Industry and Company Analysis

Presented by,
George Mathew
Iind Mcom-PGDIM
Industry
Industry- homogenous group of companies

Traditionally classified on the basis of products

Industry Life Cycle
Attributed to Julius Grodinsky
 4 stages
Pioneering Stage
Technology and products are new
Rapid growth in demand for output of industry
Great opportunity for profit
Expansion Stage
Stage of expansion or growth
Includes only those companies that have survived the
pioneering stage
Finds market for itself and develop its own strategies
Competition brings about improved products at lower
prices
Attractive for investment purposes
Investors can get high returns at lower risks
Earn increasing amounts of profit and pays attractive
dividents
Stagnation Stage
Growth stabilizes
Sales may be increasing but at a slower than that
experienced by competitive industries
Industry begins to stagnate
Eg.- Black & White Television industry
Investor should dispose the holdings
Decay Stage
Products of industry are no longer in demand
New products and new technologies have come to the
market
Industry becomes obsolete and gradually ceases to
exist
Investor should get out of the industry before the onset
of decay stage
Industry Characteristics
Demand Supply Gap
Competitive conditions in the industry
Permanence
Labour Conditions
Attitude of the Government
Supply of Raw Materials
Cost Structure
Company Analysis
Final stage of fundamental analysis
Estimation of return and risk of individual shares
Information influence investment decisions
Information – Internal or External
Forecasts future earnings of the company
Financial Statements
Profitability and financial health
Summarizes activities of the company
Analysis of Financial Statements
Liquidity Ratios
Leverage Ratios
Profitability Ratios
Activity or Efficiency Ratios
Other Variables
Company’s market share
Capacity utilization
Modernization and Expansion plans
Order book position
Availability of raw materials
Assessment of Risk
Assessment of variability in returns
Company analysis deals with an analysis of various
factors affecting the performance of companies so as to
forecast the future earnings of a company as also its
variability better known as Risk
THANK
YOU….