indian companies started to take their places. They carved a
niche in both the Indian and world markets with their expertise in reverse-
engineering new processes for manufacturing drugs at low costs. Although
some of the larger companies have taken baby steps towards drug
innovation, the industry as a whole has been following this business model
until the present.
In 2002, over 20,000 registered drug manufacturers in India sold $9 billion

worth of formulations and bulk drugs. 85% of these formulations were sold
in India while over 60% of the bulk drugs were exported, mostly to the
United States and Russia. Most of the players in the market are small-to-
medium enterprises; 250 of the largest companies control 70% of the
Indian market . Thanks to the 1970 Patent Act, multinationals represent
only 35% of the market, down from 70% thirty years ago.
Most Pharma companies operating in India, even the multinationals,

employ Indians almost exclusively from the lowest ranks to high level
management. Mirroring the social structure, firms are very hierarchical.
Homegrown pharmaceuticals, like many other businesses in India, are
often a mix of public and private enterprise. Although many of these
companies are publicly owned, leadership passes from father to son and
the founding family holds a majority share.
In terms of the global market, India currently holds a modest 1-2% share,
but it has been growing at approximately 10% per year. India gained its
foothold on the global scene with its innovatively-engineered generic
drugs and active pharmaceutical ingredients (API), and it is now seeking to
become a major player in outsourced clinical research as well as contract
manufacturing and research. There are 74 U.S. FDA-approved
manufacturing facilities in India, more than in any other country outside
the U.S, and in 2005, almost 20% of all Abbreviated New Drug Applications
(ANDA) to the FDA are expected to be filed by Indian companies]. Growth
in other fields notwithstanding, generics are still a large part of the picture.
32
London research company Global Insight estimates that India’s share of
the global generics market will have risen from 4% to 33% by 2007.
THE GROWTH SCENARIO
India's US$ 3.1 billion pharmaceutical industry is growing at the rate of 14

percent per year. It is one of the largest and most advanced among the
developing countries.
Over 20,000 registered pharmaceutical manufacturers exist in the country.
The domestic pharmaceuticals industry output is expected to exceed
Rs260 billion in the financial year 2002, which accounts for merely 1.3% of
the global pharmaceutical sector. Of this, bulk drugs will account for Rs 54
bn (21%) and formulations, the remaining Rs 210 bn (79%). In financial
year 2001, imports were Rs 20 bn while exports were Rs87 bn.
33
CHAPTER-IV
(DATA ANALYSIS
&
INTERPRETATION)
4.1 Equity Analysis of Select Pharma Company

DR. Reddys laboratories
Established in 1984, Dr. Reddy’s Laboratories (NYSE: RDY) is an emerging
global pharmaceutical company.
As a fully integrated pharmaceutical company, our purpose is to provide

affordable and innovative medicines through our three core businesses:
• Pharmaceutical Services and Active Ingredients, comprising our
Active Pharmaceuticals and Custom Pharmaceuticals businesses;
• Global Generics, which includes branded and unbranded generics;
and
• Proprietary Products, which includes New Chemical Entities (NCEs),
Differentiated Formulations, and Generic Biopharmaceuticals.
34
Our products are marketed globally, with a focus on India, US, Europe and
Russia. Dr. Reddy’s conducts NCE research in the areas of metabolic
disorders, cardiovascular indications, anti-infectives and inflammation.
Our strong portfolio of businesses, geographies and products gives us an
edge in an increasingly competitive global market and allows us to provide
affordable medication to people across the world, regardless of geographic
and socio-economic barriers.
Board of directors
• Mr. Amit Patel - Vice President, Corporate Development & Strategic

Planning
• Dr. K Anji Reddy, chairman
• Mr. GV Prasad - vice chairman & chief executive
• Mr. Satish Reddy - managing director & COO
Dr. Reddy Laboratories Ltd - Capital Structure
Authoriz Issued
ed Capita
Period Instrument Capital l -PAIDUP-
Capita
(Rs. Shares Face l (Rs.
From To (Rs. cr) cr) (nos) Value Cr)
Equity 1688455
2009 2010 Share 120 84.4 85 5 84.4
Equity 1684687
2008 2009 Share 100 84.2 77 5 84.2
Equity 1681727
2007 2008 Share 100 84.1 46 5 84.1
Equity 1679121
2006 2007 Share 100 84 80 5 84
35
Equity 7669457
2005 2006 Share 50 38.3 0 5 38.3
Equity 7651894
2004 2005 Share 50 38.3 9 5 38.3
Equity 7651894
2003 2004 Share 50 38.3 9 5 38.3
Equity 7651594
2002 2003 Share 50 38.3 8 5 38.3
Equity 7651594
2001 2002 Share 50 38.3 8 5 38.3
Equity 3158878
2000 2001 Share 50 31.6 0 10 31.6
Equity 2648723
1999 2000 Share 30 26.5 8 10 26.5
Equity 2648723
1995 1999 Share 30 26.5 8 10 26.5
Equity
1994 1995 Share 30 46.5 2250000 3 0.7
Equity 2397417
1994 1995 Share 30 46.5 6 10 24
Equity
1993 1994 Share 30 6.6 6557700 10 6.6
Equity
1992 1993 Share 10 6.6 6557700 10 6.6
Equity
1991 1992 Share 5 3.3 3278850 10 3.3
Equity
1989 1991 Share 3 2.2 2185900 10 2.2
Equity
1988 1989 Share 3 1.4 1366050 10 1.4
Equity
1986 1988 Share 1.5 1.4 1366250 10 1.4
Equity
1985 1986 Share 1.5 0.2 243500 10 0.2
Dr. Reddy Laboratories Ltd. Profit & Loss A/c

36
Mar'10 Mar'09 Mar'08 Mar'07 Mar'06
INCOME:
Sales Turnover 4,469.60 4,080.40 3,428.40 3,872.92 2,101.97
Excise Duty 74 80.9 84.51 89.66 98.71
NET SALES 4,395.60 3,999.50 3,343.89 3,783.26 2,003.25
Other Income 0 0 0 0 0
TOTAL INCOME 4,576.90 4,249.20 3,500.53 4,056.00 2,094.46
EXPENDITURE:
Manufacturing Expenses 221.4 195.9 207.46 213.46 123.18
Material Consumed 1,482.10 1,469.90 1,253.46 1,121.59 756.15
Personal Expenses 516.4 412.5 366.28 299.04 205.85
Selling Expenses 443.8 448.7 375.37 323.4 243.15
Administrative Expenses 643.4 714.5 558.6 498.42 357.86
Expenses Capitalised 0 0 0 0 0
Provisions Made 0 0 0 0 0
TOTAL EXPENDITURE 3,307.10 3,241.50 2,761.19 2,455.91 1,686.19
Operating Profit 1,088.50 758 582.7 1,327.35 317.06
EBITDA 1,269.80 1,007.70 739.35 1,600.08 408.27
Depreciation 222.4 193.6 161.99 133.5 111.33
Other Write-offs 19.3 19.7 20.71 18.16 13.31
EBIT 1,028.10 794.4 556.65 1,448.42 283.63
Interest 16 27.4 14.69 51.96 24.63
EBT 1,012.10 767 541.96 1,396.47 259
Taxes 238.7 168.6 108.88 188.99 52.64
Profit and Loss for the Year 773.4 598.4 433.08 1,207.48 206.36
Non Recurring Items 72.7 -37.5 40.65 -38.79 4.76
Other Non Cash Adjustments -0.1 -0.1 0 0 0

Other Adjustments 0.1 0.1 1.55 8.19 0.01
REPORTED PAT 846.1 560.9 475.22 1,176.86 211.12
KEY ITEMS
Preference Dividend 0 0 0 0 0
Equity Dividend 190 105.3 63.06 62.97 38.35
Equity Dividend (%) 225.11 125.05 74.99 75 100
Shares in Issue (Lakhs) 1,688.45 1,684.69 1,681.73 1,679.12 766.95
EPS - Annualised (Rs) 50.11 33.29 28.26 70.09 27.53
Dr. Reddy Laboratories Ltd. Balance Sheet

37
Liabilities 2010 2009 2008 2007 2006
Share Capital 84.4 84.2 84.09 83.96 38.35
Reserves & 5,830.2 4,727.7 4,289.4 2,223.7
Surplus 0 5,174.90 2 0 9
5,914. 5,259.1 4,811. 4,373. 2,262.
Net Worth 60 0 80 36 14
Secured Loans 0.8 2.6 3.4 1.92 145.13
Unsecured Loans 562.4 637.7 458.91 327.98 778.74
TOTAL 6,477. 5,899.4 5,274. 4,703. 3,186.
LIABILITIES 80 0 11 26 01
Assets
2,425.7 1,750.2 1,291.1 1,052.9
Gross Block 0 2,157.30 1 9 0
(-) Acc. 1,110.1
Depreciation 0 946.5 762.8 609.15 491.08
1,315. 1,210.8
Net Block 60 0 987.42 682.04 561.82
Capital Work in
Progress. 745.4 411.2 245.71 280.61 112.92
2,652.7 2,080.7
Investments. 0 1,865.10 1 966.99 911.36
Inventories 897.4 735.1 640.93 487.58 443.1
1,060.5 1,055.7
Sundry Debtors 0 1,419.70 897.71 0 581.22
1,456.7
Cash And Bank 368 384.4 537.34 1 650.94
Loans And 1,321.4 1,272.0 1,028.5
Advances 0 1,331.20 2 6 723.61
Total Current 3,647. 3,870.4 3,348. 4,028. 2,398.
Assets 30 0 01 55 87
1,543.8
Current Liabilities 0 1,163.30 786.36 731.96 624.25
Provisions 339.4 294.8 601.38 522.97 174.7
Total Current 1,883. 1,458.1 1,387. 1,254.
Liabilities 20 0 74 93 798.95
NET CURRENT 1,764. 2,412.3 1,960. 2,773. 1,599.
ASSETS 10 0 27 62 92
Misc. Expenses 0 0 0 0 0
TOTAL ASSETS 6,477. 5,899.4 5,274. 4,703. 3,186.
(A+B+C+D+E) 80 0 11 26 01
38
Dr. Reddy Laboratories Ltd. Earning Per Share
1) Earning Per Share (EPS) : It is the earnings accuring to the

Equity Share holder on every one share held by him. In other words,
Earning Per Share is the net profit after tax and preference dividend
that is earned on one unit of equity, which is one equity share. It is
calculated as
Formula: EPS = Profit after tax – Preference dividend x 100

No. of Equity Shares
Particulars 2010 2009 2008 2007 2006

REPORTED PAT 846.1 560.9 475.22 1,176.86 211.12
Shares in Issue
(Lakhs) 1,688.45 1,684.69 1,681.73 1,679.12 766.95
Interpretation: In the Year 2006 when shares are issued of 766.95 then the
PAT is 211.12 then EPS showing at 27.53 where as in 2007 The Shares
issued by the company is higly then the PAT is increased and EPS is also
increased. In the Year 2008 shares issued highly when compared to 2006
39
PAT and EPS is increased. In the year 2009 shares issued more than 2007
but the PAT & EPS is decreased in compare to 2007. In 2010 shares issued
highly as compare to back 4 years but PAT & EPS is decreased compare to
2007. Overall EPS is best in 2007 when compare to other years.
Dr. Reddy Laboratories Ltd. Price Earning Ratio
2) Price – Earning Ratio (P/E Ratio): It express the relationship

between Market price of one share of a company and the earnings per
share of that company. It is calculated as
Formula: MPS = Market Price of Equity Share

Earning Per Share
Particulars 2010 2009 2008 2007 2006

Market Price 1274.95 490.20 591.25 728.25 1421.40
Price Earning Ratio 25.44 14.72 20.92 10.39 51.6
Interpretation: In the year 2006 the Market Price is 1421.40 EPS is 27.53
and P/E Ratio is 51.6 Whereas in 2007 M.P. has decreased of 728.25 but
EPS value is increased, and P/E decreased. In 2008 M.P, EPS, P/E totally
decreased. In 2009 M.P. share is less when compare to 2006 but EPS is
40
increased of 33.29, and 14.72 P/E decreased. In 2010 M.P., EPS and P/E
has increased compare to previous 2 years.
3) Dividend Per Share (DPS): It is the amount of dividend payable

to the holder of one Equity Share. It is calculated as
Formula: Dividend on Equity Share Capital

No. of Equity
YEAR DIVIDEND Shares DPS
2006 1.5 766.95 0.001955
2007 2.5 1,679.12 0.001488
2008 3.25 1,681.73 0.001932
2009 4.5 1,684.69 0.002671
2010 5 1,688.45 0.002961
Interpretation: In table & Graph it shows that in the year 2010 Dividend
is 5 & No. of Equity shares is 1688.45 hence increases but DPS is
decreases but in the year 2006 DPS is increases of 0.001955 compare to
other years. Overall the Financial Position of the Company is Satisfactory.
41
4) Dividend Pay Out Ratio:- It is the ratio of Dividend Per share to
Earning per share. It is calculated as
Formula:
DPS
EPS
YEAR DPS EPS DPS/EPS

27.5
2006 0.002 3 7.1013
70.0
2007 0.001 9 2.1229
28.2
2008 0.002 6 6.8365
33.2
2009 0.003 9 8.0234
50.1
2010 0.003 1 5.909
Interpretation: The Dividend Pay out ratio is higher in the year 2009 of
8.0234, then in the year 2008 it is 6.8365 in 2006 it is decreases of 7.1013
then 2010 & 2007 is decreases of 5.909, & 2.1229
42
5) Dividend Yield Ratio: It Expenses the relationship between
Dividend Earned Per share and the Market Price per share. In other words,
it expenses the return on investment by purchasing a share in the stock
market without accounting for any capital appreciation. It is calculated as
Formula:
Dividend Per Share
Market Price of Share
YEAR DPS MPS DPS/MPS

2006 0.002 1421 1.41
2007 0.001 728.3 1.37
2008 0.002 591.3 3.38
2009 0.003 490.2 6.12
2010 0.003 1275 2.35
43
Interpretation: The Dividend Yield Ratio is increases in the year 2009 of
6.12 When compare to other year but in the year 2010 it is decreases of
2.35. Overall the financial position of the company is satisfactory in the
year 2009.
Trend Analysis - Dr. Reddy's Laboratories Ltd.
Trend Analysis: It involves computation of index numbers of

movements of various financial items in the financial statements for a
number of periods. It helps in understanding the nature and rate of
movements in various financial factors. However, conclusions should not
be drawn on the basis of single trend. Trends of related items should be
carefully studied. Due to weightage should be given to extraneous factors
such as Govt Policy, Economic conditions, etc; as they can effect the trend
significantly.
YEAR 2010 2009 2008 2007 2006

Sales Turnover 4,469.60 4,080.40 3,428.40 3,872.92 2,101.97
REPORTED PAT 846.1 560.9 475.22 1,176.86 211.12
Interpretation: On 2006 Sales 2101.97 and PAT showing 211.12 on 2007

Sales 3872.92 and PAT showing 1176.86 has increased highly. On 2008
Sales little bit decrease but PAT is huge decreased compare to 2007. In
2008 Sales 3428.40 continuously going down proportionately profits also
44
come down. In 2009 Sales increased and profit also little bit increased,
but in 2010 sales is increased if we compare last 5 years and profit also
increased but in 2007 sales increase little much but profit they got highly.
Overall the profit has been increased in the year 2007 of 1176.86 than
2010.
Shareholding pattern - Dr. Reddy's Laboratories Ltd.
No of % Share
Holder's Name Shares Holding
Promoters 43417812 25.66%

ForeignInstitutio
ns 46039165 27.21%
GeneralPublic 14110545 8.34%

FinancialInstituti
ons 13730635 8.11%
NBanksMutualFu
nds 8422444 4.98%
OtherCompanies 7553850 4.46%
ForeignNRI 2782551 1.64%
Others 305905 0.18%
ForeignIndustries 2500 0.00%
45
AUROBINDO PHARMA LTD
Company History
Aurobindo Pharma was born of a vision. Founded in 1986 by

Mr. P.V.Ramaprasad Reddy, Mr. K.Nityananda Reddy and a small, highly
committed group of professionals, the company became a public venture
in 1992. It commenced operations in 1988-89 with a single unit
manufacturing semi synthetic penicillins (SSPs) at Pondicherry.
Aurobindo Pharma had gone public in 1995 by listing its shares in various
stock exchanges in the country. The company is the market leader in
semi-synthetic penicillin drugs. It has a presence in key therapeutic
segments like SSPs, cephalosporins, antivirals, CNS, cardio-vascular,
gastroenterology, etc.
Board of Directors
Dr. M.Sivakumaran
Whole-time Director
Mr. M.Sitarama Murthy

Non-Executive Director
Dr.P.L.Sanjeev Reddy
Non-Executive Director
Vision
"To become Asia's leading and one among the top 15 generic Pharma
companies in the world, by 2015"
46
Mission
Aurobindo's mission is to become the most valued Pharma partner for the
World Pharma fraternity by continuously researching, developing and
manufacturing a wide range of pharmaceutical products complying to the
highest regulatory standards.
Aurobindo Pharmacy Ltd - Capital Structure
Issued
Authorize Capita
Period Instrument d Capital l -PAIDUP-
Capita
(Rs. Shares Face l (Rs.
Equity 557288
2009 2010 Share 66 27.9 37 5 27.9
Equity 537652
2008 2009 Share 50 26.9 68 5 26.9
Equity 537652
2007 2008 Share 50 26.9 68 5 26.9
Equity 533486
2006 2007 Share 50 26.7 37 5 26.7
Equity 532700
2005 2006 Share 50 26.6 00 5 26.6
Equity 507700
2004 2005 Share 50 25.4 00 5 25.4
Equity 507700
2003 2004 Share 50 25.4 00 5 25.4
Equity 232500
2002 2003 Share 50 23.2 00 10 23.2
Equity 206700
2001 2002 Share 50 20.7 00 10 20.7
Equity 200020
2000 2001 Share 50 20 00 10 20
Equity 945000
1998 1999 Share 20 9.4 0 10 9.4
Equity 472500
1997 1998 Share 10 4.7 0 10 4.7
Equity 472500
1996 1997 Share 15 4.7 0 10 4.7
Equity 472500
1995 1996 Share 5 4.7 0 10 4.7
Equity 472500
1994 1995 Share 5 4.7 0 10 4.7
Equity 185000
1993 1994 Share 4 1.8 0 10 1.8
47
48
Profit and Loss A/c - Aurobindo Pharma Ltd
Particulars 2010 2009 2008 2007 2006
INCOME:
Sales Turnover 3,319.60 2,885.25 2,351.12 1,979.76 1,472.36
Excise Duty 67.54 90.35 116.49 103.67 78.72
NET SALES 3,252.06 2,794.90 2,234.63 1,876.09 1,393.64
TOTAL INCOME 3,267.23 2,825.57 2,341.87 1,949.64 1,417.01
EXPENDITURE:
Material Consumed 1,862.54 1,721.81 1,460.18 1,241.97 951.85
Expenses Capitalized 0 0 0 0 0
TOTAL
EXPENDITURE 2,494.78 2,278.03 1,917.10 1,597.35 1,213.58
Operating Profit 757.28 516.87 317.53 278.74 180.06
EBITDA 772.45 547.54 424.77 352.29 203.43
Depreciation 95.46 82.41 74.6 71.84 51.12
Other Write-offs 0 0 0 0 0
EBIT 676.99 465.13 350.17 280.45 152.31
Interest 62.58 81.2 59.01 76.07 60.64
EBT 614.41 383.93 291.16 204.38 91.67
Taxes 184.09 35.45 54.06 -0.1 17.08
Profit and Loss for the
Year 430.32 348.48 237.1 204.54 74.59
Non Recurring Items 97.05 -224.23 48.08 21.5 -2.72
Other Non Cash
Adjustments -1.61 4.29 5.6 3.04 -2.49
Other Adjustments 0 0 0 0 0
REPORTED PAT 525.76 128.54 290.78 229.08 69.38
KEY ITEMS
Equity Dividend 27.74 24.2 17.57 13.34 8.12
Equity Dividend (%) 99.56 90.02 65.36 50.01 30.49
Shares in Issue (Lakhs) 557.29 537.65 537.65 533.49 532.7
Balance Sheet - Aurobindo Pharma Ltd

49
Liabilities 2010 2009 2008 2007 2006
Share Capital 27.86 26.88 26.88 26.69 26.67

Reserves & Surplus 1,886.50 1,293.95 1,193.72 902.63 878.78
1,320.8
Net Worth 1,914.36 3 1,220.60 929.32 905.45
Secured Loans 702.25 813.02 581.87 685.95 644.12
Unsecured Loans 1,242.53 1,301.66 1,173.78 1,290.39 561.1

3,435.5 2,110.6
TOTAL LIABILITIES 3,859.14 1 2,976.25 2,905.66 7
Assets
Gross Block 1,526.88 1,258.70 1,132.01 944.29 913.64
(-) Acc. Depreciation 481.54 385.83 304.93 231.81 195.22
Net Block 1,045.34 872.87 827.08 712.48 718.42

Capital Work in
Progress. 499.47 285.96 124.69 183.14 145.45
Investments. 379.24 277.74 290.04 202.73 174.16
Inventories 944.82 735.52 651.23 547.28 383.44
Sundry Debtors 1,151.35 1,105.67 798.97 624.41 569
Cash And Bank 4.56 86.94 239.32 500.07 142.07
Loans And Advances 593.67 696.6 584.78 568.82 370.77

Total Current 2,624.7 1,465.2
Assets 2,694.40 3 2,274.30 2,240.58 8
Current Liabilities 719.94 595.02 506.06 409.64 378.96
Provisions 39.37 30.77 33.8 23.63 13.68

Total Current
Liabilities 759.31 625.79 539.86 433.27 392.64
NET CURRENT 1,998.9 1,072.6
ASSETS 1,935.09 4 1,734.44 1,807.31 4
TOTAL ASSETS 3,435.5 2,110.6
(A+B+C+D+E) 3,859.14 1 2,976.25 2,905.66 7
Aurobindo Pharma Ltd. Earning Per Share
50
calculated as

Particulars 2010 2009 2008 2007 2006

REPORTED PAT 525.76 128.54 290.78 229.08 69.38
Shares in Issue
(Lakhs) 557.29 537.65 537.65 533.49 532.7
Interpretation: In the year 2006 PAT is 69.38 & shares issued is 532.7
EPS is 13.02. In the year 2007 PAT is increased of 229.08 shares is little
bit increased wheareas EPS is high of 42.93. In 2008 PAT, Shares issued &
EPS is totally increased then compare to other pervious years. As
compared to 2009 PAT, Shares Issued, & EPS is increased in 2010.
Aurobindo Pharma Ltd. Price Earning Ratio

51

Earning Per Share
Particulars 2010 2009 2008 2007 2006
Market Price 959.4 188.15 291.3 678.55 683.2
Interpretation:
In the Year 2006 Market Price is 683.2 and EPS is 13.02, P/E is 52.47,
whereas in 2007 increase in M.P. & EPS but decrease in P/E of 15.8. In the
year 2008 M.P. & P/E is less when compare to both years but EPS is more.
In 2009 M.P. is 188.15 and EPS is 23.9 and P/E. is 7.87. In the Year 2010
M.P. is Huge when compare to 2009 hence EPS & P/E is increased.
52

No. of
Equity Shares
Year Dividend DPS
532.7 0.00281
2006 1.5 5
533.49 0.00468
2007 2.5 6
537.65 0.00604
2008 3.25 4
537.65 0.00836
2009 4.5 9
557.29 0.00897
2010 5 1
Interpretation: In table & Graph it shows that in the year 2010

Dividend is 5 & No. of Equity shares is 557.29 hence increases but DPS is
increases but in the year 2009 DPS is increases of 0.008369 compare to
other years. Overall the Financial Position of the Company is Satisfactory.
53
Formula:
DPS
EPS
DPS EPS DPS/EPS

0.00281 13.02 0.0002162
2006 5 1
0.00468 42.93 0.0001091
2007 6 5
0.00604 54.08 0.0001117
2008 4 6
0.00836 23.9 0.0003501
2009 9 7
0.00897 94.34
2010 1 0.9509
Interpretation: The Dividend Pay out ratio is higher in the year 2010
of 09509, then in the year 2008 it is 0.00035017 in 2006 it is decreases of
0.00021621 then 2007 & 2008 is decreases of 0.00010915 & 0.00011176.
54
Formula:
Dividend Per Share
Year DPS MPS DPS/MPS

2006 0.00282 683.2 4.1203
2007 0.00469 678.55 6.9059
2008 0.00604 291.3 2.0748
2009 0.00837 188.15 4.448
2010 0.00897 959.4 9.3506

2.0748. Overall the financial position of the company is satisfactory in the
year 2009.
55
Trend Analysis – Aurobindo Pharma Ltd.

significantly.
Particulars 2010 2009 2008 2007 2006

Sales 2,885.2 2,351.1 1,979.7 1,472.3
Turnover 3,319.60 5 2 6 6
Reported PAT 525.76 128.54 290.78 229.08 69.38
Interpretation:- In the Year 2006 Salesturnover is 1472.36 and PAT is

69.38, in the year 2007 Sales & PAT increased to 1979.76 & 229.08. In
2008 excess sales & PAT of 2351.12 & 290.78 as compare to back 2 years.
In 2009 Sales is increased but profit is decreased than 2008, whereas in
2010 huge increase in sales and PAT as compare to previous years i.e.,
3319.60 & 525.76. Overall the Performace of the Sales turnover is
satisfactory in the year 2010.
56
Shareholding pattern - Aurobindo Pharma Ltd.
% Share
Holder's Name No of Shares Holding
Promoters 31671899 54.40%

ForeignInstitution
s 15355615 26.37%

FinancialInstitutio
ns 2799262 4.81%
NBanksMutualFun
ds 2688292 4.62%
Others 78685 0.14%
ForeignOcb 68635 0.12%
57
CIPLA HISTORY
Khwaja Abdul Hamied, the founder of Cipla, was born on October 31,
1898. The fire of nationalism was kindled in him when he was 15 as he
witnessed a wanton act of colonial highhandedness. The fire was to
blaze within him right through his life.
In college, he found Chemistry fascinating. He set sail for Europe in

1924 and got admission in Berlin University as a research student of
"The Technology of Barium Compounds". He earned his doctorate
three years later.
In October 1927, during the long voyage from Europe to India, he

drew up great plans for the future. He wrote: "No modern industry
could have been possible without the help of such centres of research
work where men are engaged in compelling nature to yield her
secrets to the ruthless search of an investigating chemist." His plan
found many supporters but no financiers. However, Dr Hamied was
determined to being "a small wheel, no matter how small, than be a
cog in a big wheel."
Board of Directors
Founder
Dr. K.A. Hamied
(1898-1972)
Chairman & Managing Director
Dr. Y.K. Hamied
Joint Managing Director

Mr. M.K. Hamied
Capital Structure - Cipla Ltd.
58
Authorize
d Issued
Period Instrument Capital Capital -PAIDUP-
Face Capit
(Rs. Shares Valu al (Rs.
From To (Rs. cr) cr) (nos) e Cr)
201 Equity 8029213
2009 0 Share 175 160.8 57 2 160.6
200 Equity 7772913
2008 9 Share 175 155.7 57 2 155.5
200 Equity 7772913
2007 8 Share 175 155.7 57 2 155.5
200 Equity 7772913
2006 7 Share 175 155.7 57 2 155.5
200 Equity 2998702
2005 6 Share 175 60.2 33 2 60
200 Equity 2998702
2004 5 Share 65 60.2 33 2 60
200 Equity 5997234
2003 4 Share 65 60.2 9 10 60
200 Equity 5997234
2002 3 Share 65 60.2 9 10 60
200 Equity 5997234
2001 2 Share 65 60.2 9 10 60
200 Equity 5997234
2000 1 Share 65 60.2 9 10 60
199 Equity 1999078
1995 9 Share 25 20.2 3 10 20
199 Equity 1864740 18.
1994 5 Share 25 18.7 0 10 6
199 Equity
1993 4 Share 25 3.2 3107900 10 3.1
199 Equity 10
1992 3 Share 10 3.2 310790 0 3.1
199 Equity 10
1991 2 Share 1.9 1.6 155395 0 1.6
199 Equity 10
1987 1 Share 1.9 1.6 150184 0 1.5
198 Equity 10
1985 7 Share 1.9 0.8 75092 0 0.8
198 Equity 10
1979 5 Share 0.5 0.4 37546 0 0.4
197 Equity 10
1962 9 Share 0.2 0.2 18773 0 0.2
196 Equity 10
1947 2 Share 0.2 0.2 17464 0 0.2
194 Equity 10
1945 7 Share 0.2 0.2 15000 0 0.2
59
194 Equity 10
1944 5 Share 0.1 0.1 6000 0 0.1
194 Equity 10
1943 4 Share 0.1 0 3000 0 0
194 Equity
1935 3 Share 0.1 0 1108 50 0
Cipla Pharma Ltd - Profit & Loss
Particulars 2010 2009 2008 2007 2006

INCOME:
Sales Turnover 5,657.85 5,295.33 4,293.95 3,656.92 3,103.62
Excise Duty 52.16 61.04 90.66 94.93 122.27
NET SALES 5,605.69 5,234.29 4,203.29 3,561.99 2,981.35
TOTAL INCOME 5,699.90 5,324.34 4,268.20 3,627.77 3,019.33
EXPENDITURE:
Material Consumed 2,503.45 2,399.56 2,121.11 1,785.62 1,469.76
TOTAL EXPENDITURE 4,224.76 3,989.45 3,351.12 2,740.16 2,287.46

Operating Profit 1,380.93 1,244.84 852.17 821.83 693.89
EBITDA 1,475.14 1,334.89 917.08 887.61 731.87
Depreciation 165.25 151.79 130.68 103.37 80.18
EBIT 1,309.89 1,183.10 786.4 784.24 651.69
Interest 28.3 52.23 18.05 11.16 16.07
60
EBT 1,281.59 1,130.87 768.35 773.08 635.62
Taxes 243.5 124.5 136.93 139.95 102.2
Profit and Loss for the Year 1,038.09 1,006.37 631.42 633.13 533.42
Non Recurring Items 31.5 -229.56 70.01 34.9 74.22
Other Non Cash Adjustments 11.9 0 0 0 0
REPORTED PAT 1,081.49 776.81 701.43 668.03 607.64
KEY ITEMS
Equity Dividend 160.58 155.46 155.46 155.46 155.46
Equity Dividend (%) 100 100 100 100 259.22
Shares in Issue (Lakhs) 8,029.21 7,772.91 7,772.91 7,772.91 2,998.70
Cipla Ltd - Balance Sheet
200 200 200

Liabilities 2010 2009 8 7 6
Share Capital 160.58 155.46 155.46 155.46 59.97
3,591.3
Reserves & Surplus 5,744.54 4,186.32 9 3,071.84 1,913.98
3,755.8 3,236.2 1,983.2
Net Worth 5,914.09 4,350.75 2 7 7
Secured Loans 0.41 2.79 16.98 7.25 51.27
Unsecured Loans 4.66 937.45 563.55 116.31 417.64
4,336.3 2,452.1
TOTAL LIABILITIES 5,919.16 5,290.99 5 3,359.83 8
Assets
2,201.7 1,366.6
Gross Block 2,895.44 2,693.29 9 1,799.71 7
(-) Acc.
Depreciation 884.27 700.8 540.43 411.64 310.06
1,652.3 1,047.2
Net Block 2,002.20 1,983.52 9 1,379.10 9
Capital Work in
Progress. 684.24 366.32 233.12 73.19 87.01
Investments. 265.1 81.32 94.75 117.8 22.43
1,120.4
Inventories 1,512.58 1,398.32 9 978.6 957
Sundry Debtors 1,552.71 1,837.15 1,393.9 1,028.7 875.96
61
1 8
Cash And Bank 60.84 53 79.28 131.49 44.48
Loans And 1,150.3
Advances 2,357.29 1,131.10 0 695.81 414.84
3,743.9 2,834.6 2,292.2
Total Current Assets 5,483.42 4,419.57 8 8 8
Current Liabilities 1,177.11 1,177.00 980.05 643.78 733.84
Provisions 1,347.66 391.71 416.81 410.13 272.31
Total Current 1,396.8 1,006.1
Liabilities 2,524.77 1,568.71 6 1,053.91 5
NET CURRENT 2,347.1 1,286.1
ASSETS 2,958.65 2,850.86 2 1,780.77 3
TOTAL ASSETS 4,336.3 2,452.1
(A+B+C+D+E) 5,919.16 5,290.99 5 3,359.83 8
Cipla Ltd Earning Per Share

calculated as

Particulars 2010 2009 2008 2007 2006

REPORTED PAT 1,081.49 776.81 701.43 668.03 607.64
Shares in Issue 7,772.9 7,772.9 7,772.9 2,998.7
(Lakhs) 8,029.21 1 1 1 0
EPS - Annualised
(Rs) 13.46 10 9.02 8.59 20.26
62
Interpretation: In the year 2006 the EPS value increases when
compare to after 4 years where as in 2010 PAT increases but EPS showing
down value.
Cipla Ltd. Price Earning Ratio


Earning Per Share
Particulars 2010 2009 2008 2007 2006
Market Price 338.35 220.05 220.00 236.80 662.25
EPS - Annualised (Rs)

13.46 10 9.02 8.59 20.26
Price Earning Ratio 25.14 22 24.39 27.56 32.68
63
Interpretation: The above table & graph shows that increase of Market
price, and EPS, and P/E in the year 2006 . whereas compare to other us
years it is decreases, and in 2010 Overall the position of the company is
satisfactory.


No. of
Year Equity
Dividend Shares DPS
2998.7 0.00066
2006 2 7
7772.91 0.00025
2007 2 7
7772.91 0.00025
2008 2 7
7772.91 0.00025
2009 2 7
8029.21 0.00024
2010 2 9
64
Interpretation: In table & Graph it shows that in the year 2006 – 2010
same Dividend is declaring of Rs.2 & No. of Equity shares is 8029.21 in
the year 2010 but DPS is increases in 2006 but not in 2010 by comparing
to other years. Overall the Financial Position of the Company is
Satisfactory.

Formula:
DPS
EPS
Year DPS EPS DPS/EPS

0.00066 20.26
2006 7 3.2922
0.00025 8.59
2007 7 2.9918
0.00025 9.02
2008 7 2.84922
2009 0.00025 10 0.0000257
65
7
0.00024 13.46
2010 9 1.8499
Interpretation: The Dividend Pay out ratio is higher in the year 2006 of
3.2922, then in the year 2007 it is 2.9918 in 2008 it is decreases of
2.84922 then 2010 & 2009s is decreases of 1.8499 & 0.0000257.

Formula:
Dividend Per Share
YEAR DPS MPS DPS/MPS
2006 0.000667 662.3 1.00717
2007 0.000257 236.8 1.0853
66
2008 0.000257 220 1.1681
2009 0.000257 220.1 1.1679
2010 0.000249 338.4 7.3592

1.00717. Overall the financial position of the company is satisfactory in
the year 2010.
Trend Analysis - Cipla Ltd

significantly.
YEAR 2010 2009 2008 2007 2006

67
5,657.8 4,293.9 3,656.9 3,103.6
Sales Turnover 5 5,295.33 5 2 2
1,081.4
Reported PAT 9 776.81 701.43 668.03 607.64
Interpretation: In the Year 2006 Sales is 3103.62 and PAT is 607.64,

whereas in the year 2007 sales & PAT is increased of 3656.92 and 668.03.
In the year 2008 huge increased in sales than back of 2 years i.e., 4293.95
& 701.43, and in the year 2009 sales is increased little much than compare
to 2008 & in the year 2010 sales increased little much than compare to
2009 of 5657.65 and PAT is 1081.49. Overall the position of sales turnover
and PAT is satisfactory in the year 2010.
Shareholding pattern - Cipla Ltd.
% Share
Promoters 128743291 16.03%
68
ForeignPromoter 166742687 20.77%

ForeignInstitutio
ns 123725014 15.41%
FinancialInstituti
ons 96236561 11.99%
NBanksMutualFu
nds 53558268 6.67%

Others 1108779 0.14%
ForeignIndustries 259 0.00%
NATCO PHARMA LTD
Company Profile
NATCO Pharma Limited is an Indian enterprise molded by global

aspirations. This has always demanded a preparedness and long- term
organizational vision that can encompass the turbulence's and paradoxes
of shifting terms and terrain's of business.
69
Mission
Indian pharmaceutical industry, with significant international presence.

Today it is more innovative and active than ever across the entire
spectrum in pharmaceuticals - from basic research, bulk actives &
intermediates to finished dosage forms and clinical trials.
Our Products:
Tigecycline
Tamsulosin Hcl
Imipenem and Cilastatin
Amikacin
Voriconazole
Ganciclovir
Oseltamivir
Entecavir
Budesonide
Omeprazole
Zoledronic acid
Ibandronate
Natco Pharma Ltd - Capital Structure
70
Authori Issued
zed Capita
Period Instrument Capital l -PAIDUP-
Capit
(Rs. Shares Face al (Rs.
Equity
2009 2010 Share 30 28.1 28147952 10 28.1
Equity
2008 2009 Share 30 28 28040827 10 28
Equity
2007 2008 Share 30 28 28040827 10 28
Equity
2006 2007 Share 30 27.6 27644795 10 27.6
Equity
2005 2006 Share 30 27.2 27174414 10 27.2
Equity
2004 2005 Share 30 26.2 26161383 10 26.2
Equity
2003 2004 Share 30 23.4 23381600 10 23.4
Equity
2002 2003 Share 30 17.4 17381600 10 17.4
Equity
2000 2002 Share 30 17.4 17381600 10 17.4
Equity
1999 2000 Share 30 13.1 13111100 10 13.1
Equity
1997 1999 Share 30 13.1 13111100 10 13.1
Equity
1995 1997 Share 15 13.1 13111100 10 13.1
Equity
1994 1995 Share 10 7.2 7150000 10 7.2
71
Balance Sheet - Natco Pharma Ltd
Liabilities 2010 2009 2008 2007 2006

28.0
Share Capital 28.15 4 28.04 27.64 27.17
Reserves & 229. 191.1
Surplus 273.28 86 6 152.5 120.51
257. 219. 180.
Net Worth 301.43 9 2 14 147.69
120.
Secured Loans 113.81 81 88.55 64.86 63.44
Unsecured Loans 5.49 5.53 5.58 11.58 16.62
TOTAL 384. 313. 256.
LIABILITIES 420.73 24 34 58 227.74
Assets
273. 235.3 190.6
Gross Block 318.99 07 1 4 164.56
(-) Acc. 71.9
Depreciation 85.79 2 61.59 53.06 45.58
201. 173. 137.
Net Block 233.2 15 72 58 118.98
Capital Work in 46.9
Progress. 39.6 6 28.57 20.14 15.46
Investments. 79.23 20.8 20.8 18.46 16.62
64.6
Inventories 65.62 7 55.33 49.31 42.32
47.6
Sundry Debtors 54.63 8 35.72 32.14 33.42
20.0
Cash And Bank 3.5 9 19.93 24.09 27.28
Loans And 93.3
Advances 56.96 4 70.55 57.93 41.34
Total Current 225. 181. 163.
Assets 180.72 78 53 47 144.36
107.
Current Liabilities 106.41 93 86.28 79.23 70.22
Provisions 5.61 2.52 5 3.85 0
Total Current 110. 91.2 83.0
Liabilities 112.02 45 8 8 70.22
NET CURRENT 115. 90.2 80.3
ASSETS 68.7 33 5 9 74.14
Misc. Expenses 0 0 0 0 2.54
72
TOTAL ASSETS 384. 313. 256.
(A+B+C+D+E) 420.73 24 34 58 227.74
Profit and Loss - Natco Pharma Ltd
INCOME: 2010 2009 2008 20'07 2006

Sales Turnover 313.57 275.93 237.75 194.33 170.12
Excise Duty 4.17 4.1 6.87 8.45 7.63
NET SALES 309.39 271.82 230.89 185.88 162.48
TOTAL INCOME 312.91 280.74 244.01 201.75 185.01
EXPENDITURE:
Material Consumed 104.17 94.21 92.37 77.1 73.48
TOTAL EXPENDITURE 217.47 201.39 174 145.59 137.58
Operating Profit 91.92 70.43 56.89 40.29 24.9
EBITDA 95.44 79.34 70.01 56.15 47.43
Depreciation 12.45 10.35 8.59 7.61 6.64
Other Write-offs 0 0 0 2.54 3.61
EBIT 83 69 61.42 46.01 37.19
Interest 14.69 15.05 9.73 6.61 8.03
EBT 68.3 53.95 51.69 39.4 29.16
Taxes 13.51 10.63 9.86 9.15 2.43
Profit and Loss for the Year 54.8 43.32 41.83 30.24 26.73
Non Recurring Items -5.89 0.44 -0.1 0.03 -2.69
Other Non Cash Adjustments -1.24 -1.01 -1.65 0.19 -0.2
REPORTED PAT 47.66 42.74 40.05 30.46 23.79
KEY ITEMS
73
Equity Dividend 5.63 3.51 3.43 3.4 3.37
Equity Dividend (%) 20 12.5 12.24 12.28 12.4
Shares in Issue (Lakhs) 281.48 280.41 280.41 276.45 271.74
NATCO Ltd Earning Per Share

calculated as

Particulars 2010 2009 2008 2007 2006

Reported PAT 47.66 42.74 40.05 30.46 23.79
Shares in Issue
(Lakhs) 281.48 280.41 280.41 276.45 271.74
Earning Per
share 16.93 15.24 14.28 11.01 8.75
74
Interpretation: The above table & graph shows that increase of
Reported PAT, and EPS, and Shares in Issue in the year 2007 & 2010
whereas compare to back years it is decreases, and Overall the position of
the company is satisfactory.
NATCO LTD Price Earning Ratio


Earning Per Share
Particulars 2010 2009 2008 2007 2006
Market Price 133.3 47.35 85.35 144.9 133.7
75
Interpretation: In above table & Graph shows that in the year 2006 P/E
increases of 15.26% compare to other years, whereas in the year 2007 P/E
is 13.14 decreases in the other years also. Overall the Financial Position of
the company is satisfactory in the 2006.


Year Dividend No. of Equity Shares DPS
2006 1.25 271.74 0.005
2007 1.25 276.45 0.005
2008 1.25 280.41 0.004
2009 1.25 280.41 0.004
2010 2 281.48 0.007
76
Interpretation: In table & Graph it shows that in the year 2006-2009
the Dividend is same of 1.25 but DPS is increasing in 2010 of 0.07%
comparing to other years. Overall the Financial Position of the Company is
Satisfactory.

Formula:
DPS
EPS

2006 0.005 8.76 0.0005707
2007 0.005 11.02 0.0004537
2008 0.004 14.28 0.0002801
2009 0.004 15.24 0.0002624
2010 0.007 16.93 0.0004134
77
of 0.0005707 at last decreases in 2009 of 0.0002624, Overall the
financial position of the company is satisfactory.

Formula:
Dividend Per Share
2006 0.005 133.7 3.739
2007 0.005 144.9 3.4506
2008 0.004 85.35 4.686
2009 0.004 47.35 8.4477
2010 0.007 133.3 5.2513
78
Interpretation: The Dividend Yield Ratio is increases in the year 2010
of 8.4477 When compare to other year but in the year 2007 it is decreases
of 3.4506. Overall the financial position of the company is satisfactory.
Trend Analysis - Natco Pharma Ltd.

significantly.
YEAR 2010 2009 2008 2007 2006
Sales Turnover 313.57 275.93 237.75 194.33 170.12

Reported PAT 47.66 42.74 40.05 30.46 23.79
79
Interpretation: In the year 2006 sales is 170.12 & PAT is 23.79, whereas
in the year 2007 sales & PAT is increased little much. In the year 2008
sales & PAT is huge increased when compare to 2006 i.e., 237.75 & 40.05.
In the Year 2009 there is increase in sales of 275.93 & PAT is 42.74, In the
year 2010 sales is increased of 313.57 & PAT is 47.66. Overall the Position
of the Sales Turnover & PAT is satisfactory in the year 2010.
Shareholding pattern - Natco Pharma Ltd
Holder's Name No of Shares % Share Holding

Promoters 17158189 60.96%
ForeignInstitutions 1928225 6.85%
NBanksMutualFunds 1895231 6.73%
ForeignPromoter 487708 1.73%
FinancialInstitutions 1340 0.00%
80
History of Sunpharmacy
Welcome to Sun India pharmacy began its journey in the year 1983, with a
small Ayurvedic unit at ORAI (U.P), set up by Dr. S.R.Niranjan. Under his
able guidance and dynamic leadership, Sun India is now an established
player in patent ayurvedic and generic drug segment with a nation wide
acceptance and a marketing network.o Sun Pharmacy Research.
All of our products are the result of convoluted researches conducted

by our specialized R&D professionals. With consistent efforts to develop
innovative, safe and effective remedies, our dedicated team of highly
qualified doctors and formulation chemists burn their midnight oil to
provide highly successful health products. In Global Network a
Pharmacy (P) Ltd.
81
Sun India Pharmacy is one of the largest distributors of Ayurvedic
medicines in India and among the top in Generics/OTC. The network of the
company spreads across the length and breadth of the country making our
products available even into several remote areas.
Board of Directors
The present strength of the Board of Directors
Dilip S. Shanghvi
Chairman and Managing Director
Sudhir V. Valia
Whole Time Director
Sun Pharmacy Ltd - Capital Structure
Autho
rized Issued
Capit Capita
Period Instrument al l -PAIDUP-
Capita
(Rs. (Rs. Shares Face l (Rs.
From To cr) cr) (nos) Value Cr)
Equity 20711639
2009 2010 Share 150 103.6 1 5 103.6
Equity 20711639
2008 2009 Share 150 103.6 1 5 103.6
Equity 147. 20711639
2007 2008 Share 5 103.6 1 5 103.6
Equity 127. 19340212
2006 2007 Share 4 96.7 0 5 96.7
Equity 18573163
2005 2006 Share 154 92.9 7 5 92.9
Equity 18551135
2004 2005 Share 154 92.8 6 5 92.8
82
Equity
2004 2005 Share 154 92.8 14030430 1 1.4
Equity
2003 2004 Share 126 46.4 92755678 5 46.4
Equity
2002 2003 Share 100 46.5 93048478 5 46.5
Equity
2001 2002 Share 100 46.8 46774537 10 46.8
Equity
2000 2001 Share 50 46.8 46750000 10 46.8
Equity
1999 2000 Share 50 15.4 15422833 10 15.4
Equity
1998 1999 Share 25 15.4 15422833 10 15.4
Equity
1997 1998 Share 25 15.2 15214833 10 15.2
Equity
1996 1997 Share 15 14.8 14801200 10 14.8
Equity
1995 1996 Share 15 14.8 14801200 10 14.8
Equity
1994 1995 Share 15 14.8 14801200 10 14.8
Equity
1993 1994 Share 15 7.2 7185000 10 7.2
Equity
1992 1993 Share 1 0.9 900000 10 0.9
83
Sun Pharma Ltd. Profit & Loss A/c
84
Particulars 2010 2009 2008 2007 2006
INCOME:
Sales Turnover 1,891.16 2,833.65 2,427.35 1,722.13 1,353.01
Excise Duty 46.07 59 58.84 59.57 61.37
NET SALES 1,845.09 2,774.65 2,368.51 1,662.56 1,291.64

TOTAL INCOME 2,643.44 4,024.50 3,269.81 2,355.82 1,784.11

EXPENDITURE:
Manufacturing
Expenses 100.28 94.37 72.57 56.22 48.66
Material Consumed 847.55 1,938.11 1,547.23 1,173.07 842.44
Administrative
Expenses 274.14 275.97 240.17 246 181.93
Expenses
Capitalised 0 0 0 0 0
TOTAL
EXPENDITURE 1,593.57 2,693.83 2,169.97 1,717.21 1,276.55
Operating Profit 251.52 80.82 198.54 -54.65 15.09
EBITDA 1,049.87 1,330.67 1,099.84 638.61 507.56
Depreciation 69.47 58.86 56.11 46.27 40.73
EBIT 980.4 1,271.81 1,043.73 592.34 466.83
Interest 0.44 2.77 5.06 8.8 11.23
EBT 979.96 1,269.04 1,038.67 583.54 455.6
Taxes 50.51 30.12 38.16 11.61 27.39
Profit and Loss for
the Year 929.45 1,238.92 1,000.51 571.93 428.21
Non Recurring
Items -32.37 26.37 13.53 57 33.08
Other Non Cash
Adjustments 1.57 11.7 0 0 0
Other Adjustments 0 -11.7 0 0.05 0

REPORTED PAT 898.65 1,265.29 1,014.04 628.93 461.29
KEY ITEMS
Preference Dividend 0 0 0.05 0.08 0.08
Equity Dividend 284.79 284.79 217.47 130.01 102.3
Equity Dividend (%) 275 275 209.99 134.44 110.15
Shares in Issue
(Lakhs) 2,071.16 2,071.16 2,071.16 1,934.02 1,857.32
EPS - Annualised
(Rs) 43.39 61.09 48.96 32.52 24.84
Sun Pharma Ltd. Balance Sheet
85
Particulars 2010 2009 2008 2007 2006
Liabilities
Share Capital 103.56 103.56 103.56 98.07 94.27
5,614. 5,047.8 4,104.0 2,351.4 1,370.6
Reserves & Surplus 42 6 6 2 7
5,717. 5,151. 4,207. 2,449. 1,464.
Net Worth 98 42 62 49 94
Secured Loans 29.49 23.6 22.88 20.39 18.23
1,047.7 1,727.5
Unsecured Loans 0 0 79.64 6 9
TOTAL 5,747. 5,175. 4,310. 3,517. 3,210.
LIABILITIES 47 02 14 64 76
Assets
1,159. 1,061.9
Gross Block 76 0 935.03 838.7 744.26
(-) Acc.
Depreciation 419.24 362.64 304.99 249.41 208.07
740.5 630.0
Net Block 2 699.26 4 589.29 536.19
Capital Work in
Progress. 92.15 75.95 33.43 31.91 30.8
3,951. 2,694.5 1,843.5 1,057.4
Investments. 69 9 7 9 779.62
Inventories 570.14 486.74 389.63 333.38 263.41
1,055.4
Sundry Debtors 553.29 680.03 4 310 256.47
1,265.4 1,072.4 1,202.6 1,230.8
Cash And Bank 187.27 7 2 8 2
Loans And
Advances 383.34 311.42 394.13 345.82 509.25
Total Current 1,694. 2,743. 2,911. 2,191. 2,259.
Assets 04 66 62 88 95
Current Liabilities 388.45 696.34 845.73 345.23 273.3
Provisions 342.48 342.1 262.79 7.7 122.5
Total Current 730.9 1,038. 1,108.
Liabilities 3 44 52 352.93 395.8
NET CURRENT 963.1 1,705. 1,803. 1,838. 1,864.
ASSETS 1 22 10 95 15
TOTAL ASSETS 5,747. 5,175. 4,310. 3,517. 3,210.
(A+B+C+D+E) 47 02 14 64 76
86
Sun Pharma Ltd - Share Holding Pattern
% Share
Promoters 659830200 63.72%
ForeignInstitutions 196460091 18.97%
FinancialInstitutions 38977854 3.76%
NBanksMutualFunds 30076479 2.90%
Others 883923 0.09%
CentralGovt 26920 0.00%
87
Sun Pharmacy Ltd Earning Per Share

calculated as

Particulars 2010 2009 2008 2007 2006

Reported PAT 898.65 1,265.29 1,014.04 628.93 461.29
Shares in 2,071.1
Issue (Lakhs) 6 2,071.16 2,071.16 1,934.02 1,857.32
Earning Per
share 43.39 61.09 48.96 32.52 24.84

Reported PAT, Shares, and EPS, in the year 2009 & 2010 whereas
88
compare to back years it is decreases, and Overall the position of the
company is satisfactory.
Sun Pharmacy Ltd Price Earning Ratio


Earning Per Share
Particulars 2010 2009 2008 2007 2006
1229.3
Market Price 1792.00 1111.45 5 1056.45 859.55
EPS - Annualized (Rs) 43.39 61.09 48.96 32.52 24.84
41.2 18. 25.1 32.4 34.6

Price Earning Ratio 9 19 0 8 0
89
Market price, and EPS, and P/E in the year 2010 & 2008 whereas compare
to back years it is decreases, but in the year 2007 Market Price and EPS is
& P/E ratio is increases hence, Overall the position of the company is
satisfactory.


No. of Equity
Year Dividend Shares DPS
2006 5.5 1857.32 0.003
2007 6.75 1934.02 0.003
2008 10.5 2071.16 0.005
2009 13.75 2071.16 0.007
2010 13.75 2071.16 0.007
90
Interpretation: In table & Graph it shows that in the year 2009 & 2010
the Dividend is same of 13.75 and DPS is also same of 0.007 as
comparing to 2006 – 2007 DPS is same of 0.003 but dividend is not same it
is 5.5 & 6.75. Overall the Financial Position of the Company is Satisfactory.

Formula:
DPS
EPS

2006 0.003 24.84 0.0001207
2007 0.003 32.52 9.225
2008 0.005 48.96 0.0001021
2009 0.007 61.09 0.0001145
2010 0.007 43.39 0.0001613
91
of 9.225 at last decreases in 2009 of 0.0001145, Overall the financial
position of the company is satisfactory.

Formula:
Dividend Per Share
2006 0.003 859.55 3.4902
2007 0.003 1056.45 2.8397
2008 0.005 1229.35 4.0671
2009 0.007 1111.45 6.298
2010 0.007 1792 3.9062
92
2.8397. Overall the financial position of the company is satisfactory.
Trend Analysis - Sun Pharma Ltd

significantly.
YEAR 2010 2009 2008 2007 2006

2,833.6
Sales Turnover 1,891.16 5 2,427.35 1,722.13 1,353.01
1,265.2
Reported PAT 898.65 9 1,014.04 628.93 461.29
93
Interpretation: In the year 2006 Sales is increased of 1353.01 & PAT is of
461.29, in the year 2007 sales is huge increase of 1722.13 & increase in
PAT of 628.93, In the year 2008 sales is little much increase of 2427.35 &
also PAT of 1014.04, and in the year 2009 sales increased compare to past
3 years of 2833.65 and PAT is also increased of 1265.29, whereas in the
year 2010 decrease in sales of 1891.16 and PAT is 898.65. Overall the
Position of the Company is satisfactory in the year 2009.
4.2 RETURN & RISK ANALYSIS OF A SELECT

PHARMA COMPANY
CIPLA
OPENING CLOSING D+B+(P1- D+B+(P1-
YEAR DIVIDEND BONUS PRICE PRICE P0) P0)/P0*100
2006 2 259 638.45 381.45 147.2779923
2007 2 355.2 651.1 236.8 -57.1 -8.769774228
2008 2 234.00 220.00 -12 -5.128205128
2009 2 223.40 220.50 -0.9 -0.402864816
2010 2 218.50 338.35 121.85 55.76659039
TOTAL 188.74
AVERAGE 37.748
NATCO
OPENING CLOSING D+B+ D+B+(P1-
YEAR DIVIDEND BONUS PRICE PRICE (P1-P0) P0)/P0*100
2006 1.25 259.00 662.25 404.5 156.1776062
2007 1.25 137.00 144.90 9.15 6.678832117
2008 1.25 144.10 85.35 -57.5 -39.90284525
2009 1.25 86.00 47.35 -37.4 -43.48837209
2010 2 47.00 133.30 88.3 187.8723404
TOTAL 267.33
AVERAG
E 53.466
AUROBINDO
2006 1.5 290.10 683.20 394.6 136.0220614
2007 2.5 690.00 678.55 -8.95 -1.297101449
2008 3.25 670.00 291.30 -375.45 -56.03731343
2009 4.5 295.50 188.15 -102.85 -34.80541455
2010 5 189.80 959.4 774.6 408.113804
TOTAL 451.99
AVERAGE 90.398
DR. REDDY
2006 11.25 744.90 1421.40 687.75 92.32782924
2007 6.25 1420.00 728.25 -685.5 -48.27464789
2008 3.75 720.00 591.25 -125 -17.36111111
2009 3.75 595.00 490.20 -101.05 -16.98319328
94
2010 5 495.00 1274.95 784.95 158.5757576
TOTAL 168.28
AVERAGE 33.656
SUN PHARMACY
82.1349615
2006 5.5 474.95 859.55 390.1 7
1056.4 22.2068965
2007 6.75 5 870.00 1056.45 193.2 5
18.5325047
2008 10.5 1046.00 1229.35 193.85 8
2009 13.75 1248.00 1111.45 -122.8 -9.83974359
64.0025430
2010 13.75 1101.05 1792.00 704.7 3
TOTAL 177.03
AVERAG
E 35.406
AVERAGE RETURN
CIPLA 37.74
NATCO 53.46
AUROBINDO 90.39
DR REDDY 33.65
SUNPHARMA 35.4
Interpretation:
Average Return = (R)/N
(R) = Return of the Security for the year T
N = Number of years
Based on the above average return of securities Aurobindo is earning

highest return and DR. Reddy is earning lowest return. Other securities
are earning medium rane of returns.
95
STANDARD DEVIATIONS
CIPLA
AVG
RETURN RETURN
YEAR (R) R̅ R- R ̅ (R- R ̅)2
109.5
2006 147.27 37.74 3 11996.8209
2007 -8.77 37.74 -46.51 2163.1801
2008 -5.12 37.74 -42.86 1836.9796
2009 -0.4 37.74 -38.14 1454.6596
2010 55.77 37.74 18.03 325.0809
17776.721
TOTAL 1
Variance=1/n-1(R- R ̅) = 1/5-1(17776.7211)=4444.18
Standard Deviation = = = 66.66
NATCO
RETURN AVG
YEAR (R) RETURN R ̅ R- R ̅ (R- R ̅)2
102.7
2006 156.17 53.46 1 10549.3441
2007 6.67 53.46 -46.79 2189.3041
2008 -39.9 53.46 -93.36 8716.0896
2009 -43.48 53.46 -96.94 9397.3636
134.3
2010 187.8 53.46 4 18047.2356
TOTAL 48899.337
Variance=1/n-1(R- R ̅) = 1/5-1(48899.337)=12224.83
AUROBINDO
RETURN AVG
YEAR (R) RETURN R ̅ R- R ̅ (R- R ̅)2
2006 136.02 90.39 45.63 2082.0969
2007 -1.29 90.39 -91.68 8405.2224
2008 -56.03 90.39 -146.42 21438.8164
2009 -34.8 90.39 -125.19 15672.5361
2010 408.11 90.39 317.72 100945.9984
148544.670
TOTAL 2
Variance=1/n-1(R- R ̅) = 1/5-1(148544.6702)=37136.17
DR. REDDY
AVG
YEAR RETURN (R) RETURN (R) ̅ R- R ̅ (R- R ̅)2
2006 92.32 33.65 58.67 3442.1689
2007 -48.27 33.65 -81.92 6710.8864
2008 -17.36 33.65 -51.01 2602.0201
2009 -16.98 33.65 -50.63 2563.3969
2010 158.55 33.65 124.9 15600.01
TOTAL 30918.482
96
3
Variance=1/n-1(R- R ̅) = 1/5-1(30918.4823)=7729.62
SUN PHARMACY
RETURN AVG
YEAR (R) RETURN(R) ̅ R- R ̅ (R- R ̅)2
2006 82.13 35.406 46.724 2183.132176
2007 22.2 35.406 -13.206 174.398436
2008 18.53 35.406 -16.876 284.799376
2009 -9.83 35.406 -45.236 2046.295696
2010 64 35.406 28.594 817.616836
TOTAL 5506.24252
Variance=1/n-1(R- R ̅) = 1/5-1(5506.24252)=1376.56
STANDARD DEVIATION
CIPLA 66.66
NATCO 110.56
AUROBINDO 192.70
DR REDDY 87.91
SUNPHARMA 37.102
STANDARD DEVIATION = 1/n (R- R ̅)2

Interpretation: Based on the above calculations Standard Deviation of the
Aurobindo is highest and Sunpharma is lowest. Where other securities are
having medium Standard Deviation.
4.3 TECHNICAL ANALYSIS
97
SHARE PRICE MOVEMENT OF SELECT PHARMA COMPANY
Moving Average: The Market indices do not rise or fall in straight line.
The upward and downward movements are interrupted by counter moves.
The underlying trend can be studied by smoothening of the data. The word
moving means that the body of data moves ahead to include the recent
observation. It is the 3 day moving average, on 4th day the body of data
moves to include the fourth day observation eliminating the first day
observation. Likewise it continues. In the moving average calculation,
closing price of the stock is used.
3days
CIPLA moving
DATE PRICE average
3-Jan-
11 372.5
4-Jan-
11 379.25
5-Jan-
11 376.35 376.0333333
6-Jan-
11 363.6 373.0666667
7-Jan-
11 357 365.65
10-Jan-
11 348.1 356.2333333
11-Jan-
11 346.65 350.5833333
12-Jan-
11 346.8 347.1833333
13-Jan-
11 344.5 345.9833333
14-Jan-
11 339.5 343.6
17-Jan-
11 346.8 343.6
18-Jan-
11 354.6 346.9666667
19-Jan-
11 351.55 350.9833333
20-Jan-
11 351.35 352.5
21-Jan- 354 352.3
98
11
24-Jan-
11 348.5 351.2833333
25-Jan-
11 343.15 348.55
27-Jan-
11 333.45 341.7
28-Jan-
11 335.1 337.2333333
31-Jan-
11 332.15 333.5666667
Interpretation: As above on 3 Jan Cipla open price at 372.50 on 4 th

jan it increased more than 7 Rs. Laterly continuously going down end of
the month on 31st Jan it is closed at 332.15 paise (372.50-332.15 = 40.35)
It is fallen more than 11%.
3days
moving
DATE Aurobindo average
3-Jan-11 1331.1
4-Jan-11 1359.65
5-Jan-11 1359.2 1349.983333
6-Jan-11 1355.45 1358.1
7-Jan-11 1312.7 1342.45
10-Jan-
11 1293.35 1320.5
11-Jan-
11 1295.05 1300.366667
99
12-Jan-
11 1331 1306.466667
13-Jan-
11 1297.65 1307.9
14-Jan-
11 1296.05 1308.233333
17-Jan-
11 1277.7 1290.466667
18-Jan-
11 1292.35 1288.7
19-Jan-
11 1276.5 1282.183333
20-Jan-
11 1259.95 1276.266667
21-Jan-
11 1266.4 1267.616667
24-Jan-
11 1264.05 1263.466667
25-Jan-
11 1255.55 1262
27-Jan-
11 1236.65 1252.083333
28-Jan-
11 1177.15 1223.116667
31-Jan-
11 1186.75 1200.183333
Interpretation: As above on 3 Jan Aurobindo open price at 1331.10 on

4th jan it increased more than 28.55 Rs. Laterly continuously going down
end of the month on 31st Jan it is closed at 1186.75 paise (1331.10-
1186.75 = 144.35) It is fallen more than 11%.
DATE Dr 3days
100
moving
Reddy average
3-Jan-11 1670.5
4-Jan-11 1696.25
5-Jan-11 1715.25 1694
6-Jan-11 1716.35 1709.283333
7-Jan-11 1672.65 1701.416667
10-Jan-
11 1654.35 1681.116667
11-Jan-
11 1670.9 1665.966667
12-Jan-
11 1669.4 1664.883333
13-Jan-
11 1642.2 1660.833333
14-Jan-
11 1651.45 1654.35
17-Jan-
11 1640.7 1644.783333
18-Jan-
11 1671.65 1654.6
19-Jan-
11 1657.85 1656.733333
20-Jan-
11 1666.25 1665.25
21-Jan-
11 1651.95 1658.683333
24-Jan-
11 1636.1 1651.433333
25-Jan-
11 1578.85 1622.3
27-Jan-
11 1555.05 1590
28-Jan-
11 1563.3 1565.733333
31-Jan-
11 1624.25 1580.866667
101
Interpretation: As above table and graph shows on 3 Jan DR.Reddy
open price at 1670.5 on 4th jan it increased more than 46.25 Rs. Laterly
continuously going down end of the month on 31st Jan it is closed at
1624.25 paise (1670.5-1624.25 = 46.25) It is fallen more than 2.76%.
Natc 3days moving

DATE o average
3-Jan-11 312.45
4-Jan-11 319.25
5-Jan-11 318.2 316.6333333
6-Jan-11 310.15 315.8666667
7-Jan-11 301.9 310.0833333
10-Jan-
11 294.15 302.0666667
11-Jan-
11 288.9 294.9833333
12-Jan-
11 297.9 293.65
13-Jan-
11 291.3 292.7
14-Jan-
11 287.5 292.2333333
17-Jan-
11 284.3 287.7
18-Jan-
11 292.35 288.05
19-Jan-
11 287.4 288.0166667
20-Jan-
11 305.6 295.1166667
21-Jan-
11 300.45 297.8166667
24-Jan- 302.7 302.9166667
102
11
25-Jan-
11 297.5 300.2166667
27-Jan-
11 297.15 299.1166667
28-Jan-
11 285.55 293.4
31-Jan-
11 279.6 287.4333333
Interpretation: As above table and graph shows on 3 Jan NATCO open

price at 312.45 on 4th jan it increased more than 6.8 Rs. Laterly
continuously going down end of the month on 31 st Jan it is closed at 279.6
paise (312.45-279.6 = 32.85) It is fallen more than 11%.
3days
Sun moving
DATE Pharma average
3-Jan-11 487.3
4-Jan-11 489.9
5-Jan-11 488.05 488.4166667
6-Jan-11 500 492.65
7-Jan-11 493.35 493.8
10-Jan-11 477 490.1166667
11-Jan-11 475.8 482.05
12-Jan-11 485.25 479.35
13-Jan-11 483.1 481.3833333
14-Jan-11 474.8 481.05
17-Jan-11 465.4 474.4333333
18-Jan-11 484.35 474.85
103
19-Jan-11 484.45 478.0666667
20-Jan-11 488.4 485.7333333
21-Jan-11 485.35 486.0666667
24-Jan-11 484.75 486.1666667
25-Jan-11 473.7 481.2666667
27-Jan-11 461.45 473.3
28-Jan-11 448.8 461.3166667
31-Jan-11 440.85 450.3666667
Interpretation: As above table and graph shows on 3 Jan Sun Pharma

open price at 487.3 on 4th jan it increased more than 2.6 Rs. Laterly
continuously going down end of the month on 31 st Jan it is closed at 440.85
paise (487.30-440.85 = 46.45) It is fallen more than 10%.
Rate of Change: Rate of Change indicator ROC means the rate of
change between the current price and the price ‘n’ number of days in the
past. ROC helps to find out the overbought and oversold positions in a
scrip. It is also useful in identifying the trend reversal Closing prices. Rate
of Change Indicator measures the rate of change of current price as
compared to the price a certain number of days or weeks back. To
calculate a ‘n’ day rate of change: ROC =
OR
Formula : Opening Price – Closing Price x 100
Opening Price
104
CIPL 3 days price roc=
DATE A ago ratio ratio-100
3-Jan-
11 372.5
4-Jan-
11 379.25
5-Jan-
11 376.35
6-Jan- 0.97610
11 363.6 372.5 74 -0.0238926
7-Jan- 0.94133
11 357 379.25 16 -0.0586684
10-Jan- 0.92493
11 348.1 376.35 69 -0.0750631
11-Jan- 0.95338
11 346.65 363.6 28 -0.0466172
12-Jan- 0.97142
11 346.8 357 86 -0.0285714
13-Jan- 0.98965
11 344.5 348.1 81 -0.0103419
14-Jan- 0.97937
11 339.5 346.65 4 -0.020626
17-Jan-
11 346.8 346.8 1 0
18-Jan- 1.02931
11 354.6 344.5 79 0.02931785
19-Jan- 1.03549
11 351.55 339.5 34 0.03549337
Aurobind
20-Jan- 3 days price roc=ratio-100
11 351.35 346.8 1.01312 0.01311995
Date o 21-Jan- ago ratio
0.99830
3-Jan-11 1331.1 11 354 354.6 8 -0.001692
4-Jan-11 1359.65
24-Jan- 0.99132
5-Jan-11 1359.2 11 348.5 351.55 41 -0.0086759
25-Jan- 0.97666
6-Jan-11 1355.4511 343.151331.1
351.35 14
101.82931 1.8293141
-0.0233386
7-Jan-11 1312.7
27-Jan- 1359.65 96.546905
0.94194 -3.4530945
10-Jan-11 1293.3511 333.451359.2
354 9295.155238 -4.8447616
-0.0580508
28-Jan-
1295.05 1355.45 0.96154
95.543915 -4.4560847
11-Jan-11
11 335.1 348.5 95 -0.0384505
12-Jan-11 1331
31-Jan-
1312.7 101.39407
0.96794
1.39407328
13-Jan-11 1297.6511 332.151293.35
343.15 4 100.33247 0.33246994
-0.032056
14-Jan-11 1296.05 1295.05 100.07722 0.0772171
17-Jan-11 1277.7 1331 95.995492 -4.0045079
18-Jan-11 1292.35 1297.65 99.591569 -0.4084306
19-Jan-11 1276.5 1296.05 98.491571 -1.5084295
20-Jan-11 1259.95 1277.7 98.610785 -1.389215
21-Jan-11 1266.4 1292.35 97.99203 -2.00797
24-Jan-11 1264.05 1276.5 99.024677 -0.9753231
25-Jan-11 1255.55 1259.95 99.65078 -0.3492202
27-Jan-11 1236.65 1266.4 97.650821 -2.3491788
28-Jan-11 1177.15 1264.05 93.125272 -6.8747281
31-Jan-11 1186.75 1255.55 94.52033 -5.4796703
105
3 days
DATE Dr Reddy ago price ratio Roc=ratio-100
3-Jan-11 1670.5
4-Jan-11 1696.25
5-Jan-11 1715.25
6-Jan-11 1716.35 1670.5 102.74469 2.744687219
7-Jan-11 1672.65 1696.25 98.608696 -1.391304348
10-Jan-11 1654.35 1715.25 96.449497 -3.550502842
11-Jan-11 1670.9 1716.35 97.351939 -2.648061293
12-Jan-11 1669.4 1672.65 99.805698 -0.194302454
13-Jan-11 1642.2 1654.35 99.265573 -0.734427419
14-Jan-11 1651.45 1670.9 98.835957 -1.16404333
17-Jan-11 1640.7 1669.4 98.280819 -1.719180544
18-Jan-11 1671.65 1642.2 101.79333 1.793326026
19-Jan-11 1657.85 1651.45 100.38754 0.387538224
20-Jan-11 1666.25 1640.7 101.55726 1.557262144
21-Jan-11 1651.95 1671.65 98.821524 -1.178476356
24-Jan-11 1636.1 1657.85 98.68806 -1.311940163
25-Jan-11 1578.85 1666.25 94.754689 -5.245311328
27-Jan-11 1555.05 1651.95 94.134205 -5.86579497
28-Jan-11 1563.3 1636.1 95.550394 -4.44960577
31-Jan-11 1624.25 1578.85 102.87551 2.875510656
106
NATC
DATE O 3 days ago price ratio roc=ratio-100
3-Jan-11 312.45
4-Jan-11 319.25
5-Jan-11 318.2
6-Jan-11 310.15 312.45 99.263882 -0.736117779
7-Jan-11 301.9 319.25 94.565388 -5.434612373
10-Jan-11 294.15 318.2 92.44186 -7.558139535
11-Jan-11 288.9 310.15 93.148477 -6.851523456
12-Jan-11 297.9 301.9 98.675058 -1.324942034
13-Jan-11 291.3 294.15 99.031107 -0.968893422
14-Jan-11 287.5 288.9 99.515403 -0.484596746
17-Jan-11 284.3 297.9 95.43471 -4.565290366
18-Jan-11 292.35 291.3 100.36045 0.360453141
19-Jan-11 287.4 287.5 99.965217 -0.034782609
20-Jan-11 305.6 284.3 107.49209 7.492085825
21-Jan-11 300.45 292.35 102.77065 2.770651616
24-Jan-11 302.7 287.4 105.32359 5.323590814
25-Jan-11 297.5 305.6 97.349476 -2.65052356
27-Jan-11 297.15 300.45 98.901648 -1.098352471
28-Jan-11 285.55 302.7 94.334324 -5.665675586
31-Jan-11 279.6 297.5 93.983193 -6.016806723
107
Sun 3 days price roc=ratio-
Date Pharma ago ratio 100
3-Jan-11 487.3
4-Jan-11 489.9
5-Jan-11 488.05
6-Jan-11 500 487.3 102.6062 2.606197414
7-Jan-11 493.35 489.9 100.70423 0.704225352
10-Jan-
11 477 488.05 97.735888 -2.264112284
11-Jan-
11 475.8 500 95.16 -4.84
12-Jan-
11 485.25 493.35 98.358164 -1.641836424
13-Jan-
11 483.1 477 101.27883 1.278825996
14-Jan-
11 474.8 475.8 99.789828 -0.210172341
17-Jan-
11 465.4 485.25 95.909325 -4.09067491
18-Jan-
11 484.35 483.1 100.25875 0.258745601
19-Jan-
11 484.45 474.8 102.03243 2.032434709
20-Jan-
11 488.4 465.4 104.94199 4.941985389
21-Jan- 485.35 484.35 100.20646 0.206462269
108
11
24-Jan-
11 484.75 484.45 100.06193 0.061925895
25-Jan-
11 473.7 488.4 96.990172 -3.00982801
27-Jan-
11 461.45 485.35 95.075719 -4.924281446
28-Jan-
11 448.8 484.75 92.583806 -7.416193914
31-Jan-
11 440.85 473.7 93.065231 -6.934768841
Interpretation: Rate of Change (ROC) is the identification of

Overbought and oversold region the historic high & low values of the ROC
should be identified at first to locate the overbought and oversold region.
If the scrip ROC reaches the Historic High values the scrip is in the
overbought region and a fall in the value can be anticipated. Likewise if
the scrip ROC reaches the Historic low values the scrip is in the oversold
region, a rise in the scrip price can be anticipated. Investor can sell the
scrip in the overbought region and buy it in the oversold region.
Relative Strength Index (RSI): RSI was developed Wells Wilder. It
is an oscillator used to identify the inherent technical strength and
weakness of a particular scrip or market. RSI can be calculated for a scrip
by adopting the following formula:
RSI =100-[100/ (1+RS)]
Note: RS =
109
Date Cipla Gain Loss
3-Jan-11 372.5 0 0
4-Jan-11 379.25 6.75 0
5-Jan-11 376.35 0 2.9
6-Jan-11 363.6 0 12.75
7-Jan-11 357 0 6.6
10-Jan-
11 348.1 0 8.9
11-Jan-
11 346.65 0 1.45
12-Jan-
11 346.8 0.15 0
13-Jan-
11 344.5 0 2.3
14-Jan-
11 339.5 0 5
17-Jan-
11 346.8 7.3 0
18-Jan-
11 354.6 7.8 0
19-Jan-
11 351.55 0 3.05
20-Jan-
11 351.35 0 0.2
21-Jan-
11 354 2.65 0
24-Jan-
11 348.5 0 5.5
25-Jan-
11 343.15 0 5.35
27-Jan-
11 333.45 0 9.7
Rule of RSI: If 28-Jan-
RSI crosses 11 335.1 1.65 0
31-Jan-
seventy there 11 332.15 0 2.95
total 26.3 66.65
may be
4.3833 5.5541
downturn and it Average 33 67
0.7891
is time to sell. If RS 97
the RSI falls 44.190
RSI 9
below thirty it is
time to pick up the scrip. If the share price is falling and RSI is rising, a
divergence is said to have occurred. Divergence indicates the turning
point of the market. If the RSI is rising in the overbought zone, it would
indicate the downfall of the price.
110
If RSI falls in the overbought zone, it gives a clear signal of ‘sell’. The term
‘overbought’ describes the price level at which momentum can no longer
be maintained and the price has to go down. This condition occurs after a
sharp rise in price during a period of heavy buying. When the RSI is in the
oversold region, it generates the buy signal. The term oversold is used to
describe a security or market that has declined unreasonably low level.
This condition is characterized by an increase in sales and excess of net
declines.
Date Dr Reddy Gain Loss

3-Jan-11 1670.5 0 0
4-Jan-11 1696.25 25.75 0
5-Jan-11 1715.25 19 0
6-Jan-11 1716.35 1.1 0
7-Jan-11 1672.65 0 43.7
10-Jan-11 1654.35 0 18.3
11-Jan-11 1670.9 16.55 0
12-Jan-11 1669.4 0 1.5
13-Jan-11 1642.2 0 27.2
14-Jan-11 1651.45 9.25 0
17-Jan-11 1640.7 0 10.75
18-Jan-11 1671.65 30.95 0
19-Jan-11 1657.85 0 13.8
20-Jan-11 1666.25 8.4 0
21-Jan-11 1651.95 0 14.3
24-Jan-11 1636.1 0 15.85
25-Jan-11 1578.85 0 57.25
27-Jan-11 1555.05 0 23.8
28-Jan-11 1563.3 8.25 0
31-Jan-11 1624.25 60.95 0
total 180.2 226.45
20.022
Average 22 22.645
0.8841
RS 79
46.926
RSI 49
111
Aurobind
Date o Gain Loss
3-Jan-11 1331.1 0 0
4-Jan-11 1359.65 28.55 0
5-Jan-11 1359.2 0 0.45
6-Jan-11 1355.45 0 3.75
7-Jan-11 1312.7 0 42.75
10-Jan-11 1293.35 0 19.35
11-Jan-11 1295.05 1.7 0
12-Jan-11 1331 0 35.95
13-Jan-11 1297.65 33.35 0
14-Jan-11 1296.05 0 1.6
17-Jan-11 1277.7 0 18.35
18-Jan-11 1292.35 0 14.65
19-Jan-11 1276.5 0 15.85
20-Jan-11 1259.95 0 16.55
21-Jan-11 1266.4 6.45 0
24-Jan-11 1264.05 0 2.35
25-Jan-11 1255.55 0 8.5
27-Jan-11 1236.65 0 18.9
28-Jan-11 1177.15 0 59.5
31-Jan-11 1186.75 9.6 0
total 79.65 258.5
18.464
Average 15.93 29
0.8627
RS 47
46.315
RSI 84
112
Date Natco Gain Loss
3-Jan-11 312.45 0 0
4-Jan-11 319.25 6.8 0
5-Jan-11 318.2 0 1.05
6-Jan-11 310.15 0 8.05
7-Jan-11 301.9 0 8.25
10-Jan-11 294.15 0 7.75
11-Jan-11 288.9 0 5.25
12-Jan-11 297.9 9 0
13-Jan-11 291.3 0 6.6
14-Jan-11 287.5 0 3.8
17-Jan-11 284.3 0 3.2
18-Jan-11 292.35 8.05 0
19-Jan-11 287.4 4.95 0
20-Jan-11 305.6 18.2 0
21-Jan-11 300.45 0 5.15
24-Jan-11 302.7 2.25 0
25-Jan-11 297.5 0 5.2
27-Jan-11 297.15 0 0.35
28-Jan-11 285.55 0 11.6
31-Jan-11 279.6 0 5.95
total 49.25 72.2
5.5538
Average 9.85 46
1.7735
RS 46
63.945
RSI 07
113
Date Sun Pharma Gain Loss
3-Jan-11 487.3 0 0
4-Jan-11 489.9 2.6 0
5-Jan-11 488.05 0 1.85
6-Jan-11 500 11.95 0
7-Jan-11 493.35 0 6.65
10-Jan-
11 477 0 16.35
11-Jan-
11 475.8 0 1.2
12-Jan-
11 485.25 9.45 0
13-Jan-
11 483.1 0 2.15
14-Jan-
11 474.8 0 8.3
17-Jan-
11 465.4 0 9.4
18-Jan-
11 484.35 18.95 0
19-Jan-
11 484.45 0.1 0
20-Jan-
11 488.4 3.95 0
21-Jan-
11 485.35 0 3.05
24-Jan-
11 484.75 0 0.6
25-Jan-
11 473.7 0 11.05
27-Jan-
11 461.45 0 12.25
28-Jan-
11 448.8 0 12.65
31-Jan-
11 440.85 0 7.95
total 47 93.45
7.8333 7.1884
Average 33 62
1.0897
RS 09
52.146
RSI 45
114
Interpretation: Cipla is showing RSI 44.19% & Aurobindo showing RSI
46.31% Dr. Reddy RSI 46.9%, NATCO RSI 63.9%, Sun pharmacy RSI
52.14% Cipla & Aurobindo, Dr.Reddy is nearly oversold position if it is
fallen another 10 to 13% it can start buying in above companies NATCO if
it is increase 7% we can sell NATCO, Sunpharma continuously moving
constantly.
(FINDINGS,
SUGGESTIONS
AND CONCLUSIONS)
115
FINDINGS
DR. REDDY
1. There is an increase in Sales Turnover, as sales turnover increases
the Operating Profit is also increases, and EBIT is increases,
Reported PAT, & issuing of shares, and atlast EPS is increases in the
year 2010.
2. There is an Increase in Networth, and Total Current Liabilities is

increases, where as Net Current Assets is increases in 2007, whereas
decreases in 2010, overall atlast Total Assets is increases in 2010
including Miscellaneous Expenses.
3. Earnings Per Share is increases in 2010 which shown in Graph of

50.11.
116
4. Price Earnings Ratio is increases in 2010 which shown in Graph of
25.44.
5. Trend Analysis which includes Sales Turnover and Reported PAT

increases in the Year 2010.
6. Overall the Financial Position of the Company is satisfactory.
7. Average Return of Dr.Reddy is 33.65%, and Standard Deviation is

87.91%
AUROBINDO

year 2010.

increases, where as Net Current Assets is increases in 2010, overall
atlast Total Assets is increases in 2010 including Miscellaneous
Expenses.
117
94.34.

52.47.
5. Trend Analysis which includes Sales Turnover increases in the Year

2010 of 3319.60
7. Average Return of Dr.Reddy is 90.39, and Standard Deviation is

192.70
CIPLA

year 2010.

118
Expenses.

20.26.

32.68.

2010 of 5657.85

66.66
NATCO

119
year 2010.

Expenses.

16.93.

15.26.

2010 of 313.57

110.56
120
Sun Pharmacy

year 2009.

Expenses.

61.09.

41.29.

2009 of 1265.29.

37.102
121
SUGGESTIONS
Dr. Reddy:
1. The Dr.Reddy Labs increases its EPS in the year 2007 of 70.09 but
decreases in the year 2010 of 50.11 hence it should be improved.
2. The Dr.Reddy Labs increases its P/E in the year 2006 of 51.6 but
3. The Dividend Pay Out Ratio is increases in the year 2009 of 8.0234
and decreases in 2010 of 5.909 hence, it should be improved.
4. The Sales Turnover or Market Trend is increases in 2010 of 4469.60 &

PAT is decreases of 846 where compare to other years, overall sales
should be improved at that time profit increases by the investor.
5. The Dividend Yield Ratio is increases in 2009 of 8.0234 but it is

decreases in 2010 of 2.35 hence the improvement must be made by
issuing shares to the investor.
122
6. In Dr.Reddy Labs Average Return is less than the Average Risk i.e.,
33.65 < 87.91 hence it should be improved.
7. The moving Average of Dr.Reddy Labs is fallen by 2.76% means the

Price of the share is decreases hence it should be improved.
8. The Relative Strength Index (RSI) of Dr. Reddy Labs is 46.9 Price
hence it should be nearer to Oversold Region.
Aurobindo:
1. The Aurobindo Pharma increases its P/E in the year 2006 of 52.7 but
2. In Aurobindo Pharma Average Return is less than the Average Risk

i.e., 90.39 < 192.70 hence return should be improved.
3. The moving Average of Dr.Reddy Labs is fallen by 11% means the

Price of the share is decreases hence it should be improved.
4. The Rate of Change of Aurobindo Pharma is increases on 6th Jan of

1.8293 and decreases on 31st Jan of -5.4796 hence ROC should
improve.
123
5. The Relative Strength Index (RSI) of Aurobindo Pharma is 46.3 Price
hence it should be nearer to Oversold Region.
Cipla:
1. The Cipla increases its EPS in the year 2006 of 20.26 but decreases in
the year 2010 of 13.46 hence it should be improved.
2. The Cipla increases its P/E in the year 2006 of 32.68 but decreases in
the year 2010 of 25.14 hence it should be improved.
3. The Dividend Per Share of Dr. Reddy Lab is decreases in the year
2010 of 0.000249, and it is constant of 0.000257 in 2007, 2008, 2009.
and decreases in 2010 of 1.8499 hence, it should be improved.
124
5. In Cipla Ltd Average Return is less than the Average Risk i.e., 37.74 <
192.70 hence return should be improved.
6. The moving Average of Cipla is fallen by 11% means the Price of the
share is decreases hence it should be improved.
7. The Rate of Change of Cipla is decreases on 6th Jan -0.02389 and

again it is huge decreases on 31st Jan by -0.032056 hence ROC should
improve.
8. The Relative Strength Index (RSI) of Cipla is 44.19 Price hence it

should be nearer to Oversold Region.
NATCO:
1. The Cipla increases its P/E in the year 2006 & 2007 of 15.26 & 13.14
but decreases in the year 2010 of 7.87 hence it should be improved.
125
and decreases in 2010 by 0.4134 hence, it should be improved.
3. In NATCO Ltd Average Return is less than the Average Risk i.e.,
53.46 < 110.56 hence return should be improved.
4. The moving Average of Natco is fallen by 11% means the Price of the
share is decreases hence it should be improved.
5. The Rate of Change of Natco is huge decreases on 6th Jan of -0.73611

and again it is decreases on 31st Jan by -6.0168 hence ROC should
improve.
6. The Relative Strength Index (RSI) of NATCO is 63.94 Price hence it

Sun Pharmacy:
1. The Sun Pharma increases its EPS in the year 2009 of 61.09 but
126
2. The Dividend Yield Ratio is increases in 2009 of 6.298 but it is
decreases in 2010 by 3.90 hence the improvement must be made by
issuing shares to the investor.
3. The Sales Turnover or Market Trend is increases in 2009 of 2833.65 &

PAT is increases by 1265.29 and in year 2010 it is decreases by
1891.16 & PAT is 898.65 where compare to other years, overall sales
should be improved in 2010 at that time profit increases by the
investor.
4. In Sun Pharma Average Return is less than the Average Risk i.e.,
35.4 < 37.102 hence return should be improved.
5. The moving Average of Sun Pharma is fallen by 10% means the Price
of the share is decreases hence it should be improved.
5. The Rate of Change of Sun Pharma is increases on 6 th Jan 2011 of

-2.606 and again it is decreases on 31st Jan by -6.934 hence ROC
should improve.
6. The Relative Strength Index (RSI) of Sun Pharma is 52.14 Price hence it
CONCLUSION
127
In my project, I have taken five Companies in a select Pharma Industry,
i.e, Dr. Reddy Labs Ltd, Aurobindo Pharma, Cipla Ltd, NATCO, Sun
Pharmacy. As Dr. Reddy, being the most preferred sector among the
investors, I have taken the base Dr. Reddy Labs to compare with other
industries in regard of Trend Analysis, Price Earning Multiple, Earning
Per share Dividend Per share, Dividend Pay Out Ratio.
Can conclude the Dr. Reddy Labs is an better option for the investors to
invest i.e. to give it a first preference then the preference goes to other
Pharmaceutical companies.
Dr. Reddy
1. The Sales Turnover is increases and overall the Profit margin is high.
2. The EPS, DPS and Dividend Payout ratio is satisfactory.
3. The Share Price movement is fallen hence it should be improved.
Aurobindo:
2. The EPS, DPS and Dividend Pay out ratio is satisfactory.
3. The Share Price movement is fallen by 11% hence it should be
improved
Cipla:
2. The Dividend Pay out, Return & Risk, DPS decreases.
3. The Share Price movement is fallen by 11% hence it should be
improved.
128
NATCO:
1.The P/E, Return & Risk, Dividend Payout ratio, Moving average
decreases.
Sun Pharmacy:
1. EPS, Dividend Yield Ratio, Sales Turnover, Moving Average, Return is
decreases.
Hence, from this Project i.e, “A STUDY ON EQUITY ANALYSIS ON A

SELECT PHARMA INDUSTRY” I able to understand as analyst to the
Investors for the purpose of making Investment, Analysis, Interpretation of
Financial data for the purpose of Investment decision making in capital
markets by investing the shares in Dr. Reddy Labs, hence overall position
of the company is satisfactory.
129
BIBLOGRAPHY
Books:-
INVESTMENTS
- William F. Sharpe, Gordon J. Alexander & Jeffery V. Baily.
• Security Analysis And Portfolio Management
- Punithavathy Pandian
• Financial Management
- M Y Khan and P K Jain
Web References :-
• http://nseindia.com
• http://www.bseindia.com
• http://www.investopedia.com
• http://www.hseindia.org
• http://www.hseindia.org
• http://www.economictimes.com
• http://www.business-standard.com
• http://www.investmartindia.com
130
The study Reveals that ther exist very high fluctuations in return of
pharmaceutical industry. High fluctuations in return indicate high risk
,enters the possibility of gain & loss will be very high in the particular
period Variations in return Cipla was high in February when compare to
other companies Return , aurob variation , dr.reddy had moderate
variance, Risk iis very high, Cipla has high risk, then return Cipla stock
prices decline , moderate increase, stabilize. Stock price of aurbindo
increasingly then fall Closing prce decrease , in 2 months stabilize The
overall study results that investin in variety of securities will minimize
the possibility tof risk to some extent. They is a very high risk in return
of selected Pharma company, but it can be minimize, if we see the
volatility in price movement is very high in all companies. Thus
investing in a particular stock will be more risky. When compare to
portfolio securities..
In this proj 3 industries are considered for equity analysis. The

comparision among three industries is done in regard of sales and price
earning for 5 year so it can concluded that better option for investory.
The small investor sector invest is low and return is more. This
preference is only when the comparision is among these three industries
the result may be different when all industries are considered.
The study Reveals that ther exist very high fluctuations in return of
pharmaceutical industry. High fluctuations in return indicate high risk
,enters the possibility of gain & loss will be very high in the particular
period Variations in return Cipla was high in February when compare to
other companies Return , aurob variation , dr.reddy had moderate
variance, Risk iis very high, Cipla has high risk, then return Cipla stock
prices decline , moderate increase, stabilize. Stock price of aurbindo
increasingly then fall Closing prce decrease , in 2 months stabilize
The overall study results that investin in variety of securities will
minimize the possibility tof risk to some extent. They is a very high risk
in return of selected Pharma company, but it can be minimize, if we see
the volatility in price movement is very high in all companies. Thus
investing in a particular stock will be more risky. When compare to
portfolio securities..
131
In this proj 3 industries are considered for equity analysis. The
comparision among three industries is done in regard of sales and price
earning for 5 year so it can concluded that better option for investory.
The small investor sector invest is low and return is more. This
preference is only when the comparision is among these three industries
the result may be different when all industries are considered.
132
BIBLOGRAPHY
Books:-
• Inventory Management JD EDWARDS,RAVIRAJ

• Management and Planning Series FLOYDD.FREDRICK
• Materials & Financial Management C.M.SADIWALA
Websites:-
• http://Inventorymanagement.com
• http://www.inventorymanagementguide.co.uk
• http://www.google.com
Company Website:-
• http://www.lgindia.com
• http://www.sso.lge.com
133

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CHAPTER-I

A quick overview of the roots

• The emergence of professional research

A sum of money, determined by a company’s directors, paid to

Equity of a company is the property of the ordinary shareholder, hence

Types of securities that represent ownership in a corporation stock is

• Bull Market: A market in which prices are rising. A “bull” is a

1.2 Nature of Equity Shares:

Equity shares represent an ownership of a corporation. It is true that the

2. Maturity of Equity Shares

4. Net Asset Value and Book Value

5. Financial Analysis and Accounting Data

1.3 Need for the Study

• The main need of the study is to describe the techniques and

1.4 Objectives of the Study

1.5 Scope of the Study

• The study is restricted only to Five Companies of Pharma Industry

1.6 Methodology & Data base

1.7 Limitations of the Study

Equity represents an ownership position in a corporation. It is residual

The main advantages of equity shares are listed below:

• Limited Liability: In corporate form of organization, its owners have,

• Hedge against Inflation: The equity share is good hedge against

• Share in Growth: The major advantage of investment in equity shares

• Tax Advantage: Equity shares also offers tax advantage to the

EQUITY CAPITAL TERMINOLOGY:

The important terms used in equity capital are listed below:

• Authorized Capital: The authorized capital is the maximum

• Issued Capital: Issued capital is the part of the authorized capital

MEANING OF FUNDAMENTAL ANALYSIS

Any investment is risky and as such investment decision is difficult to

Thus the performance of a company depends recession or stagnation, the

The key characteristics that are to be considered in the analysis, which

• Demand – Supply Gap.

In this age or rapid technological change, the important factor to be

Financial analysis is analysis of financial statement of a company to assess

Method or devices of Financial Analysis:

Interpret the financial statement; it is necessary to analyze them with the

The following methods of analysis are generally used.

The Efficient Market Hypothesis has three Sub-hypothesis:

• Weakly Efficient: This form of Efficient Market Hypothesis states

• Semi-Strongly Efficient: This form of Efficient Market Hypothesis

• Strongly Efficient: This form of Efficient Market Hypothesis states

What is Technical Analysis?

Technical analysis is a method of evaluating securities by analyzing

A technical analyst concentrates on the movement of share prices. He

Technical analysis is the name given to forecasting techniques that

Basic principles of the technical analysis:

The basic principles on which technical analysis is based are as follows:

• The market value of a security is related to demand and supply

Share prices do rise or fall in straight lines. The movements are

• Moving averages are the mathematical indicators of the

EMA)* Factor+Previous EMA

• Relative Strength Index is a powerful indicator that signals buying

2.1 Review of literature

Title : How Stocks Trade & How Price Movement

At the most fundamental level, supply and demand in the market

Title : Effect of Mergers on the Share Price

Author : J.C Dodds*, J.P. Quek*

Journal : journal of business finance & accounting

EQUITY ANALYSIS: A PROFESSIONAL APPLICATION

Academy of Accounting and Financial Studies Journal

Author : J.C Dodds, J.P. Quek