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CHAPTER-4
DATA ANALYSIS AND
INTERPRETATIONS

UAE EXCHANGE
The Indian banking industry: sector overview
With the economic growth picking up pace and the investment cycle on the way to
recovery, the banking sector has witnessed a transformation in its vital role of
intermediating between the demand and supply of funds
Public sector banks have been very proactive in their restructuring initiatives be it in
technology implementation or pruning their loss assets. Windfall treasury gains made
in the falling interest rate regime were used for writing off the doubtful and loss
assets.
Retail lending (especially mortgage financing) formed a significant portion of the
portfolio for most banks and they customized their products to cater to the diverse
demands.
Apart from streamlining their processes through technology initiatives such as ATMs,
telephone banking, online banking and web based products, banks also resorted to
cross selling of financial products such as credit cards, mutual funds and insurance
policies to augment their fee based income.

PORTER’S FIVE FORCES MODEL FOR THE BANKING INDUSTRY
1) BARRIERS TO ENTRY:
a.

Economies of scale: Since the existing players in the market are well
established and already have a customer base, they are able to bear the cost
of using the advantages of technology to their maximum advantage.

b.
i.

Capital requirement for entry:
The Banking Regulation Act prescribes the minimum capital
requirements for a bank Moreover, banks have to maintain a capital adequacy
ratio of 9% under the Basel I norms.

ii.

Government has declared that the foreign banks will be
permitted to establish their presence in India by way of setting up a wholly
owned banking subsidiary (WOS) with a minimum capital of Rs.300 crore.

c.

Access to distribution channels: Since banks have to set up their own
distribution channels, all the cost has to be directly born by them.

d.

Cost advantage independent of size: Existing banks have huge
databases of customers which they use when they want to sell a new product
launched by them.

e.

Legislation or Government action: Banks are governed by Banking
Regulation Act, 1949 which specifies the rules and regulations applicable to
banks. RBI is the governing body of banks in India.

2) BARGAINING POWER OF BUYERS:
Due to increased competition, the services offered by banks to customers have
improved considerably.
3) BARGAINING POWER OF THE SUPPLIERS:
Suppliers to banks can be both - the customers and RBI.
a. Customers of banks provide money to banks in the form of deposits
and in return earn some interest on that.
b. RBI acts as a supplier to banks by selling govt. securities, treasury
bills, govt. bonds, etc.

c. Call money market: Banks sometimes have to borrow from other banks
to meet CRR and SLR requirements, or other capital requirements as
provided by RBI.
4) THREAT OF SUBSTITUTES:
a. Product-for-product substitution:
i.

Banks provide interest on deposits made by people. Similar
services are offered by post offices which may act as substitutes to
the deposit schemes of banks.

ii.

Some banks offer locker services to customers for yearly rates.
Similar services are provided by many post offices.

b. Generic substitution: People who deposit their savings in banks can
invest their money in other sources like mutual funds, shares and other
securities and life insurance schemes.
5) COMPETITIVE RIVALRY:
a. Extent of competitor balance:
b. Market growth rates:.
c. High Exit Barriers
PEST Analysis for Banking Industry.
1. Political factors-: The major factors affecting the banking sector are the
following.


Banking sector reforms – As per the RBI roadmap for reforms in the
first stage from 2005 to 2009 foreign banks will be allowed to set up
wholly owned subsidiaries as well as get greater freedom to set up new
branches.



Fulfilling the minimum priority sector credit -The government
mandation of fulfilling the minimum priority sector credit (of which 18

per cent is food credit) has forced the domestic banks to cater to this
segment despite the low profitability and vulnerability of asset quality.


Banks have also been allowed to set up Offshore Banking Units in
SEZ’s

2. Economic factors-:
Basell II norms for the risk management in banking sector - The new Basel
Accord have its foundation on three mutually reinforcing pillars. The first
pillar is compatible with the credit risk, market risk and operational risk. The
second pillar gives the bank responsibility to exercise the best ways to manage
the risk specific to that bank.
Concurrently, it also casts responsibility on the supervisors to review and
validate banks’ risk measurement models. .
Consolidation and merger and acquisitions in the banking sector-. HDFC
bank also acquired TIMES BANK in 2001 which increased its customer base
by 3 lakh customers.
Universal Banking has been introduced. ICICI Bank ,HDFCs closest
competitor is already into Universal Banking so HDFC is also getting into it
as now it is providing retail banking and also depository facilities in the form
of demat account.
3. Social factorsBig and growing middle class in India -: This has been a major factor in the
growth of the retail loans like consumer loans in the form of home loans, car
loans, education loans, auto loans etc. Retail loans have grown from 19% in
FY’99 to 51% FY’06.Consumer credit accounts for a meager 28.6 per cent of
the country's GDP and the buoyancy in the economy offers sufficient scope for it
to grow.
Geographical and Cultural diversity- This is leading to a greater demand for
financial products and customization by the customers.

4. Technical factorsThe Indian Financial Network (INFINET) was inaugurated in June 1999. It is
based on satellite communication using VSAT technology and would enable
faster connectivity within the financial sector.
Banks (All): No of players = 40
Sector statistics:
Table No: 4.1
We see the sector aggregates and make a financial comparison for the major banks
Top Players
FY2014
Based on Total Income
Total

ICICI BANK
PNB
WESTER UNION

Income
(Rs Mn)
63161.9
29218

Based on OPBDT
Change
(%)
54.50
ICICI BANK
14.91
PNB
WESTER UNION

MONEY
TRANSFER
BANK OF INDIA
UAE

OPBDT
(Rs Mn)
37174
22205.2

Change
(%)
19.36
39.36

16882.5

19.53

76352.8

-1.29

MONEY
27709.5

23.78

23317

25.43

TRANSFER
BANK OF INDIA
UAE

EXCAHNGE
18550.8 60.24
EXCHANGE
14324
27.48
% change - indicates the change between current and corresponding quarter.

Table No: 4.2
TOP FOREIGN REGIONAL BANKS COMPANIES BY MARKET CAP

Quarterly
Aggregates

No: of Players - 29
Previous Quarter
317927
74296.8
30481.7
126435

Total Income (Rs Mn)
OPBDT (Rs Mn)
PAT (Rs Mn)
Equity Capital (Rs Mn)

Latest Quarter
305290
81622.6
32705.4
77730.1

UAE Exchange Vs Industry Leaders
Statistic

Industry Leader UAE

UAEBank

Market Capitalization

BBV 75.96B

5.83B

13 / 24

P/E Ratio (ttm)

BMA 84.36

30.04

2 / 24

PEG Ratio (ttm, 5 yr expected) BCA 3.22

0.64

16 / 24

Revenue Growth (Qtrly YoY)

BFR

29.70%

45.60% 4 / 24

EPS Growth (Qtrly YoY)

IRE

154.00% 33.90% 6 / 24

Long-Term Growth Rate (5 yr) KB

44.5%

30.0% 2 / 24

Return on Equity (ttm)

91.21%

N/A

BFR

Long-Term Debt/Equity (mrq)
Dividend Yield (annual)

N/A
LYG

6.20%

0.70% 18 / 24

COMPANY ANALYSIS:
1.

UAE Exchange (UAE)

Key Highlights
Symbol: UAE
Sector: Financial
Industry: Foreign Regional Banks
Market Cap: 43882 Cr

N/A

Data Since: 2014-01-02
Last close: 2710
Full time employees: 10030
UAE Exchange is a remittance and currency exchange company
headquartered in the United Arab Emirates with operations in a number
of countries. .

UAE EXCHANGE is a leading global remittance and

foreign exchange brand trusted by millions of customers and partners,
across the world. A people’s brand, UAE EXCHANGE is known for
quality and customer centric approach. Started over 30 years ago, UAE
EXCHANGE provides world class services and earned trust of over 3.5
million customers, worldwide. With 570 + direct offices in 30 countries
across five continents makes the company the only brand in the segment
to own a global network of this magnitude. It is the largest remittance
companies and has extensive network in the Middle East and Asia.

2.

TATA MOTORS

Market/ Economy Analysis
It covers the macro economy analysis and the various macro economic factors on the
national level like GDP, Monetary policies of India, Fiscal Policies and Inflation and
money supply etc.

GDP
Real GDP growth accelerated from 7.5 per cent during 2011-12 to 8.4 per cent during
2012-13 on the back of buoyant manufacturing and services activity supported by a
recovery in the agricultural sector. Real GDP growth has, thus, averaged over eight
per cent during the last three years and over seven per cent in the first four years
(2002-03 to 2005-06) of the Tenth Five Year Plan.
Strengths of India today are:

A well diversified industrial base which profits from self-reliance in all core industries
.A large & sophisticated financial architecture - The robust capital Markets today have
over 9000 listed companies and boast of a massive Market capitalization.
A healthy GDP composition with agriculture contributing 22%, Industry 22% and
services, which have gone strength to strength, accounting. For 56% of the GDP an
acknowledged strength in knowledge driven industries like Information technology,
biotechnology, entertainment Software etc
India has Over 3 million scientific & technical manpower, Over 0.6 million S&T post
graduates, Over 0.7 million graduate engineers, Over 3500 doctorates in sciences
every year.
Assuming trend growth in agriculture under normal monsoon conditions and barring
domestic or external shocks, the Reserve Bank in its Annual Policy Statement for
2014-15 (April 2014) placed real GDP growth, for policy purposes, in the range of
7.5-8.0 per cent during 2014-15 Growth prospects are, however, subject to a number
of downside risks. The risks emanating from the global economy are: potential
escalation and volatility in international crude oil prices, firming up of overall
inflationary pressures and expectations, and a hardening of international interest rates
along with the withdrawal of monetary accommodation.
India’s demographic advantage – In contrast to developed Countries, India will
have a younger population for the next 50 years. Hence India would be the hub for
R&D.

Inflation
Inflation was contained to 6.3 per cent by end-March 2014 within the indicative
trajectory of 5.0-5.5 per cent during 2014-15. The actual inflation was considerably
lower than the indicative trajectory and this could be mainly attributed to the deferred
pass-through of even the cognisable permanent component of international crude oil
prices.
Money Supply
Monetary and liquidity conditions remained largely comfortable during 2013-14
reflecting proactive liquidity management operations by the Reserve Bank under the

liquidity adjustment facility, flexible management of issuances under the market
stabilisation scheme, and some private placement of Government securities
In short, the Indian economy is exhibiting strong fundamentals and displaying
considerable resilience. At the same time, there are continuing signs of demand
pressures, especially high credit growth that could exert upward pressure on prices
when associated with supply shocks such as from oil. These pressures have the
potential for impacting stability and inflation expectations. While domestic
developments continue to dominate the economy, global factors tend to gain more
attention now than before. The global outlook for growth is positive but downside
risks in regard to inflation also RBI is applying new repo and reverse repo for the
balance of inflation and monetary policies.
The following are macroeconomic policies, generally found as part of governmentdirected industrial auto policies
(a) Restrictions on domestic and foreign investment.
(b) Domestic content requirements
(c) High tariff walls
(d) Auto export requirements
(e) National production to sales ratios
(f) Distribution controls
(g) Quotas and licensing requirements that significantly restrict imports
(h) Government approval for product related decisions, including vehicle make,
body type, engine size, etc.
(i) Special government categories for auto taxes
INDUSTRY ANALYSIS
Since, 1991 opening of the economy has changed the face of auto industry. Today, it is
amongst the main drivers of growth of Indian economy with an output multiplier of
2.24(for every Re.1 invested, auto sector gives back Rs.2.24 to the economy). In
recent years we have seen increasing number of global players entering Indian market
by way of Joint ventures, collaborations or wholly owned subsidiary
The automobile industry is torn between trying to reduce costs on the one hand and,
on the other, dealing with the high price of performance-enhancing technology and
environmental compliance. Key drivers in the automotive industry are:



Reducing air pollution



Reduction of weight



Recyclability



Safety



Better performance and engine efficiency



Aesthetics



Longer service Life

INDUSTRY LIFE CYCLE:
The automobile market is at the maturity stage of the life cycle, locally and globally,
due to an increased number of competitors from domestic and foreign markets. The
automobile market is characterized by a low potential for market growth, but high
sales and profit potential as the products have still not saturated the market as a whole.
Figure No: 4.1

MAJOR COMPETITORS OF TATA MOTORS ARE
Maruti Udyog Ltd.
General Motors India
Ford India Ltd.
Eicher Motors
Bajaj Auto
Hero Motors

Hindustan Motors
Hyundai Motor India Ltd.
Royal Enfield Motors
Telco
TVS Motors
Opportunities and Threats
a) Opportunities
● Road Development: The ongoing road development program would improve
connectivity to ports, cities and villages through a network of highways and
interconnecting roads by 2013-14. Improved road network would help in faster
movement of goods between various cities and towns. The Company launched TATA
Novus range of vehicles in the heavy segment and TATA ACE for last mile
distribution.
● Car penetration in India: Car penetration in India is 7 cars per 1,000 persons.
● International: In FY 2013-14, the Company increased share of its overseas vehicle
sales from 7.6% last year to record high of 11.1% (as % of its total sales) and has
planned further increase in this year.
b) Threats
● Global Competition: India is increasingly attracting global players to set up
manufacturing facility for producing cars, especially small cars. Global automobile
manufacturers are also entering India in commercial vehicle segment to leverage
India’s low cost production advantage to their favor.
● Fuel Prices: The continuing fuel price increase in the domestic market could
significantly impact demand of commercial and passenger vehicles.
● Input costs: Commodity items particularly steel, non-ferrous metals, rubber and
engineering plastics have witnessed huge price increases in the past. These prices are
expected to increase further affecting the Company’s profitability.
● Interest rate hardening and other inflationary trends: With interest rates hardening
and liquidity crunch in the system, growth in sales may be adversely impacted.

● Government Regulations: Stringent emission and safety requirements could bring
new complexities for automotive and component manufacturers impacting the
Company’s business.
Risks and Concerns:
● Interest Rates: FY 2013-14 started with increasing interest rate regime and
tightening liquidity position in the economy. Increasing interest rates could further
affect vehicle demand which could have an adverse impact on the Company’s
revenues and profits.
● Exchange rates: The Company exports vehicles to many countries and exchange
rate fluctuations in the order execution period could impact the Company’s business.
● Freight rates: In FY 2012-13 freight rates in road transport sector moved up mainly
due to surge in construction activity, ongoing road development projects and severe
restriction on over-loading. Demand for commercial vehicles could be impacted by
further change in freight rates and change in fuel prices.
● Domestic market: The Company plans to reduce the impact of this cyclicality on its
business, by strengthening its less cyclical businesses like buses, light trucks, small
commercial vehicles.
● Overseas market: In overseas markets, the Company competes with global players
which have multiple vehicle platforms, large financial capability and global branding.
● Manufacturing: The Company manufactures vehicles at multiple locations and
given the geographical dispersion of its suppliers it faces Logistics Problems.
● New Competition: Competitive activity is expected to increase in commercial
vehicle and passenger vehicle domestic market in coming years.
● New projects: The Company currently is in midst of executing many new projects
ranging from launch of new car platforms to development of new Truck models.

III Company Analysis
Key Highlights
Symbol: TTL
Sector: Consumer Goods

Industry: Auto Manufacturers Major
Market Cap: Rs.29232 crores
Data Since: 1945
Last close: Rs. 742.90
Brief Summary of the company
Tata Motors is one of the largest companies in the Tata Group with a total income of
US$ 2.35 billion*. More than 3 million Tata vehicles ply on Indian roads making Tata
a dominant force in the Indian automobile industry.

Joint Venture with Fiat and Hitachi
Tata Motors has decided to enter into a 50-50 JV with Fiat, at Pune, for manufacturing
passenger vehicles, engines and transmissions for both, domestic and international
markets.. The Company has also entered into a JV with Hitachi, to set up a new plant
in Kharagpur
Product Mix
Tata Motors is India's only fully integrated automobile manufacturer with a portfolio
that covers trucks, buses, utility vehicles and passenger cars. It would be no
exaggeration to say that Tata Motors provides the wheels for India's growth.
Segmental Overview
Commercial Vehicle Segment
The Company registered 69.6% volume growth in the domestic CV segment during
4QFY13 from 37,228 units in Q3FY12 to 63,082 units in Q3FY06. The market share
in this segment was 65.8% in Q4FY06, as compared to 55.2% in Q1FY13. The
M/HCV goods-carrier segment registered a 54.4% growth YoY, with sale of 33,515
units and a market share of 64.5%, up by around 410 bps, driven by infrastructure
development and increase in international trade.

Passenger Vehicle Segment
The Company reported a growth of 21.2% YoY, to 49,907 vehicles, in the domestic
passenger vehicle segment and a market share of 16.2% in the quarter. The passenger
vehicle industry registered a volume growth of 20.4% during Q4FY13
Plants
Tata Motors owes its leading position in the Indian automobile industry to its strong
focus on in digenisation. Their manufacturing plants are situated at Jamshedpur in the
East, Pune in the West and Lucknow in the North.
Charts showing Key Statistics of tata motors.
Figure No: 4.2
SOURCS OF REVENUE
20013-14

2012-13

Share holding pattern as on 31-Mar
Figure No: 4.3

RATIO ANALYSIS

Ratios

2014

2013

2012

Debt/equity

0.56

0.49

0.44

Current ratio

1.08

0.87

0.76

Operating profit margin %

12.11

11.51

12.38

Gross profit margin

10.87

10.43

11.04

ROCE %

31.25

32.76

33.77

total assets turnover ratio

3.15

3.53

3.43

ROE %

27.61

30.09

22.57

Dividend-equity

497.94

453.73

282.11

Retention Ratio

67.43

63.32

65.19

DPS (Rs.)

13.01

12.5

7.99

EPS (Rs.)

25

34

41

Dividend Payout Ratio

0.39

0.42

0.37

CAGR of EPS

0.177

CAGR of Dividend Payout Ratio

-0.017

Average ROE

25.74

average retention

63.54

Growth % (g = Avg. RR × Avg. ROE )

16.36

Market return

14.54%

P/E ratio (on the basis of historical analysis) = 18.12

Therefore, the Weighted P/E ratio = (18.12+24.24)/2 = 21.181
Projected EPS = EPS OF 2006 + CAGR of EPS*EPS OF 2006
= Rs.48.271
Value of Share at the end of financial year 06-07
= Projected EPS * Weighted P/E Ratio
= Rs.1022

HPCL
Globalization and the Indian Petroleum Industry
Indian petroleum industry in the post independent period (1947-2001) it may be
divided into three distinct phases


(i) early phase (1947 to 1969)- when the government consolidated its control
over the industry with Soviet assistance;



(ii) development phase (1970 to 1989)- in this period the US companies
played dominant role replacing the Soviets and



(iii) the economic liberalisation phase of 1990s.

Figure No: 4.4
PORTER’S MODEL

SWOT ANALYSIS
STRENGHS


Favourable production – sale mix.



Entry on petrochemicals and gas sector will reduce dependence on R&M
sector.



Second largest refining capacity and pipeline infrastructure in the industry.



Good presence in high demand regions of west and north India.

WEAKNESSES


Dependence on refining function high.



Moderate share in high profitable retail segment.



Diversifications in petrochemicals could trouble the company.



High burden of subsidy loss on cooking gas and kerosene.

OPPORTUNITIES


Per capita energy consumption low in country.



Deficiency of coal will benefit oil and gas sector.



Growing domestic market for gas.



Overseas presence in upstream and downstream will determine growth.

THREATS


Rising oil prices could dampen demand.



High regulatory risk.



Loss of market share to private players.



Entrance of private players in pipelines will take away monopoly of company
in north India.

COMPANY ANALYSIS
The Annual Report is broken down into the following specific parts:
A) The Director's Report,
B) The Auditor's Report,
C) The Financial Statements, and
D) The Schedules and Notes to the Accounts.
.
A.THE DIRECTOR’S REPORT
The Director’s Report is a report submitted by the directors of a company to its
shareholders, advising them of the performance of the company under their
stewardship.
B. THE AUDITOR'S REPORT
The auditor represents the shareholders and it is his duty to report to the shareholders
and the general public on the stewardship of the company by its directors
C. FINANCIAL STATEMENTS
It comprises of Balance Sheet, Profit and Loss account, Cash Flows. Its analysis
would be discussed later.

D.SCHEDULES

The schedules detail pertinent information about the items of Balance Sheet and Profit
& Loss Account. It also details information about sales, manufacturing costs,
administration costs, interest, and other income and expenses
1. THE MANAGEMENT

HPCL is a public sector undertaking. Thus it is a professionally managed company.
There are some parameters of management on which a company is analysed :
a. integrity of management
b. past record of management
c. how highly is the management rated by its peers in the same industry
d. how the management fares in adversity
e. the depth of the knowledge of management
f. open and innovative management
On all these parameters HPCL scores good.
2. COMPANY

Many times a company has made losses in the previous years but that does not mean
that the company is bad to invest. Thus many factors are studied while studying a
company.
a) perception of competitors
HPCL is the second largest petroleum company after IOCL. Thus it is a
competitor of IOCL and it is trying hard to compete with IOCL on every front.
That is why now it has decided to diversify itself in the oil exploration sector
b) company policies
As this is a PSU thus the policies are made by the government. The oil sector is
one which is highly regulated by government. Thus from time to time it is
required to watch out the various policies changed.
3. ANNUAL REPORT
The most primary and most important source of information about a company is its
Annual Report. This is prepared every year and distributed to its shareholders.

Figure No: 4.5

Ratio Analysis
Table No: 4.3
Evaluation of Intrinsic Value of the Security

STDEV MKT
STDEV SEC

0.011934
0.03831

Average
RETENTION

CORRELATION
BETA
RISK
FREE

RATIO
0.485958 ROE
1.56765 G

RATE
MKT RATE

6.50%
14%

K

18.26%

0.60504
0.19842
0.120052

Hence we see that here our g is less than k .Thus we see that as per Dividend
Discount Model our Intrinsic value is div=22(1+.012)=24/.0626= 387
Price= Projected EPS + Weighted P/E ratio
Using CAGR EPS = 43.468

Weighted P/E Ratio = 7.5+665/2=336.25
Price = 43.468+336.25 = 381

JET AIRWAYS
MARKET
Figure 4.6
Currently the market scenario is as shown:

1) ACC LIMITED

Table No: 4.4
Currently the market scenario of aviation share market

AIRLINE
Jet Airways
Air Deccan
Kingfisher
Spice Jet
GoAir

CURRENT ACQUISITION INVESTMENTS
FLEET
PLANS
US $Bn
53
30 by 2019
2
29
79 by 2018
2.7
11
100 by 2017
4.5
6
38 by 2016
1.9
4
33 by 2015
2.4

STATE OF THE INDUSTRY


High growth potential due to economic boom and highly under penetration in
the market



0.02 trips per capita per annum



Long-term GDP growth at 8% annually



It is forecasted that India would be the second fastest growing travel and
tourism economy in the world



ATF (Aviation Turbine Fuel) prices and airport charges in India are among the
highest in the world



Regulatory and infrastructure bottlenecks have prevented accelerated growth
in the industry



The government is proactively looking to address the bottlenecks

MACRO ENVIRONMENT
Refers to the factors which influence an industry but are beyond its control. Main
factors are:
POLITICAL
ECONOMIC
SOCIO-CULTURAL
TECHNOLOGICAL
Other Factors
DEMOGRAPHIC
NATURAL ENVIRONMENT
POLITICAL
OPEN SKY POLICY
DEREGULATIONS IN DIFFERENT SPHERES
LESS ENTRY BARRIERS
REDUCTION IN FDI LIMIT: 49% for airlines

100% for airport

SOCIO-CULTURAL


Growing Middle Class
1997to 2003: 39.5 million to 56.7m households
2009: 300 million
2014: 400 million estimates



Increase in leisure travel by tourists by 15% in 2014



3.2 million Foreign tourists visited India last year; tourism industry grew 8.8
per cent over 2003, the highest growth rate in the world.

SOCIAL

TECHNOLOGICAL
MODERNISATION OF AIRPORTS
ILS-INSTRUMENT LANDING SYSTEMS
DEMOGRAPHIC
CHANGING STRUCTURE OF CONSUMERS
HIGHEST % PEOPLE IN 20-50 AGE GROUP

EDUCATIONAL GROUPS
SHIFT TOWARDS NUCLEAR FAMILIES
(Source NCAER)
MIDDLE CLASS INCOME OVER RS. 90,000 P.A.

NATURAL ENVIRONMENT
HIGH ENERGY COSTS


The cost of aviation turbine fuel ATF in India for domestic airlines is almost
double for international market.



Govt. Increased prices by 7.5%. From 32.56 to 35/litre.



ATF price in Feb soared by 3.5% to the price in Jan 06.

PORTERS FIVE FORCE ANALYSIS
 THREAT OF NEW ENTRANTS


Easy entry but execution doubtful



The capital requirement-a min of 30cr capitalization before takeoff



Network & time slots of existing players



Expected retaliation



Legislation or government action: equity capital for floating an airline



Differentiation



Exit barriers



Inadequate airport infrastructure, shortage of pilots, high fuel costs



Compulsion to operate on uneconomical routes, no subsidy

 POWER OF BUYERS


Large number of buyers: Business travelers sector intensified by GDP
growth, leisure customer market too a huge growth opportunity



Alternative source- large number of options available



Cost of switching- Minimal



No differentiation among the players in the same segment

 POWER OF SUPPLIERS
ATF AIRCRAFT MFG PILOT


Switching costs- options of switching is very limited



Brand value- high



Forward integration- no history in past but possible



Shortage of pilots



High fuel costs

AVAILABILITY OF SUBSTITUTE


Product for product substitution- consumers can choose between the
various options such as road and rail.



Substitution for need- with technology the need to travel has reduced
but it is not possible to totally do away with it. It is marginally
possible.

COMPETITIVE RIVALRY
Increased competitive pressures due to new entrants
Growth rates- high projected to be 22%
High fixed costs
Extra capacity
Acquisition of weaker companies
High exit barriers
Differentiation
S.W.O.T of the Industry
Key Attractions:


Low entry barrier.



Attraction of foreign shores.



Foreign equity allowed.



Rising income levels and demographic profile.

Key Problems:


Crippling “Oil Shock”.



Absence to Institutionalized Funding.



Acute shortage of trained Pilots, severely limiting growth prospects.



Unplanned location of Airports.

Key Developments that may Influence the future:


Average growth of about 25%-30%



Air Freight segment is growing faster than the Passengers segment.



Duties slashed on ATF and IATT.



Pilot license applications have tripled.



Expecting investments - US $30 billion by 2012 and about US $50 billion by
2015.



Expected Market Size is projected to be about 50 million by 2010.

JET AIRWAYS
Market Share: 35%
Strengths


Virtual monopoly on Corporate Accounts



Membership of IATA



One of the Youngest Fleets in the World



Debt-Equity Ratio of almost one is to one

Weaknesses


Required 1000 pilots in next two years.



Concentrates only most profitable routes.



Failed attempts at Merger.

Opportunities


Hugh untapped international sectors



Increase in domestic flight density



Expanding operations into Air Freight business



Integrate more long haul aircrafts

Threats


Stiff competition in the Economy class from Low Cost Carriers.



Competition in the Business Class form newcomers like KingFisher



Hugh investments locked in future fleet expansion plans



Single source of revenue

Growth Forecast


World Passenger traffic grew to 52.12 million in the last fiscal, from 43.47
million in 2008-09, to register a growth of 19.9 percent.



In the last fiscal, the Indian aviation industry logged a robust growth of 24
percent and experts say the sector will expand by at least 16 percent annually
for the next five years, riding on the overall economic growth of eight percent.

The Positive Steps
Greenfield airports –Bangalore/Hyderabad
• J/Vs for Ground Handling and MRO facilities
• Highly advanced GPS aided Geo augmented navigation (GAGAN) system
operational this year.
• AAI set up more radar stations – to bring entire Indian airspace under radar
monitoring.
• Training more Pilots and Air Traffic Controllers.
• Raising retirement age of pilots to 65 from 61.
New Entrants
The aviation sector is likely to see the launch of many new airlines, including:


Premier Airways



Star Air



East West Airlines



Indigo

II TECHNICAL ANALYSIS OF STOCKS

1) ACC LIMITED
Figure No: 4.7

ANALYSIS: Trend:The stock after correcting to 50% of the long bull run [Bottom 676 – Top 1197] prices
reversed back and are now in intermediary upward trend.
Moving Averages:The stock is currently trading above all the important trading moving averages. The
moving average crossover of 13 days & 40 days is observed on 22nd Dec. 2013
triggering price trend reversal and buy at current levels.
13 days: = 1037.70 40 days: = 1060.84
30 days: = 1078.65 100 days: = 991.62
Moving Average Channels:􀂾 The stock on giving a close above 1070 levels has given a breakout above the
moving averagechannel signaling buy at current levels.
Relative Strength Index (RSI):􀂾 RSI on falling to 34 levels in the profit booking mode bounced back to bull zone at
53.46 showing synchronization with price movement.

Pitchfork:-

􀂾 The stock have broken the upper arms and moved out (at 1072) of the corrective
trend pitchfork signaling positive trend & buy at current levels.
􀂾 The stock is now moving towards the median of the major pitchfork which is
INFOSYS TECH
around 1160 levels.
12th
Oscillators:Date
February
􀂾 Osc (10,70) trading favorably in positive zone indicating presence of long term
2014
traders.
Close
2351.25
􀂾 Osc (5,35) are pulling back to zero from negative, indicating entry of short term
traders.

Trend

Up

Support

2340

Resistance
2380
1) INFOSYS TECHNOLOGIES LIMITED
Stop loss
2317

The Trend refers to the daily trend of the stock and not intraday but one may trade
intraday based on it. If you are a slightly longer term investor, you may go on holding
the stock in long if trend is up or you may go on holding the stock in short position if
trend is down. If you are a short term trader you may use the below paragraph
information and play for small moves.
How to trade according to the data mentioned above
If an entry is made in front of support and the close is above the support, it means

that one can buy the stock intraday during market hours at support and put an
appropriate stop loss mentioned below. Once you have bought the stock
intraday, put the Stop Loss accordingly mentioned and sell it before the market
CIPLA

closes.

If an entry is made in front of resistance and
12th the close is less then resistance, it
means that one can short the stock
during market hours at resistance and
Dateintraday
February
put an appropriate stop loss mentioned below.
At close one should cover if one is an
2014
intraday trader.

Close

248.35

If we do not find the stock giving
signal
for intraday trading, than we will
Trend clearNot
Clear
leave the support or resistance field empty.
Support
220

2) CIPLA LIMITED

Resistance

260

Stop loss

205

How to trade according to the data mentioned above
If an entry is made in front of support and the close is above the support, it means that
one can buy the stock intraday during market hours at support and put an appropriate
stop loss mentioned below. Once you have bought the stock intraday, put the Stop
Loss accordingly mentioned and sell it before the market closes.
If an entry is made in front of resistance and the close is less then resistance, it
means that one can short the stock intraday during market hours at resistance
and put an appropriate stop loss mentioned below. At close one should cover if one

is an intraday trader.
If we do not find the stock giving clear signal for intraday trading, than we will leave
the support or resistance field empty.
BPCL
If you are a slightly longer term investor, you may go on holding the stock in long if
2014 position if trend is down. If
trend is up or you may goDate
on holding12th
the February
stock in short
Close
you are a short term trader
you may use the 331.85
below paragraph information and play for
small moves.

Trend

Down

Support

355

Resistance

390

Stop loss

347

2) BHARAT PETROLEUM CORPORATION LIMITED

How to trade according to the data mentioned above
If an entry is made in front of support and the close is above the support, it means
that one can buy the stock intraday during market hours at support and put an
appropriate stop loss mentioned below. Once you have bought the stock intraday, put
the Stop Loss accordingly mentioned and sell it before the market closes.
If an entry is made in front of resistance and the close is less then resistance, it means
that one can short the stock intraday during market hours at resistance and put an
appropriate stop loss mentioned below. At close one should cover if one is an intraday
trader.

If we do not find the stock giving clear signal for intraday trading, than we will
leave the support or resistance field empty.
RANBAXY
12th
Date

February
2014

Close

409.15

Trend

Not Clear

Support

360

Resistance

420

4) RANBAXY LABORATORIES
LIMITED 350
Stop loss

How to trade according to the data mentioned above
If an entry is made in front of support and the close is above the support, it means
that one can buy the stock intraday during market hours at support and put an
appropriate stop loss mentioned below. Once you have bought the stock intraday, put
the Stop Loss accordingly mentioned and sell it before the market closes.
If an entry is made in front of resistance and the close is less then resistance, it means

that one can short the stock intraday during market hours at resistance and put an
appropriate stop loss mentioned below. At close one should cover if one is an intraday
trader.

TATAMOTORS

If we do not find the stock giving clear12th
signal for intraday trading, than we will
Date
February
leave the support or resistance field empty.
2014
Close

875.05

Trend

Down

Support

810

Resistance
5) TATA MOTORS LIMITED
Stop loss

895
795

How to trade according to the data mentioned above
If an entry is made in front of support and the close is above the support, it means
that one can buy the stock intraday during market hours at support and put an
appropriate stop loss mentioned below. Once you have bought the stock intraday, put
the Stop Loss accordingly mentioned and sell it before the market closes.

If an entry is made in front of resistance and the close is less then resistance, it means

that one can short the stock intraday during market hours at resistance and put an
appropriate stop loss mentioned below. At close one should cover if one is an intraday
trader.
If we do not find the stock givingRELIANCE
clear signal for intraday trading, than we will
leave the support or resistance field empty.
Date

12th
February
2014

Close

1358.85

Trend

Not Clear

Support

1290

Resistance
6) RELIANCE INDUSTRIES
LIMITED 1370
Stop loss

1280

How to trade according to the data mentioned above
If an entry is made in front of support and the close is above the support, it means
that one can buy the stock intraday during market hours at support and put an
appropriate stop loss mentioned below. Once you have bought the stock intraday, put
the Stop Loss accordingly mentioned and sell it before the market closes.
If an entry is made in front of resistance and the close is less then resistance, it means

that one can short the stock intraday during market hours at resistance and put an
appropriate stop loss mentioned below. At close one should cover if one is an intraday
trader.

M&M
If we do not find the stock giving clear signal for intraday trading, than we will
12th
leave the support or resistance field empty.
Date
February
2014
Close

880.80

Trend

Down

Support

930

Resistance
980
7) MAHINDRA & MAHINDRA LIMITED
Stop loss
918

How to trade according to the data mentioned above
If an entry is made in front of support and the close is above the support, it means
that one can buy the stock intraday during market hours at support and put an
appropriate stop loss mentioned below. Once you have bought the stock intraday, put
the Stop Loss accordingly mentioned and sell it before the market closes.
If an entry is made in front of resistance and the close is less then resistance, it means
that one can short the stock intraday during market hours at resistance and put an
appropriate stop loss mentioned below. At close one should cover if one is an intraday

trader.
If we do not find the stock giving clear signal for intraday trading, than we will
leave the support or resistance field empty.
SBIN
12th
Date

February
2007

Close

1183.70

Trend

Not Clear

8) STATE BANK OFSupport
INDIA

1120

Resistance

1170

Stop loss

1105

How to trade according to the data mentioned above
If an entry is made in front of support and the close is above the support, it means
that one can buy the stock intraday during market hours at support and put an
appropriate stop loss mentioned below. Once you have bought the stock intraday, put
the Stop Loss accordingly mentioned and sell it before the market closes.
If an entry is made in front of resistance and the close is less then resistance, it means
that one can short the stock intraday during market hours at resistance and put an

appropriate stop loss mentioned below. At close one should cover if one is an intraday
trader.
If we do not find the stock giving clear signal for intraday trading, than we will
leave the support or resistance field empty.

MARUTI
Date

12th

February
2014

Close

912

Trend

Down

Support

950

Resistance

990

10) MARUTI UDYOGStop
LIMITED
loss

940

How to trade according to the data mentioned above
If an entry is made in front of support and the close is above the support, it means
that one can buy the stock intraday during market hours at support and put an
appropriate stop loss mentioned below. Once you have bought the stock intraday, put
the Stop Loss accordingly mentioned and sell it before the market closes.

If an entry is made in front of resistance and the close is less then resistance, it means
that one can short the stock intraday during market hours at resistance and put an
appropriate stop loss mentioned below. At close one should cover if one is an intraday
trader.
If we do not find the stock giving clear signal for intraday trading, than we will
leave the support or resistance field empty.

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