INTRODUCTION

Earnings per Share (EPS) is generally considered most important factor to determine share
price and firm value. Literature shows that most of the individual investors take their
individual investment decision based on the EPS. This paper attempts to provide empirical
evidence on how EPS affect the company profitability. We also further found that the share
price movement depends on micro and macro economic factors on the economy. The main
objective of this report is to find out the affects of EPS that reflects in the share price
movement. A hypothesis is taken (EPS and Share Price move on the same track) for finding
out the factors that show why the positive or negative changing trend of the share price and
the EPS is not working. So, by the reasons for that one can easily identify the idea why the
perfect market is not working. In this paper, on the analysis part we have analysis on it and
the reasons that we get is many factors are related with it. So, the object of this report will be
known to all about the factors that discontinued the relationship with EPS and shock price
movement that usually the investor misrepresented by the raising news of EPS.

EARNINGS PER SHARE

The term earnings per share (EPS) represents the portion of a company's earnings, net of
taxes and preferred stock dividends, that is allocated to each share of common stock. The
figure can be calculated simply by dividing net income earned in a given reporting period
(usually quarterly or annually) by the total number of shares outstanding during the same
term. Because the number of shares outstanding can fluctuate, a weighted average is typically
used.

Earnings per share (EPS) are the portion of the company’s distributable profit which is
allocated to each outstanding equity share (common share). Earnings per share are a very
good indicator of the profitability of any organization, and it is one of the most widely used
measures of profitability. The earnings per share is a useful measure of profitability, and
when compared with EPS of other similar companies, it gives a view of the comparative
earning power of the companies.
EPS when calculated over a number of years indicates whether the earning power of the
company has improved or deteriorated. Investors usually look for companies with steadily
increasing earnings per share.
Growth in EPS is an important measure of management performance because it shows how
much money the company is making for its shareholders, not only due to changes in profit,
but also after all the effects of issuance of new shares (this is especially important when the
growth comes as a result of acquisition).
The 5 Types of Earnings per Share

While the math may be simple, there are many varieties of EPS being used these days and investors
must understand what each one represents, if they're to make informed investment decisions. For
example, the EPS announced by a company may differ significantly from what is reported in the
financial statements and in the headlines. As a result, a stock may appear over or under-valued
depending on the EPS being used. This report will define some of the varieties of EPS and discuss
their pros and cons. There are five types of EPS to be defined in the context of the type of "earnings"
being used

1. Reported EPS (or GAAP EPS): We define reported EPS as the number derived from
generally accepted accounting principles (GAAP), which are reported in SEC filings. The company
derives these earnings according to the accounting guidelines used. A company's reported earnings
can be distorted by GAAP. For example, a one-time gain from the sale of machinery or a subsidiary
could be considered as operating income under GAAP and cause EPS to spike. Also, a company
could classify a large lump of normal operating expenses as an "unusual charge," which can boost
EPS because the "unusual charge" is excluded from calculations. Investors need to read the footnotes
in order to decide what factors should be included in "normal" earnings and make adjustments in their
own calculations.

2. Ongoing EPS: Ongoing EPS is calculated based upon normalized or ongoing, net income and
excludes anything that is an unusual one-time event. The goal is to find the stream of earnings from
core operations, which can be used to forecast future EPS. This can mean excluding a large one-time
gain from the sale of equipment, as well as an unusual expense. Attempts to determine an EPS using
this methodology is also called "pro forma"

3. Pro Forma EPS: The words "pro forma" indicate that assumptions were used to derive
whatever number is being discussed. Different from reported EPS, pro forma EPS generally excludes
some expenses or incomes that were used in calculating reported earnings. For example, if a company
sells a large division, it could, in reporting historical results, exclude the expenses and revenues
associated with that unit. This allows for more of an "apples-toapples" comparison .Another example
of pro forma is a company choosing to exclude some expenses, because management feels that the
expenses are non-recurring and distort the company's "true" earnings. Non-recurring expenses,
however, seem to appear with increasing regularity these days. This raises questions as to whether
management knows what it's doing, or is trying to build a "rainy day fund" to smooth EPS.

4. Headline EPS: The headline EPS is the EPS number that is highlighted in the company's
press release and picked up in the media. Sometimes it is the pro forma number, but it could also be
an EPS number that has been calculated by the analyst or pundit that is discussing the company.
Generally, sound bites do not provide enough information to determine which EPS number is being
used.

5. Cash EPS : Cash EPS is operating cash flow (not EBITDA) divided by diluted shares
outstanding. Generally, cash EPS is more important than other EPS numbers, because it is a "purer"
number. Cash EPS is better because operating cash flow cannot be manipulated as easily as net
income and represents real cash earned, calculated by including changes in key asset categories, such
as receivables and inventories. For example, a company with reported EPS of 50 cents and cash EPS
of $1 is preferable to a firm with reported EPS of $1 and cash EPS of 50 cents. Although there are
many factors to consider in evaluating these two hypothetical stocks, the company with cash is
generally in better financial shape. Other EPS numbers have overshadowed cash EPS, but we expect it
to get more attention because of the new GAAP rule (FAS 142), which allows companies to stop
amortizing goodwill. Companies may start talking about "cash EPS" in order to differentiate between
pre-FAS 142 and post-FAS 142 results, however, this version of "cash EPS" is more like EBITDA per
share and does not factor in changes in receivables and inventory. Consequently, it may not be as
good as operating-cash-flow EPS, but is better in certain cases than other forms of EPS.
 INDUSTRY PROFILE

CHEMICAL INDUSTRY OVERVIEW

India ranks 12th in the world for the production of chemicals by volume. India’s chemical
industry contributes about 3% to the nation’s Gross Domestic Product (G.D.P). The industry
has a turnover of about US$30 billion, and accounts for about 14% in the general index of
industrial production (IIP) and 17.6% in the manufacturing sector.

It also accounts for about 13-14% of total exports and 8-9% of total imports of the
country .The industry is mostly concentrated in western india,which accounts for 45-50% of
the total industy size.

ORGANIZATIONAL STRUCTURE

This company is a family owned concern, the other name given to it is “CLOSELY HELD
COMPANY”. The company is headed by the chairman, the managing director’s plans the
strategic issues, the executive director gets them completed through the vice presidents. The
vice-presidents have their respective departments. Executive director has over all executive
authority along with senior vice-president(finance). Reporting them are different offices
under the department.

The chemical industry in india which generates almost 13% of country total export is
growing annually at a growth rate anywhere between 10% and 12%.now we can discuss the
growth rates and other important things of chemical industry in india sector wise.

The chemical industry in india is based on the idea of Diversification. The industry is a
multi product and multi-faceted one. Depending on these product categories we can divide
the chemical industry in India in following sectors;

Inorganic chemicals -In this sector the growth rate is near about 9% and the chemicals
produced in this sector are mainly used in alkalis,fertilizers,detergents and glass.

Drugs and Pharmaceuticals - This sector of Indian chemical industry holds the 4th
place in the world in terms of volume.Export led growth is the characteristics of this sector.
Plastics and petrochemicals – This sector of Indian chemical industry is the fastest
tgrowing one among all the sectors.Reliance petro chemicals is the company which
dominates this sector.

Pesticides,Fertilizers, and other Agro-chemicals products – This sector of the

chemical industry in india account for almost 2.5% of the global market.it possesses an
impressive domestic market growth rate of 10%.

Speciality and Fine Chemicals like Dyes and Paints – This sector is characterized
by high level of fragmentation.this sector is involved in production of paints,
dyes,inks,polymers and a lot of other chemical products.The sector has a growth rate of near
about 12%.

LIST OF COMPANIES

 Sree Rayalaseema Alkalies and Allied Chemicals ltd.

 Sree Rayalaseema HI-Strenth Hypo ltd.
 TGV Securities Private ltd.
 Sree Rayalaseema Galaxy projets ltd.
 Sree Maruthi Marine Industries ltd.

GROUP PROFILE OVERVIEW

The companies head the TGV GROUP companies with an asset base of 750 crores.

SREE RAYALASEEMA ALKALIES &ALLIED CHEMICALS LTD.

SRAACL was incorporated on 24 jan 1981 in the state of A.P & certificate of
commencement of business was obtained on 8th july 1981. SRAACL was pioneering venture
with bipolar membranes cel technology in an Indian alkali industry.SRAACL, which is
engaged in manufacturing of caustic soda,cholorine & hydrochloric acid, is an existing profit
making & dividend paying company.

SREE RAYALASEEMA HI-STRENGTH HYPO LTD.

SRHHL formely known as itachi Hi-strength Hypo ltd was incorporated on 24 oct
1993 in the state of a.p and certificate of commencement of business was obtain on 30 oct
1986. The name change has taken in the year 1993 and bits members at their annual general
meeting on 30 dec 1993 have approved the same. SRHHL is engaged with bleaching
powder,sulphuric acid etc.

SREE MARUTHI MARINE INDUSTRIES LTD

SMMIL formely as maruthi crystal salt company ltd was incorporated in 1973 in the
state of tamil naidu. SMMIL is a joint venture project with TIDCO Chennai stock exchange.
It was a loss making company, which was taken over TGV in may 1990. And it was turned
successful profits.

TGV PROJECTS AND INVESTMENTS LTD

VVPIL formely had known as VV Tran investments ltd was incorporated on 12 may
1986 in the state of A.P. VVPIL is engaged in the manufacture of chlorinated paraffin &
hydrochloric acid. VVPIL is also engaged in hire purchase and investments. A 3 star hotel
with a commercial complex of 200 shops located in the heart of the Kurnool is a unit of the
company.

BRILLIANT INDUSTRIESLTD

Brilliant industries formely known as brilliant investment ltd was incorporated on 1 feb
1998 in the state of A.P. BIL is also engaged in the investments in bottling and sale of
hydrogen gas.BIL is engaged in investments, hire purchases,leasing etc.BIL is category
merchant banker with branch offices at Bangalore,Mumbai,Chennai,and delhi.

SREE RAYALASEEMA DUTCH KASENBOW LTD

SRDKL formerly known as sree bleaching chemicals ltd was incorporated on 3 sep
1990 in the state of A.P. SRDKL is engaged in the manufacturing of stable bleaching powder
at its plant located at gondiparla,Kurnool.

SREE RAYALASEEMA GALAXY PROJECTS LTD

SRGPL is a SSI-Exporter engaged in the manufacture of industrial grade non ferric

alum, commonly known as aluminium sulphate. SRGPL is in its puriest form and comes in
fine white powder, and crystalline forms. The companys manufacturing capacity stands at an
impressive of 12000 TPA.
SREE RAYALASEEMA AGRO-CHEMICALS LTD

The company helps farmers to get better yields by manufacturing agro chemicals of
proven quality. It is efficiency and the central tobacco research institute by the gujrat
agricultural university has certified potency.

THE MOURYA-INN

The conglomerate has made successful floral into the hospitality sector with a centrally
air conditioned 3 star hotel. The mourya-inn at Kurnool with 8 grand suites 92 well appointed
rooms and conference hall and banquet hall.

TGV INFO SYSTEM LTD

TGV info system ltd the division of illustrated of TGV conglomerate is a reflection of
change embracing attitude. TGV info systems ltd has a clear object of providing exhaustive
and comprehensive software solutions and services.

TGV SECURITIES LTD

BSL is a member of NSE and Bangalore stock exchange has made a public issue of 250
lakhs in march 1996.
 COMPANY PROFILE

Sree Rayalaseema Alkalies and Allied Chemicals Ltd is an Indian based company .The
company operates through three divisions, under the chemicals division,caustic soda,
potassium hydroxide,chlorine and hydrochloric acid are manufactured.During the fiscal year
ended 31,march 2010,the caustic unit produced 99452 metric tons of caustic soda. The oils
and fats division produces castor oils derivatives,fatty acids,soap noodles,glycerin and
bathing toilet soap. The castor oil plant yielded 10,231 metric tons of oil processing during
fiscal year 2010. Under the power division, the power plant at bellary is being operated with
furnace oil as feed stock and company delivers its generations to Karnataka power
transmission corporation limited under a power purchasing agreement. The power plant bied
18208 million kilowatt hours of electricity to KPTCL during fiscal 2010.

SRAAC LTD ,Kurnool ,Andhra Pradesh, india chemicals products

manufacturer,export/import,pvt ,Ltd.

Firm since 1985 it give us pleasure to write to you from one of the leading producers of
castor derivatives in india. We are flagship company of US$150 million TGV Group, a
conglomerate of diversified activities with major interests in chlor-alkali products, fatty
acides besides castor derivatives.we have also diversified into information and technology
and FMCG business recently.

We are ISO 9001-2000,ISO14001 and 18001 certified company.we have to our credit
national awards for best R&D and many more awards for environmental freindness and
social awareness.we have been supplying the castor derivatives to international markets since
the unception in 1996. Today we have got a very articulated quality and practices.to further
strengthen our market presence towards attaining market leadership,we felt it appropriate to
approach a world class company like yours for castor derivatives.

Our quality CASTOR DERIVATIVES PRODUCTS include;

 Refined castor oil (BSS Grade)

 Hydrogenated castor oil (Flakes/Powder)
 12 Hydroxy stearic acids (Flakes)
 Ricinolic acid (Liquid)
PRODUCTS;

Manufacturers,exporters and distribution of chemicals as follows *caustic potash flakes

(KOH -90%) *Caustic soda flakes (NAOH-48%/98%) *Refined Glycerine *stearic acid
(various grades) *soap noodles (80;20,90;10) * Hydeochloric Acid * liquid chlorine *Barium
sulphate *sodium sulphate (Na2SO4) * Sodium Hypochlorite * Potasium Carbonate * Toilet
Soaps our group of companies manufactures * calcium hypochlorite *mono chloro acetic acid
*alum *Bleaching powder * Sulphuric Acid.
 OBJECTIVES OF THE STUDY

 To study and understood the concept of EPS and the factors affecting EPS.
 To study the history, present, and future scenario of the chemical industry.
 To identify the factors affecting EPS of SRAAC Ltd.
 To examine the factors affecting EPS of SRAAC Ltd.
 NEED AND SIGNIFICANCE OF THE STUDY

The need for the study is to examine the factors affecting the earnings per share (E.P.S) of the
company and to study how E.P.S is affecting company profitability. How far it is able to get
its company’s goal and achievements, finally this study indicates that the financial
effectiveness of the company. This study is focusing on company’s financial performance;
hence the study has been under taken.
 DATA COLLECTION

 Primary Data Collection Method: The primary data is collected by interacting

with the finance manager and other concerned executives at the administration office
of the company. The primary data is collected through interaction and discussion with
the officials and the staff of the company.

 Secondary Data Collection Method: All the secondary data use for study has
been extracted from the previous annual reports and other published materials of the
company.

 Other Sources:

1. www.moneycontrol.com
2. www.TGVGROUP.com
SCOPE AND LIMITATION OF THE STUDY

 The simple i.e., financial statements are known only for a limited periods.
 A study is for 5 years which may not be sufficient for in-depth analysis.
 This analysis is conducted only on the basis of figures from the financial
statement.
 The time is not sufficient to conduct in depth study.
 Money is another constraint for the study.
 REVIEW OF LITERATURE

 Md. Rashidul Islam (2014) In his study entitled how earnings per share (E.P.S)
affects share price and value of the firm.
Earnings per Share (EPS) is generally considered most important factor to determine
share price and firm value. Literature shows that most of the individual investors take
their individual investment decision based on the EPS. This paper attempts to provide
empirical evidence on how EPS affect the share price movement. We have collected
and analyzed 22 scheduled banks 110 firm year data and found that share price does
not move as fast as the EPS move. We also further found that the share price
movement depends on micro and macro economic factors on the economy. We
suggest that investors must consider other factors as well as EPS in order to invest in
the security market.
 Camelia Burja (2011) The information about company performance, especially
about its profitability, is useful in substantiating managerial decisions regarding
potential changes in the economic resources that the company will be able to control
in the future. This objective aims achieving superior economic results that will
increase the company’s competitiveness and will satisfy the shareholders’ interests.
The paper presents some company performance analysis models, which highlight the
influencing factors. The models are based on regression analysis, and the obtained
results emphasize the strong connection between the profitability of the analyzed
company expresses through Return on assets and the management of available
resources.
 A.Seetharaman and John Rudolph raj (2011) The impact of an announcement of
Earnings per Share (EPS) on stock prices had often been the centre of interest to
researchers, shareholders and investors. This is because; EPS is one of the
investment tools to evaluate a company’s performance either in the short or long
term. The estimated earnings can be used to measure the financial health and
prospect of a company. Therefore, in this research paper, an investigation and
evaluation has been performed to indicate the impact of EPS on the stock prices.
Although, there are some limitations in the use of EPS as an investment analysis
tool, it can be concluded that EPS is a classical model, which is important and
relied upon by investment analysts to measure the performance of business entities.