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A
PROJECT REPORT
ON
RISK AND RETURN OF A PORTFOLIO
AT
KARVY STOCK BROKING LIMITED
SUBMITTED BY
ADITY ASOPA
HINDUSTAN COLLEGE OF SCIENCE AND TECHNOLOGYFARAH, MATHURA
Annexure II
Declaration
I, Adity ASOPA, hereby declare that the project titled “RISK AND RETURN OF A
PORTFOLIO” is an original work carried out under the guidance of Mrs. Tanu
1
Marwah. The report submitted is a bonafide work of my own efforts and has not
been submitted to any institute or published before.
Signature of the student
Name of the student:
ADITY ASOPA
Date: 04TH MARCH 2012
Annexure V
Acknowledgement
At the very outset, it is with a deep sense of gratitude that I acknowledge the able
guidance received from Mrs. Tanu Marwah and other Finance team of Karvy Stock
Broking Limited, during all stages of this project. The project owes much of its work
2
to their generative suggestions, illuminating comments, encouragement and
ceaseless patience.
I would like to take the opportunity to thank my HOD Mrs. Riju Agarwal HCST,
Mathura for her guidance and support throughout the study. Her opinions and
experience offered me valuable insights into the study area and gently enhanced the
value of the project.
Last but not the least, my endless appreciation goes to my family who has stood by
my side and gave me moral support whenever I was low and boosted my will power.
I would fail in my duty, if I do not make a special mention of all others who helped me
directly or indirectly in pursuit of this project.
Thank You.
Signature of the student
ADITY ASOPA
Date: 04TH MARCH 2012
Annexure VI
INDEX
Chapter.No. Content Page No
3
Chapter 1 Introduction5-6
Chapter 2 Objectives7
Chapter 3Company Profile
8-37
Chapter 4 Introduction (About Project)
38-40
Chapter 5 Research Methodology41-44
Chapter 6 Questionnaire
45-47
Chapter 7Data Collection
Analysis & Interpretation
48-59
BibliographyBooks / Articles referred
Websites referred
60
Chapter 1
Introduction
Investors in equity markets are besieged by risk. At times, in fact, it seems as though
equity investors are more likely to lose money than gain it. In order to address the
perceived risk associated with investing, portfolio risk management was developed.
4
Portfolio risk management is a field of economics, finance and statistics that seeks to
help investors manage the risk associated with the investments they make. Portfolio
risk management is largely predicated on the idea that there is some trade-off
between risk and return. Equities with higher levels of risk must also carry higher
returns, in order to compensate owners for undertaking an elevated level of
uncertainty. Portfolio risk management attempts to quantify and manage this risk so
as to better match investments to the needs of investors.
Stock exchanges to some extent play an important role as indicators, reflecting the
performance of the country’s economic state of health. Stock market is a place
where securities are bought and sold. It is exposed to a high degree of volatility;
prices fluctuate within minutes and are determined by the demand and supply of
stocks at a given time. Stockbrokers are the ones who buy and sell securities on
behalf of individuals and institutions for some commission.
The securities and exchange board of India (SEBI) is the authorized body, which
regulates the operations of stock exchange, banks and other financial institutions.
The past performance in the capital market specially the securities scam by Harshad
Mehta has lead to tightening of the operation by SEBI. In addition the international
SEBI and investment expose has made it imperative to better operational efficiency.
With the view to improve, discipline and bring better transparency in this sector,
constant efforts are being made and to ascertain extent improvement have been
made.
As the condition of capital market constantly improving, it has started drawing
attention of lot more people than before. On the career related aspect, professional
opportunities to choose for a wide range of jobs available in the organization in this
sector and one can expect to have good time ahead of him.
In present scenario stock broking sector is provi9ding more service with the basic
investment and karvy have a good financial instruments like Mutual Fund, Demat,
Bond etc. which give the right way to save the money and earn good profit by
invested premium. Today people want more services and more return on their
investment. So this stock broking company is providing more value added services
with basic investment operation.
So this is just into the – part of the project inside I have discuss the definition, market
share and the performance in detail manner. I hope the research work would be
satisfactory an up to the expectation of the reader.
5
Chapter 2
OBJECTIVES OF THE STUDY:
Any activity done without an objective in a mind cannot turn fruitful. An objective
provides a specific direction to an activity. Objectives may range from very general to
very specific, but they should be clear enough to point out with reasonable accuracy
6
what researcher wants to achieve through the study and how it will be helpful to the
decision maker in solving the problem.
The objectives of the study were as follows-
To identify the factors influencing investment decisions in stocks
market.
To understand the significance given by investors to those factors and
to understand the familiarity of investors with respect to those factors.
To understand how much risk is involved by investing money in stock
market.
What is the relation between Risk and Return.
How much return should an investor require form a given portfolio?
Chapter 3
COMPANY PROFILE
Karvy Consultants Limited was established in 1982 at Hyderabad. It was established
by a group of Hyderabad based practicing Chartered Accountants. At initial stage it
was very small in size. It was started with a capital of Rs 150000.In starting it was
offering only auditing and taxation services. Later it acts into the registrar and Share
7
transfer activities and subsequently into financial services and other services like
Financial Product Distribution, Investment Advisory Services, Demat Services,
Insurance etc.
Today Karvy has access to millions of Indian Shareholders, besides companies,
banks, financial institutions and regulatory services. Over the past one and half
decade Karvy has evolved as a veritable link between industry, finance and people.
In January 1998, Karvy became first Depository Participants in Andhra Pradesh. An
ISO 9002 Company. Karvy’s commitment to quality and retail reach has made it an
Integrated Financial Service Company. Today Company has 230 Branch Offices in
164 cities all over India. The Company service over 16 million individual investors,
180 corporate and handle corporate disbursements that exceed Rs.2500 crores.
Karvy is a Asset Management Company:
The role of an AMC is to act as the investment manager of the Trust under the Board
supervision and direction of the Trustees.
The AMC is required to be approved and registered with SEBI.
The AMC of a Mutual Fund must have a net worth of at least Rs. 10 crore at all time.
The AMC cannot act as a trustee of any other Mutual Fund.
They will float schemes only after obtaining the prior approval of the Trustees and
SEBI.
The director of AMC should be a person of reputed of high standing and at least
have five years experience in relevant field.
AMC can be terminated with 75% unit holders or majority of trustees.
WHERE KARVY STAND IN THE MARKET?
KARVY is a legendary name in financial services, Karvy’s credit is defined by its
mission to succeed, passion for professionalism, excellent work ethics and customer
centric values.
Today KARVY is well known as a premier financial services enterprise, offering a
broad spectrum of customized services to its clients, both corporate and retail.
Services that KARVY constantly upgrade and improve are because of company’s
8
skill in leveraging technology. Being one of the most techno-savvy organizations
around helps company to deliver even more cost effective financial solutions in the
shortest possible time.
What bears ample testimony to Karvy’s success is the faith reposed in company by
valued investors and customers, all across the country. Indeed, with Karvy’s wide
network touching every corner of the country, even the most remote investor can
easily access Karvy’s services and benefit from company’s expert advice.
Achievements of Karvy:
Largest mobilizer of funds as per PRIME DATABASE
First ISO - 9002 Certified Registrar in India
A Category- I Merchant banker
A Category- I Registrar to Public Issues
Ranked as "The Most Admired Registrar” by MARG
Handled the largest- ever Public Issue - IDBI
Strategic tie-up with Jardine Fleming India Securities Ltd
Handled over 500 Public issues as Registrars
Handling the Reliance Account which accounts for nearly 10 million account holders
First Depository Participant from Andhra Pradesh.
Mission Statement of ‘Karvy’
An organization exists to accomplish something or achieve something. The mission
statement indicates what an organization wants to achieve. The mission statement
may be changed periodically to take advantage of new opportunities or respond to
new market conditions.
Karvy’s mission statement is “To Bring Industry, Finance and People together.”
Karvy is work as intermediary between industry and people. Karvy work as
investment advisor and helps people to invest their money same way Karvy helps
industry in achieving finance from people by issuing shares, debentures, bonds,
mutual funds, fixed deposits etc.
Company’s mission statement is clear and thoughtful which guide geographically
dispersed employees to work independently yet collectively towards achieving the
9
organization’s goals.
Vision of Karvy Stock Broking Limited
To be the “Category Champion” for Capital Markets and Retail Finance in India.
Company’s vision is crystal clear and mind frame very directed. “To be pioneering
financial services company. And continue to grow at a healthy pace, year after year,
decade after decade.” Company’s foray into IT-enabled services and internet
business has provided an opportunity to explore new frontiers and business
solutions. To build a corporate that sets benchmarks for others to follow.
Quality Policy of Karvy:
To achieve and retain leadership, Karvy shall aim for complete customer satisfaction,
by combining its human and technological resources, to provide superior quality
financial services. In the process, Karvy will strive to exceed Customer’s
expectations.
Quality Objectives of Karvy
Build in-house processes that will ensure transparent and harmonious relationships
with its clients and investors to provide high quality of services.
Establish a partner relationship with its investor service agents and vendors that will
help in keeping up its commitments to the customers.
Provide high quality of work life for all its employees and equip them with adequate
knowledge & skills so as to respond to customer's needs.
Continue to uphold the values of honesty & integrity and strive to establish
unparalleled standards in business ethics.
Use state-of-the art information technology in developing new and innovative
financial products and services to meet the changing needs of investors and clients.
10
Strive to be a reliable source of value-added financial products and services and
constantly guide the individuals and institutions in making a judicious choice of
same.
Strive to keep all stake-holders (shareholders, clients, investors, employees,
suppliers and regulatory authorities) proud and satisfied.
Karvy Group Companies
These are as follows-:
Karvy Consultants Limited
Karvy Investor Services Limited
Karvy Stock broking Limited
Karvy Computer Shares Pvt. Ltd.
Karvy realty (India) Pvt Ltd
Karvy globle services Ltd
Karvy data base management services
Karvy comtrade Ltd.
11
Karvy Insurance broking Pvt Ltd.
Karvy Consultants Limited.
KARVY STOCK BROKING LIMITED
History.
Karvy Consultants Limited was established in 1982 at Hyderabad. It was established
by a group of Hyderabad-based practicing Chartered Accountants. At initial stage it
was very small in size. It was started with a capital of Rs. 1, 50,000.
In starting it was only offering auditing and taxation services. Later, it acts into the
Registrar and Share transfer activities and subsequently into financial services and
other services like Financial Product Distribution, Investment Advisory Services,
Demat Services, Corporate Finance, Insurance etc.
All along, Karvy’s strong work ethics and professional background leveraged with
Information Technology enabled it to deliver quality to the individual. A decade of
commitment, professional integrity and vision helped Karvy achieving a leadership
position in its field when it handled largest number of corporate and retail that proved
to be a sound business synergy.
Today, Karvy has access to millions of Indian shareholders, besides companies,
banks, financial institutions and regulatory agencies. Over the past one and half
decades, Karvy has evolved as a veritable link between industry, finance and
people.
In January 1998, Karvy became first Depository Participant in Andhra Pradesh. An
ISO 9002 Company, Karvy’s commitment to quality and retail reach has made it an
Integrated Financial Services Company.
Today, company has 230 branch offices in 164 cities all over the India. The company
adds 5 new offices every month to the company’s ever growing national network in
12
every nook and corner of the country. The company service over 16 million individual
investors, 180 corporate and handle corporate disbursements that exceed Rs.2500
Crores.
Company Birth
The birth of Karvy was on a modest scale in 1981. It began with the vision and
enterprise of a small group of practicing Chartered Accountants who founded the
flagship company. Karvy Consultants Limited. We started with consulting and
financial accounting automation, and carved inroads into the field of registry and
share accounting by 1985. Since then, we have utilized our experience and
superlative expertise to go from strength to strength to better our services, to provide
new ones, to innovate, diversify and in the process, evolved Karvy as one of India’s
premier integrated financial service enterprise.
Thus over the last 20 years Karvy has traveled the success route, towards building a
reputation as an integrated financial services provider, offering a wide spectrum of
services. And we have made this journey by taking the route of quality service, path
breaking innovations in service, versatility in service and finally…totality in service.
Our highly qualified manpower, cutting-edge technology, comprehensive
infrastructure and total customer-focus has secured for us the position of an
emerging financial services giant enjoying the confidence and support of an enviable
clientele across diverse fields in the financial world.
Our values and vision of attaining total competence in our servicing has served as
the building block for creating a great financial enterprise, which stands solid on our
fortresses of financial strength - our various companies.
With the experience of years of holistic financial servicing behind us and years of
complete expertise in the industry to look forward to, we have now emerged as a
premier integrated financial services provider.
And today, we can look with pride at the fruits of our mastery and experience –
13
comprehensive financial services that are competently segregated to service and
manage a diverse range of customer requirements.
Establishment Year: 1981
Firm Type: Public. Ltd.
Nature of Business : Services
Level to Expand : International
Head office : "Karvy House", 46 Avenue 4, Street No. 1, Banjara
Hills, Hyderabad - 500034, (Andhra Pradesh), India.
Parthasarathy - Managing Director
M Yugandhar - Managing Director
M S Ramakrishna - Director
Stuart Crosby - Chairman
Mark Davis - Director
Chandra Balaraman - Director Overview
Karvy Stock Broking Limited provides stock broking and research advisory services
in India. The company offers portfolio analysis, depository participant, and financial
planning and management services for individuals and institutional clients. It also
provides a monthly magazine, Fin polis, which provides up-dated market information
on market trends, investment options, and opinions. The company was founded in
1990 and is based in Hyderabad, India. Karvy Stock Broking Limited is a subsidiary
of Karvy Consultants Limited. Karvy, is a premier integrated financial services
provider. Karvy covers the entire spectrum of financial services such as
Stockbroking, Depository Participants, Distribution of financial products - mutual
funds, bonds, fixed deposit, equities, Insurance Broking, Commodities Broking,
Personal Finance Advisory Services, Merchant Banking & Corporate Finance,
placement of equity, IPOs, among others.
Values:
1. Integrity
2. Responsibility
14
3. Reliability
4. Unity
5. Understanding
6. Excellence
7. Confidentiality
Karvy has adequate internal control systems and procedures commensurate
with the size nature of its business. These system and procedures provide
reasonable assurance of maintenance of proper accounting records, reliability
of financial information, protection of resources and safeguarding of assets
against unauthorized use.
General Information’s of Karvy Stock Broking Ltd.
1. Sales performance
In Rupees – Karvy Stock Broking Ltd generate around 15000 to 20000
revenue in per day basis.
In units – And around 3500 units in monthly basis.
2. Number of Employees
(Section-wise or as per classification like skilled, semiskilled,
unskilled worker, officers, managers, etc.)
The number of Employees in Karvy Stock Broking Ltd since
In 1991 – 676
In 2008 – 7000
In 2010 – 10000, and the organization increases 1000 employees per year in
each and every branch.
Manager – In Karvy Stock Broking Ltd number of manager is one.
Officers - In Karvy Stock Broking Ltd number of officers is three.
15
Skilled – At present there are six skilled employees in Karvy Stock Broking Ltd.
Semiskilled – At present there are four semiskilled employees in Karvy Stock
Broking Ltd.
Unskilled worker - At present there are two semiskilled employees in Karvy
Stock Broking Ltd.
3. Detailed Organizational charts
Karvy Stock Broking Ltd. Branch level organization chart
CHAIRPERSON
COUNTRY HEAD
VICE PRESIDENT
EMPLOYEE
16
CHAIRPERSON -: In Karvy there is a one chairperson.
COUNTRY HEAD -: One country head.
VICE PRESIDENT -: There are six vice presidents in the six zones,
East
West
North
South
South-East
North-East
Employees of the organization report to the Vice presidents and the Vice president
report to the Country head and lastly Country head submit the final copy of report to
the Chairperson. The overall organizational chart of the Karvy Stock Broking Ltd
shows a vertical format or structure.
National level organization chart
CM & MD
(Hyderabad)
GM GM GM
(Marketing) (Finance) (HRM)
Zonal Manager
17
Regional Manager
Branch Mgr. Branch Mgr. Branch Mgr.
Accountant Sr. Executives
Executives
4. Future plans of the company
The future plans of the Karvy Stock Broking Ltd.is try to acquire more
number of customer, and acquisition of Demat & Trading Accounts.
The organaition also plans to do more number of tie up with banks.
5. KARVY Stock Broking Limited is a member of:
National Stock Exchange (NSE)
Bombay Stock Exchange (BSE)
Hyderabad Stock Exchange (HSE)
6. Product, photographs of the product, technical details, etc.
Product:-
18
I-ZONE
IPO
VALUE SAVER
Photographs of the product:-
7. COMPETITOR ANALYSIS
1. Bajaj Capital
It was established in 1964 at Delhi. In 1965 it innovates a new financial instrument
‘Companies Fixed Deposits’ and becomes the first company to raise Fixed Deposits.
The objective of company is to provide professional guidance to investors on where,
when and how to invest and to assist the corporate sector in its resource raising
activities. Bajaj Capital became the first company to set up ‘Investment Centers’ all
over India for this purpose. Today, Bajaj Capital has 90 offices in over 40 important
19
Indian Cities and has a team of around 500 employees nationwide.
Services provided
Merchant banking
Buying and Selling of Money Market Investments
Distribution of financial products
Investment Advisory Service
» Company fixed deposits
» Bonds
» Mutual funds
» Life insurance
» General insurance
» Pension schemes
» Post office schemes
» Tax saving schemes
» Insurance linked investment schemes
» Initial public offerings
» Housing loans
» NRI schemes
» Car insurance
Financial Planning
» Investment planning
» Retirement planning
» Insurance planning
» Children's future planning
» Tax planning
» Short-term cash flow planning
2. MCS Ltd.
20
It is established in 1985 in Delhi. It is one of the largest Data Processing House
employing more than 600 people.MCS Ltd. has 8 branches all over India.
Volumes Handled
Share registry activities for over 100 corporate servicing over 10 million investors.
Mutual fund operations for 25 funds, servicing over 4.5 million investors.
Billing & settlement plan for Indian operations of IATA Geneva for 1.2 million tickets
per annum covering (26 airlines & over 1200 agents).
Services Offered:
Registrars and Transfer Agents
Registrars to IPO’s /Right Issues
Registrars to Open Offers
Registrars to Mutual Funds
Data Processing for Airlines
Print Shop Services
MCS is a major player in these activities in the Country with a market share of about
25%. MCS today provides these services to over 140 Corporate and Mutual Funds
for a total investor base of 15 million.
3. N.J.India Investments Pvt. Ltd.
NJ India Invest (formerly known as NJ Capital stocks) was started in 1994 to cater to
the growing financial services sector. NJ India Invest evolved out as a client focused
need based investment advisory firm. NJ regards mutual fund as one of the best
investment avenue available to satisfy any kind of investment need.
4. ICICI Securities Ltd.
21
ICICI Securities Limited (i-SEC) is a wholly owned investment-banking subsidiary of
ICICI Limited. ICICI is the only non-Japanese Asian financial institution to be listed
on the New York Stock Exchange (NYSE). ICICI Securities was formed on 22nd
Feb. 1993, when ICICI's Merchant Banking Division was spun off into a new
company; ICICI Securities today is India's leading Investment Bank and one of the
most significant players in the Indian capital markets. ICICI Brokerage Services
Limited (IBSL) set up in March 1995, IBSL is a 100% subsidiary of i-SEC. It
commenced its securities brokerage activities in February 1996 and is registered
with the National Stock Exchange of India Limited and The Stock Exchange,
Mumbai.ICICI has started a website ICICIdirect.com which is the
mostcomprehensive website, which allows you to invest in Shares, Mutual funds,
Derivatives (Futures and Options) and other financial products.ICICI has a large
network of branches all over India.
Services offered:
Merchant Banking
Demat Service
Stock Broking
5. HDFC
HDFC is the leading financial company in India. IT has large network of branches all
over India. HDFC Securities which is fully subsidiary of HDFC provides
dematservice.
HDFC and its subsidiary provides following services.
Demat Service
Life Insurance
Banking Service
Housing Finance
Vehicle Finance
Education Loan
Personal Loan
22
Mutual Fund
6. Kotak Securities Ltd.
Kotak Securities needs no introduction as one of the largest stock broking houses in
the country and a leading distributor of primary market offerings. Kotak Securities
limited is a joint venture between Kotak Mahindra Bank and Goldman Sachs, the
international investment banking and brokerage firm.
Kotak Securities is a corporate member of both the BSE and the NSE. It is also a
depository participant with the National Securities Depository Limited (NSDL) for
trading and settlement of dematerialized shares.
Services offered:
Stock Broking
Financial Product Distribution
Demat Services
Investment Advisory Services
7. Motilal Oswal Securities Ltd.
Motilal Oswal Securities Ltd (MOSt) is one of the leading equity research and
broking houses of India. MOSt has a 20-member research team, which is engaged
round the clock in analyzing the Indian economy and corporate sectors to identify
equity investment ideas. Asia Money Broker's Poll 2002 has rated MOSt as one of
the best Indian broking house, for research, for the second time since 2000.
Motilal Oswal is member of NSDL and CDSIL for DP. It has wide network of
branches. It has 158 branches all over India.
Services Offered:
Demat Services
Stock Broking
Investment Advisory Service
23
8.MARKETING STRATEGY OF KARVY
Market Positioning-:
Market positioning statements of Karvy are “At Karvy we give you single window
service” and “We also ensure your comfort”. So, Karvy focus on the consumers who
prefer almost all investment activities at same place by providing number of various
financial services. At Karvy a person can purchase or sell shares, debentures etc.
and at the same place also demat it. Karvy also provides other investment option to
the same person at same place like Mutual Fund, Insurance, Fixed Deposit, and
Bonds etc. and help the person in designing his portfolio. By this way Karvy provides
comfort to its customers.
Karvy is also positioned according to Rise and Trout. Karvy is promoted as a no. 1
investment product distributor and R & T agent of India.
Target Market:
Karvy uses demographic segmentation strategy and segment people based on their
occupation. Karvy uses selective specialization strategy for market targeting. Target
person for the Karvy Stock Broking and Karvy Investment Service are persons who
can work as sub-broker for the companies. Companies focus on Advisors of
Insurance and post office, Tax consultants and CAs for making sub-broker.
Marketing channel System:
Karvy uses one level marketing channel for investment product distribution. Sub-
brokers work as intermediary between consumer and company. Company has both
forward and backward flow of activity through channel. Company distributes
24
stationery, brokerage, and information forward to its sub-broker. The sub-brokers
send filled forms, queries, amount of investment etc. back to the company.
Training Channel Members:
Karvy provides training to the sub-brokers because they will be viewed as the
company by the investors. The executives of Karvy explain various new schemes of
investment to the sub-brokers with its objective, risk factors and expected return.
Company also periodically arrange seminar to guide sub-brokers.
Advertising and Promotion:
The objective of advertising of Karvy is to create awareness about services of Karvy
among investors and sub-brokers and increase sub-brokers of Karvy.
Company doesn’t give advertisement in media like TV, Newspapers, and Magazines
etc. Karvy’s advertisement is made indirectly by the companies associate with it.
Karvy is R & T agent of around 700 companies. They publish name, address and
logo of Karvy on their annual report.
Karvy also publish its weekly Stock Market Newsletter ‘Karvy Bazaar Baatein’ and
monthly magazine ‘The Finapolis’ to guide investors and sub-brokers about market.
9. HR Policy’s of Karvy Stock Broking Ltd.
Recruitment and Selection Policy:
The upper level members like zonal managers, regional managers, branch
managers and senior executives are recruited by publishing recruitment
advertisement in leading national level newspaper. The qualified applicant are
then called for interview and selected.
The regional manager has authority to select lower level employee like peon,
25
marketing executives, accountant etc. by approval of zonal manager.
Training and Development:
Continuous training and upgrading technical, behavioral and managerial skills
is a way of life in Karvy. Karvy encourages employees to hone their skills
regularly to enable them to face the challenges of the changing requirements
of customers that fit market up and down.
Training needs analysis is done on a regular basis and systematic
methodologies are ensured that skills and capabilities of all employees are
constantly upgraded to enable them to perform in the challenging work
environment.
New employee has given training under experienced employee. The new
employee work under experience employee and observe his all activities.
When company employs new technology or there is any change in the
working of company the training program is arranged.
Employee Motivation:
Karvy’s employees are highly empowered. They don’t have to report any
person of the same branch but they report upper level branch. E.e. Marketing
executive of Jamnagar branch directly reports Senior Marketing executive of
Baroda zonal office.
If particular branch earn certain profit then Karvy gives them special
incentives. E.g. last year Karvy had arranged two days tour of Div for their
employees of Rajkot, Jamnagar, Junagadh and Bhavnagar branch which was
totally free of cost. This also helps in maintaining co-operation between
employees.
10. KARVY SERVICES- AN OVERVIEW:
26
1. Stock broking
2. Demat services
3. Investment product distribution
4. Investment advisory services
5. Corporate finance & Merchant banking
6. Insurance
7. Mutual fund services
8. IT enabled services
9. Registrars & Transfer agents
10. Loans.
1. Stock Broking:
KARVY is working as Capital Market Intermediaries. Stockbrokers are regulated by
SEBI [Stock-brokers and Sub-brokers] Regulations, 1992. The stockbroker is a
member of the stock exchange. Stockbrokers are the intermediaries who are allowed
to trade in securities on the exchange of which they are members. They buy and sell
on their own behalf as well as on behalf of their clients.
Stockbrokers expand their business by engaging sub-broker. Sub-brokers mean
“any person not being a member of a stock exchange who acts on behalf of a stock
broker as an agent or otherwise for assisting the investors in buying, selling or
dealing in securities through such stock-brokers.”
2. Demat Services:
Karvy is a depository participant with the National Securities Depository Limited
(NSDL) for trading and settlement of dematerialized shares.
Depository Participants (DPs) are described as an agent of the depository. They are
intermediaries between the depository and the investors. The relationship between
the DPs and the depository is governed by an agreement made between the two
under Depositories Act.
A DP can offer depository-related services only after obtaining a certificate of
registration from SEBI.
Since Karvy is also in the broking business, investors who use Karvy’s depository
27
services get a dual benefit. They can use Karvy’s brokerage
services to execute transactions and Karvy’s depository services to settle them.
3. Investment Products Distribution:
Company is also concern with the distribution of investment products like
(a). Fixed Deposit
(b). Bonds
(c). IPO
(a). Fixed Deposit:
KARVY is dealer of 34 fixed deposits of various types which includes fixed deposits
of Public Sector, Non Banking Finance Companies, Housing Finance Companies
and Manufacturing Companies.
Company is dealer of following Fixed Deposits
PUBLIC SECTOR
1 HUDCO
2 Sardar Sarovar Narmada Nigam Ltd.
3 Tamilnadu Power Finance Corporation Ltd.
4 NTPC
NON BANKING FINANCE COMPANIES
1 Ashok Leyland Finance Ltd.
2 Bajaj Auto Finance Ltd.
3 Birla Home Finance Ltd.
4 Cholamandalam Investment & Finance Co. Ltd.
28
5 Escorts Finance Ltd.
6 First Leasing Company of India Ltd.
7 IDBI Suvidha
8 Nicco Uco Alliance Credit Ltd.
HOUSING FINANCE COMPANIES
1 Can Fin Homes Ltd.
2 Dewan Housing Finance Corporation Ltd.
3 Gruh Finance Ltd.
4 HDFC Ltd.
5 PNB Housing Finance Ltd.
6 Sundaram Home Finance Ltd.
MANUFACTURING COMPANIES
1 A P Paper Mills Ltd.
2 Amtek India Ltd.
3 Atul Ltd.
4 Ballarpur Industries Ltd.
5 Chambal Fertilizers & Chemicals Ltd.
6 Escort Ltd.
7 Greaves Ltd.
8 Gujarat Alkalies & Chemicals Ltd.
9 Indian Express
10 Ind-Swift Ltd.
11 JK Industries Ltd.
12 Jindal Steel & Power Ltd.
13 Sound Craft Industries Ltd.
14 Supreme Industries Ltd.
15 Zuari Industries Ltd.
29
(b). Bonds:
Karvy is dealer of following bonds
RBI Saving Bonds
NHB
REC
(c). IPO:
Company is also provides services related to Initial Public Offer of company.
Company provides stationary at the time of IPO as well as provides information to
investors regarding IPO and solves their queries.
4. Investment Advisory Services:
This division provides portfolio management services to high net-worth individuals
and corporate. The expertise of Karvy in research and stock broking gives it the right
perspective to provide investment advisory services. Company provides advisory
services to its clients.
Financial goal of each individual investor varies according to his dream, ambition and
family size and future financial planning for the children & old age pension for self
and wife so does the pathway to achieve it. Karvy apply the principles of Financial
Planning as both science & art, it understands the time horizon, risk bearing capacity
and investment goals of investors keeping in mind their psyche and financial needs.
Based upon this Karvy helps individual investors to plan their entire life up to
retirement, Taxes, Insurance needs and other important personal financial goals. It
designs portfolio for investor to invest their saving in various financial products like
shares, bonds, debentures, mutual funds, fixed deposits, insurance etc., Company
design portfolio by considering following factors.
30
Investor’s requirement of getting money back,
Investor’s willingness to take risk,
Investor’s tax planning etc.
5. Corporate finance & Merchant banking:
Corporate finance is the financial activity of corporation. It deals with the firm's
operations with regard to investing and financing. It concerned with how firms raise
capital and the consequences of alternative methods of raising capital. Firm’s capital
can be raised by raising loans, issuing shares, and acquiring or merging with other
businesses by public or private companies.
Merchant banking is a financial intermediation that matches entities that need capital
and those that have capital. Hence they facilitate the flow of capital in the market.
Karvy enjoys SEBI category (I) authorization for Merchant Banking. Karvy offers the
full spectrum of Merchant Banking Services, beginning from identifying the best time
for an issue to final stage of marketing it, to harvest unparalleled success.
As a merchant banker Karvy offer following services:
Issue management
Instrument designing
Pricing of the issue
Registration process for the issue of shares
Marketing efforts
Final allotment to investors
Listing details on stock exchanges
Loan syndication
Lease financing
Corporate advisory services
Underwriting
Portfolio management
6. Insurance:
31
Karvy is also dealer of many private life insurance companies. At Jamnagar branch,
company is associated with dealing of following companies.
ICICI Prudential Life Insurance
HDFC Life Insurance
TATA AIG Life Insurance
7. Mutual Fund Services:
Since its inception in 1982, Karvy has demonstrated a dedication coupled with
dynamism that has inspired trust from various segments – corporate, government
bodies and individuals. Karvy has since been performing a pivotal role as the
intermediary – the interface – between these players.
With Mutual Funds emerging as a distinct asset class, Karvy has made a strategic
choice to leverage the power of latest technology to provide a cutting edge to its
services. Karvy, today, service nearly 80% of the asset management companies
(AMCs) across an extensive network of service centers with assets under service in
excess of Rs.10,000 crores.
Karvy's ability to mass customize and offer a diverse range of products for a diverse
range of customers has helped mutual fund companies to uniquely position
themselves in the market place. These diverse range of services cut across multiple
delivery channels – service centers, web, mobile phones, call center – has brought
home the benefits of technology to investors, distributors, and the mutual funds.
Going forward, Karvy shall strive to create new products and services, which would
address the needs of the end customer. Company’s single minded focus in
delivering products for customers has given it the distinguished position of being the
preferred provider of financial services in the country.
List of Mutual Fund Clients of KARVY:
1 Alliance Mutual Fund
2 Birla Mutual Fund
3 Bank of Baroda Mutual Fund
4 Can Bank Mutual Fund
5 Chola Mutual Fund
6 Deutsche Mutual Fund
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7 DSP Merrill Lynch Mutual Fund
8 Franklin Templeton Investments
9 GIC Mutual Fund
10 HDFC Mutual Fund
11 HSBC Mutual Fund
12 IL & FS Mutual Fund
13 JM Mutual Fund
14 Kotak Mutual Fund
15 LIC Mutual Fund
16 Punjab National Bank Mutual Fund
17 Prudential ICICI Mutual Fund
18 Principal Mutual Fund
19 Reliance Mutual Fund
20 State Bank of India Mutual Fund
21 Standard Chartered Mutual Fund
22 Sundaram Mutual Fund
23 SUN F&C Mutual Fund
24 Tata Mutual Fund
8. Income Tax enabled services:
Karvy has been started this service since March, 2004. Karvy is work as TIN
Facilitation Centre it provides following IT enabled services.
a. Distribution of PAN Card.
b. Distribution of TAN Card.
c. Services related to e-TDS.
Karvy work as an intermediary between NSDL and IT payers. Karvy provides various
form for different IT enabled services and guide people to fill that forms. It also
solves queries of the tax payers. It also distributes PAN and TAN card to the tax
payers.
9. Registrars & Transfer agents:
33
In 1985, Karvy entered the Registrar and Share Transfer Business to create a
market niche in the competitive field of financial services. In 1994-95, it reached a
milestone when it processed 104 Public Issues constituting 46 per cent market
share. Now in its second decade of existence, Karvy is the leader in the industry: In
an opinion poll conducted by an independent market research agency - MARG,
Karvy has been rated as India’s Most Admired Registrar on various parameters: -
Overall Excellence.
Handling of Volumes
Timely Dispatch
Quality Management and Technological Up gradation.
A SEBI Category 1 Registrar, So far, Karvy has handled over 675 ISSUES as
Registrars to public issues processed over 52 million applications and is servicing
over 16 million investors from various locations spread over 205 clients.
10. Loan:
Karvy has recently started this service at selected branches of metro cities. This
service has not been started in Saurashtra-Kucch region. Karvy provides loans for
following.
Vehicle Loan
Home Loan
Personal Loan.
11. CHARGE SCHEDULE for I Zone
Parameter ICICI Direct Sharekhan Indiabulls Reliance Money
Karvy
First Yr 900 650/- 1200/- 500 650/-
Demat AMC 550 420 415 400 375
34
Delivery Brokerage
0.45 TO 0.85%
Rs. 100 minimum charges &0.5 to 0.8%
0.4 to 0.8% top up system
0.30%
Intraday / Futures
0.1 TO 0.45%
0.08% 0.04 to 0.05%
top up system
0.03%
Options Rs. 85 75 rs 85rs top up system
70/-
Margin Trade 6 times 9 times 10 times 10 times 4 times
Demat 2 times 4 times 3 times 3 times No
Upfront brokerage payment
NO 5000 TO 120000 10000 TO 100000
NO NO
Brokerage Negotiable
YES YES YES YES YES
12. Comparision of availability of the Feature.
Comparision of availability of the Feature
Parameter ICICI Direct Sharekhan
Indiabulls Reliance Money
Karvy
Equities, F&O YES YES YES YES YES
Mutual Fund YES NO YES NO YES
IPO NO NO YES NO YES
Market watch screen NO YES YES NO YES
Instant order confirmation NO YES YES NO YES
Live Market news NO YES YES NO YES
Multiple Bank Gateway NO YES YES YES YES
BTST – enabled NO YES YES NO YES
Consolidated Net worth Statement
YES YES YES NO YES
Hidden Charges YES YES YES YES NO
Alerts and Reminders NO NO NO NO YES
Real time Portfolio Valuations
YES YES YES NO YES
35
Live Intraday scrip charts NO YES YES NO YES
SMS integration NO YES YES NO YES
Order on phone YES YES YES YES YES
Other statistical information like FII data, MF buying / selling activities etc
NO NO NO NO YES
User friendliness NO YES YES NO YES
Hot keys functionality similar to dealer terminal
NO YES NO NO YES
Exe version for frequent traders
YES NO NO YES NO
Net worth during market hours
NO YES YES NO YES
Personal finance tools NO NO YES NO YES
Extension of current relationship
NO NO NO NO YES
SWOT ANALYSIS OF KARVY
Strengths:
1. Employees are highly empowered.
2. Strong Communication Network.
36
3. Good co-operation between employees.
4. Number 1 Registrar and Transfer agent in India.
5. Number 1 dealer of Investment Products in India.
Weaknesses:
1. High Employee Turnover.
Opportunity:
1. Growth rate of mutual fund industry is 40 to 50% during last year and it
expected that this rate will be maintained in future also.
2. Marketing at rural and semi-urban areas.
Threats:
1. Increasing number of local players.
2. Past image of Mutual Fund.
INTRODUCTION OF THE TOPIC
“RISK AND RETURN OF A PORTFOLIO”
Meaning of Risk :
37
Risk is the potential that a chosen action or activity (including the choice of inaction)
will lead to a loss (an undesirable outcome). The notion implies that a choice having
an influence on the outcome exists (or existed). Potential losses themselves may
also be called "risks". Almost any human Endeavour carries some risk, but some are
much more risky than others.
Definitions of risk:
A probability or threat of a damage, injury, liability, loss, or other negative occurrence
that is caused by external or internal vulnerabilities, and that may be neutralized
through preemptive action.
The many inconsistent and ambiguous meanings attached to "risk" lead to
widespread confusion and also mean that very different approaches to risk
management are taken in different fields. For example:
The ISO 31000 (2009) /ISO Guide 73 definition of risk is the 'effect of uncertainty on
objectives'. In this definition, uncertainties include events (which may or not happen)
and uncertainties caused by a lack of information or ambiguity. This definition also
includes both negative and positive impacts on objectives.
Another definition is that risks are future problems that can be avoided or mitigated,
rather than current ones that must be immediately addressed.
Risk can be seen as relating to the Probability of uncertain future events For
example, according to Factor Analysis of Information Risk, risk is:the probable
frequency and probable magnitude of future loss.
Meaning of Return:
The profit on, or advantage received from, labour, or an investment, undertaking,
adventure, etc.
38
Definition:
The annual return on an investment, expressed as a percentage of the total amount
invested also called rate of return. The yield of a fixed income security. Its same as
tax return.
Relationship between Risk and Return:
Risk and reward are directly related. hypothetically, the riskier the asset, to more
potential reward one expects to gain. the less risky, the less gain.
The higher the risk, the higher the return required. The reverse is also true. The
lower the risk (or the safer the asset) the lower the return.
The explanation is that high returns tend to be achieved in businesses that can't
really provide a predictable flow of inflows. With these investments, you will
frequently feel it, either going up or down (and even going out of business). No one
will invest in these assets if they pretend return a minimal amount. The bank is much
safer and provides that already!
Very safe investments (little risk) don't offer a bumpy ride. They tend to be quite
predictable, offering an almost secure return. This comes at a price. Since you run
minimal risk (the issuer of the asset does run with a lot more risk, but promises you a
rate), the issuer will offer you a lesser return.
"No risk" is generally defined to be the interest rate that a secure and stable
government will pay you for loaning money. For example, if you invest in treasury
bills from the US Government they give you a certain rate of interest, or if you put
your money in a bank Certificate of deposit they give you interest.
This is defined as a "no risk" investment because you are "guaranteed" to get
your money back plus the interest.
39
In other form of investment will contain a risk that is defined against the
benchmark of a "no risk" investment. These types of investment are more risky
(because they do not have the security or stability that a national government
may have). Some are "mildly risky," others are "very risky."
As an investor, if you invest in a risky endeavor, you expect that should the
investment work out, you better receive a higher payoff than if you were to simply
put your money into a bank. Otherwise there's no point in investing in risky stuff.
Therefore, the riskier the venture, the higher the potential return. Note the word
"potential."
High return is not guaranteed. It just means that the "highest return" you could
expect from the investment, will be better than what you would get by depositing
the money in a bank and collecting interest.
RESEARCH METHODOLOGY
Research methodology has multiple dimensions. Research Methodology is a way to
systematically solve the research problems scientifically. The importance of
knowledge of research methodology and how the research is done stems from the
following considerations:
40
1. Primary Data.
2. Secondary Data.
(A) Research Plan:
1. Primary data:
The primary data constitute an integral part of the market research
information and which are based on the followings.
i. Observations and Findings
ii. Interviewing
The primary data has been collected through questionnaire survey.
(B) Area of Survey:
The area selected for my research study is Agra. I have selected some
residential and market area. The following factors kept in mind while
conducting the survey:
i. The interviewee age between 22 to 55.
ii. The samples are both males and female (70% respondents are
male and 30% of them were females).
41
(C) Following things consider during questionnaire:-
It is extremely important to ask the right questions to get the right
information, which serves the purpose.
It is instrumental to measure the level of knowledge, attitude and
behavior of the respondents.
It includes the respondents to co-operate and to answer, which are
trustworthy.
The needs are to be identified to classify the interviewer.
The design of the questionnaire should be simple for the respondents
as well as the interviewer.
RESEARCH DESIGN
1. Types of Study EXPLORATORY RESEARCH
2. Sources of Data SECONDARY DATA
3. Data Collection Mode QUESTIONNAIRE METHOD
42
4. Target Respondent SALARIED PEOPLE AND BUSINESSMAN
5. Sample Size 50
6. Sampling Method RANDOM SELECTION.
Sampling procedure: - Respondents for the purpose of survey has been
selected according to my convenience.
Contact Methods: - In the survey the respondents are selected randomly.
I had personally gone to all the respondents and asked them to fill the
questionnaire and if they were not ready to fill, I noted down their response
while interaction with them. I went to the residential areas for direct interaction
with respondents.
Data Collection Method: I have used ‘Survey Method’ to collect data. I
have collected data using questionnaire.
Questionnaire Plan: I have used ‘Structured Questionnaire’ for gathering
the required data through contacting respondent personally.
Type of Information: I have collected Fact, Awareness, Attitude, Future
action plan and reason using questionnaire.
Type of Questions: ‘Close-ended questions’ or ‘Dichotomous’ and
‘Multiple Choice’ types are asked in the questionnaire for data collection.
43
Data Analysis & Interpretation: Data Analysis is based on the data
collected by way of Questionnaires.
QUESTIONNAIRE
Personal Information
1. Name - ____________________________
2. Age -
a) 18- 25 b) 26-40 c) 41-60 d) 61 and above.
44
3. Qualification:
a) Undergraduate b) Graduate c) Post Graduate d) Professional Degree
e) Doctorate
4. Occupation:
a) Student b) Service c) Business Man d) House Wife e) Retired
5. Do you want to invest?
a) Yes b) No
6. If “Yes”, then where do you want to invest?
a) Mutual fund b) Share c) Post office saving d) Bank deposit (FD)
e) Others
7. How do you do equity trading?
a) Online b) Offline
8. How long have you been investing in equity trading?
a) 0-1 year b) 1-3 years c) 3-5 years d) More then 5 years.
9. How did you come to know about karvy as a distributor of share and
mutual funds?
a) News Paper b) Relatives and Friends c) Investment Advisors
d) Television e) Internet
10. What is your level of awareness about share investment?
a) Very High b) High c) Low d) Moderate e) Very Low
11. Karvy is more concern about---------------
a) Return to customer b) Client relationship c) Customer needs
d) Their own commission
45
12. Would you like to work with Karvy Securities Ltd for dealing in mutual
fund?
a. Yes
b. No.
13. If no, then the reason would be:
a. Not answered
b. No time
c. Lack of knowledge
d. No expansion plans.
14. How company is helped to create a Strong Portfolio?
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
------------------------------------------
15. What additional benefits or services karvy gave to their customers?
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
-------------------------------------------
16. Is the organization services--------
a) Good.
b) Very Good.
c) Bad
d) Very Bad
e) Not Satisfied
46
f) Satisfied.
17. Is organization make aware to their customer for recent market changes-----------
a) Yes
b) No
c) Very Frequent.
18. The new product of karvy “ VALUE SAVER” is effective or not?
a) Effective
b) Not effective.
19. Is karvy provide low broking charges?
a) Yes
b) No
c) Not excetly.
20. Your opinion about karvy stock broking ltd.jamshedpur--------
THANK YOU FOR YOUR KIND COOPERATION
2. Secondary Data:
The data is collected through the secondary sources and it is based on
fundamentals. The fundamentals are calculated in the long term and short
term basis. For calculating fundamentals in long term aspect I have taken few
47
companies from different sectors, so that the risk and return analysis of 10
companies give a clear view of a portfolio.
1. COMPARISION BETWEEN THE HEAVY – ENGINEERING
COMPANIES
*indicates it is better as comparison to the other company’s value
48
Comparative parameters BHEL LARSEN & TURBO
EPS Rs 88.60 Rs 72.66*
P/E RATIO 15.83 25.29 *
BOOK VALUE Rs 325 * Rs 303.28
D/E RATIO 0.01 * 0.37
CURRENT RATIO 1.37 * 1.19
NET PROFIT MARGIN 12.55% * 11.56%
GROSS PROFIT MARGIN 16.06% * 12.74%
RETURN ON CAPITAL EMPLOYED 41.37% * 22.49%
RETURN ON EQUITY 27.08% 23.95% *
DIVIDEND PAID 179% 725% *
PROFIT GROWTH 37.35% 42.84% *
MARKET CAPITALIZATION 94,906.71 cr * 1,00,919.11 cr
ANALYSIS
This comparison shows that in most of the parameters BHEL is good but L&T is
better in EPS its stock price is also cheaper and giving a good return on equity
and capital employed and having a good profit growth as compared to BHEL
where profit is fluctuating year after year so, it is more risky. L&T is also giving a
high dividend to its shareholders. So we have chosen L&T for our portfolio. And
here are some future plans for L&T which gives a green signal to buy.
Future prospects for Larsen & turbo ltd
L&T bagged an order of Rs 1513crore for the construction of high rise tower,
luxury hotels, hospital and factory building projects.
Order from ITC for construction ITC hotel costing Rs 238cr.
L&T has a significant market share in construction segment.
L&T wins US$ 217.25 million orders for electrical project from gulf.
L&T is emerging one of the strong players in development and construction of
metro rail system, airport expansion and modernization & port upgradation.
Its order book is booked for RS 71650cr
2. COMPARSION BETWEEN THE PHARMACEUTICAL
COMPANIES
49
Comparative parameters SUN PHARMA RANBAXY
EPS ( avg for last 5 yrs) Rs 13.37 * Rs 27.28
P/E RATIO 35.70 * 20.12
BOOK VALUE Rs 276.06 * Rs 121.74
D/E RATIO 0.01 * 0.83
CURRENT RATIO 2.14 * 1.40
NET PROFIT MARGIN 33.99% * 19.74%
GROSS PROFIT MARGIN 9.86% 18.31% *
RETURN ON CAPITAL EMPLOYED 17.05 * 12.82
RETURN ON EQUTIY 15.71 * 22.41
DIVIDEND PAID 350 % * 40%
PROFIT GROWTH 211.00% * 100.83%
MARKET CAPITALIZATION Rs 49,708.80cr * Rs 22,755.60cr
*indicates it is better as comparison to the other companies value.
ANALYSIS
After comparison of all the parameters it shows that SUN PHARMA is the best
among the two. It is cheaper as compared to other. It is also giving a good return on
capital employed and equity. It is giving a good dividend to its shareholders and the
company’s profit is also growing as compared to RANBAXY which is showing a
negative growth. SUN PHARMA ‘s market share is also better as compared to
RANBAXY. So we have chosen SUN PHARMA for our portfolio which attracting the
most to purchase it.
Future prospects for Sun pharma
A presence in lifestyle and chronic therapy categories such as diabetes and neuro-
psychiatry ensures higher growth and twice the margins for Sun Pharmaceutical.
50
The company has a consistent growth track record with sales growing annually by 36
per cent over the last four years and net profits by 47 per cent during the same
period. While the domestic formulation sector is growing at 11 per cent, Sun Pharma
has managed to grow its domestic business by 19 per cent for H1, 2009.
In the international segment, expect the US (40 per cent of sales) business to grow
at about 25 per cent for the current fiscal. While the company is awaiting approval on
the 96 ANDAs it has filed with the US FDA and plans to file 30 more, FY10 might see
a slight correction as generic sales move down due to the recessionary trends in the
Top 8 global markets.
While uncertainties on Taro acquisition and FDA queries on its Caraco plant are
negatives for the stock, expect these to be resolved in the next one quarter. The
comfortable cash position at $500 million (Rs 2,500 crore) ensures that Sun Pharma
can tide over the tight liquidity conditions prevailing currently and also look out for
acquisitions at attractive valuations. At Rs 1,057, the stock can deliver returns of
about 25 per cent over the next one year.
Sun generates 41 per cent of its annual revenues from the US market, a record of
sorts among Indian drug firms. The company is bullish on its US prospects and
expects 25 per cent growth in the country this year, higher than the 18-20 per cent
growth projection it has given for other markets including India.
3. COMPARISION BETWEEN THE CONSTRUCTION COMPANIES
51
COMPARATIVE PARAMETERSJP ASSOCIATES DLF
EPS ( avg for last 5 yrs) Rs 5.48 Rs 7.48 *
P/E RATIO 15.08 * 31.90
BOOK VALUE Rs 40.01* Rs 75.59*
D/E RATIO 2.11 * 0.99
CURRENT RATIO 1.73 * 5.47
NET PROFIT MARGIN 16.52% ------% *
GROSS PROFIT MARGIN 18.53% 39.82%*
RETURN ON CAPITAL EMPLOYED 13.01% 6.96% *
RETURN ON EQUITY 20.84% * 5.96%
DIVIDEND PAID 20% 100% *
PROFIT GROWTH( avg growth for last 5
yrs)90.45% 50.57% *
MARKET CAPITLAIZATION Rs 18,106.16 cr Rs 39,379.68 cr *
*indicates it is better as comparison to the other company’s value.
ANALYSIS
Here DLF is having good prospects when the financial ratios are concerned. As we
know JP ASSOCIATES is a diversified company in itself, it has presence in cement,
oil& gas, construction sectors. So it is a portfolio sector in itself. We are expecting a
strong boost in economy as well as all these above said sectors and as we are not
having any stocks in these cement and oil& gas. So we have chosen JP
ASSOCIATES as one of our stock.
FUTURE PROSPECTS FOR JP ASSOCIATES.
JP ASSOCIATES inks MoU for Rs 1050 cr cement plant in Assam. The project
would be a joint venture one with Assam Mineral Development Corporation (AMDC) ,
a government of Assam undertaking. The total production capacity of the plant would
52
be 2 million tones. The plant when completed will produce about 6667 MT or about
1, 33,334 bags of bags per day.
JP Associates rises on board's nod to raise Rs 4,000 crore .The Jaiprakash (JP)
Associates stock rose 3.58 per cent to Rs 130.3 on receiving the go-ahead from its
board to raise Rs 4,000 crore through the issue of non-convertible debentures.
These funds would be used for its capex programme, working capital needs and for
other general corporate purposes.
Cement dispatch growth remains robust .The 224-million-tonne cement industry
is yet again set to strike a growth of 10 per cent in June. If the initial numbers from
the top cement makers are anything to go by, industry analysts said, the continuous
robust growth will be maintained.
4. COMPARISION BETWEEN THE STEEL COMPANIES
Comparative parameters TATA STEEL JSW STEEL
EPS ( avg for last 5 yrs) Rs 71.56 Rs90.12 *
P/E RATIO 8 9.61 *
53
BOOK VALUE Rs 418* Rs 504*
D/E RATIO 0.68 * 1.26*
CURRENT RATIO 1.12 * 0.55*
NET PROFIT MARGIN 19.96% * 11.09%
GROSS PROFIT MARGIN 31.36% * 17.33%
RETURN ON CAPITAL EMPLOYED 13.06% * 15.08%
RETURN ON EQUITY 13.45% 21.14% *
DIVIDEND PAID 120.00% 122.5% *
PROFIT GROWTH 37.35% 49.36% *
MARKET CAPITALIZATION 53,918.25cr * 19,110.00 cr
*indicates it is better as comparison to the other company’s value
ANALYSIS
This comparison shows that in most of the parameters JSW STEEL is good but
TATA STEEL is better in Cash ratio and Debt Ratio. It’s stock price is also
cheaper and giving a good return on equity and margins on gross and net profit
margins and having a good profit growth as compared to JSW STEEL where
profit is fluctuating year after year so, it is more risky. TATA STEEL is also
giving a high dividend to its shareholders. So we have chosen TATA STEEL for
our portfolio. And here are some future plans for TATA STEEL which gives a
green signal to buy.
Future prospects for TATA STEEL
Mumbai, June 16, 2011 – As a part of the ongoing review of the strategic
investments of the company, Tata Steel Limited Board have considered the recent
announcement of Rio Tinto Jersey Holdings 2010Limited to de-list Riversdale Mining
54
Limited following its increased shareholding to 73.20% in Riversdale Mining Limited.
Tata Steel has decided that it would not want to hold its equity investment in
Riversdale Mining Limited which is proposed to be delisted, without any joint venture
agreement with the majority shareholder in unlisted Riversdale Mining Limited.In
view of the above, the Board of Tata Steel Limited has decided to divest its entire
26.27% stake in Riversdale Mining Limited to Rio Tinto in its current takeover offer
for Riverdale Mining Limited, following which the company has initiated steps to
undertake the transaction. The sale consideration of approximately A$ 1,060 Million
represents around 100% appreciation of value in less than four years since the first
investment. The investment is currently held by Tata Steel Global Minerals Holding
Pte Limited an indirect wholly owned subsidiary of Tata Steel Limited. Tata Steel has
always welcomed Rio Tinto as the controlling shareholder of Riversdale Mining
Limitedand continues to focus on its current holding of 35% in Riversdale Energy
(Mauritius) Limited, a subsidiary of Riversdale Mining Limited, which owns coal
assets in Mozambique. Tata Steel will continue in the Joint Venture with Riversdale
Mining Limited in Mozambique. Tata Steel would look forward to work with Rio Tinto
and discuss in good faith ways to enhance its participation in the Benga JointVenture
based on the framework captured in the Joint Venture Agreement between Tata
Steel and Riversdale Mining Limited.
4. COMPARSION BETWEEN THE MOTOR COMPANIES
Comparative parameters TATA MOTORS MARUTI
EPS ( avg for last 5 yrs) Rs 39.26 * Rs 79.21
55
P/E RATIO 34.51* 14.74
BOOK VALUE Rs.262.30* Rs 409.65
D/E RATIO 1.11 * 0.07
CURRENT RATIO 0.44 * 0.91*
NET PROFIT MARGIN 6.26% * 8.34%
GROSS PROFIT MARGIN 8.84% 9.93 % *
RETURN ON CAPITAL EMPLOYED 9.66 * 27.89*
RETURN ON EQUTIY 15.15 * 21.1*
DIVIDEND PAID 200 * 150.00%
PROFIT GROWTH ( Avg growth for last 5
yrs)142.10% * 93.30%
MARKET CAPITALIZATION Rs59,937.42 cr * Rs 33,290.00cr
*indicates it is better as comparison to the other companies value.
ANALYSIS
After comparison of all the parameters it shows that MARUTI is the best among the
two. It is cheaper as compared to other. It is also giving a good return on capital
employed and equity. It is giving a good dividend to its shareholders and the
company’s profit is also growing as compared to TATA MOTORS which is showing a
negative growth. TATA MOTORS‘s market share is better as compared to MARUTI.
But in other parameters MARUTI is better than TATA MOTORS. So we have chosen
MARUTI for our portfolio which attracting the most to purchase it.
Analysis and Interpretation from Primary and
Secondary Data
56
1. From the survey it is believed that the demographic characteristics such as age,
gender, marital status, education etc and economic characteristics such as Annual
Household income, savings, etc are the important factors that influence one’s
investment decisions as that influence the one’s financial needs, risk appetite etc.
2. Age is considered as influencing factor in investment decisions. When reaches
different stages of lifecycle, Investor’s needs for investment changes. The
investment needs of young investor and needs of aged investors are different
because young investor looks capital appreciation whereas aged investor look for
current income as he does not have any regular source of income.
3. Education level of investor plays major role in investment decisions. The assets
involved in educated investors’ portfolio is different from that of less educated
investors’. The higher education an investor has higher will be knowledge of
investment and knowledge of investment will influence the investment decisions.
4. Income of investors from all possible sources influences the investment decisions.
If an investor has higher income that exceeds all possible expenditures, there is
possibility that he will invest remaining disposable income in various avenues of
investment he is comfortable with.
5. The objective of investor determines the portfolio of his/her investment. If an
investor who expects higher income in very short period will look for speculative
stocks for investment and ready to take higher risk. If the investors’ objective is to
reduce the tax burden, he looks for tax savings avenues of investments.
6. Investment decision in stocks is influenced by many factors including
demographic factors, socio-economic factors, etc. Decisions of buying or selling of a
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stock is mostly influenced by recommendations of brokers/consultant as investor
believes that consultant/broker has expertise and specialized in the domain. Investor
who believes they have required expertise make decisions based on their investment
philosophy like belief in fundamental factors and or current market scenario.
7. It is believed that fundamental analysis is to arrive at value of a stock and current
market analysis is to arrive at timing of buying or selling. But speculators use current
market factor to make quick profits and genuine investors would like to make money
by parking their funds for a longer horizon.
8. Investment decisions of investors depend on the perceived adequacy of
knowledge of investment. Therefore respondents are asked to state their perceived
knowledge of investment.
9. The major factor that influences investment decisions is risk appetite of investor.
Investor who is able to withstand the substantial losses arising out of an investment
will prefer speculative stocks as it gives higher return. Hence investors are asked to
different questions that constitute risk appetite of investors.
10. An analysis of Fundamental factors is to arrive at value of share. Profitability of
a firm, long-term solvency position, liquidity of the firm, efficiency with respect to
asset utilization are considered as fundamental factors. Investors weight different
factors differently.
11. The fundamental factors which is considered most is Profitability of the
company and followed by efficiency of the company. The other two factors
considered are liquidity and efficiency of the firm. It can be inferred that investors
prefer those company’s share which are profitable and which are more efficient.
Investors opine that their future returns depend on profitability and efficiency of the
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firm as efficiency of the firm influence the future returns of the firm and thereby
returns of investors and it will ensure their objective of investment over a period of
time.
12. Investors consider both fundamentals of the company and Trends of price and
volume movements before investing. The reason for that might the investors use
fundamentals to value the shares and use technical factors or current market
scenario for deciding the timing of the purchase or sell decisions.
BIBLIOGRAPHY
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Websites
www.karvy.com
www.moneycontrol.com
www.moneytoday.com
www.izone.com
www.calloptionputoption.com
www.mcxindia.com
www.equitymaster.com
Books
Kothari, C.R., Research Methodology, New Delhi, Vikas Publishing House Pvt. Ltd., 2007
Chandra, Prasanna, Investment analysis and portfolio management, New
Delhi, Tata McGraw-Hill Education Pvt. Ltd., 2011
Chandra, Prasanna, Financial management, New Delhi, Tata McGraw-Hill
Education Pvt. Ltd., 2010
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