Chetana’s R. K.

Institute of Management & Research

Bandra (East), Mumbai

EQUITY ANALYSIS OF SELECTED COMPANIES IN

AUTOMOBILE SECTOR
Summer Internship Project
With
KARVY STOCK BROKING LTD

Submitted in partial fulfillment of the requirements for

Master of Management Studies
(University of Mumbai)
Academic Year: 2017-2018

Submitted By
VARSHA VIJAY CHAUDHARI
Roll No. 69
MMS-Batch: 2016-18

1
 Declaration
I hereby declare that this project report titled “Equity analysis of selected companies in
automobile sector”, submitted in partial fulfillment of the requirement of Master of Management
Studies to Chetana’s R.K. Institute of Management and Research, is my original work and not
submitted for award of any degree or diploma fellowship or for similar title or prize. References
of work and related sources of information have been duly acknowledged in the report.

The project has been carried out under the guidance of Prof. Hitesh Punjabi.

I further declare that I have no objection and grant the rights to Chetana’s R.K. Institute of
Management and Research to publish any chapter/project or use it for future reference if they
deem fit.

Place : Mumbai
Date :
Name : VARSHA VIJAY CHAUDHARI
Class : MMS Batch 2016-18
Roll No. : B-69
Signature : ___________
 Certificate
This is to certify that the project titled “EQUITY ANALYSIS OF SELECTED COMPANIES
IN AUTOMOBILE SECTOR”, submitted by VARSHA VIJAY CHAUDHARI to Chetana’s
R. K. Institute of Management & Research in partial fulfillment of the requirement of Master
Of Management Studies, has been done under the guidance of the undersigned during the period
May to June, 2017.

Date:

Place: Mumbai

Faculty Guide Director

Prof. Hitesh Punjabi Dr. Jayashree A. Bhakay
 ACKNOWLEDGEMENT

Quality is not a result of accident. It demands hard work, commitment and dedication. A summer
internship project is a golden opportunity for learning and self-development. On the very outset
of this report, I would like to extend my sincere and heartfelt obligation towards all the people
who have helped me in this endeavor. Without their active guidance, help, co-operation &
encouragement, I would not have made headway in the project.

I am thankful to our Honorable Director Dr. Jayashree Bhakay for giving me a big opportunity to
undergo an internship project.

I express my deepest thanks to my internal guide Prof. Hitesh Punjabi for his guidance and
support. He supported me by showing different methods of information collection of the
company. He gave a right direction towards the completion of the project.

I wish to express my indebt gratitude and special thanks to Mr. Vishal Ved(assistant general
manger) and Mr. Gaurang Bhatt (Senior Cluster Manager), Karvy Stock Broking limited, Lower
Parel branch, Mumbai who inspite of being extraordinarily busy with duties, took out time to
hear, guide and keep me on the correct path and allowing me to carry out my industrial project
work at their esteemed organization

Varsha Vijay Chaudhari

 Executive Summary

The present study deals with the analysis of financial performance of Selected companies
of automobile industry in India, which are based on the segment that the companies which
produce both passenger cars and commercial vehicles. This study is examined financial
performance of selected companies of automobile industry in India industry in India. Automobile
industry has become one of the important industries of the economy. Automotive Industry,
globally, as well in India, is one of the key sectors of the economy. Due to its deep forward and
backward linkages with several key segments of the economy, automotive industry has a strong
multiplier effect and acts as one of the drivers of economic growth. The sector has tremendous
potential for providing employment. The Indian Automobile industry includes two - wheelers,
trucks, cars, buses and three – wheelers which play a vital role in development of the Indian
economy. For study of financial performance Mahindra & Mahindra Ltd. & Maruti Suzuki India
Ltd. are selected.
The present study covers fundamental analysis of selected companies in automobile
sector. Fundamental analysis is an approach to arrive at the ‘correct price’ of the
security. Fundamental analysis is a method of evaluating a security that entails attempting to
measure its intrinsic value by examining related economic, financial and other qualitative and
quantitative factors, and company specific factors. TOP- DOWN APPROACH E-I-C approach:
Economy (E) - industry (I) – company (C) is used for carrying out Fundamental Analysis. The
present study aims at carrying out the Fundamental analysis of two leading companies of Indian
automobile industry. The Financial performance of selected companies of Indian Automobile
Industry is analyzed by ratio analysis of the respective company. The ratios which are considered
are majorly Profitability, Liquidity and valuation ratios. This study is based on financial
statements of companies, which is secondary data. Data is collected from annual reports of the
selected companies. Further information obtained from Society of Indian automobile
manufacturers (SIAM), Magazines, News Papers, and websites etc.
 TABLE OF CONTENTS
Page No.
Chapter 1 INTRODUCTION 1-11
1.1 Introduction to the Task 1
1.2 Introduction to the Sector/Industry 3
1.3 Introduction to the Organization 7
1.4 Introduction to the Project 11

Chapter 2 SUMMER INTERNSHIP TASK DETAILS 12-14

2.1 Objective of the project 12
2.2 Detailed description of task 12
2.3 Research Methodology 13

Chapter 3 ANALYSIS / INTERPRETATIONS 15-38

Chapter 4 CONCLUSIONS & RECOMMENDATIONS 39-40

4.1 Conclusions derived 39
4.2 Learnings emerged 40

Chapter 5 Bibliography 41
 CHAPTER 1
INTRODUTION
1.1 Introduction to task
My work profile in Karvy Stock Broking Ltd. was that of a Finance intern.
The Karvy Group is headquartered in Hyderabad, Telangana.
I work in their Mumbai office that is located in Lower Parel, the address being as mentioned
below:

142-C,
Victor House,
NM Joshi Marg,
Lower Parel (West),
Mumbai- 400013

Services offered in the branch: Equity Broking, Depository Participant, Distribution of Financial
Products (Mutual Funds, FD and Bonds), Wealth Management Services, Currency Derivatives,
Portfolio Management Services, etc.
I worked with Karvy Stock Broking Ltd under the guidance of Mr. Gaurang Bhatt.

1.1.1 Equity Broking Services of Karvy:

Karvy’s equity advisors help clients time the market better with their expert guidance and
ensure that smart decisions are taken by the clients. Stock markets are erratic, but they mirror the
mood of the economy. Over the years, investment in equities is the best long-term wealth
maximization option. The gap between unpredictability and a safety anchor in the market can be
lessened by knowledge of market functioning and changing trends, planning with foresight and
choosing one’s options with care. Apart from just providing stock buying and selling options,
Karvy provides services using a holistic approach.
Karvy has several trading terminals that provide retail stock-broking facilities. 900
offices are located across the country. This ensures that the customer is never too far located

1
from a Karvy office. Also, customers can easily view their portfolios online with the help of the
online platform provided by Karvy. Research reports are daily sent twice to the customers. The
Morning Moves includes the predicted market scenario for the day whereas in the Daily Wrap up
report the market and the report are reviewed. The reports are prepared by the highly skilled
research team comprising of technical analysts and fundamental specialists.
In India, shares and securities are held electronically in a dematerialized (or Demat)
account, instead of the investor taking physical possession of certificates. A Demat account is
opened by the investor while registering with an investment broker (or sub-broker). The
Dematerialized account number is quoted for all transactions to enable electronic settlements of
trades to take place. Every shareholder will have a Dematerialized account for the purpose of
transacting. Access to the Dematerialized account requires an internet password and a transaction
password. Transfers or purchases of securities can then be initiated. Purchases and sales of
securities on the Dematerialized account are automatically made once transactions are confirmed
and completed.

1.1.2 Equity analysis

Equity analysis is a term that refers to the evaluation of a particular trading instrument, an
investment sector or the market as a whole. Stock analysts attempt to determine the future
activity of an instrument, sector or market. There are two basic types of stock
analysis: fundamental analysis and technical analysis. Fundamental analysis concentrates on data
from sources including financial records, economic reports, company assets and market share.
Equity analysis is a method for investors and traders to make buying and selling decisions. By
studying and evaluating past and current data, investors and traders attempts to gain an edge in
the markets by making informed decision.

1.2 Introduction to industry

The emergence of stock market can be traced back to 1830. In Bombay, business passed
in the shares of banks like the commercial bank, the chartered mercantile bank, the chartered

2
bank, the oriental bank and the old bank of Bombay and shares of cotton presses. In Calcutta,
Englishman reported the quotations of 4%, 5%, and 6% loans of East India Company as well as
the shares of the bank of Bengal in 1836. This list was a further broadened in 1839 when the
Calcutta newspaper printed the quotations of banks like union bank and Agra bank. It also quoted
the prices of business ventures like the Bengal bonded warehouse, the Docking Company and the
storm tug company. Between 1840 and 1850, only half a dozen brokers existed for the limited
business. But during the share mania of 1860-65, the number of brokers increased considerably.
By 1860, the number of brokers was about 60 and during the exciting period of the American
Civil war, their number increased to about 200 to 250. The end of American Civil war brought
disillusionment and many failures and the brokers decreased in number and prosperity. It was in
those troublesome times between 1868 and 1875 that brokers organized an informal association
and finally as recited in the Indenture constituting the “Articles of Association of the Exchange”.
On or about 9th day of July, 1875, a few native brokers doing brokerage business in shares and
stocks resolved upon forming in Bombay an association for protecting the character, status and
interest of native share and stock brokers and providing a hall or building for the use of the
members of such association. As a meeting held in the broker’ Hall on the 5th day of February,
1887, it was resolved to execute a formal deal of association and to constitute the first managing
committee and to appoint the first trustees. Accordingly, the Articles of Association of the
Exchange and the Stock Exchange was formally established in Bombay on 3rd day of December,
1887. The Association is now known as “The Stock Exchange”. The entrance fee for new
member was Re.1 and there were 318 members on the list, when the exchange was constituted.
The numbers of members increased to 333 in 1896, 362 in 1916and 478 in 1920 and the entrance
fee was raised to Rs.5 in 1877, Rs.1000 in 1896, Rs.2500 in 1916 and Rs. 48,000 in 1920. At
present there are 23 recognized stock exchanges with about 6000 stock brokers. Organization
structure of stock exchange varies. 14 stock exchanges are organized as public limited
companies, 6 as companies limited by guarantee and 3 are non-profit voluntary organization. Of
the total of 23, only 9 stock exchanges have been permanent recognition. Others have to seek
recognition on annual basis.

3
 These exchange do not work of its own, rather, these are run by some persons and with
the help of some persons and institution. All these are down as functionaries on stock exchange.
These are as follows:
1. Stock brokers
2. Sub-broker
3. Market makers
4. Portfolio consultants etc.

1.) Stockbrokers
Stock brokers are the members of stock exchanges. These are the persons who buy, sell or
deal in securities. A certificate of registration from SEBI is mandatory to act as a broker. SEBI
can impose certain conditions while granting the certificate of registrations. It is obligatory for
the person to abide by the rules, regulations and the buy law. Stock brokers are commission
broker, floor broker, arbitrageur etc. Detail of registered brokers Total no. of registered brokers as
on 31.03.2008 Total no. of sub brokers as on 31.03.2008 9000 24,000

2.) Sub-broker
A sub-broker acts as agent of stock broker. He is not a member of a stock exchange. He
assists the investors in buying, selling or dealing in securities through stockbroker. The broker
and sub-broker should enter into an agreement in which obligations of both should be specified.
Sub-broker must be registered SEBI for a dealing in securities. For getting registered with SEBI,
he must fulfill certain rules and regulation.

3.) Market Makers

Market maker is a designated specialist in the specified securities. They make both bid and
offer at the same time. A market maker has to abide by bye-laws, rules regulations of the
concerned stock exchange. He is exempt from the margin requirements. As per the listing
requirements, a company where the paid-up capital is Rs. 3 crore but not more than Rs. 5 crore
and having a commercial operation for less than 2 years should appoint a market maker at the
time of issue of securities.

4
 4.) Portfolio consultants
A combination of securities such as stocks, bonds and money market instruments is
collectively called as portfolio. Whereas the portfolio consultants are the persons, firms or
companies who advise, direct or undertake the management or administration of securities or
funds on behalf of their clients.

However, over the past 5 years this industry has gone through a major consolidation phase.

There is a decline in the number of stock brokers in India. This decline can be attributed to a number
of reasons. Tightening of regulations can be seen as a major factor, with introduction of a number of
KYC and other compliance norms. SEBI and the government are making every effort to ensure
investor safety. Regulations are important to ensure the stock markets are used in the right way as a
savings and investment avenue, as against a platform for speculation or gambling.

Another reason is the advent of new discount broking players which have taken the
traditional broking houses by surprise and have put a major pricing pressure on the old school
broking players. Increasing technology costs have also affected all the broking houses as the
customers have started to demand better and swift technology and the whole industry is inching
towards automation of processes; which is important for the growth of financial markets in India.

Also, the revenues from core broking activities have declined significantly, by almost 7 to 8
percent in FY 16. Derivatives volumes have taken a hit as SEBI has increased the minimum lot size
of futures and options contracts to keep small investors at bay from these arguably risky trading
instruments.

Every industry, at some point in time, goes through a consolidation phase. Stock broking is
no different. The efficient players are still going strong and are taking full advantage of the situation
by acquiring new customers aggressively. A lot of big players have diversified themselves into other
businesses like NBFC, Real Estate or Asset Management. This has given an opportunity to the mid-
sized and emerging brokers to capture the growing and untapped markets.

Of the 125-crore people in India, only 0.6 crores people invest or trade in the stock,
commodity or currency markets. In China or the US, this sub-set is more than 10 percent. SEBI,
stock exchanges, brokers and other market intermediaries are burning their midnight oil for investor
education and it has started to yield results. New investors are entering the markets either by way of

5
direct investments or through the mutual funds route. Other assets like real estate or gold have not
yielded as much returns as the equity markets in the past 5 years and a lot of people are beginning to
understand this. Additionally, the liquidity offered by the stock markets is not available with most of
the other investment avenues. The tightening of the compliance norms by SEBI has resulted in
transparency in the markets and increased public’s faith in the integrity of the whole industry.

The Way Forward for Brokers – Indian stock broking industry is undergoing a shift. A lot of
existing customers are quickly moving to the newer discount broking players which offer very cheap
pricing with basic broking services coupled with excellent trading technologies. Regular traders and
investors are finding these models extremely cheap and attractive. On the other hand, the traditional
brick and mortar broking houses are focusing more on developing newer markets. They are now
building better & transparent customer support systems. They have also realized that to survive and
compete in this industry, they need to gradually become more efficient by reducing their overheads.
Simpler Aadhar based account opening norms will ensure smooth and efficient KYC adherence.
Complimentary third party products like SIPs, mutual funds and insurance are other newer products
which offer diversification options to the existing customers.

The times are very opportune for all the discount brokers as well as full service brokers in
different ways. The stock brokers who become efficient by focusing on technology, reducing
unwanted costs and improving customer support in their domain will emerge to be the new leading
players in future.

1.3 Introduction to KARVY GROUP:

Karvy Group is one of the main 5 integrated financial specialist co-ops in India providing
services across multiple segments in the market. They have a wide nearness in India and have more
than 450 branches (900 offices) in over 400 cities and towns.

CLIENTELE
Individuals Investors 70 million
Corporate houses 600

6
 Despite the fact that they are mainly into providing financial services, they likewise offer
non-financial services too. During adverse economic circumstances, the non-financial businesses
help back off the weight on the financials of the organization.

Companies under the Karvy Group:

Karvy has a lot of independent companies dealing in a wide range of services.

 Karvy Stock Broking LTD: Equity Broking, Depository Participant, Distribution of

Financial Products (Mutual Funds, FD and Bonds), Wealth Management Services,
Currency Derivatives, Portfolio Management Services

7
 Karvy Comtrade LTD: Commodities Broking

 Karvy Capital LTD( Formerly Karvy Capital Private LTD): NBFC & Portfolio Manager

 Karvy Investment Advisory Services LTD(Formerly known as Karvy Insurance Broking

LTD): Investment Advisory Services

 Karvy Holdings LTD: Core Investment Company

 Karvy Middle East LLC: Wealth Management Products for NRI's

 Karvy Realty (India) LTD: Realty Services

 Karvy Financial Services LTD: Non Banking Financial Services

 Karvy Insurance Repository LTD: Insurance Repository services

 Karvy Forex & Currencies Private LTD: Currency and forex services

 Karvy Consultants LTD: Consultancy and Advisory Services, Publications

 Karvy Computershare Private LTD: Registrar and Share Transfer agent

 Karvy Computershare W.L.L( Formerly known as Fakhro Karvy Computershare W.L.L ):

Agent for Custody & Registration of Securities, Registered Administrator

 Karvy Data Management Services LTD: Data Management Services

 Karvy Investor Services LTD: Merchant Banking and Corporate Finance

 Karvy Insights LTD: Market Research

8
  Karvy Analytics LTD: Analytics

 Karvy Solar Power LTD: Power Generation

 Karvy Global Services LTD: Business Process Outsourcing

 Karvy Global Services Inc, USA: Business Process Outsourcing

 Karvy Inc, USA: Institutional Broking

AWARDS & ACCOLADES:

YEAR MILESTONE
2004 Best Depository Participant in the country
2006 ISTD – "Vivekananda National Award" for Excellence in HRD & Training
2007 "Amity Corporate Excellence" award at the 9th International Business Summit
and Research Conference-INBUSH
2007 "Amity Corporate Excellence" award at the 9th International Business Summit
and Research Conference-INBUSH.
2010 "Largest E-Broking House in India" at BSE Equity Broking Awards 2010
2011 Adjudged as the "Best Analyst in Base Metal Category" at the prestigious "Best
Market Analysts Awards 2011" by Zee Business in association with NCDEX
Awarded the "Broker with Best Corporate Desk for Commodity Broking" at the
2011 prestigious Bloomberg UTV Financial Leadership Awards 2011
2014 Won the prestigious ZEE Business Award for the "Best Agri. Analyst" 2014 in
the fifth edition
of India’s Best Market Analyst Awards on Saturday
2014 "NSDL Star Performer Award 2014 for Highest Asset Value"
2016 “Market Excellence Award, Commodities - Metal” in Zee Market Excellence
Awards 2016

THE MANAGEMENT TEAM PROMOTERS & MANAGEMENT TEAM

1) Mr. C. Parthasarathy
Chairman & Managing Director

9
2) Mr. M. Yugandhar
Managing Director
3) Mr. M. S. Ramakrishna
Director

MANAGEMENT TEAM
1) Mr. V.Mahesh
Managing Director – Karvy Data Management
2) Mr. V. Ganesh
CEO – Karvy Computershare
3) Mr. Sushil Sinha
Wholetime Director - Karvy Comtrade
4) Mr. P. B. Ramapriyan
Vice President & Head - Financial Product Distribution
5) Mr. Rajiv R. Singh
Vice President & Business Head - Karvy Stock Broking Limited

6) Mr. J. Ramaswamy
Group Head - Corporate Affairs
7) Mr. Deepak Gupta
Group Head – HR
8) Mr. G. Krishna Hari
Group Head – Finance

Vision and Mission of the Organization:

VISION:

10
Strive to be the leaders and experts through our processes, people and technology offering the
unique blend that delivers superior value by establishing and maintaining the highest levels of
services and professionalism.

MISSION:
To be the leading and preferred service provider to our customers, and we aim to achieve
this leadership position by building an innovative, enterprising, and technology driven
organization which will set the highest standards of service and business ethics.

1.4 Introduction to the Project

The Indian auto industry is one of the largest in the world. The industry accounts for 7.1
per cent of the country's Gross Domestic Product (GDP). The Two Wheelers segment with 81 per
cent market share is the leader of the Indian Automobile market owing to a growing middle class
and a young population. Moreover, the growing interest of the companies in exploring the rural
markets further aided the growth of the sector.
This report contains a detailed analysis of Mahindra and Mahindra Ltd from a variety of
perspectives in a bid to help the reader understand the firm better. The project is based on tools
like fundamental analysis and ratio analysis

11
 CHAPTER 2
Summer Internship Task Details

2.1 Objective

 To understanding the process of demat account.

 To understand the broking processes in the competitive environment

 To perform the fundamental analysis and ratio analysis on selected company.

2.2 Literature Review

Hemal Pandya & Hetal Pandya (2013): The automobile industry is one of the core industries
in India and is optimistic of posting good sales in the coming years. So, the investment in the
shares and securities of automobile companies seems to be profitable. In their research paper
entitled ‘Fundamental analysis of Indian automobile industry’ they have discussed the
Fundamental analyses of two leading companies of Indian automobile industry viz. Tata Motors
and Maruti Suzuki and estimating their intrinsic value to assist investment decisions.

Prof. Madhavi Dhole (2013): performed fundamental analytical study of four automobile sector
companies in Price movement of shares. The study concluded that investors are interested in
predicting the future behavior of stock market. The study concluded that the investor should look
at the price movements of a particular company over the years and then should go for better
portfolio. The future plans of an organization are also vital information for analysis. The study
shows that the speculative or sentimental factors do play role in price movement of shares.

Hossein Khanifar (2012): He studied the factors affecting investors’ decisions by performing
fundamental analysis. The analysis is done by studying economy industry and then firm. The

12
population included in the study was broking firm at Tehran stock exchange. The study shows
that EPS, profit margin, P/E ratio, sales have highest importance in analyst decision followed by
economy related factors and industry related factors.

Velury Vijay Bhasker (2013): says that Indian Automobile Industry is globally one of the
largest industries and a key sector of the Economy and that with the increasing number of foreign
companies in the Indian market, the amount of employment have and will continue to increase
significantly. It has attempted to study the FDI in this sector and how the government should
work to increase this sectors efficiency.

BACKGROUND OF STUDY

The goal of analyzing a company's fundamentals is to find a stock's intrinsic value, a

fancy term for what you believe a stock is really worth - as opposed to the value at which it is
being traded in the marketplace. If the intrinsic value is more than the current share price, your
analysis is showing that the stock is worth more than its price and that it makes sense to buy the
stock

2.3 Methodology

PART A
The proposed study is descriptive in nature. The study is partially based on o the
secondary data.
Every intern at KSBL was allotted to a specific mentor under whom the study and
findings were carried out.

PART B
2.3.1 Nature of research
The research design for the study is conclusive in nature. It is totally based on secondary
data.

13
 2.3.2 Sources of data collection
Data is collected from annual reports of the companies, BSE website ,magazines ,IBEF
website, SIAM website.
.

14
 Chapter 3
Analysis/Interpretations

PART A
NON-RESEARCH BASED STUDY

On the first few days of my arrival, I was asked to observe the work of the interns that
were already present in the office. A book named “Basics of Financial Markets” published by the
Karvy Group itself was handed to me to study how the economy works. This book consisted
information of the financial market in general and the terms that I would need to know during the
term of the internship. Topics like mutual funds, IPOs, derivatives, etc., were covered in the
book. Also, information about how trading was done was mentioned in the book.
I was given the task of reading the daily reports of the market sent by the research team
and comment on the market scenario. As per the observations made, it can be predicted that the
market will be bullish for another few months.
Since, stock broking involves having a clearly defined knowledge about the market, it is
essential that as interns we are able to comprehend the basic day-to-day market terms. During my
internship, I sat alongside my mentor, and observed his work technique. One of the most
important things to learn was the reaction to market changes. Analysis of changes in prices of
stocks and the trends involved is a very important factor while giving advice to clients regarding
their portfolios. Answering the calls that he received during the market hours were one way of
learning that you certainly have to be on your toes during market hours. Watching the market is
crucial. Live updates on companies’ performances and latest news certainly impacted the market.
Also, it is of essence that the dealer has technical skills to operate the terminal swiftly with no
room for any kind of errors as a small mishap could lead to loss of client’s money.

15
 The terminal used by Karvy for dealing is NEST (Next Generation Electronic Securities
Trading Platform) that provides an integrated system for trading and risk management. Zeus is
the platform used by Relationship Manager for accessing client database.

Aegon Life Insurance

Karvy has a tie up with Aegon Life Insurance to sell various life insurance products to
their clients. Two training session was conducted by the Aegon representatives to provide
information about the various products and to help with the pitching that would be done to the
clients. The training session was quite interactive and innovative. In the first session basic
information on insurances was provided whereas in the second session the products were
discussed in details as well the most effective way of pitching insurance to customers was
discussed.
Aegon Life Insurance is a Joint Venture in India between Aegon and BCCL (Times
Group). There are traditional and ULIP insurance plans. The traditional plans generally have a
lock-in period of about 2-3 years. The traditional plans are:
1) Term Plan: It is the most popular plan among customers. The sum assured is available to the
nominee on the death of the insured if the death occurs before the expiry of the plan. It has the
cheapest premium. Taxation benefits of 80C and 10 (10D) are enjoyed by the clients.

2) Endowment Plan: In case of death sum assured plus a bonus amount is paid to the nominees,
if death occurs within the period of the plan. If the insured dies after the expiry of the plan, only
the bonus amount is given to the nominee.

3) Anticipated Endowment Plan: Sum assured is paid to the insured/nominee on death or

maturity as well as after specified intervals. It is popularly also known as money back plan.

4) Whole Life Plan (Pension plan): The whole pension amount is agreed upon first and later on
the basis of the amount, the premium is ascertained.

ULIP (Unit Linked Insurance Plan) is a market related plan. There is no guarantee as it depends
on the market. The lock-in period is 5 years. Tax benefit is of 80C and 10 (10D).

16
The products offered by Aegon are:

1) Guaranteed Growth Insurance Plan: this is a traditional plan which is available to people aged
between 8 to 50 years. A fixed amount is guaranteed to the policy holder. It is a non-medical
plan, i.e., no medical check-ups are required for this plan. Thus, it is very easy to issue.

2) iMaximise Insurance Plan: This is a ULIP plan which has two options.
They are:

a) Option 1: this plan is for investment purpose only. In case of death of the policy holder, the
nominee will receive either the sum assured or the fund value whichever is higher. After the
amount is paid the plan ceases to exist.

b) Option 2: mainly for child education. On death of the policy holder before the termination of
the policy, the future premiums that would have been paid by the client will be invested by the
company. The sum assured will be paid immediately on death along with a lump sum amount on
maturity as well regular income to the nominee will be paid.

Also, a brief overview of futures was given. According to the dealers of futures, there are some
essentials of futures.
 Futures have a pre-determined lot size.
 Margins are important.
 Futures are based on underlying assets.
 Roll over. This is the process wherein the futures are sold on their expiry date and futures
for the next period are bought.
Also, in futures, the payment of losses and receiving of gains takes place on a daily basis. Every
day the losses and gains are calculated and adjusted in the clients account

17
 PART B
Macro-Economic Analysis
The Indian growth story has had its share of ups and downs over the last decade. From
the growth stages at the start of the millennium to the boom during the mid-2000’s, from the
resilience during the global financial meltdown to the lackluster performance over the last three
years, the Indian economy has come a full circle. Here we are today in the midst of a worldwide
economic downturn once again and India emerging as one of the very few resilient countries
with arguably the most robust macro-economic health.

Figure 3.1 GDP growth rate (Source: worldbank.org)

The real GDP of the country is at 7.1% with growth projections of up to 7.8% over the
next couple of years. This coupled with a current stable inflation of around 5-6% is nicely set for
growth in investments and output. The projections over the next couple of years for inflation are

18
further downward. This along with growing GDP implies an increase in marginal propensity to
spend for the consumers as well as a higher disposable income as can be seen in the graph below.
The overall global economy is currently on a weak note and analysts don’t expect it to be
recovering anytime soon. Commodity prices have taken a substantial beating over the last year
led primarily by a depreciating crude oil. China; the world’s largest consumer of almost all types
of commodities has substantially reduced its requirements thereby impacting its suppliers and
consecutively having a domino effect on the entire market. This reduced consumption of
commodities is a result of the weakening global demand for goods and services impacting China
the most, due to premier position in the exports market. This has adversely affected the forex
market with an artificially devalued Yuan and an ever-appreciating US Dollar led by
strengthening American fundamentals. The Indian Rupee (INR) has not remain untouched during
this period of currency turmoil by continuing to depreciate against the dollar in order to remain
competitive. This was however also aided by the fact that the RBI Governor has constantly been
of the opinion that the post 65 levels of the INR are the actual levels.

Figure 3.2

19
The exchange rate is expected to stabilize in the 67-68 USDINR range over the coming four
years. A stable exchange rate is beneficial for both importers and exporters as it eliminates the
risks that usually accompany volatility.
The Reserve Bank of India kept all the key rates unchanged in their sixth bi monthly
review of the monetary policy. It has decided to maintain the status quo as of now as so as to
wait for the announcements made in the Union budget of 2016 and make decisions accordingly.
The Finance ministry is expected to return on its fiscal consolidation strategy this financial year
after diverging from the same last year with less than ideal results due to external global factors.
Hence the amount of government expenditure as against their total revenue is expected to be
lackluster. Instead the private sector is expected to be encouraged to do the same.
Sector Analysis
The Indian auto industry is one of the largest in the world. The industry accounts for 7.1
per cent of the country's Gross Domestic Product (GDP). The Two Wheelers segment with 81 per
cent market share is the leader of the Indian Automobile market owing to a growing middle class
and a young population. Moreover, the growing interest of the companies in exploring the rural
markets further aided the growth of the sector. The overall Passenger Vehicle (PV) segment has
13 per cent market share.
India is also a prominent auto exporter and has strong export growth expectations for the near
future. In April-March 2016, overall automobile exports grew by 1.91 per cent. PV, Commercial
Vehicles (CV), and Two Wheelers (2W) registered a growth of 5.24 per cent, 16.97 per cent, and
0.97 per cent respectively in April-March 2016 over April-March 2015.* In addition, several
initiatives by the Government of India and the major automobile players in the Indian market are
expected to make India a leader in the 2W and Four Wheeler (4W) market in the world by 2020.
India is also a prominent auto exporter and has strong export growth expectations for the near
future. In 2014-15, automobile exports grew by 15% over the previous year while the CAGR
over the period 2010-15 is nearly 14.5%. The composition of the exports is given below.

20
 Figure 3.3

In April-October 2015, overall automobile exports grew by 5.78%. PVs, CVs, three
wheelers and two wheelers registered a growth of 6.34%, 17.95%, 18.59% and 3.22%
respectively in April-October 2015 over April- October 2014. It is estimated that the Indian
automotive sector has the potential to generate up to US$ 300 billion in annual revenue by 2026,
and in the process create 65 million additional jobs and contribute over 12% to India’s Gross
Domestic Product. Also, the luxury car market is expected to register high growth by producing
150,000 units by 2020.
Several initiatives undertaken by the Government of India and the major automobile players in
the Indian market are expected to make India a leader in the two wheeler and four wheeler
market in the world by 2020. The government aims to develop India as a global manufacturing as
well as a research and development (R&D) hub. In its endeavor to achieve this objective the
National Automotive Testing and R&D Infrastructure Project (NATRIP) centers as well as a
National Automotive Board have been set up. These will act as facilitators between the
government and the industry to enable a better information and knowledge transmission
mechanism.

21
Some of these initiatives are as follows:
 Government of India aims to make automobiles manufacturing the main driver of the
‘Make in India’ initiative, as it expects passenger vehicles market to triple to 9.4 million
units by 2026.
 In the Union budget of 2015-16, the Government had announced a credit of Rs 850,000
crores (US$ 127.5 billion) to farmers, which is expected to boost the sales of tractors.
 The Government plans to promote eco-friendly cars in the country i.e. CNG based,
hybrid and electric vehicles.
 The government has formulated a scheme for faster adoption and manufacturing of
electric and hybrid vehicles in India, under the National Electric Mobility Mission 2020
to encourage the progressive induction of reliable, affordable and efficient electric and
hybrid vehicles in the country.
 Also, the well-established Regulatory Framework under the Ministry of Shipping, Road
Transport and Highways, plays a vital role in providing a boost to this sector.

SWOT Analysis
Strengths:
1. Product innovation - The expenditure on research and development is on overdrive in
order to keep pace with changing technologies such as electric vehicles, ethanol fuel etc.
2. Focus on Asia – With western markets saturating, markets in India and other Asian
countries is where all manufacturers are now focusing.
3. High competition – The cut throat competition due to ever increasing demands of the
consumers is keeping the industry constantly on the edge to improve and innovate
4. Manufacturing base – A host of companies from various nationalities have set base
domestically in order to gain a cost advantage thereby providing a booming employment
scope.

Weaknesses:
1. Recalled cars – In recent past, a host of companies have recalled their cars for a variety of
safety reasons leading to increasing questions being raised from all quarters of society.

22
 2. Uncertain factors – Factors like international crude oil prices, government policies etc.
keep the players in this market on the edge as any changes in these factors will gravely
affect either positively or negatively.

Opportunities:
1. Alliances – Increasingly a large number of firms are entering into alliances with firms
having similar objectives with a view to being a bigger success in the market.
2. Lifestyle evolution – The ever changing composition of families and their respective
lifestyles is leading to a variety of different needs in terms of specifications and models
by the consumers.

Threats:
1. Volatile world economy – The overall uncertainty in the global economy has dented the
confidence of global manufacturers. In spite of a certain sweet spots, overall the global
macro-economic trends are not encouraging the players.
2. High cost in R&D – The amount of money spent in R&D does not always necessarily
translate to products and hence profits. It is incumbent on firms to capitalize on this
investment.

Impact of GST on the Automobile Industry

 The two taxes charged to the end consumer on car and bikes currently are excise and
VAT, with an average combined rate of 26.50 to 44% which is higher than the expected
rates of 18 and 28% under GST. Therefore, there will be less burden of tax on the end
consumer under GST.
 The final GST rates have been announced for the different kind of automobiles. As
expected the GST on car and bikes are kept under the 28% bracket and a list of cess to
be levied on a different kind of automobile has also been declared by the Indian
government. Cess has been levied on different kind of automobiles ranging from 1 to
15%. GST will be beneficial for the people in the market for small family cars like
Alto, Santro, Nano, Datsun Go as a minimum cess of 1% has been charged over and

23
 above the GST rate of 28%. Bikes which have an engine of greater than 350CC like
Enfield 500CC or Harley Davidson etc would be charged GST at the rate of 28% and
an additional 3% cess would be levied. It is difficult to understand the placement of
yachts, aircraft, personal jets under the 3% cess bracket along with the small cars
having engine >1200CC and <1500CC instead of the 15% cess.
 Currently, there are a lot of free services/warranties offered by the car manufacturers
due to the competitive nature of the industry. These free goods/services are not taxed
under current tax laws. Under GST, the free services/ warranties would also be eligible
for taxation
 So the conclusion is implementation of GST would reduce the cost of manufacturing
of cars and bikes due to the subsuming of different taxes levied currently. Under GST,
the taxes would be charged on consumption state rather than the origin state, which
would give a boost to the growth rate of the automobile industry.

Impact of demonetization on automobile sector

 The scrappage of notes of denominations INR 1,000 and INR 500 has taken the
nation by storm. The sudden announcement made by Prime Minister Narendra Modi on
8th Nov, 2016 threw citizens into a quandary and even though this would be a short-
term impact, its ramifications would be felt throughout various sectors.

 In the automobile sector, the scrapping of INR 1,000 and INR 500 notes has had a
huge effect. In the month of November itself the bookings were down 50%. The results
for December 2016 have come out and they are even more shocking for the auto
makers. Vehicles sales in India are down to a 16 year low.

 For Dec 2016, vehicle sales declined to 1,221,929 units. This is a 18.66% decline.
India last reported these kind of vehicle sales back in December 2000. Dealerships
across the country have reported a drastic dip in walk-ins and inquiries, in both urban
and more particularly in rural areas. Business in Gujarat, Punjab and NCR has been
more affected with buyers in these regions preferring to make payments by cash.

24
  Customers opting for finance options also make down payments in cash which has
hence brought down sales considerably. This drastic dip in demand is even more
pronounced in the luxury car market. In rural areas, sales of automobiles have dipped
by around 40% and are expected to go down 60% as the cash crunch continues and as
most farmers prefer to make payments by cash.

Company Analysis

1. Mahindra & Mahindra Ltd

Mahindra & Mahindra, branded on its products and better known as 'Mahindra',
produces SUVs, saloon cars, pickup vehicles, commercial vehicles, two wheelers and tractors. It
owns assembly plants in India, China, United Kingdom and three assembly plants in the United
States. Its global subsidiaries include Mahindra Europe based in Italy, Mahindra USA Inc.,
Mahindra South Africa and Mahindra (China) Tractor Co. Ltd. They also maintain business
relations with foreign companies like Renault, International Truck etc.

Mahindra formerly had a joint venture with Ford called Ford India Private Limited to build
passenger cars. However their first manufactured passenger vehicle was the Logan in April 2007
under the Mahindra Renault joint venture. They made their maiden entry into the heavy trucks
segment with the Mahindra Truck and Bus Division, the joint venture with International Truck,
USA. The company has pursued an aggressive product expansion strategy that has seen the
launch of several new platforms and vehicles over the last few years, including an entry-level
SUV Xylo in January 2009, selling over 15,000 units in its first six months. Mahindra launched
its heavily publicized SUV, XUV500 in September 2011. The new SUV by Mahindra was
designed in-house and it was developed on the first global SUV platform that could be used for
developing more SUVs. Mahindra's two wheeler segment launched a new scooter in the first
quarter of 2015. Besides India, the company also targeted Europe, Africa, Australia and Latin
America for this model. The company launched the CNG version of its mini truck Maxximo on

25
29 June 2012. A new version of the Verito in diesel and petrol options was launched by the
company on 26 July 2012 to compete with Maruti's Dzire and Toyota Kirloskar Motor's Etios

M&M has a global presence and its products are exported to several countries. In early 2008,
they commenced their first overseas CKD operations with the launch of the Mahindra Scorpio in
Egypt, in partnership with the Bavarian Auto Group, soon followed by assembly facilities
in Brazil.

Mahindra & Mahindra has a controlling stake in Mahindra Reva Electric Vehicles and has gained
a controlling stake in South Korea's SsangYong Motor Company in as early as 2011.

Core Management

 Mr. Keshub Mahindra

Mahindra and Mahindra are led under the watchful guidance of their Chairman Emeritus Mr.
Keshub Mahindra. He served as the Chairman from 1963 to 2012 laying the foundations of
Mahindra as we know them to be today.

 Mr. Anand Mahindra

Mr. Mahindra, the current Chairman of the company joined the firm in 1997 as the Managing
Director. He has been instrumental in turning the company into a truly global, multi-faceted,
purpose driven company. He is also very well known for his philanthropic efforts in the area of
girl child education.

 Mr. Pawan Goenka

He is the President of the auto and farm sector joined the company in 1993. It was under his
leadership that the company launched their most successful product till date, the Scorpio. He is
member of the Society of Indian Automobile Manufactures (SIAM)

 Johng-sik Choi
Mr. Choi became the president of Ssangyong Motor in 2010 helping the firm successfully

26
relaunched their brand into the minds of the customers. He helped them achieve highest annual
revenues and exports in 2013.

 Mr. Ruzbeh Irani

If Mahindra is renowned as a brand force to be reckoned with today, then Mr. Ruzbeh Irani is
to be credited for this achievement. Being the Chief Brand Officer, he has maintained and helped
maintain the highest ethics. He has been responsible for building the business’s core brand
strategy.

 Mr. Pravin Shah

He heads the domestic and international operations of the company. He has been closely
associated with the firm’s process of evolution into a SUV and MPV leader. He has been the
Chairman of the International Trade Committee of the Bombay Chambers of Commerce.

Sales & Profit Trend Analysis

Figures are in rupees crores

Figure 3.4 Sales & Profit Trend Analysis (Source:bseindia.com)

27
 The last few years has been a bit of a mixed bag for Mahindra and Mahindra when
considering sales and profits together. Sales has been a consistent performer over this time frame
with a CAGR of 10.44%. The length of the duration and the high growth rate over this long
duration signifies the effective performance of the company in terms of net sales.
Profits paint a different picture of the financial health of the company. Even though
profits have increased at a CAGR of 5.8%, the degree of variability in the same might be of
concern. It also provides an insight into the increase in expenses of the firm over the same
period. This can be with attributed to a reduction in the firm’s efficiency or to significant and
consistent capital expenditures over the period.

2.MARUTI SUZUKI INDIA LTD

Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an automobile
manufacturer in India. It is a 56.21%-owned subsidiary of Japanese automobile and motorcycle
manufacturer Suzuki Motor Corporation. As of January 2017, it had a market share of 51% of
the Indian passenger car market. Maruti Suzuki manufactures and sells popular cars such as
the Ciaz, Ertiga, Wagon R, Alto, Swift, Celerio, Swift Dzire, Omni, Baleno and Baleno RS. The
company is headquartered at New Delhi. In February 2012, the company sold its ten millionth
vehicle in India.
Maruti was established in February 1981 by Sanjay Gandhi on Background
of Government of India though the actual production commenced only in 1983. It started with
the Maruti 800, based on the Suzuki Alto kei car which at the time was the only modern car
available in India. Its only competitors were the Hindustan Ambassador and Premier Padmini

Maruti Suzuki has three manufacturing facilities in India. All manufacturing facilities have a
combined production capacity of 1,700,000 vehicles annually. The Gurgaon manufacturing

28
facility has three fully integrated manufacturing plants and is spread over 300 acres
(1.2 km2).The Gurgaon facilities also manufacture 240,000 K-Series engines annually. The
Gurgaon Facilities manufactures the Alto 800, WagonR, Omni, Gypsy King, Ertiga, S-
Cross, Vitara Brezza, Ignis and Eeco. The Manesar manufacturing plant was inaugurated in
February 2007 and is spread over 600 acres (2.4 km2). Initially it had a production capacity of
100,000 vehicles annually but this was increased to 300,000 vehicles annually in October 2008.
The production capacity was further increased by 250,000 vehicles taking total production
capacity to 800,000 vehicles annually. The Manesar Plant produces the Alto 800, Alto
K10, Swift, Swift DZire, Ciaz, Baleno, Baleno RS and Celerio. On 25 June 2012, Haryana State
Industries and Infrastructure Development Corporation demanded Maruti Suzuki to pay an
additional Rs 235 crore for enhanced land acquisition for its Haryana plant expansion. The
agency reminded Maruti that failure to pay the amount would lead to further proceedings and
vacating the enhanced land acquisition. The launch of the Desire was happened in the month of
May 2017 and the variant is said to have good mileage. The Gujarat manufacturing plant became
operational in February 2017. The plant current capacity is about 250,000 units per year. But
with new investments Maruti Suzuki has plan to take it to 450,000 units per year. In 2012, the
company decided to merge Suzuki Power train India Limited (SPIL) with itself. SPIL was started
as a JV by Suzuki Motor Corp. along with Maruti Suzuki. It has the facilities available for
manufacturing diesel engines and transmissions. The demand for transmissions for all Maruti
Suzuki cars is met by the production from SPIL.

Core committee

Mr. R. C. Bhargava (Chairman)

Mr. R.C. Bhargava currently the chairman of Maruti Suzuki India Ltd is the man behind
huge success of MSIL. He joined MSIL in 1981 as director of Marketing. He has been awarded
with Padma Bhushan by Indian Government for his major contribution in decisively placing
India on the motorization map of the world.

Mr. Kenichi Ayukawa (Managing Director& CEO)

29
 He served as Director on the Board of Maruti Suzuki India Limited from July 2008 to
March 2013. Before taking charge as the Managing Director at Maruti Suzuki India Limited he
served as Managing Executive Officer and Executive General Manager, Global Marketing at
Suzuki Motor Corporation, Japan.

Mr. Toshiaki Hasuike

Mr. Toshiaki Hasuike is non-executive director and joint managing director of MSIL. At
Suzuki Motor Corporation, he has handled several key assignments in automobile engineering,
Design, Product Planning and Quality. Besides his specialisation in body design area, he led new
model development projects as Chief Engineer.

Mr. R.P.Singh

Mr. R.P.Singh is executive director of MSIL. Having advanced to several diverse roles
from operations to strategic areas, he has driven MSIL’s market expansion and introduced path
breaking practices at channel and company levels.

Mr. Kinji Saito

Mr. Kinji Saito is non-executive director of MSIL. He served as the Director of

Marketing and Sales at Maruti Suzuki India Limited from May 2002 to March 2006. He
involved with the marketing aspect of Suzuki's Indian market operations since 1995

Ms. Pallavi Shroff

Ms. Pallavi Shroff is Non-Executive Women & Independent Director of MSIL since
2005. She has vast experience in the areas of Corporate and Commercial Litigation, Power
Litigation, Telecoms Litigations, Anti- Dumping, International and Domestic Arbitration,
Competition and Anti Trust, Company Law and Intellectual Property.

Sales & Profit Trend Analysis

30
 Figures are in rupees crores

Figure 3.5 Sales & Profit Trend Analysis (Source:bseindia.com)

For Maruti Suzuki India Ltd last few years have been better considering sales and profit
together. Sales has been increasing with CAGR of 11.07%. The length of the duration and the
high growth rate over this long duration signifies the effective performance of the company in
terms of net sales.
At the same time profits of the company shows tremendous growth with CAGR of
18.10% over the same period of time. This can be with attributed to increase in the firm’s
efficiency.

31
KEY RATIOS

1. Liquidity ratios

LIQUIDITY RATIOS MARUTI SUZUKI MAHINDRA AND MAHINDRA

2015 2016 2015 2016

CURRENT RATIO 0.968 0.646 1.178 1.162
QUICK RATIO 0.662 0.367 0.928 0.897
CASH RATIO 0.005 0.01 0.209 0.208

Figure 3.6

32
 Figure 3.7

Liquidity refers to the covertibility of the assets into cash. It usually signifies the ability
of the firm to meet short term commitments.
Current ratio speaks of the position of current assets in comparison with current
liabilities.It is able to measure how adequately current liabilitiies are covered.This ratio indicates
the degree of buffer against losses.The larger the ratio, the larger is the buffer, and lower is the
risk.Here we can see that the current ratio of Maruti suzuki is decreased from 0.968 to 0.646.
This decrease can be attributed to fall in current investment of the company. In year 2016,
Mahindra & Mahindra held assets of Rs.1.162 for its every rupee of current liability while at the
same time Maruti suzuki India Ltd held assets only of Rs. 0.643 for its every rupee of current
liability.
Quick ratio indicates the immediate loan repaying ability of the firm. From the graph we
can notice that the immediate loan repayment capacity of maruti suzuki has reduced
significantly from 66.2% to 36.7%. Also, there was a fall in the quick ratio of Mahindra and
Mahindra from 92.8% to 89.7%. Here, if we consider the above two firm, we can comparetively

33
say that the overall immediate loan repaying capacity of mahindra and mahindra is far better than
that of maruti suzuki.
Cash ratio also speaks about the liquidity position of the firm. It precisely considers only
the cash and marketable securities available with the firm which can be used to repay the
liabilities. It is considered as the most important of all the three ratios. Comparing Maruti suzuki
and mahinda and mahindra, we can conclude that the liquidity position of mahindra and
mahindra is better as copared to that of maruti suzuki.
This indicates a relatively better working capital management process by Mahindra and
Mahindra as compared to Maruti Suzuki.

1. PROFITABILITY RATIOS

MAHINDRA AND
PROFITABILTY RATIOS MARUTI SUZUKI
MAHINDRA

2015 2016 2015 2016

NET PROFIT MARGIN 7.70% 8.20% 8.30% 3.40%

ROE 15.70% 16.90% 10.30% 89.70%

GROSS PROFIT MARGIN 28.00% 30.00% 40.80% 42.60%

34
 Figure 3.8

Figure 3.9

Profitability refers to firm’s ability to generate earnings. These are the residual
earning/profits over sales.

35
 Gross profit margin is the ratio of gross profit and net sales. It is usually measured in
percentage which indicates the earning capacity of the firm. For example, if the fim has a net
sales of Re. 1, and the gross profit margin is 30% then, we can say that, the company earns 30
paise per rupee of sales as gross profit. From the above graph, we can say that the gross profit
margin has increased for both maruti suzuki and mahindra and mahindra. Comparing the two,
mahindra and mahindra has a lot better margin of gross profit.
Net profit margin is the percentage of revenue left after all expenses have been deducted
from sales. The measurement reveals the amount of profit that a business can extract from its
total sales. From the graph we can see that the net profit margin shows increased figures for both
the companies. Comparing the two, we can conclude that the net profit margin for maruti suzuki
is 2.5 times as that of mahindra and mahindra.
Return on equity gives us an overall idea about what an investor gets as earnings per
rupee of his investment. In case of maruti suzuki for year 2015 the ROE is 15.9% which means
the investor can earn 15.9 paise per rupee of his investment. Similarly in 2016 ROE is 16.9%
which means the investor can earn 16.9 paise per rupee of his investment. Also in case of
mahinndra and mahindra ROE was 10.3% and 8.3% for the year 2015 nd 2016 respectively. As
ROE of maruti suzuki is higher as compared to mahindra and mahindra, hence from investors
point of view maruti suzukki is better for the investment on the basis of ROE

2. Valuation Ratios

VALUATION MARUTI SUZUKI MAHINDRA AND MAHINDRA

2015 2016 2015 2016
EV/EBIDTA 14.84 11.9 14.09 13.13
P/B RATIO 4.71 4.16 3.65 3.3
P/E RATIO 30.1 24.57 21.14 22.37

36
 Valuation is the financial process of determining what a company is worth. Valuation
ratios put that insight into the context of a company’s share price, where they serve as useful
tools for evaluating investment potential.

Figure 3.10

Figure 3.11

37
 EV/EBIDTA ratio is widely used as a valuation tool, allowing investors to compare the
value of a company, debt included, to the company’s cash earnings less noncash expenses. It is
ideal for analysts and potential investors looking to compare companies within the same
industry. The EV/EBITDA is considered by some to be a better valuation metric because it
remains unaffected by changing capital structures and offers fairer comparisons of companies
with capital structures that differ. It also removes the effects of noncash expenses on a company’s
value
The price-to-book ratio measures a company's market price in relation to its book value.
The ratio denotes how much equity investors are paying for each dollar in net assets. If a
company is trading at a P/BV of less than 1, this indicates any or both of the two -
 Investors believe that the company's assets are overvalued, or
 The company is earning a poor return on its assets.
A high P/BV indicates vice versa, i.e., markets believe the company's assets to be undervalued or
that the company is earning and is expected to earn in the future a high return on its assets.
Price-to-earnings ratio (P/E) looks at the relationship between a company’s stock price
and its earnings. The P/E ratio gives investors an idea of what the market is willing to pay for the
company’s earnings. The price-earnings ratio indicates the rupees amount an investor can expect
to invest in a company in order to receive one rupee of that company’s earnings. This is why the
P/E is sometimes referred to as the multiple because it shows how much investors are willing to
pay per rupee of earnings. Here, in financial year 2015 and 2016 Maruti suzuki were trading at a
multiple (P/E) of 30.1 and 24.57 repectively, the interpretation is that an investor is willing to
pay Rs.30.1 for Re1 of earnings and Rs 24.57 for Re. 1 of earnings. Similarly, in financial year
2015 and 2016 Mahindra & Mahindra were trading at a multiple (P/E) of 21.14 and 22.37
repectively, the interpretation is that an investor is willing to pay Rs.2.14 for Re.1 of earnings
and Rs 22.37 for Re.1 of earnings.

38
 Chapter 4
LEARNINGS AND CONCLUSIONS

4.1 Learnings
The Summer Internship Project has proved immensely beneficial and had been a great source of
learning on academic, professional and personal level. The learning from the organization can be
listed as follows:
ACADEMIC
 Working in KSBL has made me learn the basics of the market.
 I was in the equity department but was given the knowledge of other departments as
well.

 Learnt stock trading and the procedure as to how it is done on the broker side.

 Learnt how to open a De-mat account.

 Learnt how to study and analyze equity reports and the concept of future markets and
derivatives.

PROFESSIONAL
 Learnt about corporate code of conduct to be followed in any organization with
professional settings. This included reporting to seniors, professional mails representing
organization to outside parties etc.
 Learnt about importance of professional relationship with customers in an organization
especially in a customer dominated industry.
 Learnt as to how in such kind of a competitive market, relations and your goodwill are
the only things that will take you forward.
 Learnt about how operations are integrated in an organization, and how different departments
interact for successful completion of orders

39
 4.2 Conclusion
Fundamental analysis is an important technique to find the value of stock as it considers
all past information about country, industry and company. The present study reveals that still the
automobile sector is shining as there is continuous increase in the production of total no of
vehicles in the Industry. SWOT analysis presents that the major strengths of Indian automobile
industry is large domestic market and availability of cheap labour; and raising demand from rural
areas of India is acting as the opportunity in expansion of the market. Maruti Suzuki India’s
performance is comparatively better than Mahindra & Mahindra Ltd in terms of earning per
share, return on equity. Fundamental analysis is helpful when the investing amount is huge and
investment is to be made for long time.

40
 CHAPTER 5
BIBLIOGRAPHY

 Karvy Group. (n.d.). Promoters and Management Team. Retrieved from Karvy:
 https://www.karvy.com/promoters-management-team.
 Karvy Group. (n.d.). Karvy Group. Retrieved from Karvy
 https://www.karvy.com/karvygrou
 www.worldbank.org
 http://www.bseindia.com/bseplus/AnnualReport/500520/5005200317.pdf
 http://www.bseindia.com/bseplus/AnnualReport/532500/5325000316.pdf
 http://www.siamindia.com/statistics.aspx?mpgid=8&pgidtrail=9
 https://dbie.rbi.org.in/DBIE/dbie.rbi?site=home
 http://data.worldbank.org/country/india?view=chart
 https://www.ibef.org/industry/india-automobiles.aspx
 http://www.moneycontrol.com/financials/marutisuzukiindia/ratiosVI/MS24#MS24
 http://www.moneycontrol.com/financials/mahindramahindra/ratiosVI/MM#MM

41