INTRODUCTION:

Fundamental Analysis is a stock valuation technique that uses financial and economic
analysis to predict the movement of company’s stock price. The fundamental information
that is analyzed can include the company’s financial report and non-financial information
such as estimates of the growth of demand for competing products, industry comparison,
analysis of the effects of new regulations or demographic changes and economy wise
changes.

A potential (or current) investor uses fundamental analysis to examine a company’s

financial results, its operations and the market(s) in which the company is competing to
understand the stability and growth potential of that company. Company factors, to
consider, might include dividends paid. The way a company manages its cash, the
amount of debt company has, and the growth of a company’s revenues, expenses and
earnings. A fundamental analyst may enter long or short position based on the result of
fundamental analysis.

The theory underpinning fundamental analysis is that, to truly make money in the long
run, an investor must focus on the company itself rather than merely on the movement of
its stock price. As Benjamin Graham and David Dodd say in their classic work security
analysis, in the short run, the market is a voting machine, not a weighing machine. An
investor uses fundamental analysis to find the companies that are built to last.

Fundamental analysis adherents believe a company’s “INTRINSIC VALUE” will be

reflected in the stock price through market forces, but that , while the market is ultimately
efficient, some stocks (for any number of reasons) are either over or under-valued in the
short run.

I. PROBLEM STATEMENT:
Indian stock market according to many analysts has a lot of value in it, which is yet to be tapped.
Many stocks are mispriced; means stocks may be under valued or over valued according to the
tune of market psychology. Intelligent investors keep track of many stocks which they feel are
undervalued.

Many stock analysts undertake various types of research to evaluate a stock. These analyses may
be qualitative or quantitative. Qualitative analyses mostly are time tested. One cannot for sure
predict the exact stock value or its expected returns over a period of 5 years.

II. OBJECTIVES OF THE STUDY:

• To calculate the intrinsic value of the firm and to compare it with the market
value of the firm.

• To check whether the firm is under or over valued

III. SCOPE OF THE STUDY:

The scope of the study is confined to IT sector of India, listed in BSE Sensex.

KARVY COMPANY PROFILE:

The Karvy Group was formed in 1983 at Hyderabad, India. Karvy ranks among the top
player in all the fields it operates. Karvy was started by a group of five chartered
accountants in 1979. The first firm in the group, Karvy Consultants Limited was
incorporated on 23rd July, 1983. In a very short period, it became the largest Registrar
and Transfer Agent in India. This business was spun off to form a separate joint venture
with Computershare of Australia, in 2005. Karvy’s foray into stock broking began with
marketing IPO’s in 1993. Karvy was among the first few members of National Stock
Exchange, in 1994 and became a member of the Stock Exchange Mumbai in 2001.
Dematerialization of shares gathered pace in mid-90s. Karvy has 575 offices over 375
locations across India and overseas at Dubai and New York. Karvy has a professional
management team and ranks among the best in technology, operations, and more
importantly, in research of various industrial segments.

Vision:

 To have a single minded focus on investor servicing.

 To establish Karvy as a household name for financial services.

 To set industry standards.

Mission:

To be a leading and preferred service provider to customer and to achieve this leadership
position by building an innovative, enterprising, and technology driven organization
which will set the highest standards of service and business ethics.

Achievements:

 Among the top 5 stock brokers in India (4% of NSE volumes)

 India's No. 1 Registrar & Securities Transfer Agents

 Among the top 3 Depository Participants

 ISO 9002 certified operations by DNV

IV. RESEARCH METHODOLOGY:

TYPE OF STUDY:

Descriptive Approach:

Data is based on past and current performance of the economy, industry and individual
companies, to understand the causes for prevailing results and based on this future
performance and opportunities are interpreted.

SAMPLING DESIGN:

Companies are selected based on convenient sampling which is the market leader in IT
sector. The samples are:

 Infosys Technologies Limited

 Wipro Limited

 Tata Consultancy Services

DATA ANALYSIS:

Based on the various financial criteria, we make the decision on BUY/ SELL/ HOLD the
securities. The evaluation is done on the basis of fundamental analysis using Top-Bottom
approach.

Top-Bottom Approach

 Economic Analysis
  Industry Analysis

 Company Analysis

Nature of data used:

The nature of data used in the study is purely based on secondary data

Primary data: The primary data collected based on the discussion with stock broking
company manager.

Secondary data: Secondary data collected from journals, websites, books and annual
reports of companies.

V. LIMITATIONS OF THE STUDY:

The study is based on historical data.