Portfolio Management and Mutual Fund

Interim Report

Section: A

Submitted to: Dr. M V Narasimha Chary

Department of Finance

Submitted by: Subham Deb

22BSPHH01C1222
 A. Fundamental Analysis of Share
Portfolio –
A) Equity Holding (80%)
1. Tata Motors Ltd
2. Tata Consumer Products Ltd
3. Kotak Mahindra Bank Ltd
4. Supreme Industries Ltd
5. Linde Ltd
6. Torrent Power Ltd
7. Indian Energy Exchange Ltd
8. CDSL Ltd
9. Angel One Ltd
10. Blue Star Ltd
11. CMS Info System Ltd
12. Motherson Sumi Wiring India Ltd

B) Debt Holding (20%)

1. Government of India Bonds
2. Treasury Bill
3. Corporate Bonds
3.1 The great eastern shipping company limited.
3.2 Indiabulls Housing Finance Limited
Large Cap companies –
1) Tata Motors
Company Overview: Tata Motors is the largest automobile manufacturer in India, with a
leading presence in commercial vehicles and a growing presence in passenger vehicles. It
also owns Jaguar Land Rover (JLR), a premium and luxury vehicle manufacturer.
Industry Analysis:
 Indian auto industry facing headwinds from chip shortage, inflation, and economic
slowdown.
 Commercial vehicle segment likely to recover, but passenger vehicle growth may be
muted.
 Increasing electric vehicle penetration a long-term opportunity, but competition
intense.
Profit & Loss Analysis:
 Positives: Revenue grew at an average of 5.59% over the past 5 years. EBITDA
margins have improved in recent years. Profit also grew at an average of 32.55% over
the past 5 years, with the highest growth of 29.12% in 2021.
 Negatives: Passenger vehicle market share in India has declined. High debt levels
raise concerns about financial stability.
Balance Sheet analysis:
 Positives: Strong liquidity position in terms of high current ratio indicating that short-
term debt is well-covered by current assets, high capital investment made by the
company in EV segment and in increasing the capacity.
 Negatives: High debt-to-equity ratio raises concerns about long-term financial
stability but has a stable interest coverage ratio of 2.86x .
Ratios:
 ROE: 5.6%, significantly lower than historical levels but is expected to rise given its
rising profitability.
 ROCE of 5.95% is low as compared to its competitors but given its bullishness in the
EV sector combined with JLR performance its earnings are expected to rise .
Moat:
 Brand Recognition: Strong brand recognition in India, particularly in commercial
vehicles.
 Distribution Network: Extensive distribution network in India and JLR's established
global presence.
 Government Support: Potential benefit from government policies favoring domestic
automakers.
Valuation Analysis:
 Current valuation (P/E of 16.6x) is low as compared to its industry P/E of 24.3x.
 Future growth prospects hinge on JLR's performance, passenger vehicle market share
recovery, and EV segment growth which are expected to rise .
Comparison with Peers:
 Mahindra & Mahindra: Similar segment presence in India, lower valuation (P/E: 22x).
 Maruti Suzuki: Leading player in Indian passenger vehicles, strong financial position.
Reasons for Inclusion in Portfolio:
 Growth Potential: Strong potential for growth in JLR and the Indian EV market.
 Turnaround Story: Company has shown signs of financial improvement in recent
years.
 Large Cap Stability: Provides stability and diversification within a portfolio.
 2) Tata Consumer Products
Tata Consumer Products Ltd. is one of the leading companies of the Tata Group, with
presence in the food and beverages business in India and internationally. It is the second
largest tea company globally and has significant market presence and leadership in many
markets.
Industry Analysis:
 Large and growing FMCG market in India: Fueled by rising disposable incomes,
urbanization, and changing consumer preferences.
 Intense competition: Dominated by established players like HUL, Nestle, and ITC,
with regional players gaining traction.
 Shift towards branded products: Branded segment boasts higher margins and faster
growth compared to unbranded.
 Premiumization & Health & Wellness trends: Consumers increasingly seeking
perceived quality and functional benefits.
Profit & Loss Statement Analysis:
 Positives:
o Consistent revenue (10.62% CAGR) and profit (14.32% CAGR) growth over
5 years.
o Strong EBITDA margin expansion (15.27% CAGR) indicates cost efficiency.
o Diversified portfolio across tea, coffee, water, pulses, spices, etc. mitigates
sector risks.
 Negatives:
o High brand penetration in established categories like tea and coffee limits
explosive growth potential.
o Dependence on the Indian market exposes the company to economic
fluctuations.
o Recent acquisitions need further integration and optimization.
Balance Sheet:
 Liquidity: Good short-term debt coverage with a Current Ratio of 2.43.
 Solvency: High solvency due to low Debt to Equity ratio of 0.09 and high interest
coverage of 18.7x
 Contingent Liabilities: Significant guarantees (₹5,597 crore) and other liabilities
(₹1,225 crore) requires careful monitoring.
 Capital Expenditure (Capex): Investments in plant modernization and capacity
expansion (₹359 crore), with future plans likely focused on new segments and
technology.
  Shareholder Equity: Stable financial footing with ₹16,222 crore in equity, showing a
7.4% growth from FY22.
Ratios:
 ROE: 6.86%, which is slightly lower because of lower margins due to high inflation.
 ROCE of 9.32% is moving in similar line as compared to industry , which is expected
to rise due to falling inflation.
Moat:
 Strong brand recognition and distribution network: Particularly in India, with brands
like Tata Tea and Tata Salt.
 Established relationships with farmers and suppliers: Secures raw material supply and
cost-efficiency.
 Government support: Potential benefit from policies favoring domestic FMCG
players.
Valuation Analysis:
 Current P/E of 75x appears high compared to peers because of the available growth
opportunities.
 Future growth depends on successful integration of acquisitions, expanding in new
segments, and navigating volatile commodity prices.
Reason for Portfolio Inclusion:
 Growth potential: Strong brand, focus on high-growth segments like packaged water
and healthy foods.
 Turnaround story: Improving financial metrics post-acquisitions.
 Diversification: Reduces portfolio risk with exposure to a large and growing FMCG
market.
3) Kotak Mahindra Bank Ltd
Kotak Mahindra Bank is a diversified financial services group providing a wide range of
banking and financial services including Retail Banking, Treasury and Corporate
Banking, Investment Banking, Stock Broking, Vehicle Finance, Advisory services, Asset
Management, Life Insurance and General Insurance.
Industry Analysis:
 Indian banking sector expected to grow driven by economic recovery, credit
demand, and digitalization.
 Increased competition from new age fintech players and non-traditional lenders.
Profit & Loss:
 Revenue Growth: Steady and strong, 21.89% YoY, 15.9% 3-year CAGR.
 Profit Growth: Excellent track record, 31.03% YoY, 22.1% 3-year CAGR.
 Net Interest Margin: Stable and healthy, 4.53% YoY, 4.4% average last 3 years.
 Segment Revenue: Diversified across Corporate Banking, Wholesale Banking, Retail
Banking, and Investment Banking.
Balance Sheet:
 Solvency: Moderately leveraged, debt-to-equity ratio of 3.75x but under control since
a banking company , comfortable interest coverage (13.41x).
 Capital Adequacy: Exceeds regulatory requirements, Tier-1 capital ratio of 16.3%.
Ratios:
 ROE: Strong and improving, 20.23% YoY, 17.8% average last 3 years.
 ROCE: Consistently high, 31.67% YoY, 28.49% average last 3 years.
 Gross NPA: Slightly elevated but declining, 2.53% YoY, 2.79% average last 3 years.
 Net NPA: Low and under control, 0.86% YoY, 1.03% average last 3 years.
Moat:
 Strong brand and reputation in private banking.
 Extensive branch network and digital banking platform.
 Focus on high-growth segments like retail and SME lending.
 Strong risk management and asset quality practices.
Valuation:
 Current P/E ratio of the company is 21.5x as against industry P/E ratio of 12.8x seems
over valued but is expected to grow given its healthy financials, strong management
and the opportunities in the Banking sector .
Portfolio Inclusion:
 Consider for:
o Growth potential and defensive qualities in volatile markets.
o Excellent financial health and track record.
o Long-term investment with attractive growth prospects.
Technical Analysis:
 Currently in an upward trend, technical indicators positive.
  Breakout potential if market sentiment remains positive and positive news flow
persists.

Mid Cap & Small Cap Companies

1) Supreme Indutries Ltd
Supreme Industries Ltd is one of the leading plastic products manufacturing company in
India having 25 manufacturing facilities spread across the country, offering a wide and
comprehensive range of plastic products in India.
Industry Analysis:
 Leading player in India's plastic pipes and fittings market.
 Growing demand driven by infrastructure development, housing, and urbanization.
 Intense competition from regional and international players.
Profit & Loss Statement:
 Positives: Consistent revenue growth (7-9% average) over the past decade, except for
COVID-19 dip. Profit growth of 15.48% for the past 3 years. Strong operating
margins (23-26%).
Balance Sheet:
 Strong current ratio (2.26) indicates good short-term debt coverage. Virtually debt-
free with low debt-to-equity ratio. Healthy cash flow management (CFO/PAT > 1).
 Increased Capital Investment is expected to give higher future growth.
Ratios:
 ROE: 21.38%, healthy and higher as compared to peers.
 Debt-to-Equity: 0.26x, exceptionally low, indicating strong financial stability.
Moat:
 Market leader in plastic pipes and fittings.
 Strong brand and distribution network.
 Virtually debt-free with efficient cash flow management.
Valuation Analysis:
 Current P/E of 56.1x appears high compared to historical averages and peers
suggesting overvaluation because it is a market leader and the market is anticipating
that the earnings will rise in future.
Reasons for Portfolio Inclusion:
 Growth potential in pipes & fittings market driven by infrastructure and housing.
  Strong financial position with minimal debt and solid cash flow.
 Potential for further margin expansion through efficiency and vertical integration.
2) Linde India Ltd
Linde India Limited, a subsidiary of BOC Group,UK (owns 75% stake in the company),
is primarily engaged in manufacture of industrial and medical gases and construction of
cryogenic and non-cryogenic air separation plants.
Industry Analysis:
 Leading industrial gas manufacturer in India, serving diverse sectors like
steel, chemicals, healthcare, and food & beverage.
 High growth potential driven by increasing industrialization and adoption of advanced
technologies.
 Intense competition from global players like Air Liquide and Messer.
Profit & Loss Statement:
 Consistent revenue growth (9.59% CAGR) over past 5 years. Profit growth of 32.55%
CAGR, but volatile due to pandemic and input costs. Strong EBITDA margins (25%).
 High operating profit Margin of 25%.
Segment Revenue:
 Industrial Gases (75%): Strong growth driven by steel and chemicals sectors.
 Engineering & Projects (25%): Lower growth but provides diversification.
Balance Sheet Analysis:
 Liquidity: Good short-term debt coverage with a Current Ratio of around 2.05.
 Solvency: Virtually debt-free with a low Debt-to-Equity Ratio, indicating strong
financial stability.
 Capex: Recent investments in capacity expansion and technology upgrades, specific
figures not provided.
Ratios:
 ROE: 18.2%, significantly higher than industry benchmarks due to raising
profitability .
 ROCE: 20.49%, healthy and consistent, indicating efficient capital usage.
Moat:
 Strong brand recognition and established distribution network in India.
 Long-term contracts with key industrial players ensure stable demand.
 Market leader in industrial gases.
  Virtually debt-free with solid cash flow management.
Valuation Analysis:
 High P/E (117x): Above industry average and peers. Justifiable for long-term growth
potential with the caveat of active portfolio management.
Technical Analysis:
 Uptrend with recent pullback: Offering a potential buying opportunity after a strong
run-up.
 Indicators hinting at momentum: MACD crossover and Stochastic Oscillator suggest
near-term upside potential.
 Moderate volatility: Bollinger Bands show current price within the bands.
 Support and resistance levels: Strong support around ₹2,800 and ₹2,600, resistance at
₹3,200 and ₹3,400.
Reasons for Portfolio Inclusion (Long-Term Perspective):
 Strong growth potential in India's industrial gas market.
 Efficient capital allocation and strong operational performance.
 Potential for margin expansion and shareholder value creation.
3)Torrent Power Ltd
Torrent Power Ltd is a leading integrated power utility company in India with presence across
generation, transmission and distribution of power. Its operations are spread across the states
of Gujarat, Maharashtra, Uttar Pradesh and Karnataka.
Industry Analysis:
 Indian power sector poised for strong growth driven by electrification and rising per
capita energy consumption.
 Government focus on renewable energy transition opens opportunities for players like
Torrent Power.
Profit & Loss:
 Revenue Growth: Compounded growth of 17% in recent years, driven by rising
customer base and power demand.
 Profit Growth: Compounded growth of 18% over 5 years , net profit growth
mirroring revenue growth.
 Cost Control: Efficient operations, with fuel costs constituting 60% of revenue.
Segment Revenue:
 Distribution: Primary driver, contributing over 80% of revenue.
 Generation: Mix of coal, gas, and renewable power, contributing ~20% of revenue.
Balance Sheet analysis:
 Liquidity: Strong current ratio (1.23x) and healthy cash flow coverage ratio (>2x).
 Solvency: Debt-to-equity ratio moderate 0.9x, manageable interest burden.
 Capex: Strong focus on renewable energy generation expansion.
 Shareholder Equity: Steady increase, reflecting retained earnings and prudent capital
allocation.
Ratios:
 ROE: Decent return on equity at 19.6% and high as compared to peers.
 ROCE: Strong operating efficiency, ROCE consistently above 20%.
Moat:
 Strong distribution network presence in high-growth regions.
 Focus on renewable energy transition, ensuring future relevance.
 Diversified generation portfolio mitigating fuel price risks.
Valuation:
 Current P/E of ~20, considered high but supported by long-term growth potential.
 Investment purpose should factor in long-term power demand growth and RIL
investment in Jio Green Power partnership.
Portfolio Inclusion:
 Consider including for exposure to the growing power sector and potential upside
from renewable energy diversification.
Technical Analysis:
 Stock in an uptrend, forming higher highs and higher lows.
 RSI above 50, indicating buying momentum.
 Bollinger Bands expanding, suggesting potential for further upside.
4)Indian Energy Exchange Ltd
Indian Energy Exchange Ltd incorporated in 2007 provides an automated platform and
infrastructure for carrying out trading in electricity units for physical delivery of electricity
Industry Analysis:
 Indian power market undergoing significant transformation with increased renewable
energy generation and trading.
 IEX is well-positioned to benefit from this transition and growing electricity demand.
Profit & Loss:
 Revenue Growth: Stable growth of 12% over 5 years , driven by increased trading
volume.
 Profit Growth: Consistent margin expansion and strong profit growth (>20%).
 Cost Control: High operating margin of 84% due to technology focused business.
Segment Revenue:
 Electricity Trading: Primary source, contributing over 95% of revenue.
 Renewable Energy Certificates (RECs) & Energy Saving Certificates
(ESCs): Emerging segment, contributing ~5% of revenue.
Balance Sheet:
 Liquidity: current ratio exceeding 1.47x suggest stable liquidity, due to low debt and
strong cash flow.
 Solvency: Debt-free company, no concerns regarding solvency.
 Capex: Limited capital expenditure needs due to asset-light business model.
 Shareholder Equity: Consistent increase from retained earnings.
Ratios:
 ROE: Exceptionally high ROE of 40% means high return of shareholders fund.
 ROCE: Exceptional ROCE 51.8% demonstrating efficient use of the funds in the
business.
Moat:
 Largest power exchange in India, with dominant market share (~95%).
 Strong regulatory framework and government support for clean energy trading.
 Technology platform and operational efficiency create barriers to entry.
Valuation:
 Current P/E of 43.7x, considered high but supported by strong growth prospects and
strong market position.
 Investment for long-term play on India's energy transition and growing electricity
demand.
Portfolio Inclusion:
 Consider for exposure to the high-growth energy trading sector and potential upside
from clean energy initiatives.
Technical Analysis:
 Stock in an uptrend with solid support levels.
  Relative Strength Index (RSI) around 50, indicating neutral momentum.
 Bollinger Bands widening, suggesting potential for further volatility.

5) Central Depository Services (India) Ltd

Central Depository Services Limited is a Market Infrastructure Institution (MII), part of the
capital market structure, providing services to all market participants - exchanges, clearing
corporations, depository participants (DPs), issuers and investors. It is a facilitator for holding
of securities in the dematerialised form and an enabler for securities transactions.
Industry Analysis:
 Indian stock market witnessing strong growth, driven by economic expansion and
increased retail participation.
 Dematerialization trend gaining momentum, benefiting CDSL.
Profit & Loss:
 Revenue Growth: Strong and consistent growth of 24% over 5 years, driven by rising
trading volumes and dematerialization.
 Profit Growth: Higher profit growth of 22% due to rising margins and increased
trading volumes.
 Cost Control: High operating margin of 57% due to asset-light business model.
Segment Revenue:
 Depository Services: Primary driver, contributing over 95% of revenue.
 Other Services: Includes data products, value-added services, and fees, contributing
5% of revenue.
Balance Sheet:
 Liquidity: Strong liquidity due to current ratio of 2.29x due to lower short term
obligation and efficient working capital management.
 Solvency: Debt-free company, no concerns regarding solvency.
 Capex: Limited capital expenditure needs due to technology-driven operations.
Ratios:
 ROE: High ROE of 23.8% reflecting the efficient use of shareholders fund.
 ROCE: Exceptional ROCE of 30.3%, demonstrating efficient use of the fund raised
by the company .
Moat:
 Monopoly position in the Indian depository services market with over 70% market
share.
  Strong track record of operational excellence and technological innovation.
 Regulatory moat and long-term contracts with exchanges and brokers.
Valuation:
 Current P/E of 60x, considered high but supported by strong growth
prospects, monopoly position, and high return ratios.
 Investment for long-term play on India's strong equity market growth and
dematerialization potential.
Portfolio Inclusion:
 Consider for exposure to the high-growth demat space and potential upside from
rising market participation.
Technical Analysis:
 Stock in an uptrend with strong support levels.
 RSI around 50, indicating neutral momentum.
 Bollinger Bands widening, suggesting potential for further volatility.
6) Angel One Ltd
Angel One Ltd is a diversified financial services company and is primarily engaged in the
business of stock, commodity and currency broking, institutional broking, providing margin
trading facility, depository services and distribution of mutual funds, lending as a NBFC and
corporate agents of insurance companies.
Industry Analysis:
 Indian retail brokerage market projected to grow at 15-20% CAGR driven by
digitization and rising investor base.
 Increasing competition from established players and new fintech entrants.
Profit & Loss analysis:
 Strong revenue growth 31.8% CAGR over 5 years and higher profit growth of 52%
CAGR over 5 years.
 High operating margins of 47%, segment revenue dominated by brokerage (94%).
Balance Sheet analysis :
 Comfortable liquidity (Current Ratio 1.31), virtually debt-free with strong ROE
(47.1%) & ROCE (44%).
 Negligible contingent liabilities, recent capex focused on technology upgrades and
branch expansion.
Ratios & Valuation:
 High P/E ratio of 27.1 warrants long-term growth focus and justifies value for those
seeking high-growth potential.
 ROCE of 44% suggests efficient utilization of capital.
 ROE of 47.1% tells the high growth prospects for the company in terms of creating
wealth for its shareholders.
Moat:
 Focus on technology and digital platforms, diversified product offerings, strong brand
recognition.
 Growing retail investor participation in Indian capital markets.
Portfolio Inclusion:
 High-growth potential in online broking and wealth management.
 Efficient cost structure and strong financial profile.
Technical Analysis:
 Uptrend with recent pullback, indicators suggest potential upside after crossing
resistance.
 Support levels at ₹1,300 and ₹1,200, resistance at ₹1,450 and ₹1,500.
7)Blue Star Ltd
Blue star manufacturers air purifiers, air coolers, water purifiers, cold storage and speciality
products. The Company offers turnkey solutions in MEP (Mechanical, Electrical, Plumbing,
and Fire-fighting) Projects. It is the largest after-sales service provider for air conditioning
and commercial refrigeration products in the country.
Industry Analysis:
 Indian air conditioning market expected to grow significantly driven by rising
temperatures and changing lifestyle preferences.
 Government initiatives promoting energy-efficient cooling solutions benefit Blue Star.
Profit & Loss:
 Revenue Growth: Strong and consistent growth of 11.4% in recent years, driven by
rising demand for air conditioners and commercial refrigeration units.
 Profit Growth: Profit grew by 31.6% outpacing revenue growth, with margins
expanding due to operational efficiency.
Segment Revenue:
 Air Conditioning & Refrigeration: Primary driver, contributing over 80% of revenue.
 Water Coolers & Dispensers: Contributing ~10% of revenue.
  Engineering & Projects: Smaller segment, contributing ~5% of revenue.
Balance Sheet:
 Liquidity: Modest current ratio 1.36 times , managed cautiously due to working
capital requirements.
 Solvency: Debt levels manageable, debt-to-equity ratio around 0.37.
 Capex: Consistent investments in product development and modernization.
Ratios:
 ROE: High ROE of 23.4%, enabling greater prospect for the shareholders .
 ROCE: Strong ROCE of 24.4%, demonstrating efficient use of the capital.
Moat:
 Established brand with strong presence in the Indian air conditioning and refrigeration
market.
 Focus on innovation and energy efficiency initiatives.
 Diversification across segments mitigates market fluctuations.
Valuation:
 Current P/E of 61.8x as compared to industry P/E of 82.3x is low suggesting that the
company is undervalued and greater chance for price appreciation.
 Investment for long-term play on growing demand for cooling solutions and rising
disposable incomes.
Portfolio Inclusion:
 Consider for exposure to the consumer durables sector and potential upside from
increasing electrification, urbanization trends and increase in the personal disposable
income of the consumer necessitates the inclusion of the stock in the portfolio.
Technical Analysis:
 Stock in an uptrend with strong support levels.
 RSI above 50, indicating strong buying momentum.
 Bollinger Bands widening, suggesting potential for further upside.

8) CMS Info Systems Ltd

CMS Info Systems Limited is India's largest cash management company in terms of the
number of ATM points and retail pick-up points as of March 31, 2021. The company is
engaged in installing, maintaining, and managing assets and technology solutions on an end-
to-end outsourced basis for banks, financial institutions, organized retail and e-commerce
companies in India.
Industry Analysis:
 Cash management industry expected to grow driven by ATM usage, digitization, and
security needs.
 Rising competition from fintech companies and alternative cash management
solutions.

Profit & Loss Statement:

 Revenue Growth: Strong consistent growth, 21.04% YoY, 13.6% 3-year
CAGR, 18.09% 5-year CAGR.
 Profit Growth: Excellent track record, 29.02% YoY, 29.21% 3-year CAGR, 29.31% 5-
year CAGR.
 Cost Control: Effective operating margins, averaging 21.89% over the past 5 years.
 Segment Revenue: Diversified across Cash Management Services, Managed
Services, and Cards.
Balance Sheet:
 Liquidity: Strong, current ratio of 3x, healthy cash flow management (CFO/PAT of
1.14).
 Solvency: Almost Debt-free with a Debt to Equity ratio of 0.12x, excellent interest
coverage ratio of 20.12.
Ratios:
 ROE: Strong and improving, 20.89% YoY, 19.7% average last 3 years.
 ROCE: Consistently high, 28.37% YoY, 26.82% average last 3 years.
Moat:
 Strong market position in cash management services.
 Long-term relationships with major banks.
 Technological expertise and innovation.
 Diversification across segments.
Valuation:
 Current P/E of the company is 20.8x as against the industry P/E of 36.1x which
suggest that the stock is undervalued.
 Price appreciation may be justified for:
o Consistent high growth, healthy financials, and strong moat.
o Analyst bullishness with an average 1-year price target of Rs. 470.56.
Portfolio Inclusion:
 Consider inclusion for:
o Strong growth potential and defensive qualities in a volatile market.
o Excellent financial health and management record.
o Long-term investment with high expectations.
Technical Analysis:
 Currently in a sideways consolidation phase, technical indicators mixed.
 Breakout potential if market sentiment improves and positive news flow persists.
9) Motherson Sumi Wiring India Ltd
Motherson Sumi Wiring India, a JV between Sumitomo Wiring System and Motherson
Group, is a market leader in the Indian wiring harness industry with a market share of over
40%.
Industry Analysis:
 Global automotive wiring harness market expected to grow driven by:
o Rising vehicle production, especially EVs.
o Increasing complexity of electronic components in vehicles.
 Intense competition from established and emerging players.
Profit & Loss:
 Revenue Growth: Moderate, 14.68% YoY, 5.2% 3-year CAGR.
 Profit Growth: Profit growth of 11.3% and historically strong (22.4% 3-year CAGR).
 Cost Control: Improved margins (11.38% EBITDA) despite inflationary pressures.
 Segment Revenue: Primarily Wiring Harness (98.2%), remaining from Other
Businesses.
Balance Sheet:
 Liquidity: Strong, current ratio of 1.66, adequate cash flow (CFO/PAT of 0.83).
 Solvency: low Debt to Equity ratio of 0.21x , excellent interest coverage ratio of
24.46.
 Capex: ₹199 Crore of Capital Expenditure done and is double as compared to
previous financial year.
Ratios:
 ROE: High ROE of 39.8% due to increased profitability.
  ROCE: Exceptionally strong, 43.8% due to efficient use of capital.
Moat:
 Established global wiring harness supplier with Tier-1 automotive clients.
 Strong manufacturing capabilities and cost efficiency.
 Diversification into electric vehicle segments.
Valuation:
 The current P/E ratio of the company is 51.9 times as against industry P/E of 32.2x
suggest that the company is overvalued.
 High valuation could be justified by:
o Strong profitability and return ratios (RoCE, ROE) historically.
o Growth potential in EV segment and global expansion plans.
Portfolio Inclusion:
 Consider for:
 Long-term investors seeking robust financials and growth potential in EV
space.
 Tolerance for potential short-term volatility due to high valuation.
Technical Analysis:
 Currently in a consolidation phase, technical indicators mixed.
 Breakout potential depends on market sentiment and positive company news.
Debt Holding
1. Government Of India Bond (2036)
 Rock-Solid Rating: AAA rating from CRISIL & FITCH assures minimal credit risk
and reliable interest payments.
 Attractive Yield: 7.4875% annualized (semi-annual payments) outperforms inflation,
providing real returns.
 Extended Maturity (2036): Potential for higher returns compared to shorter-term
bonds, capitalizing on long-term economic growth.
 Government Backing: Unparalleled safety of principal due to Indian government
guarantee.
 High Liquidity: Easy resale on secondary markets for early encashment if needed.

2. Treasury Bill
 Minimal Risk: Backed by the Indian government, offering virtually zero credit risk.
 Attractive Returns: Provides decent returns of around 7% based on various maturities.
 Liquidity: Easily tradable on secondary markets for early encashment if needed.
 Capital Protection: Face value guaranteed at maturity, shielding against losses.
 Short Maturities: Minimize interest rate fluctuations, ideal for short-term needs.
 Portfolio Diversification: Reduces overall risk by adding a low-volatility asset in the
portfolio.

3. Corporate Bond
3.1 The Great Eastern shipping company Ltd

 High Return: 8.27% current yield (yearly payout) significantly surpasses current
inflation and many other investment options.
 Highest Rating: AAA rating from CRISIL & FITCH signifies high creditworthiness
and low default risk.
 Shorter Maturity (2027): Lower interest rate risk compared to longer-term bonds,
offering quicker capital return.
 Established Company: The Great Eastern Shipping Company Ltd. is a well-reputed
player in the Indian shipping industry.

3.2 Indiabulls Housing Finance Ltd

 Enticing Return: 10.82% current yield (yearly payout) significantly outpaces inflation
and most other investments.
 Shorter Maturity (2027): Lower interest rate risk due to short maturity.
 Brand Name : Indiabulls Housing Finance Ltd. is a major player in India's housing
finance sector.
 AA Rating: A solid credit rating from CRISIL & FITCH, indicating moderate credit
risk and potentially strong future performance.
 B. Minimum Variance Portfolio
Sharpe Optimization Model
Steps 1- Data Collection.

Adjusted Closing Price

Date Tata Motors Tata ConsumerKotak
Products
Mahindra
Supreme
Bank
Industries
Linde IndiaTorrent
Ltd Power
Indian Energy
CDSLExchange
Angel One Blue Star Ltd
CMS Info System
MotherLtd
Son sumi
27-12-2021 480.90 729.48 1793.54 2159.45 2467.21 526.94 248.13 1462.32 1122.51 491.9983 260.50 45.26
03-01-2022 489.08 722.27 1901.54 2127.817 2575.43 547.17 256.04 1511.32 1169.56 485.9204 270.50 49.52
10-01-2022 508.32 748.17 1935.44 2150.44 2565.85 551.03 261.92 1575.13 1255.46 503.1088 290.16 51.06
17-01-2022 500.29 712.90 1891.05 2167.928 2751.89 524.09 247.05 1543.54 1437.26 481.836 271.19 49.66
24-01-2022 495.75 704.41 1895.60 2024.584 2704.37 515.95 228.60 1461.35 1335.41 423.0987 259.00 48.58
31-01-2022 499.04 720.01 1881.52 1953.47 2727.58 552.46 228.55 1534.62 1320.63 491.5364 268.63 47.18
07-02-2022 497.30 687.83 1825.65 1915.491 2598.04 471.59 216.30 1481.58 1246.88 506.318 254.67 43.65
14-02-2022 491.62 704.02 1823.95 1904.397 2682.20 464.61 214.43 1431.42 1239.35 509.9161 240.71 43.37
21-02-2022 458.32 696.17 1854.06 1982.439 2700.50 450.42 201.27 1332.26 1270.92 513.9763 233.53 44.60
28-02-2022 415.95 657.36 1749.66 1921.933 2592.04 454.20 208.07 1321.48 1249.51 499.8025 234.17 44.81
07-03-2022 416.85 702.99 1760.49 1929.83 2763.49 465.92 221.92 1480.95 1236.44 477.9461 254.52 45.26
14-03-2022 432.45 757.79 1817.41 1989.027 3184.55 468.20 219.95 1495.38 1544.64 477.8488 258.70 41.94
21-03-2022 430.76 719.57 1719.80 1940.778 3429.45 470.86 225.62 1436.34 1534.48 481.5443 250.35 45.26
28-03-2022 439.78 774.96 1774.12 1975.851 3826.07 486.90 227.64 1459.11 1471.94 530.8486 266.42 45.26
04-04-2022 450.65 802.34 1781.96 2031.657 3906.91 525.71 237.59 1423.57 1622.35 560.7036 261.80 49.52
11-04-2022 429.71 802.24 1777.07 1976.045 3695.14 531.04 232.07 1399.78 1613.01 559.7311 254.03 51.06
18-04-2022 437.49 800.28 1725.29 1902.508 3443.39 524.79 226.90 1393.34 1815.55 553.6046 256.78 49.66
25-04-2022 436.24 808.27 1788.20 1886.279 3552.65 516.60 211.47 1345.03 1867.42 552.5347 259.14 48.58
02-05-2022 407.28 750.58 1772.77 1918.785 3465.46 478.13 197.77 1188.00 1391.56 521.2211 253.84 47.18
09-05-2022 403.04 723.74 1777.02 1816.424 3141.21 418.25 184.22 1061.64 1256.53 481.3011 230.98 43.65
16-05-2022 416.70 725.70 1826.55 1746.375 3068.25 416.31 191.32 1109.08 1377.19 493.3598 232.50 43.37
23-05-2022 428.27 711.82 1943.43 1737.559 2923.34 419.65 181.41 1055.16 1273.29 487.9383 225.33 44.60
30-05-2022 430.56 739.74 1856.00 1801.601 3026.34 451.10 179.68 1166.70 1427.42 487.525 225.82 44.81

In the 1st Step the Adjusted weekly closing price of the selected stocks for 2 year is collected
from Yahoo Finance website .

Step 2 – Calculate weekly returns.

Returns
Date Tata Motors Tata Consumer
KotakProducts
Mahindra
Supreme
Bank
Industries
Linde IndiaTorrent
Ltd Power
Indian Energy
CDSLExchange
Angel One Blue Star Ltd
CMS Info System
MotherLtd
Son sumi
27-12-2021
03-01-2022 2% -1% 6% -1% 4% 4% 3% 3% 4% -1% 4% 9%
10-01-2022 4% 4% 2% 1% 0% 1% 2% 4% 7% 4% 7% 3%
17-01-2022 -2% -5% -2% 1% 7% -5% -6% -2% 14% -4% -7% -3%
24-01-2022 -1% -1% 0% -7% -2% -2% -7% -5% -7% -12% -4% -2%
31-01-2022 1% 2% -1% -4% 1% 7% 0% 5% -1% 16% 4% -3%
07-02-2022 0% -4% -3% -2% -5% -15% -5% -3% -6% 3% -5% -7%
14-02-2022 -1% 2% 0% -1% 3% -1% -1% -3% -1% 1% -5% -1%
21-02-2022 -7% -1% 2% 4% 1% -3% -6% -7% 3% 1% -3% 3%
28-02-2022 -9% -6% -6% -3% -4% 1% 3% -1% -2% -3% 0% 0%
07-03-2022 0% 7% 1% 0% 7% 3% 7% 12% -1% -4% 9% 1%
14-03-2022 4% 8% 3% 3% 15% 0% -1% 1% 25% 0% 2% -7%
21-03-2022 0% -5% -5% -2% 8% 1% 3% -4% -1% 1% -3% 8%
28-03-2022 2% 8% 3% 2% 12% 3% 1% 2% -4% 10% 6% 0%

In the 2nd Step calculate the weekly returns for the selected stocks for calculating the
historical return and risk.
Step 3 – In the 3rd step calculate the average returns, variance, standard deviation, and
coefficient of variation for the selected stocks for analysis of the historical performance.
Tata Motors Tata Consumer
KotakProducts
Mahindra
Supreme
BankIndustries
Linde IndiaTorrent
Ltd Power
Indian Energy
CDSLExchange
Angel One Blue Star LtdCMS Info System
MotherLtd
Son sumi
Average Weekly returns 0.46% 0.34% 0.07% 0.82% 0.93% 0.65% -0.36% 0.33% 1.33% 0.74% 0.47% 0.37%
Weekly variance 0.13% 0.09% 0.06% 0.20% 0.24% 0.24% 0.22% 0.22% 0.56% 0.21% 0.19% 0.16%
Weekly Stdev 3.55% 2.92% 2.55% 4.46% 4.87% 4.93% 4.64% 4.72% 7.49% 4.53% 4.32% 3.99%
Annual Return 23.99% 17.76% 3.52% 42.72% 48.55% 33.98% -18.85% 17.12% 69.10% 38.57% 24.64% 19.48%
Annual Variance 6.54% 4.44% 3.38% 10.35% 12.31% 12.65% 11.21% 11.57% 29.21% 10.69% 9.71% 8.26%
Annual Stdev 25.6% 21.1% 18.4% 32.2% 35.1% 35.6% 33.5% 34.0% 54.0% 32.7% 31.2% 28.7%
Cofficient of Variation 1.07 1.19 5.22 0.75 0.72 1.05 -1.78 1.99 0.78 0.85 1.26 1.48

In the above analysis we have find the average weekly returns, average variance and standard
deviation. For better understanding we have calculated the annualized value of the same. In
the analysis we have found that Angel One Ltd have given the best returns and also has the
highest standard deviation among all , Indian Energy Exchange has the least return but due to
its strong fundamentals it is considered in the portfolio. As far as the standard deviation is
concerned Kotak Mahindra Bank ltd has the lowest standard deviation among all. the As far
as the coefficient of variation is concerned CDSL Ltd is the highest among all the portfolio’s
which tells us that for every unit of return how much risk we are taking.
Step 4 – Calculate Variance Covariance Matrix for the selected Stocks.
Variance - Covariance Matrix
Tata Motors Tata Consumer
KotakProducts
Mahindra
Supreme
Bank
Industries
Linde IndiaTorrent
Ltd Power
Indian Energy
CDSLExchange
Angel One Blue Star Ltd
CMS Info System
MotherLtd
Son sumi
Tata Motors 0.001245518 0.00039 0.000326 0.000394 0.000285 0.000585 0.000449 0.000593 0.000897 0.000313 0.000537 0.000299313
Tata Consumer Products 0.000389696 0.000846 0.000231 0.000266 0.000501 0.000414 0.000308 0.000451 0.000684 0.00037 0.00045 0.000255781
Kotak Mahindra Bank 0.000326375 0.000231 0.000643 0.000126 0.000103 0.000143 0.000189 0.00019 0.000326 0.000171 0.000296 0.000231708
Supreme Industries 0.000393582 0.000266 0.000126 0.001971 0.000722 0.000308 0.000441 0.000325 0.000504 0.000422 0.000314 0.000297748
Linde India Ltd 0.000284933 0.000501 0.000103 0.000722 0.002344 0.000558 0.000489 0.000343 0.000701 0.000369 0.000493 0.000468328
Torrent Power 0.000584606 0.000414 0.000143 0.000308 0.000558 0.00241 0.00044 0.000928 0.000772 0.000531 0.000551 0.000408482
Indian Energy Exchange 0.000449326 0.000308 0.000189 0.000441 0.000489 0.00044 0.002134 0.000987 0.0004 0.00069 0.000814 0.000495987
CDSL 0.000592544 0.000451 0.00019 0.000325 0.000343 0.000928 0.000987 0.002204 0.001264 0.000674 0.000921 0.000397288
Angel One 0.000897408 0.000684 0.000326 0.000504 0.000701 0.000772 0.0004 0.001264 0.005563 0.000697 0.000875 0.000656396
Blue Star Ltd 0.000313166 0.00037 0.000171 0.000422 0.000369 0.000531 0.00069 0.000674 0.000697 0.002037 0.000438 0.000406692
CMS Info System Ltd 0.000536789 0.00045 0.000296 0.000314 0.000493 0.000551 0.000814 0.000921 0.000875 0.000438 0.001849 0.000293592
Mother Son sumi 0.000299313 0.000256 0.000232 0.000298 0.000468 0.000408 0.000496 0.000397 0.000656 0.000407 0.000294 0.001573949

The variance covariance matrix is calculated among the selected stocks using the data
analysis tab for calculating the optimum weight of the portfolio.
Step 5 – Calculate the optimum weight of the portfolio using the Sharpe optimization
method.
Optimum Portfolio weight
Objective Max Sharpe Ratio Minimum Variance
Tata Motors 1.00% 1.00%
Tata Consumer Products 1.00% 1.00%
Kotak Mahindra Bank 1.00% 22.40%
Supreme Industries 19.15% 2.51%
Linde India Ltd 19.98% 1.00%
Torrent Power 4.65% 1.00%
Indian Energy Exchange 1.00% 1.00%
CDSL 1.00% 7.06%
Angel One 14.89% 1.00%
Blue Star Ltd 14.33% 1.00%
CMS Info System Ltd 1.00% 38.63%
Mother Son sumi 1.00% 2.41%
SUM 80% 80%

Risk Free Rate 6.94% 6.94%

(91 day Tbills )

Expected Portfolio return 36.2% 15.2%

Expected Portfolio Variance 0.06% 0.05%
Expected Portfolio Stdev 2.49% 2.24%
Sharpe Ratio 11.745 3.688

The fifth step is to calculate the optimal weights for the portfolio. According to IPS, the total
investment is 80% in stocks and 20% in debt, so the total is 80%.
Optimal weights are created for the two portfolios. The goal of the first portfolio is to
maximize the Sharpe ratio, and the goal of the second portfolio is to minimize risk. The
optimal weights are calculated using an Excel solver function. However, there is a restriction
that each stock has a weight of at least 1% and the sum of all stocks is 80%.
Therefore, the optimal weighting of the first portfolio maximizes the Sharpe ratio, and the
optimal weighting of the second portfolio minimizes the portfolio risk.
Portfolio selection depends on the investor's personal preferences, but as an investor, I would
choose the first portfolio that maximizes the Sharpe ratio.