1

A PROJECT REPORT
ON
“Equity Research on IT Industry”
A Summer Internship Project (SIP) done in

Asset villa financial services LLP

Submitted in partial fulfillment of the requirement for the award of degree of
Master of Management Studies (MMS) under the university
of Mumbai
Submitted by

NAME OF THE CANDIDATE: Prerna Prakash Walunj

ROLL NO: 2022M191 PRN: -
BATCH: 2022-2024 ACADEMIC YEAR 2023-2024

Under the guidance of

NAME OF THE GUIDE
Dr Lakshmi Chandrashekharan
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Bharati Vidyapeeth’s
Institute of Management Studies & Research, Navi Mumbai
ACKNOWLEDGEMENTS

This internship opportunity that I am having with Asset Villa

Financial Services LLP is a great chance for learning and
professional development.
I am using this opportunity to express my heartfelt gratitude
and special thanks to Mr. Jayprakash S Maurya Sir,
Channel Head of Asset villa financial services LLP. who in
spite of being extraordinary busy with his duties, took out the
time to hear, guide and keep me on the correct path and
allowed me to carry out my project at his esteemed
organization.
I express my deepest thanks to Dr. Lakshmi
Chandrashekaran Ma’am for giving necessary advice,
guidance, and constant supervisions as well as for providing
necessary information regarding the project; also, for his
support in completing the project. I choose his moment to
acknowledge his contribution gratefully.
My heartfelt gratitude to all the people related to the industry
and my colleagues who gave me their valuable time, without
their support the project couldn’t have reached where it is now.
I perceive this opportunity as a big milestone in my career
development.
I will strive to use the gained skills and knowledge in the
best possible way, and I will continue to work on their
improvement, in order to attain career objectives. Hope to
continue cooperation with all of you in the future.

Yours Sincerely
Prerna Walunj
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CERTIFICATE

This is to certify that the Summer Internship Project (SIP) titled

“Equity Research on IT Industry” is successfully done by Miss. Prerna
Walunj, Roll No 2022M191 Batch 2022-2024, Academic Year 2023-2024, a
student of Bharati Vidyapeeth’s Institute of Management Studies and Research,
Navi Mumbai, submitted in partial fulfillment of MMS -Master of Management
Studies programme affiliated to the University of Mumbai from 8th May 2023
to 8thJuly 2023 at Asset villa financial services LLP.

Date: ___________

_____________________ _________________
Prof._____________ Dr. Anjali Kalse
Project Guide Director
BVIMSR BVIMSR
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EXECUTIVE SUMMARY

The project FUNDAMENTAL & TECHNICAL ANALYSIS explains various

aspects related to portfolio management such as selection of equity shares, making
investments in different mutual funds, life insurance, etc.
The project aims at making a portfolio which can deliver good results to the
investors and for doing this we were thought how to analyze different stocks and
predict their future growth movement. Starting with the training sessions we were
thought about different investment options available for an investor and how to help
investor to choose the best alternative so that he can gain maximum from his
investments
We were given training how to analyze different sectors of the economy and what
are the things a portfolio manager should look at while selecting stocks for his
portfolio. We were given hand on training on online trading platform where we
learnt how to trade stocks online and how to do analyze the future performance of
stocks using different technical analysis tool candle sticks pattern. Then we learned
financial ratios and how these ratios are important in determining the future of the
stock.
Then to get some personal management and convincing skills we were given a task
to sell life insurance policy where different plans were explained to us, and we need
to sell those plans in open market where company checked our time management
and personal management skills where I gave a business of 50,000 in 7 days.
We have been allocated a sector on which our project will be based on and
currently I am working on Information Technology (Software) Sector.
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ACKNOWLEDGEMENT........................................................................................ 2
CERTIFICATE ......................................................................................................... 3
EXECUTIVE SUMMARY. ......................................................................................4
INTRODUCTION OF SECTOR… .......................................................................9
Theoretical Background ...................................................................................... 10
Competitor ........................................................................................................... 12
Literature Review ................................................................................................ 15
Products and Offering ...........................................................................................16
Vision and Mission… .......................................................................................... 23
Significance of Study ............................................................................................24
Scope of Study ......................................................................................................25
RESEARCH DESIGN AND METHODOLOGY… .......................................... 26
Objectives of the Study .........................................................................................26
Research Methodology ........................................................................................ 26
Fundamental Analysis ......................................................................................... 27
Technical Analysis .............................................................................................. 29
Types of Long-Term Technical Analysis Patterns .............................................. 31
Short Term Analysis ............................................................................................ 40
Candle Stick Patterns… ........................................................................................41
Data Collection… ................................................................................................ 43
Economic Data… ................................................................................................ 44
Analysis and Major Findings…........................................................................... 48
Result of Fundamental Analysis of stocks of IT Sector… .................................. 48
Long Term Technical Analysis Result ..................................................................59
Short Term Technical Analysis Result ..................................................................67
Hedging ............................................................................................................... 71
Findings… ........................................................................................................... 69
Conclusion ........................................................................................................... 74
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Recommendation .................................................................................................. 75
Bibliography……………………………………………………………… 76
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1. Introduction
1.1 About the Sector
Indian information technology (IT) industry has played a key role in putting India on
the global map. In addition to fueling India ‘s economy, this industry is also
positively influencing the lives of its people through an active direct and indirect
contribution to various socio-economic parameters such as employment, standard of
living and diversity. The industry has played a significant role in transforming India
‘s image from a slow-moving bureaucratic economy to a land of innovative
entrepreneurs and a global player in providing world-class technology solutions and
business services, according to National Association of Software and Service
Companies (NASSCOM).
Information Technology in India is an industry consisting of two major
components: IT services and business process outsourcing (BPO). The sector has
increased its contribution to India’s GDP from 1.2% in 1998 to 7.7% in 2017.
According to NASSCOM, the sector aggregated revenues of US$160 billion in
2017, with export revenue standing at US$99 billion and domestic revenue at US$48
billion, growing by over 13%. The United States accounts for two-thirds of India’s
IT services exports.
India’s growing stature in the Information Age enabled it to form close ties
with both the United States and the European Union. However, the recent global
financial crises have deeply impacted Indian IT companies as well as global
companies. As a result, hiring has dropped sharply, and employees are looking at
different sectors like financial services, telecommunications, and manufacturing,
which have been growing phenomenally over the lastfew years.
With fundamental structural changes visible everywhere in the IT services due to
Cloud computing, proliferation of Social media, Big data, Analytics all leading to
digital services and digital economy, many of the leading companies in India’s IT
sector reported lower headcountsin their financial results.
8

Theoretical background of IT sector

The IT (Information Technology) sector is a vast and dynamic field that

encompasses the use of computers, software, networks, and data to manage and
process information. Its theoretical background is built upon various foundational
concepts and theories, including:

Computer Science: Computer science forms the backbone of the IT sector. It

includes the study of algorithms, data structures, programming languages, and
computational theory. Concepts like Turing machines, complexity theory, and
formal languages are fundamental in computer science.

Information Theory: Information theory, developed by Claude Shannon, is critical

for understanding data transmission, compression, and encryption. It quantifies
information and has applications in coding theory and data compression.

Networking: Networking theory covers the principles of data communication and

the design of networks. The OSI model and TCP/IP protocol suite are essential
theoretical frameworks in this domain.

Database Management: Database theory deals with data organization, storage,

retrieval, and management. It includes concepts like relational databases, SQL, and
ACID properties.

Software Engineering: Software engineering principles guide the development,

testing, and maintenance of software systems. Topics like software development life
cycles, design patterns, and agile methodologies are part of this field.

Cybersecurity: Theoretical foundations of cybersecurity involve cryptography,

network security, and information security policies. Understanding threat models,
vulnerabilities, and risk assessment is crucial.
9

Artificial Intelligence (AI): AI theory encompasses machine learning, neural

networks, natural language processing, and expert systems. It explores how
computers can mimic human intelligence.

Human-Computer Interaction (HCI): HCI theory focuses on how humans interact

with computers and software. It involves usability principles, user-centered design,
and cognitive psychology.

Economics of IT: This branch explores the economic aspects of the IT sector,
including cost-benefit analysis, IT investment, and the impact of technology on
markets and industries.

Ethical and Legal Aspects: Theoretical foundations of IT also include ethics and
legal considerations, such as intellectual property rights, privacy, and cybersecurity
ethics.

Data Science and Big Data: Theoretical concepts in data science include statistical
analysis, machine learning algorithms, and data mining. Big data theory deals with
handling and analyzing large datasets efficiently.

Cloud Computing: Theoretical underpinnings of cloud computing involve

virtualization, distributed systems, and service models like IaaS, PaaS, and SaaS.

These theoretical foundations collectively provide the knowledge and framework

needed to understand, develop, and innovate within the IT sector. The field is
continuously evolving, with new theories and concepts emerging as technology
advances.
10

Competitors

There are numerous competitors in the IT industry, ranging from large

multinational corporations to smaller startups. Some major competitors as of
my last knowledge update in September 2021 included companies like
Microsoft, Apple, Google, Amazon, IBM, and Oracle. However, the
landscape can change rapidly, so it's a good idea to check the latest market
reports for the most up-to-date information on IT industry competitors.
11

Literature review

A literature review on the IT sector would typically involve

summarizing and analyzing relevant academic papers, articles, and
publications on various aspects of the IT industry. While I can't provide a
comprehensive literature review, I can outline some key themes and topics
that are often discussed in research related to the IT sector. You can then use
this as a starting point for your own literature review:

Digital Transformation: Many studies explore how organizations are

leveraging IT to undergo digital transformations, improving their operations
and customer experiences.

Cloud Computing: Research on cloud services, including adoption

trends, security challenges, and the impact of cloud on business models.

Artificial Intelligence and Machine Learning: The application of AI

and ML in various industries, including healthcare, finance, and customer
service, is a popular research topic.

Cybersecurity: Papers often examine the latest cybersecurity threats,

strategies for defense, and the economic and social impacts of cyberattacks.

Big Data and Analytics: Studies on data management, analysis, and

the role of big data in decision-making and innovation.

Internet of Things (IoT): Research explores the growth of IoT devices,

their applications, and the challenges related to security and privacy.

E-commerce and Online Retail: Topics include online consumer

behavior, e-commerce platforms, and the impact of e-commerce on
traditional retail.

Social Media and Online Communities: Analysis of social media's

influence on society, politics, and business, as well as studies on online
community dynamics.
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IT Governance and Project Management: Research on IT project

success factors, project management methodologies, and IT governance
frameworks.

IT Outsourcing and Offshoring: Studies on the outsourcing of IT

services, including benefits, risks, and the impact on local and global
economies.

Ethical and Legal Issues: Exploration of ethical dilemmas related to

IT, such as data privacy, surveillance, and the responsible use of technology.

IT Education and Workforce Development: Research on IT skills

gaps, training programs, and the demand for IT professionals.

To conduct a comprehensive literature review, you would typically

search academic databases like PubMed, IEEE Xplore, ACM Digital
Library, Google Scholar, and more, using relevant keywords related to your
specific area of interest within the IT sector. You'd then critically evaluate
and synthesize the findings from the selected papers to draw insights and
identify research gaps.
13

IT Industry Products & Services

Product and offering of IT industry

The IT industry offers a wide range of products and services,

including:

Hardware: This includes computers, servers, networking equipment,

and mobile devices. These are the physical components that form the
foundation of IT systems.

Software: IT companies develop and sell various types of software,

including operating systems, productivity applications, and specialized
software for industries like healthcare, finance, and design.

Cloud Computing: Cloud service providers offer infrastructure,

platforms, and software as a service (IaaS, PaaS, and SaaS). This allows
businesses to offload their IT infrastructure and software needs to remote
data centers.

Cybersecurity: With the increasing importance of data security, IT

companies provide cybersecurity solutions such as firewalls, antivirus
software, and threat detection systems.

Consulting and Integration Services: Many IT firms offer consulting

services to help businesses design and implement IT solutions tailored to
their needs. Integration services ensure that different IT systems work
seamlessly together.

Data Analytics and Business Intelligence: IT plays a crucial role in

collecting, processing, and analyzing data. Data analytics tools and business
intelligence platforms help organizations make data-driven decisions.

Artificial Intelligence and Machine Learning: AI and ML technologies

are used for tasks like natural language processing, image recognition, and
predictive analytics. They find applications in areas like chatbots,
recommendation systems, and autonomous vehicles.
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Vision & Mission

The vision and mission of the IT sector can vary depending on

specific companies and organizations, but here are some general examples:

Vision:
"To be at the forefront of technological innovation, driving positive
change, and improving the quality of life through cutting-edge IT solutions."

Mission:

"Deliver high-quality and secure IT services and products that

empower businesses and individuals to thrive in the digital age."
"Continuously innovate and adapt to emerging technologies, ensuring
our solutions remain relevant and effective."
"Foster a diverse and inclusive IT workforce that promotes creativity,
collaboration, and excellence."
"Contribute to the global community by sharing knowledge,
addressing societal challenges, and promoting ethical and sustainable
practices."
"Strive for operational excellence, efficiency, and customer
satisfaction in all our endeavors."
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Study Significance

The significance of a study refers to its importance or relevance in

addressing a particular research question or problem. It can be viewed from
various angles:

Contribution to Knowledge: Research adds to the existing body of

knowledge by generating new insights, theories, or data. Significance lies in
how a study advances our understanding of a subject.

Practical Applications: Research can have real-world implications. Its

significance may be evident in how it can solve practical problems, improve
processes, or inform policy decisions.

Social Impact: Some studies address pressing social issues, such as

public health, environmental concerns, or societal challenges. Their
significance is tied to the potential positive impact on society.

Academic Relevance: In an academic context, research contributes to

the development of a field of study. Significance is determined by its
potential to influence future research and scholarship.

Personal Growth: For individual researchers, the significance of a

study can be personal. It may be a stepping stone in their academic or
professional journey, leading to career advancement or personal
development.
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Research design and methodology in IT industry

Research design and methodology in the IT industry are critical

components of conducting meaningful and effective research. Here's an
overview of how to approach research design and methodology in the IT
sector:

1. Define Your Research Objectives:

Clearly outline the objectives of your IT research. What do you want

to achieve or understand through your study?
2. Choose a Research Design:

Select an appropriate research design that aligns with your objectives.

Common designs in the IT industry include:
Descriptive Research: To describe and document IT phenomena or
practices.
Exploratory Research: To explore new IT concepts or technologies.
Explanatory Research: To explain the causes and effects of IT-related
issues.
Experimental Research: To test hypotheses by manipulating variables
in controlled settings.
Longitudinal Research: To study IT trends or changes over time.
3. Data Collection Methods:

Determine how you will collect data in the IT industry. Common

methods include:
Surveys: For gathering opinions, preferences, and quantitative data.
Interviews: For in-depth insights and qualitative data.
Observations: For studying IT processes or behavior.
Document Analysis: For reviewing IT-related documents, code, or
technical specifications.
Big Data Analysis: If dealing with large datasets, use data mining,
machine learning, or statistical analysis techniques.
4. Sampling Strategy:

If applicable, decide on your sampling strategy. Will you survey a

random sample of IT professionals, conduct purposeful interviews with
experts, or use a specific sampling method relevant to your research design?
17

5. Data Analysis:

Plan how you will analyze the data collected. This may involve
quantitative analysis (e.g., statistical tests) or qualitative analysis (e.g.,
content analysis, thematic coding).
6. Ethical Considerations:

Ensure your research follows ethical guidelines, especially if it

involves sensitive IT data or human subjects.
7. Pilot Testing:

Before full-scale data collection, consider pilot testing your methods

to identify and address any issues or ambiguities.
8. Data Interpretation:

Interpret your findings in the context of the IT industry. What do your

results mean for IT practices, trends, or future developments?
9. Report and Disseminate:

Present your findings in a well-structured research report, and

consider sharing your insights through academic publications or industry
conferences.
10. Continuous Learning:

Stay updated on the latest developments in the IT industry, as the field

is rapidly evolving. This will help you frame your research questions in a
current context.
18

ECONOMICAL DATA:

• GST COLLECTION:
The gross GST revenue collected in the month of
April, 2023 is ₹ 1,87,035 crore of which CGST is ₹38,440 crore, SGST
is ₹47,412 crore, IGST is ₹89,158 crore (including ₹34,972 crore
collected on import of goods) and cess is ₹12,025 crore (including
₹901 crore collected on import of goods). The revenues for the
month of April 2023 are 12% higher than the GST revenues in the
same month last year. During the month, the revenues from
domestic transactions (including import of services) are 16% higher
than the revenues from these sources during the same month last
year. For the first time gross GST collection has crossed ₹1.75 lakh
crore mark. Total number of e-way bills generated in the month of
March 2023 was 9.0 crore, which is 11% higher than 8.1 crore e-way
bills generated in the month of February 2023.
19

BUDGET:
Capital expenditure in the 2023-24 Union Budget doubled from Rs 4.26 lakh
crore of actual expenditure in 2020-21 to Rs 10.01 lakh crore budgeted in 2023-24.
This is the third consecutive year that capital investment outlay has increased, but
at the cost of social welfare programmes that provide a social safety net to citizens
and ensure basic rights, including livelihoods, health, nutrition and education. The
total receipts other than borrowings is estimated at Rs 27.2 lakh crore and the total
expenditure is estimated at Rs 45 lakh crore. The net tax receipts are estimated at
Rs 23.3 lakh crore. The fiscal deficit is estimated to be 5.9 per cent of GDP.
20

CALCULATION OF GDP:
Gross domestic product is a monetary measure of the market value of all the
final goods and services produced and sold in a specific time period by a country
or countries. GDP is most often used by the government of a single country to
measure its economic health.
GDP= C + I + G + (X-M).
• C is consumer spending
• I is business investment
• G is government spending
• (X-M) is net exports

QUARTERLY GDP
RATES
2021(in %) 2022(in %) 2023(in %)
Q1 3.1 1.6 4.1
Q2 -29.3 20.1 13.5
Q3 -7.5 8.4 6.3
Q4 0.4 5.4 4.4
21

INFALTION
Inflation is the rate at which the general level of prices for goods and
services in an economy rises, leading to a decrease in the purchasing power of a
currency. It's typically measured as an annual percentage increase in prices and can
have various causes, such as increased demand, supply disruptions, or excessive
money supply growth. Central banks often use monetary policy tools to try and
control inflation and keep it within a target range to maintain economic stability.
22

ANALYSIS OF IT COMPANY (TCS)

Tata Consultancy Services (TCS) is an Indian multinational information
technology (IT) services and consulting company with its headquarters
in Mumbai, Maharashtra. It is a part of the Tata Group and operates in 150 locations
across 46 countries. In July 2022, it was reported that TCS had over 600,000 employees
worldwide. TCS is the second largest Indian company by market capitalization and is
among the most valuable IT service brands worldwide, and is the top Big Tech
(India) company. In 2015, TCS was ranked 64th overall in the Forbes "World's Most
Innovative Companies" ranking, making it one of the highest-ranked IT services
companies and a top Indian company.

Tata Consultancy Services

TCS campus at SIPCOT, Chennai, Tamil Nadu

Traded as  BSE: 532540

 NSE: TCS
 BSE SENSEX Constituent
 NSE NIFTY 50
Constituent

ISIN INE467B01029

Industry Information technology

Consulting
Outsourcing

Founded 1968; 55 years ago

Founder J. R. D. Tata

Headquarters Mumbai, Maharashtra, India

Area served Worldwide

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COMPANYSITUATION

SWOT ANALYSIS

Strengths Weakness

 Wide Range of Services  Inability to Provide Adequate Returns to

 Broad Network Globally its Shareholders

 Skilled and Experienced Management  Legal Battles

Team

Opportunities Threats

 Growth in Service Market Globally  Domestic and International Competitors

 Cloud-Based Solutions  Changing Technological Trends

 Retaining a Sustainable Workforce

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Strengths
Wide Range of Services

Tata Consultancy Services provides a broad IoT intellectual property portfolio and

capabilities covering strategic planning, organizational structure, execution, application services

in technology and business, and post-delivery maintenance and support services .

The company’s IoT technologies concentrate on transforming companies and consumers

through sectors including manufacturing, CPG, distribution, electricity, energy, transport,

logistics, safety, Hitech and telecoms.

Broad Network Globally

The enterprise has an established network of partners. In alignment with its strategic

vision it develops and nurtures strategic partnerships. The partner initiatives are intended to work

together on partner technologies and to be trained, assisted and resourced for partner technology

products (Tata Consultancy Services Ltd.

“Its global alliance partners include Amazon Web Services, Adobe, Apigee, AppDynamics,
Appian, Aptitude software, Automation anywhere, Avaya, Blueprint, Bosch, CA, Cisco, Citrix,
Cloudera, Hewlett Packard Enterprise, Dell, Oracle, VMware, RedHat, Hitachi, Google, IBM,
Microsoft, Juniper Networks, NetApp, SAP, and Symantec, among others.”
25

Weakness

Inadequate Returns to its Share Holders

During the financial year 2018, the company’s operational performance declined. In

2018, the company’s margin decreased to 24.8% from 25.7% as compared to the margin in 2017.

Lack of focus and follow-up on the cost management by the company indicates weak operational

performance

Legal Battles

In 2016, TCS was found guilty for the alleged misuse of Epic System’s confidential
information. As a result of this TCS had to pay for the damages worth 940 million dollars
(MarketLine,2019). Such legal battles may affect the company’s performance, overall growth
and reputation in the market

Opportunities

Growth in Service Markets Globally

The global market for IT services has exceeded $697.7 billion in 2017 and is projected to

grow by $947 billion by CAGR by 6.3 percent in 2017-22. Infrastructure services represented

45.1% of the global IT services market ' total market value, followed by 30.9% application

service and 24% BPO services in 2017 .

In regional terms, the US accounted for 37,5% of the overall IT services industry, led by Europe,

31,7%, AsiaPacific, 24,2%, the Middle East, 0,2% and the rest of the world, 6,4% in 2017.
26

Cloud-Based Solutions

Digital technologies of transformation and fast internet connectivity come into being.

Cloud-based solutions are growing worldwide and expenses on cloud services are expected to

rise by more than 19% in the next five years.

TCS has a robust cloud-based architecture and is, therefore, able to benefit from the

generated market.

Threats

Domestic and International Competitors

Organizations, including Wipro, Infosys, Capgemini, and Deloitte, etc. operate intensively in the
IT sector which contributes to the global price wars which reduce the market share.
27

PESTEL ANALYSIS

POLITICAL TECHNOLOGICAL

 Government preferred firm  Dynamically changing pursuits of technology

 The Brexit impact and innovations like AI, cloud computing,

etc.

ECONOMIC LEGAL

 Strong market position  Previous history of data stealth

 The SEZ benefit  Workers held responsible for copying data

SOCIAL ENVIRONMENTAL

 Population composition  The introduction of financial inclusion

 Class division in society network

28

MISSION, VISION & VALUES

The firm defines its mission as “Our mission reflects the Tata Group's longstanding commitment

to providing excellence: To help customers achieve their business objectives by providing

innovative, best-in-class consulting, IT solutions and services and To make it a joy for all

stakeholders to work with us.”

For keeping up with the mission of the firm, work has been done in various aspects. As a

result, TCS was voted Global Most Outstanding Company in India by investors across the world

in Asiamoney's 2019 Asia Outstanding Company survey. Besides, TCS has been listed as India's

most successful company in the decade, with Asiamoney's top investor surveys the highest

number of times over the last 10 years.

As regards the vision of the company, The TCS mission is to disassociate the growth of

the company and impact on the environment from activities to reflect the bottom line of the

business. The Green Approach is an aspect of its internal procedures and resources. Their

mission is to evolve sustainably from green buildings to green IT to a green distribution chain

and to help clients accomplish sustainable growth through green solutions and business

processes.

According to TCS, "Our vision is to decouple business growth and ecological footprint from its

operations to address the environment bottom-line. The green approach is embedded in our

internal processes and services offerings...... From green buildings to green IT to a green supply

chain, our mantra is to grow sustainably and help our customers achieve sustainable growth

through our green solutions and service offerings."

29

Financial Performance
The financial performance is the most important data about a company for any investor
for making an investment decision. So, let's analyze the financial
performance of the company requested by you ‘Tata Consultancy Services’ In Crore Rupees
over the past 3 years.

Financial aspects 2019 2018 2017

Total Revenue 150,774 126,746 122,187

Total Expenses 109,211 92,654 87,674

Net Income 31,562 25,880 26,357

Current Assets 92,131 81,224 80,316

Total Assets 114,943 106,296 103,252

Current Liabilities 22,084 17,828 14,512

Total Liabilities 114,943 106,296 103,252

Stockholders’ Equity 89,446 85,128 86,214

Debt-to-Equity 1.28% 1.24% 1.19%

Dividend/share Rs 18 Rs 29 Rs 27.5

Current Ratio 4.17% 4.55% 5.53%

Return on Equity 35.2% 30.4% 30.5%

30

Reported Earnings Rs 83.05 Rs 67.10 Rs 66.71

Per Share (Basic)
Stock Price Rs 1776.15 Rs 2031.33 Rs 1451.45

Market Capital 8.37 Trillion 7.19 Trillion 6.69 Trillion

Total Number of 270,24,50,947 137,61,18,911 144,34,51,698

Common Stock
Outstanding

In the past 3 years, TCS has continued to show a substantial increase in its annual

revenue. A transition from the Fiscal year 2017 to 2018 showed an increase of 3956 crores while

from 2018 to 2019 an increase of 24028 crores was observed. Net profit margins increased from

20.4% in the fiscal year 2018 to 20.9% in the fiscal year 2019. On the other hand, the rise in the

expense figure was nominal in overall due to inflation, yet TCS has implemented measures such

as avoiding travel where necessary and shifting people from overseas to India to reduce costs.

The company business meetings are generally done via video conferencing .

TCS has been outstanding in growing its assets overtime and converting them value for

money assets. In November 2018, it acquired W12 Studios, a London-based award-winning

digital design studio. W12 Studios adds to the portfolio of services of TCS Interactive as it helps

leading global brands to innovate, produce and deliver unique digital experiences throughout the

user journey (Tata Consultancy Services, 2019). Also, recently TCS acquired some assets at the

GMTC-I, which could improve its automotive engineering capacity. Also, TCS will support its

global vehicle programs with engineering design services over the next five years through the

acquisition of GMTC-I in Bengaluru in its two companies’ partnership. Consequently, TCS total
31

assets rose by a growth of 7% in FY2018 and by 8.1% in FY2019. While a 15-20% return on a

rising business is commonly accepted as nice, TCS has surpassed this cap ten years early.

Consequently, today Tata Consultancy Services Limited has outperformed all the IT consulting

sectors and other services sectors on basis of its return on equity – delivering a higher

30.26% compared to a peer-average of 15.18% over the past 12 months. TCS will spend much

more with more leverage and gain more revenue, increasing its earnings in upcoming years.

Although TCS has managed to provide a subsequently reasonable dividend to its

investors for the past several years, the dividend fell in the last fiscal year from Rs 29/share in

2018 to Rs 18/share in 2019 (Tata Consultancy Services, 2019). Economists have blamed the

continuously declining economy of India as a major reason for this fall in the company’s

dividend. It is very clear that the declining economy of a country directly impacts the dividend of

the companies. Even then TCS has responded to this decline comparatively better than other

rival companies in the sector.

The same thing was seen in the stock price that fell off the company from 2018 to 2019.

One can observe the remarkable growth shown by the company from 2017 to 2018 where the

stock price of the firm rose from Rs 1451.45 to Rs 2031.33 (Tata Consultancy Services, 2019).

The company's market value hit more than $98 billion in April 2018, with TCS share closing to

7% higher. The share price hits spikes in the January-March 2018 quarter (Q4) which was due to

stronger than expected profits (Business Today, 2019). This can also probably be an outcome of

TCS’s newly announced 1:1 bonus share issue, which furthermore lifting investors’ sentiments.

In April 2018 TCS became the first Indian IT firm to hit this landmark of $100 billion

(Rs 6,65,275 crore) market capitalization while Infosys which is considered as a major rival of

the company in India had a market cap of $40 billion. Even in a declining economy the company
32

still stands tall due to its diversification in the American and European markets.

Comparative Analysis Between Infosys and TCS

33
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35
36

P/E Ratio

Current P/E Ratio

 The current P/E ratio of Infosys is 16.8 and for TCS, the P/E ratio is 21.5. Thus, we can

see than TCS is enjoying a good amount of premium valuation over Infosys.

 The recent growth numbers of sales, net profit can be the contributing factors in the

premium valuation of TCS or discounted valuation of Infosys.

Historical Average P/E Ratio

 For Infosys, 3-years, 5-years, and 10-years P/E ratios are 18.6, 19.41 and 20.28

respectively. On the other hand, for TCS, 3-years, 5-years, and 10-years P/E ratios are

31.7, 23.02 and 22.46 respectively.

 From the above, we can get the trend for P/E numbers for Infosys, which earlier the

stock, was having a premium valuation of P/E around 20. But over the years, there is a

decreasing trend in Infosys’s valuation.

 And after the recent whistleblower complaints against executives of Infosys for unethical

practices, the stock has corrected by 16%. As a result, it is trading at a discounted

valuation.

Sales Growth

 For Infosys, 3-years and 5-years sales growth CAGR (Compounded Annual Growth

Rate) is 9.81% and 10.52% respectively.

37

 While for TCS, 3-years and 5-years sales growth CAGR (Compounded Annual Growth

Rate) is 10.47% and 12.35% respectively.

 TCS has achieved a higher growth rate on sales than that of Infosys. It is the reason why

TCS is having a premium valuation than Infosys.

Net Profit Growth

 For Infosys, 3-years and 5-years Net profit growth CAGR is 4.2% and 7.45%

respectively.

 While for TCS, 3-years and 5-years sales growth CAGR is 9.52% and 10.55%

respectively.

 In the case of Net profit growth, we can see TCS is outperforming over Infosys with

accelerated growth momentum.

38

Analysis and Major Findings

Result Of Fundamental Analysis of stocks of IT Sector
The Process of doing fundamental analysis on stock of IT Sector involves steps as
follows:

Selection of Ranking Procedure Fund Allocation

Stock(Large forSelected Basedon
Cap Companies stocks Ranking

Determination List of value pick Net Asset

ofsectorial P/E andgrowth
ratio pick Valuation

Valuation of Selection of
Growth
stock picks

Selection of Determination of
Value LTPT(Long term
picks pricetarget)
39

Hedging
A hedge is an investment to reduce the risk of adverse price movements in an asset.
Normally,a hedge consists of taking an offsetting position in a related security.
Investors and money managers use hedging practices to reduce and control their
exposure torisks. In order to appropriately hedge in the investment world, one
must use variousinstruments in a strategic fashion to offset the risk of adverse price
movements in the market.The best way to do this is to make another investment in a
targeted and controlled way. Ofcourse, the parallels with the insurance example
above are limited: in the case of floodinsurance, the policy holder would be
completely compensated for her loss, perhaps less adeductible. In the investment
space, hedging is both more complex and an imperfect science. A perfect hedge is
one that eliminates all risk in a position or portfolio. In other words, thehedge is
100% inversely correlated to the vulnerable asset. This is more an ideal than a
realityon the ground, and even the hypothetical perfect hedge is not without cost.
Basis risk refers tothe risk that an asset and a hedge will not move in opposite
directions as expected; "basis"refers to the discrepancy.
40

FINDINGS
 Financial literacy in our country is very less and people still invest through
conservative style of investing.
 General public still have this notion that financial market I nothing, but legal
gambling and they are afraid to invest because it does not guarantee any fixed
rate of return as compared to other investments other than financial markets.
 Inform or aware people about financial market and the rate of return on
investments which is higher than other investments like banks, bonds or real
estate is mandatory.
 To mitigate or diversify the risk, it is suggested that the capital should be invested
in all thedirections.
 Since people still invest through conventional style, all the territories of
investment should be explored so that they do know how to grow their capital.
 Technical analysis uses data from short periods of time to develop the patterns used
to predict securities or market movement, while fundamental analysis relies on
information that spansyears.
41

CONCLUSION
 The fund’s percentage performance of NAV starts beating the index’s percentage
performance on the latest date of status.
 This shows that fundamental analysis is the very important tool for long term
investment.
 Short duration of data collection in technical analysis, investors tend to use this
method morein short-term trading.
 The information technology sector in India has a low-cost advantage by being 5-6
times lessexpensive than the US.
 The NAV seems to be a lot more volatile than the industry index value due to
inclusion of a few stocks. This means that the risk is more in the Fund’s AUM
rather than the Information technology (Software) Index but since higher risk
yields to a higher return, the Fund is seen as a better way to grow the initial
amount of Rs.10 Crores.
42

RECOMMENDATIONS
 It is recommended not to invest in a stock on an intraday basis as the risk is too high.
 A stock should be tracked for at least 1 Month before including it in any fund.
 If the fund’s NAV percentage change is unable to beat the Index point percentage
change benchmark, then re-allocation of funds must be done in order to ensure a
better return fromthe fund.
 Re-analysis on a newer base date can also be undertaken if a stock selected in the
fund starts to underperform due to unfavorable news concerning the Political,
Social and Economic Factors.
 Before going to invest, an investor should have clear and adequate knowledge of
capital market.
 It is better to go for long term investment rather than short term investment.
Because it is less risky and also provide sufficient return.
 The investors who want to evaluate long-term investment decisions must start
with a fundamental analysis of a company, an individual stock or the market as a
whole.
 In case of half knowledge about stock market is very dangerous. So, whenever a
person wants to invest in stock market, he should take necessary tips from
technical analysts.
 Investors and analysts who use technical analysis feel strongly that future
performance can be determined well by reviewing patterns based on past
performance data.



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43

BIBLIOGRAPHY
 https://www.tcs.com/
 https://www.wipro.com
 https://www.infosis.com
 www.ibef.org
 https://www.scribbr.com