A Summer Internship Project Report on

ANALYSIS OF STOCKS OF DR. REDDYS LAB AND APOLLO HOSPITAL ENT.

FROM HEALTHCARE SECTOR FOR INVESTMENT DECISION
Submitted in partial fulfillment of the requirements for the degree of

Post Graduate Diploma in Management (Finance)

by

Shefali Suryavanshi

(Roll No.A2F- 42)

Under the guidance of

Prof. Puneet Bafna

A Study conducted for

GROWTH ARROW

at
Indira School of Business Studies PGDM,
Tathawade, Pune 411033

(2020-22)

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 DECLARATION

I, Shefali Suryavanshi, hereby declare that the project work entitled “Analysis Of Stocks
Of Dr. Reddys lab and Apollo Hospital ENT From Healthcare Sector For Investment
Decision” submitted to the record of authentic and original work carried out by me under
the guidance of Prof. Puneet Bafna, faculty mentor, Indira school of business studies
PGDM, Pune, during the academic year 2020- 2022 in the partial fulfilment of the
requirement for the degree of Post Graduate Diploma in Management (PGDM – Finance).

It is to the best of my knowledge and belief. This is to declare that all my work indulges in
the completion of the assignment such as research, analysis and suggestions are profound
and honest work of mine and the results embodied.
In this report have not been submitted to any other university or institute for the award of
any degree.

Shefali Suryavanshi
PGDM-A2F-42
(Finance)

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CERTIFICATE FROM COMPANY

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 ACKNOWLEDGEMENT

The internship opportunity I had with Growth Arrow was a great chance for learning and
professional development. Therefore, I consider myself as a very lucky individual as I was
provided with an opportunity to be a part of it.

I am using this opportunity to express my deepest gratitude to Megesh Sir who despite
being extraordinarily busy with his duties, took time out to hear, guide and keep me on the
correct path and allowing me to carry out my project at their esteemed organization and
extending during the training.

I would like to thank Prof. Puneet Bafna, Internal Project Guide, ISBS for his valuable
time and guidance throughout this internship period.

I perceive this opportunity as a big milestone in my career development. I will strive to use
gained skills and knowledge in the best possible way.

Shefali Suryavanshi
PGDM-A2F-42
(Finance)

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 CERTIFICATE FROM INDIRA SCHOOL OF BUSINESS
STUDIES PGDM

This is to certify that Ms. Shefali Suryavanshi is a bonafide student at this Institute and has
successfully completed her project entitled “Analysis Of Stocks Of Dr Reddys lab And
Apollo Hospital Ent. From Healthcare Sector For Investment Decision” at Growth
Arrow. for partial fulfillment of course Post Graduate Diploma in Management (Finance)
at Indira School of Business Studies PGDM.

Dr Kumendra Raheja Prof. Puneet Bafna

Director, ISBS Internal Guide

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 EXECUTIVE SUMMARY

Title of the project: - “Analysis Of Stocks Of Dr Reddys lab And Apollo Hospital Ent.
From Healthcare Sector For Investment Decision”

Company where this Project was Undertaken: - Growth Arrow.

Objective of the Study: -

• To explain how basic tools of fundamental analysis may be applied to arrive at

investment decision.
• To Obtain the knowledge about how to select stocks for investment.
• To do Fundamental Analysis of selected companies.
• To study the equity analysis and obtain the knowledge of equity market.

Findings/Learnings from the Project: -

• The project Portfolio management and equity research.

• The project aims at making a portfolio which can deliver good results to the investors and

for doing this we were thought how to analyze different stocks and predict their future

growth movement.

• We were given training on how to analyze different sectors of the economy and what are the

things a portfolio manager should look at while selecting stocks for his portfolio.

• We were given hand on training on online trading platform where we learnt how to trade

stocks online and how to do analyze the future performance of stocks using different

technical analysis tools such as candle sticks pattern.

• We learned financial ratios and how these ratios are important in determining the future of

the stock.

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Table of Contents

S.No. Contents Page

No.
1. Introduction 8

2. Sector Analysis 10

3. PESTEL Analysis 22

4. Five Force Model Analysis 26

5. Impact of Covid-19 on Global Stock Market 30

6. Major Players in the Market 32

7. Company Analysis 33

8. News Analysis 37

9. Review of Literature 39

10. Objectives 42

11. Data Analysis/ Data visualization, Results and Interpretation 46

12. Findings 60

13. Limitation of the project 62

14. Recommendation 64

15. Bibliography 67

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 Chapter 1
Introduction

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About the Project: -

The Title of the Project was “EQUITY RESEARCH: ANALYSIS OF STOCKS OF

COMPANIES FROM HEALTHCARE SECTOR FOR INVESTMENT DECISION”.

The project Portfolio management and equity research explains various aspects related to
portfolio management such as selection of equity shares, making investments in different
shares based on fundamental and technical analysis.

The project aims at making a portfolio which can deliver good results to the investors and for
doing this we were thought how to analyze different stocks and predict their future growth
movement. To predict the future of any stocks, the first step is to do its fundamental and
technical analysis. Starting with the training sessions we were thought about different
investment options available for an investor and how to help investor to choose the best
alternative so that he can gain maximum from his investments.

We were given training on how to analyze different sectors of the economy and what are the
things a portfolio manager should look at while selecting stocks for his portfolio. We were
given hand on training on online trading platform where we learnt how to trade stocks online.
Then we learned financial ratios and how these ratios are important in determining the future
of the stock.

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 Chapter 2
Sector Analysis

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Sector Analysis:

Sector: BFSI SECTOR

BFSI stands for Banking, Financial Services, and Insurance. It is an industry term companies that
provide a wide range of banking services, financial products and services, and insurance products.
The main component of BFSI sector here we are studied and working within it is Financial Services.
The History of Indian financial markets span back 200 years around the end of the 18 th century Indian
financial market comprise of the primary market, FDI’s alternative investment options, the pension
sectors, asset management segment as well.
One of the oldest across the globe and is the fastest growing and best among all the financial markets
of the emerging economies. The capital market of India initially developed around Mumbai, with
around 200 to 250 securities brokers participating in active trade during the second half of the 19th
century.
● Types of Financial Services offered in India:

● Banking
● Professional Advisory
● Wealth Management
● Mutual Funds
● Insurance
● Stock Market
● Treasury/Debt Instruments
● Tax/Audit Consulting
● Capital Restructuring
● Portfolio Management

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 ● Stock Market:
Stock markets refer to a marketplace where investors can buy and sell stocks. The price at
which each buying and selling transaction takes is determined by the market forces (i.e.,
Demand and supply for a particular stock). A stock market is a public market for the
trading of company stock and derivatives at an agreed price; these are securities listed on a
stock exchange as well as those only traded privately. The size of the world stock market
was estimated at about US$70.75 trillion on December 31, 2019.The stock market is one of
the most important sources for companies to raise money. This allows businesses to be
publicly traded or raise additional capital for expansion by selling shares of ownership of
the company in a public market. In fact, the stock market is often considered the primary
indicator of a country & s economic strength and development. Rising share prices, for
instance, tend to be associated with increased business investment and vice versa.

STOCK EXCHANGE:
A stock exchange is an entity which provides trading facilities for stockbrokers and traders,
to trade stocks and other securities. Stock Exchanges are an organized marketplace, either
corporation or mutual organization, where members of the organization gather to trade
company stocks or other securities. Stock exchanges also provide facilities for the issue and
redemption of securities as well as other financial instruments and capital events including
the payment of income and dividends. The securities traded on a stock exchange include:

• shares issued by companies.

• unit trusts

• derivatives

• pooled investment products and bonds

To be able to trade a security on a certain stock exchange, it must be listed there. Usually
there is a central location at least for recordkeeping, but trade is less and less linked to such
a physical place, as modern markets are electronic networks which gives them advantages of
speed and cost of transactions. Trade on an exchange is by members only. The initial offering
of stocks and bonds to investors is done in the primary market and subsequent trading is done
in the secondary market. A stock exchange is often the most important component of a stock
market. Supply and demand in stock markets is driven by various factors which, as in all free

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markets, affect the price of stocks. There is usually no compulsion to issue stock via the stock
exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said
to be off exchange or over-the- counter. This is the usual way that derivatives and bonds are
traded. Increasingly, stock exchanges are part of a global market for securities. The stock
markets in India are one of the oldest in the world and have a strong presence and network
of domestic and local intermediaries.

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GLOBAL SCENARIO:
Approximately 630,000 companies are now traded publicly throughout the world. The
growth of global stock markets outside of the United States and Europe is a key reason
that the number of public firms continues to grow. The U.S. still has the largest
exchange in the world, but many of the largest exchanges now reside in Asia, which
continues to grow in influence on the world stage. Below is an overview of some of
the largest exchanges in the world.

New York Stock Exchange:

The New York Stock Exchange (NYSE) is part of NYSE EURONEXT, which now
has exchanges in the U.S. and Europe. It estimates that its exchanges represent a third
of all equities traded in the world. The NYSE continues to be one of the primary
exchanges in the world and the largest in terms of the nearly 25.6 trillion U.S. dollars
in stock market capitalization it represents. The NYSE has been around since 1792 and
it is believed that Bank of New York, which is now part of Bank of New York Mellon,
was the first stock traded.

Tokyo Stock Exchange:

The Tokyo Stock Exchange (TSE) is the largest exchange in Japan and also number two
behind the NYSE in terms of the more than US$5.67 trillion in market capitalization
the companies on its exchange represent. A stronger national currency is part of the
reason behind the increasing size of the TSE. Around 2,292 firms are listed on the TSE.
The exchange was estimated to have first opened in 1878 and partners with other
exchanges around the world, such as the London Stock Exchange below.

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Hong Kong Stock Exchange:

The Hong Kong Stock Exchange is one of the top 10 largest stock exchanges. The
firms that are listed on the Hong Kong Stock Exchange represent close to $44 trillion
in total market capitalization. Roughly 2,538 companies are listed on the exchange,
which dates to just prior to 1900, when it first started operating. Most importantly, the
exchange represents one of the primary avenues for global investors to invest in
China.

Shanghai Stock Exchange:

The Shanghai Stock Exchange is one of the newest in the world. It opened in late
1990, and 1,500 companies trade on its exchange. Trading volume continues to
increase, but has fallen dramatically since 2008, which marked a peak in terms of
investment interest in China.

The Bottom Line:

that also deserve mention include the Nasdaq, which is also based in the U.S., The
Bombay Stock Exchange in India, Sao Paulo Stock Exchange in Brazil and the
Australian Stock Exchange also continue to grow in influence on the global stage.
The current global pandemic has slowed the progress of emerging markets, but they
are expected to continue to gain market share in the coming decades as their economies
grow and new firms go public and raise capital to serve a growing class of consumers,
and continue to grow the worldwide network of exchanges.

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INDIAN SCENARIO:
Owing to the high incidence of indigenous of equity broking, India got a Native share brokers
associated early as 1875. This association latter came to be known as Bombay stock Exchange
(BSE). In the 1864 there were more than 1000 Brokers in Mumbai who traded in stocks.
High premium was also a familiar concept during that time. In the 1970s Foreign Exchange
Regulation Act (FARA) was introduced that encouraged multinational companies to divest
their foreign equity. This phenomenon gave a fresh impetus to retail investing.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

The Securities and Exchange Board of India (SEBI) was constituted on 12 April 1988 as a
non- statutory body through an Administrative Resolution of the Government for dealing
with all matters relating to development and regulation of the securities market and investor
protection and to advise the government on all these matters. SEBI was given statutory status
and powers through an Ordinance promulgated on January 30, 1992. SEBI was established
as a statutory body on 21 February 1992. The Ordinance was replaced by an Act of
Parliament on 4 April 1992.

The preamble of the SEBI Act, 1992 enshrines the objectives of SEBI – to protect the interest
of investors in securities market and to promote the development of and to regulate the
securities market. The statutory powers and functions of SEBI were strengthened through the
promulgation of the Securities Laws (Amendment) Ordinance on 25 January 1995, which
was subsequently replaced by an Act of Parliament. The Securities and Exchange Board of
India (SEBI) provides certain guidelines for registration as stockbrokers. To act as a
stockbroker or sub-broker, registration under Securities and Exchange Board of India is
compulsory.

OBJECTIVES OF SEBI

According to the preamble of the SEBI, the three main objectives are:

1. To protect the interests of the investors in securities

2. To promote the development of securities market

3. To regulate the securities market

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 LIST OF STOCK EXCHANGES IN INDIA

1. Bombay Stock Exchange (BSE)

2. National Stock Exchange (NSE)

1. BOMBAY STOCK EXCHANGE (BSE):

The Bombay Stock Exchange Limited is the oldest stock exchange not only in the
country, but also in Asia with a rich heritage of over 133 years of existence. In the
early days, BSE was established as The Native Share & Stockbrokers Association.
It was established in the year 1875 and became the first stock exchange in the
country to be recognized by the government. In 1956, BSE obtained a permanent
recognition from the Government of India under the Securities Contracts
(Regulation) Act, 1956.

BSE provides an efficient and transparent market for trading in equity, debt
instruments and derivatives. BSE is the first exchange in India and the second in
the world to obtain an ISO 9001:2000 certifications. It is also the first exchange
in the country and second in the world to receive Information Security
Management System Standard BS 7799-2- 2002 certification for its BSE On-line
Trading System (BOLT). BSE continues to innovate.

The BSE On-line trading (BOLT):

BSE On-line Trading (BOLT) facilitates on-line screen-based trading in

securities. BOLT is currently operating in 25,000 Trader Workstations located
across over 359 cities in India.

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 SESSION TIMING:

Session Timings
Beginning of the Day Session 8:30-9:00

Pre-open trading session 9:00-9:15

Trading Session 9:15-15:30

Position Transfer Session 15:30–15:50
Closing Session 15:50–16:05
Option Exercise Session 16:05

1. National Stock Exchange (NSE):

The National Stock Exchange of India Limited (NSE) is a Mumbai-based stock exchange. It
is the largest stock exchange in India in terms of daily turnover and number of trades, for
both equities and derivative trading. NSE has a market capitalization of around US$3 trillion
and is expected to become the biggest stock exchange in India in terms of market
capitalization. Though a few other exchanges exist, NSE and the Bombay Stock Exchange
are the two most significant stock exchanges in India and between them are responsible for
most share transactions. NSE is mutually owned by a set of leading financial institutions,
banks, insurance companies and other financial intermediaries in India but its ownership and
management operate as separate entities.

NSE's trading systems is a state-of-the-art application. It has an uptime record of 99.99% and
processes more than a billion messages every day with the sub-millisecond response time.

NSE has taken huge strides in technology in these 20 years. In 1994, when trading started,
NSE technology was handling 2 orders a second. This increased to 60 orders a second in
2001. Today NSE can handle 1,60,000 orders/messages per second, with infinite ability to
scale up at short notice on demand, NSE has continuously worked towards ensuring that the
settlement cycle comes down. Settlements have always been handled smoothly. The
settlement cycle has been reduced from T+3 to T+2/T+1.

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Industry structure:
The global securities market has been constantly evolving over the years to better serve the
needs of traders and investors alike. Traders require liquid markets with minimal transaction
and delay costs in addition to transparency and assured completion of the transaction. Based
on these core requirements, a handful of securities market structures have become the
dominant trade execution structures in the world.

Quote-Driven Markets

Quote-driven markets are electronic stock exchange systems where buyers and sellers engage
in transactions with designated market makers or dealers. This structure only posts the bid
and ask quotes for specific stocks dealers are willing to trade. In a purely quote-driven market
structure, traders must interact directly with dealers, who supply liquidity in the market. That
is why this structure is well-suited for illiquid markets. Dealers can provide liquidity to
securities by maintaining an inventory of those that are thinly traded or trade at low volumes.
By providing liquidity, dealers make money from the spread between the bid and ask quotes.
To generate profits, they try to buy low at the bid and sell high at the ask and have high
turnover.

Order-Driven Markets

In order driven markets, buyers and sellers post the prices and amounts of the securities they
wish to trade by themselves rather than through a middleman like a quote-driven market. Most
order-driven markets are based on an auction process, where buyers are looking for the lowest
prices and sellers are looking for the highest prices. A match between these two parties results
in a trade execution. Order execution in this market structure is not guaranteed as traders are
not required to meet the bid or ask prices they quote. Price discovery is determined by the limit
order of traders in the particular security. here are two main types of order-driven markets, a
call auction, and a continuous auction market. In a call auction market, orders are collected
during the day and at specified times an auction takes place to determine the price. A
continuous market, though, operates continuously during trading hours with trades executed
whenever a buy and sell order match up.

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 Structure of Securities Market in India:

The Industrial securities market refers to the market for shares and bonds of the existing
companies, as well as those of new companies. This market is further divided into New Issue
Market (NIM) and Old Issue Market. The New Issue Market is also called Primary Market.
Likewise, the Old Issue Market is also called Secondary Market or Stock Exchange.

However, it is important to emphasize that the New Issue Market and Stock Exchange are inter-
linked and work in conjunction with each other. Although they differ from each other in the
sense that the New Issue Market deals with ‘new securities’ issued for the first time to the
public and Stock Exchange deals with those securities which have already been issued once
to the public.

(i) Primary Market:

The primary market is concerned with the floatation of new issues of shares or
bonds. The firms floating new issues to raise funds may be new companies or
existing companies planning expansions. The Merchant Banking Division of a
commercial bank is asked by the company to advise on the viability of floatation
of an issue before an issue is floated in the market.

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 The stock issuing company also approaches the institutional underwriters like LIC,
UTI, ICICI and IDBI, to ensure the marketability of an issue. The underwriters
like LIC and UTI purchase securities from the New Issue Market to hold these in
their own asset portfolio.

In Indian capital market, there are two main ways of floating new issues:

a) Public issues, and

b) Rights issues.

(ii) Secondary Market:

The Secondary Market deals in existing securities. This market provides both
liquidity and marketability to such securities. It implies that it is a market where a
security can be bought or sold at small transaction cost. Although the Secondary
Market deals with the purchase and sale of old securities, the firms issuing new
securities get themselves registered on a Stock Exchange by applying for listing
of shares. Listing offers the investor a ‘market’ for the sale of his stock.

The Secondary Market of Securities in India functions through its following two segments:

a) Stock Exchange.
b) Over-the-Counter Market.

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 PESTEL Analysis:

A PESTLE analysis is a framework to analyses the key factors Political, Economic, Sociological,
Technological, Legal and Environmental influencing an organization from the outside.

Political:
The capital market of India is very vulnerable. India has been politically instable in the
past, but it is a little politically stable now-a-days. The political instability of the country
has a very strong impact on the capital market. The share market of India changes as the
political changes took place. The BSE Index, SENSEX goes up and down with any kind of
small and big political news, like, if there is news that a particular political party has
withdrawn its support from the ruling party, and then the capital market will go down with
a bang. The capital market of India is too weak and is based on speculations. The political
stability of the country is very important for the stability and growth of capital market in
India. The political imbalance or balance of the country is the major factor in deciding the
capital market of India. The political factors include:

• Employment laws

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• Tax policy

• Trade restrictions and tariffs

• Political stability

Economic:
The economic measures taken by the government of India has a very strong relationship with the
capital market. Whenever the annual budget is announced the capital market goes up and down with
the economic policies of the government. If the policies are supportive to the companies, then the
capital market takes it positively and if there is any other policy that is not supportive, and it is not
welcomed then the capital market goes down. Like, in the case of allocation of 3-G spectrum, those
companies that got the license for 3-G, they witnessed sharp growth in their share values so the
economic policies play a major part in the growth and decline of the capital market and again if there
is relaxation on any kind of taxes on items of automobile industry then the share of automobile sector
goes up and virtually strengthen the capital market .The economic factors include:

• Inflation rate

• Economic growth

• Exchange rates
• Interest rate

Social:
India is a country of unity in diversity. India is socially rich, but the capital market is not very
attached with the social factors. Yes, there is some relation between the social factors with
the capital market. If there is any big social factor, then to some extent it affects the capital
market, but small social factors do not impact at all. Like, there was opposition of reliance
fresh in many cities and many stores were closed. The share prices of the reliance fresh went
down but the impact was on and individual firm there was not much impact on the capital
market on a whole the social factors have not much of impact on the capital market in India.
The social factors include:

• Emphasis on safety

• Career attitudes

• Population growth rate

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• Age distribution

• Health consciousness

Technological:
The technological factors have not that much effect on the capital market. India is
technological backward country. Same as social factors, technological factor can influence
an individual form, but it cannot have a big impact on a whole of capital market. The Bajaj
got a patent on its dts-i technology and launched it in its new bike, but it does not effect on
capital market. The technological change in India is always on a lower basis and it does not
effect on country. The technological factors include:

• R&D activity

• Technology incentives

• Rate of technological change

• Automation

Environmental:

Initially The environmental factors do not play a vital role in the capital market. But the
time has changed, and people are more eco-friendly. This is really bothering them that if
any firm or industry is environment friendly or not. An increasing number of people,
investors, corporate executives are paying importance to these facts, the capital markets still
see the environment as a liability. They belie that it is of no use for their strategy. The
environmental performance is even under-valued by the market.

Legal:
Legal factors play an important role in the development and sustain the capital market.
Legal issues relating to any industry or firm decides the fate of the capital market. If the
govt. of India or the parliament introduces a new law that can affect the running of the
industry, then the industry will be demotivated, and this demonization will lead to the
demonization of the investors and will result in the fall of capital market. Like after the
Hardhat Mehta scam, new rules and regulations were introduced like PAN card was made
necessary for trading, if any investor was investing too much money in a small firm, then

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the investors were questioned. These regulations were meant to maintain transparency in
the capital market, but at that time, investment was discouraged. Legal factors are necessary
for the improvement and stability of the capital market.

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 Five Force Model Analysis:

Threat of new entrants :

The threat of entry posed by new or potential competitor is a low. It isn’t easy for a new bank or
financial institution to enter the market and try to compete on the same level as existing bank
or financial institution. In fact, a new competitor face a number of significant obstacles like RBI
permission, massive amount of capital required, government permission, etc.

Threat of substitute products :

The threat of substitute products has increased in banking sector, as companies outside the industry
have begun to offer specialized financial services that were traditionally only available from banks.

Competitive Rivalry:
The service offerings by financial companies are almost the same. Thus, there is a low level of service
differentiation. Due to the increased rivalry among the Companies, there has been use of aggressive
selling & intensive marketing strategies by the companies to gain the market share.

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Bargaining Power of Suppliers :
Supplier’s bargaining power is also high. There are two main supplies for a bank. The depositors and
employees who work in that organization. The suppliers in this case are the depositors or the Financial
services funds. The suppliers have many alternatives at their disposal to invest their money depending
on their risk appetite.

Bargaining Power of Customers:

Buyers bargaining power is high and chance of pressure on interest rates prevails in the industry.
The consumers have got many alternatives for availing credit. The consumers have a large spectrum
to choose from.

Internal Competition
We know that competition is good for the market. It keeps the businesses on their toes and
offers competitive prices to consumers. However, the intensity of the competition can affect
the performance of every company in a given sector.

According to Porter, the competition is the most intense when the following conditions are
met:

• There are numerous competitors and most of them have similar size and value.

• The growth is slow causing a rush for a major share of the market.

• The products or services offered by all companies in the sector are homogeneous. This
makes it easier for a consumer to switch from one provider to another increasing the
chances of poaching.

• In sectors where the product is perishable and/or the fixed price is very high, companies
are tempted to cut prices.

• If a company wants to increase its output, it needs to do so in large increments for the
expansion to be cost-efficient.

• The exit barriers are very high.

• The competitors are a highly diverse lot with different goals and personalities.

While I can talk about each point in great detail, the crux of it is that in most market
segments competitors pose an internal threat to each other to maintain balance and prevent
monopoly.

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And, the points mentioned above can help you understand the extent of rivalry in the sector.
Before buying a stock, you must ensure that you understand the position of the company in
its sector with respect to its competitors.

Regulatory bodies in the sector and their role :

The Regulatory Bodies in Indian Financial System are regulatory organizations in India that ensure
the smooth functioning of the financial system. RBI is the regulator of the banking sector, SEBI is
the primary regulator of the stock markets, IRDA regulates the insurance industry, PFRDA
regulates the pension fund industry and the AMFI sets ethical standards for the mutual fund’s

industry.

Reserve Bank of India (RBI) :

The Reserve Bank of India (RBI) is India’s central bank and was established under the Reserve
Bank of India act in 1935.

The primary purpose of RBI is to conduct the monetary policy and regulate and supervise the
financial sector, most importantly the commercial banks and the non-banking financial companies.

It is responsible to maintain price stability and the flow of credit to different sectors of the economy.

The RBI also regulates and controls interest rates and liquidity in the money markets which have a
profound impact on the functioning of other financial markets and the real economy.

RBI is the financial regulator of all the financial institutions like public sector banks, private sector
banks, RRBs, Cooperative banks and all type of non-banking financial companies.

Securities and Exchange Board of India (SEBI) :

The Securities and Exchange Board of India (SEBI) is a statutory body established under the SEBI
act of 1992, as a response to prevent malpractices in the capital markets that were negatively
impacting people’s confidence in the market.

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Its primary objective is to protect the interest of the investors, preventing malpractices, and ensuring
the proper and fair functioning of the markets.

To protect investors and other participants by preventing insider trading, price rigging, and other
malfeasances.

To implement codes of conduct and guidelines for the various market participants; auditing various
exchanges, registering brokers, investment bankers; deciding on the various fees and fines.

These are performed to promote the growth and development of the capital markets. It includes –
Imparting training to various intermediaries, conducting research, promoting self-regulation of
organizations, facilitating innovation, etc.

Insurance Regulatory and Development Authority of India (IRDAI) :

The Insurance Regulatory and Development Authority of India (IRDAI) is an independent
statutory body that was set up under the IRDA Act,1999.
Its purpose is to protect the interests of the insurance policyholders and to develop and regulates
the insurance industry. It issues advisories regularly to insurance companies regarding the changes
in rules and regulations.

Pension Funds Regulatory and Development Authority (PFRDA) :

The Pension Fund Regulatory and Development Authority (PFRDA) is a statutory body, which was
established under the PFRDA act, 2013.
It is the sole regulator of the pension industry in India.
Its services extend to all citizens, including non-resident Indians (NRIs).
Its main objective is to ensure income security for senior citizens. To this end, it regulates pension
funds and protects pension scheme subscribers.

Forward Market Commission of India (FMC) :

FMC is a regulatory authority governed by the Ministry of Finance, Govt. of India. It is a statutory
body, established in 1953 under the Forward Contracts (Regulation) Act, 1952. The commission
allows commodity trading in 22 exchanges in India. The FMC is now merged with SEBI.

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Impact of Covid-19 on Global Stock Market:

During the second Covid-19 wave global equity markets, including Indian markets have
rallied a lot since the last market crash. The Covid-19 pandemic is a good enough reason to
witness a correction. Equity markets may correct in the near term as there has been an
increase in volatility. The probability that the markets could go into a phase of correction is
greater than going significantly higher from the levels which we have seen some time back.
The volatility is expected to continue for some time.

On 23 March 2020, stock markets in India post worst losses in history. SENSEX fell 4000
points (13.15%) and NSE NIFTY fell 1150 points (12.98%). However, on 25 March, one
day after a complete 21-day lock-down was announced by the Prime Minister, SENSEX
posted its biggest gains in 11 years, adding a value of ₹4.7 lakh crore (US$66 billion) for
investors. On 8 April, following positive indication from the Wall Street that the pandemic
may have reached its peak in the US, the stock markets in India rose steeply once again.

By 29 April, Nifty held the 9500 mark.

Impact of COVID-19 on National Stock Exchange of India NIFTY 50 (1 Jan 2020 to 19 May
2020). The NIFTY 50 is NSE's benchmark broad based stock market index for the Indian equity
market.

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Indices: S&P BSE 500 (Period Jan – 2015 to May – 2020). Open, High, Low, Close visible.
Fall depicted in black. Rise depicted in white.

There is a continues fall in the S&P BSE 500 due to the rise in number of cases of covid-19
during the 2nd wave.

After its record high of 52,516.76 in February, the benchmark S&P BSE Sensex ( BSESN)
rose modestly in March and declined about 1.5% in April. But daily caseloads of COVID-
19 have started declining and the index is now up around 6% for the year, with over half of
those gains achieved in recent weeks.

The May 11-26 Reuters poll of more than 30 equity analysts saw the Sensex index adding
another 5% and hitting a record 53,200 by end-2021, albeit not much higher than February's
peak and well below what was expected three months ago.

From Tuesday's close of 50,637.53 the Indian bourse was forecast to rise nearly 8% to
54,500 by mid-2022. It was then forecast to close out 2022 at 58,500.

"The equity market always discounts what today's fundamentals are, and instead looks at
what it might be three to six months down the line, by when corporate earnings, economic
activity and growth should pick up.

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Major Players in the Market:

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 Chapter 3
Company Analysis

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 Company Analysis:

Company Name: GROWTH ARROW

Growth Arrow is independent financial service domain. Developing strong commitment
towards new standard in financial services in better way. Which stands innovative platform
towards wealth and prosperity. The MD of the company is Adv. Naresh Agrawal with the
experience of 32 years. The company is in Bangalore, Karnataka.

Vision & Mission:

Financial planning in stock market investments, stock market training, Advisory services
on trading, intraday, short term and long term, equity, futures, options, commodity, nifty,
bank Portfolio Managements Services. They have 1000+ clients throughout the world
which stands the best testaments, Growth Arrow is an innovative platform for educating
and mentoring the theory towards wealth and prosperity.

Services provided:
• Investment Planning
• Training Program
• Advisory Services

Objective of the Study: -

• They make strategies that matches your financial goals and objectives of your financial
resources. We plan and develop your strategies with our investment research tools, that
helps you to evaluate investment performance and market circumstances to analyze your
next idea can help you to achieve your financial goals.

• Backed by research experts our training programs are delivered by real time mentors who
has earned years of experience and expertise in stock market training. We are known for
practical investor education for market participants would be equity investors, and the
public in general.

We believe knowledge is divine, in order to acquire more, spread more,

34 | P a g e
 1. Settle on what you want to learn?

2. How do you want to learn?

3. When do you want to learn?

• A keen knowledge is the most vital advantage an investor acquires, that is why we provide
our clients with an exceptional education experience using innovative interactive resources.
We strive to help you make more informed investment decisions & have some for while
you are learning.

• They provide professional finance by placing your funds in a right investment vehicle
based on the investor’s future goals. They take the time horizon and priorities into the
consideration for safety of the investor as well as we care for the liquidity and returns level.
As known, proper investment planning will help the investors to produce financial rewards
overtime.

SWOT Analysis of Growth Arrow

• STRENGTHS:

• Online Trading Facility

• Largest Chain of Retail Share Shops in India

• Dedicated and responsive workforce/staff

• Value added service for HNI client.

• Research Center

• Trading option like Future & Option and Commodities

• Volume based differentiated product.

• WEAKNESSES:

• Less informative website

• Does not have slab rate brokerage which is provided by competitors.

• Problems due to network crash

• Unawareness Among Investors

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• OPPORTUNITY:

• Collaboration with international financial institution

• To tap the Untapped market

• To capture the market lost to its competitors.

• To focus on developing a superior and powerful portal

• To spread awareness of its Brand Name.

• THREATS:

• Follow government laws.

• Competitors develops.

• Prolonged depression and high volatility in the market

• New Entrants.

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 Chapter 4
News Analysis

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BFSI Sector :

In February 2020, the cabinet committee on Economic Affairs gave its approval for continuation of
the process of recapitalization of Regional rural banks (RRBs) by providing minimum regulatory
capital to RRBs for another year beyond 2019-20 till 2020-21 to those RRBs which are unable to
maintain minimum capital to risk weighted assets ratio of 9% as per regulatory norms prescribed by
RBI.

The NPAs of commercial banks recorded a recovery of Rs. 4,00,000 crore in last four years including
record recovery of Rs.1,56,746 crore

Healthcare Sector:
Healthcare was one of the top performing sectors of 2020. It continues to do well in 2021 as there’s
an ever increasing demand for life saving drugs, immunity boosting supplements. Of late, people
have been focusing more on buying healthcare products.
With vaccination drive in full swing, there’s a good opportunity for pharma companies as India looks
forward to various types of vaccine.
The pharma market witnessed a growth of 37.2% in value terms for June 2021 quarter, partly aided
by the Covid-19 portfolio.
Going forward, the outlook for the sector would depend on the management commentary on growth
outlook in India, update on restart of USFDA inspections, price scenario in base US business, and
traction in specialty products.

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 Chapter 5
Review of Literature/
Theoretical Background

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 THEORITICAL BACKGROUND

What Is Fundamental Analysis ?

Fundamental analysis is the examination of the underlying forces that influence the
prosperity of the economy, business groups, and organizations. Similarly, as with most
analysis, the objective is to derive a forecast and benefit from future price movements. At
the organization level, Fundamental analysis may include examination of financial
information, the board, business idea and competition.

At the business level, there may be an examination of supply and demand forces for the
products advertised. For the national economy, Fundamental analysis may concentrate on
monetary information to survey the present and future development of the economy. To
forecast future stock prices, Fundamental analysis consolidates financial, industry, and
company's analysis to infer a stock's present fair value and figure out future value. If fair value
is not equivalent to the present stock value, Fundamental analysts believe that the stock is
either overvalued or undervalued and the market price will ultimately gravitate towards fair
value.

Fundamentalists do not need the counsel of the random walkers and trust that markets are
weak- form efficient. By trusting that prices do not accurately reflect all accessible data,
fundamental analysts look to capitalize on perceived price discrepancies.

STEPS FOR DOING SECTORAL FUNDAMENTAL ANALYSIS: -

1. Select a sector for doing the analysis (for Ex- Cement, Automobile, telecom etc.)

2. As the investment in mutual funds is long term, therefore take large cap (<20000cr. Market
value) stocks from that sector and some mid cap (5000cr. – 20000 cr. Market value) stocks
also if there are less stocks.

3. Check the last closing share price of every stock in the list and note it down.

4. Get the P/E value of every stock. It can be calculated or can be seen in the company details.

5. [P/E = Price / EPS (earnings per share)]

6. Calculate Industrial P/E by taking the average of the P/E’s of the stocks in the list.

7. Calculate EPS by multiplying P/E by Price of the stock.

8. Industrial P/E we can see if the stock is overvalued or undervalued.

40 | P a g e
9. If the value is above Industrial P/E, then it is overvalued and if below then Undervalued.

10. Overvalued stock shows that its value will decrease in future and undervalued shows that
its price will increase. So, it is obvious to buy the U.V. stock and sell O.V. stock.

11. We can calculate the future price i.e., LTPT (long term price target) by multiplying the
industrial P/E by EPS of that stock.

Importance of Fundamental Analysis :

Fundamental analysis helps you in better making an investing decision. Fundamental analysis

of stocks helps you determine their fair value. Also, with stock fundamental analysis, you can
evaluate the health and performance of any organisation through crucial numbers and major
economic indicators.

Fundamental securities analysis helps you to predict future price movement and gauge whether

a stock is undervalued or overvalued. At the same time, it helps you analyse a company’s

strength and its ability to beat its competitors.

Fundamental analysis of stocks also helps in understanding the business model of a firm and

the working of management, essential for making a prudent investment decision.

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Chapter 6
Objective

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 Objective of the Report :
• To explain how basic tools of fundamental analysis may be applied to arrive at
investment decision.
• To Obtain the knowledge about how to select stocks for investment.
• To do Fundamental Analysis of selected companies.
• To study the equity analysis and obtain the knowledge of equity market.

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 Chapter 7
Research Methodology

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Research Methodology:
Method of Research:
Research = Re + Search, Systematic Investigation Discovering something new.

It may be research for product, Idea, service, thinking process, Politics, Social issues,
Strategy.

According to Clifford Woody: - Research comprises defining and redefining problems,

formulating hypothesis or suggested solutions, collecting, organizing and evaluating data;

making deduction and reaching conclusions; and at last, carefully testing the conclusions to
determine whether they fit the formulating hypothesis.

Type of Research: Descriptive &Analytical Research

Data Type: Secondary Data

Data Collection Tools: Secondary Data Collected

Annual Reports of Companies

Websites Data Analysis Tools: Ratio Analysis

Sampling Plan: Sampling Frame: All the Two Healthcare Sector Companies

Sampling Unit:
• DR. REDDYS LAB

• Apollo Hospital Ent.

Sample Size: Three Healthcare Sector Companies

Sampling Method: Judgmental Sampling, Sample is selected on the basis of Market

Cap.

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 Chapter 8
Data Analysis/ Data visualization,
Results and Interpretation

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 Data Analysis:

Economic Analysis
An economic analysis is a process followed by experts to understand how key economic factors
affect the functioning of an organization, industry, region, or any other particular population group,
with the purpose of making wiser decisions for the future.

The analysis aims to determine how effectively the economy or something within it is operating.
For example, an economic analysis of a company focuses mainly on how much profit it is making.

In economic analysis, the present performance of the economy as a whole is identified using
economic factors like GDP, GNP, Inflation rate, Fiscal deficit, Current account deficit,
Unemployment rate. Table depicts the ten years data of economic factors from 2010 to 2020 which
indeed help the investors to take better investment decision.

Category 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019- 2020-21
12 13 14 15 16 17 18 19 20
GDP (%) 5.24 5.46 6.39 7.41 8 8.17 7.17 6.98 5 -7.96
Inflation rate
8.86 9.31 10.91 6.35 5.87 4.94 2.49 4.86 5.84 6.2
(%)
BOP (INR
-62.51 -91.47 -49.12 -27.31 -22.45 -12.11 -38.16 -65.59 -29.76 33
Billion)
Index of
Industrial 4.5 4.9 5.6 4 3.4 2.9 0.8 5.5 -8.4 0.2
Production (IIP)
Fiscal Deficit
4.8 5.9 4.9 4.4 4.09 3.8 3.5 3.4 3.4 9.3
(%)
Unemployment
rate (%) 5.64 5.65 5.67 5.61 5.57 5.51 5.42 5.33 5.36 7.11

Gross Domestic Product (GDP)

Gross domestic product is a monetary measure of the market value of all the final goods and
services produced in a specific time period. India saw a steady rise in GDP from 2011 – 2017 but
later has seen a downward slop due to the economic slowdown and covid-19 pandemic as the GDP
slips to -7.96 at the end of 2020.

Inflation rate

As the Inflation Rate falls down the purchasing power of the economy increases which boast the
market performance. Inflation in Indian economy has been declining from 10.91 percent in 2013-14
to 2.49 percent in 2017-18, thereafter it has been growing steadily and is estimated to be above 6%
due to covid-19 pandemic.

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Balance of Payment (BOP)

Balance of Payment depicts the economic transaction of country with rest of the world. It is
important for every country to have good economic relations with another developed and
developing country for mutual benefits. BOP statement of a country indicates whether the country
has a surplus or a deficit of funds. Due to the covid-19 pandemic India saw a steep decline in the
imports thus resulting into a positive BOP after many years. This was majorly agricultural exports
of the country as it remained the only sector to give positive figures among all.

Index of Industrial Production (IIP)

Industrial productions in an economy establish productivity of the country. India has always seen a
fluctuating IIP, but it recorded a new low of -8.4 in 2019 due to extreme lockdowns of covid-19
pandemic.

Fiscal Deficit

A fiscal deficit is a shortfall in a government's income compared with its spending. Fiscal deficit of
India was very much controlled below 6% before covid-19 pandemic. Due to the economic
shutdown government had to inject more money in the economy due to which it rose to 9.3% of the
GDP.

Unemployment

The unemployment rate is defined as the percentage of unemployed workers in the total labour
force. It provides insights into the economy’s spare capacity and unused resources. Unemployment
rate in India was controlled between 5-6% but due to covid-19 pandemic it suddenly has increased
to 7.11% in 2020.

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Industry Analysis
Healthcare Industry

Health care companies servicing the health care market in India can be broadly classified into three
categories; hospitals, health care insurance companies and pharmaceutical companies. In each of
these categories of companies, there are specific companies that have established themselves as
market leaders in the provision of health care services in India.

The specific leading hospital companies in India are Apollo Hospitals which operates a chain of
hospitals in India’s major cities, Wockhardt Hospitals which also operates a chain of hospitals
targeting high end clients and Fortis Health Care which also operates a chain of hospitals and
medical clinics throughout India (India: Healthcare and Pharmaceuticals Report 2010).

The major companies that operate in the health insurance provision in India are TATA AIG, Bajaj
Allianz and Max New York Life , all of which are partnerships of international health insurance
companies and local Indian companies formed with the intent of provision of healthcare insurance.
A local company, Reliance Company also holds a substantial share of the Indian health insurance
market (India: Healthcare and Pharmaceuticals Report 2010).

In the pharmaceutical sector of the healthcare industry in India, numerous companies exist, spread
all over the country. The largest of these companies that hold a substantial market share in the
pharmaceutical sector are Ranbaxy Laboratories which is the leading pharmaceutical company in
the country, Dr. Reddy’s Laboratories, Cipla Lupin pharmaceuticals, Sun pharmaceuticals,
Nicholas Piramal, Orchid pharmaceuticals and Zydus Cadila pharmaceuticals all of which are
indigenous Indian companies. International pharmaceutical companies that have a footing in India
are GlaxoSmithKline of UK, Pfizer and Merck and Company, both of which are of United States
(India: Healthcare and Pharmaceuticals Report 2010).

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Porter’s five forces models
Porter’s five forces models consist of five major indicators to analyse an industry i.e. threat of new
entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers and
degree of rivalry

Threat of new entrants :

The threat of entry posed by new or potential competitor is a LOW. Sustainment of pharma
industry is based on their focus on research and development unit. The cost associated with R&D
unit setup and its functioning is very high. Along with this the strict rules and regulations from the
government on approval of new drugs have to lead to creating a huge barrier in terms of high
capital investment. Beside all these challenges such as drawing up of proper distribution strategies,
selecting the right products to research and invest upon ,anticipating competition among others are
limiting the entry in pharma industry market.

Bargaining Power of Buyers :

In pharmaceutical industry, the end user of the product (patient) is different from the influencer
(doctor) influencing his decisions. This is a unique feature of pharmaceutical industry.
Consumer/Patient behaviour in India suggests that he will buy whatever medicine is prescribed by his
doctor or physician.

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Therefore we can say that doctors influence the buying power of buyers. There are some situation in
which the buyer poses a strong hold over the pricing. Situation like when there is a large volume
purchase or when there are multiple suppliers of the same product. In short, buyers can exercise the
power by seeking price reduction and threatening to go to other suppliers to get their products. Hence,
the bargaining power of buyers is medium.

Bargaining power of suppliers : The bargaining power of suppliers in market is very low.
Pharma industry is depends upon several organic chemicals. Pharma being a well-established
industry has led to a number of suppliers limiting their power to influence price through bargaining.

Threat of Substitutes :
Pharma industry faces a huge competition in terms of substitute products as the creation of generic
products are cheap. Customers can find a substitute medicine in terms of generic drugs. Generic
drug companies do not have the high costs associated with the research & development of new
drugs and that allows them to sell at cheaper prices . Hence threat of substitutes is high in pharma
industry.

Degree of Rivalry :
Overall the pharma industry is highly competitive due to the potential for very high return if new
drugs can be created. The rivalry between various companies in the industry is caused as all the
various companies wants to improve their position in the market. The rivalry between the
companies is in the form of price competition, advertising battles, and product introduction.

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PESTEL Analysis

Pestle is a mnemonic which in its expanded form denotes P for Political, E for Economic, S for
Social, T for Technological, L for Legal and E for Environmental. It gives a bird’s eye view of the
whole environment from many different angles that one wants to check and keep a track of while
contemplating on a certain idea/plan.
P-Political
E-Economic
S-Social
T-Technological
L-Legal
E-Environment

Political Factors: Government Subsidies

The healthcare industry is impacted by many factors including, insurance mandates, tax legislation
changes, and consumer protection. Government spending for healthcare can be affected by tax
policy changes. It can be a benefit, allowing for increased subsidies. Or it can be a cause for
concern. Governmental changes can affect the public and the healthcare services they’re entitled to,
especially with changing healthcare bills and plans.

Economic Factors: Loss of Services

Healthcare organizations will be affected by many economic factors, especially inflation,
unemployment, and interest rates. Any of these changes can change how the public is able to spend
their money, impacting policy spending. Companies who manufacture medical devices won’t have
many people able to pay their rate if the unemployment rate is increased. Likewise, if less people
are able to work, they won’t qualify for work benefits, including healthcare.
For people without these benefits, it’s likely they won’t be able to pay the entire cost of any
hospital or emergency room visit. They’re less likely to seek help when they become ill. The public
will have a limited selected of health services they can actually afford.

Social Factors: Changes in Beliefs

Healthcare relies on understanding the changes in demographics and public values. Certain
communities can share fears, beliefs, and cultural norms. If a healthcare professional or hospital
isn’t aware of these conditions while they treat that public, it can cause problems. Additionally,
medical professionals need to stay on their toes about new trends. 52 | P a g e
For example, the use of essential oils as a cure for various illnesses including cases of flu, fevers,
and even incurable conditions like autism, are on the rise. Understanding why people are turning to
these natural remedies can help healthcare professionals talk and discuss concerns or treatment with
these users.
Another example is the new trend of eating detergent pods. Understanding why kids are turning to
such dangerous activities can help prepare clinics if they children need assistance at their location.
People are also becoming more health conscious. Some business across the country must now post
the calorie amount of each item on their menu, giving people the option to choose what to eat based
on these numbers.
The public, in general, is turning towards specific health diets including paleo and keto. Or they’re
making changes, like eating less f artificial sugars and processed chemicals. This is in response to
the growing threat of obesity in adults and children. Hospitals and health professionals can benefit
from following these shifting and progressive trends.

Technological Factors:
The healthcare industry is seeing positive changes in treatments because of technological
advancements. Developments with medical devices allow patients to receive better care. For
example, hearing aid devices have the tools to enhance performance, providing crystal clear sound,
less background noise, and premium options for a better hearing experience.
We’re seeing changes in app developments, allowing patients to get care faster than ever before.
More businesses are using apps to connect doctors with patients right in their homes. And the
ability to ask questions about illnesses now include email and live-chat on websites. We’re heading
towards a positive direction for patient care thanks to our ever-evolving technology.

Legal Factors :
Most of the pharmaceutical industries look on the legal aspects of the industry and they follow the
rules and regulations while doing their business in the market. They have legal aid, which can help
them to curb the external challenges in the industry. Various countries and the pharmaceutical
companies are taking steps in generic drug production and they are introducing new health reform
in the pharmaceutical industry, which can help them in understanding their issues and mitigating
their issues amicably. Some countries face the pressure from the firms and they have to introduce

new reforms in solving their concerns and meeting their demands which are facing during their
business. It is also necessary to meet the legal issues of the import and export of the drugs and has

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to pay the taxes and other duties. They also ensure proper use of the medicines and prevent the
issue if highly sensitive medicines to unauthorised persons.

Environmental Factors :
There is growing concern over the environmental issues and the stake holders are becoming more
aware about the need for the business and they are taking some proactive steps. They are taking
steps to enhance their business and marketing plans and link them with different environmental
issues. They have started different Corporate Social Responsibility programs and take the
opportunity to product development, which can identify eco opportunities to promote these
products and this business. The industry has to follow the instructions and regulations of the
governments while spreading their business in the markets.

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 DATA VISUALIZATION & INTERPRETATION

Company Analysis
Below is the example on how to do fundamental to predict the future price of shares of different
companies and how to take decision on buying and selling a particular share.

Tools used for company analysis

Earnings Per Share = Net income – Preferred Dividend / Shares outstanding

Current Ratio =Current Assets/ Current Liabilities

Return on Equity = Profit After Tax / Shareholder's Equity

Return on Capital
= Profit Before Interest and Tax / Capital Employed
Employed

Debt to Equity Ratio = Debt / Equity

Interest Coverage Ratio = EBIT / Interest Expense

Price to Sales Ratio = Share Price / Total Sales

Price to Book Value

= Market Price Per Share / Book Value Per Share
Ratio

Current Ratio-The current ratio is a liquidity ratio that measures a company's ability to pay short-
term obligations or those due within one year. It tells investors and analysts how a company can
maximize the current assets on its balance sheet to satisfy its current debt and other payables.
The 2: 1 is considered as a standard ratio.

Return on Equity-The return on equity ratio or ROE is a profitability ratio that measures how much
money is returned to shareholders as a percentage of the money invested by them. ROE of 15-20%
are generally considered good.

Debt to equity -The Debt to equity ratio (D/E) compares a company’s total liabilities to its shareholder
equity and can be used to evaluate how much leverage a company is using. Higher leverage ratios tend

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to indicate a company or stock with higher risk to shareholders which means as we can see company
has kept its debt to equity ratio below 1% from which we can say that the company is using less
leverage and it means that it’s a good ratio.

Return on Capital Employed - Return on Capital Employed (ROCE) is a financial ratio that can be
used in assessing a company's profitability and capital efficiency.

Interest Coverage Ratio (ICR) - Interest Coverage Ratio (ICR) is used to determine how easily a
company can pay its interest expenses on outstanding debt. The lower the ratio the more the company
is burdened by debt expenses. When a company’s ICR is 20.09 or lower, its ability to meet interest
expense may be questionable and as ideally ICR is said to be greater than 3.

Price to book value- The P/B ratio measures the market's valuation of a company relative to its book
value. The higher the ratio, the higher the premium the market is willing to pay for the company
above its hard assets. A company either is undervalued or in a declining business if the value of 1
or less.

Price-to-Sales (P/S) Ratio- The price-to-sales (P/S) ratio is a valuation ratio that compares a
company’s stock price to its revenues. It is an indicator of the value that financial markets have
placed on each dollar of a company’s sales or revenues. A low ratio could imply the stock is
undervalued, while a ratio that is higher-than-average could indicate that the stock is overvalued.

Dr.Reddy's Laboratories Ltd– Analysis

Dr. Reddy’s Laboratories Ltd, also popularly known as Dr Reddy's, is a listed public company
incorporated on 24 February 1984. It is classified as a public limited company and is located in ,
Telangana. Its authorized share capital is INR 120.00 Cr and the total paid-up capital is INR 83.19
cr.

Vision- Providing Affordable Medicines, Developing Innovative Medicines

Mission- We are committed to providing affordable and innovative medicines for healthier lives.

We strive every day to do what matters most to patients: lowering healthcare costs, increasing

access to medicine, and developing innovative e products for unmet and under-met medical needs.

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 Company Essentials
Ratios 2021 2020 2019
Earnings Per Share 10.74 32.70 16.97

Current Ratio 1.79 1.13 1.17

Return on Equity 3.26 13.62 7.08

Return on Capital 9.32 17.13 10.24

Employed
Debt to Equity 0.54 1.00 1.04

Interest Coverage Ratio 66.44 59.07 30.94

Price to Sales 3.95 1.41 1.77

Price to Book Value 9.07 4.74 5.10

Strengths

• The company has shown a good profit growth of 27.78% for the Past 3 years.
• Company has a healthy Interest coverage ratio of 66.44
• The company has a good cash flow management; CFO/PAT stands at 1.68.
• The company has a strong degree of Operating leverage, Average Operating leverage stands
at 4.23.

Limitations

• The company has shown a poor revenue growth of 10.08% for the Past 3 years.

Is Dr. Reddy''s Lab an attractive stock to invest in?

While healthcare services are offered by the public as well as private sectors, in urban as well as rural
areas, generally people prefer private hospitals over public hospitals for treatment of diseases, illness,
and sickness. So, let’s look into Dr. Reddy''s Lab and its performance over the period of time.

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• Operating cash flow ratio: It measures the adequacy of a company’s cash generated from
operating activities to pay off short-term financial obligations. Its cash from the operating activity
was Rs 3,570.30 Cr.

• Financial Strength: Health care organizations usually have high debt loads and low equity capital
in their balance sheet. So, Debt to Equity ratio is important to analyze the company’s sustainability.
Dr. Reddy''s Lab has a Debt to Equity ratio of 0.54 , which is a strong indication for the company.

• Operating profit margin: It determines a company's potential earnings. It assesses how well-
managed a company with respect to its basic overhead costs and other operating expenses, Dr.
Reddy''s Lab has OPM of 20.32 % which is a good sign for profitability.

• ROE: Dr. Reddy''s Lab have a average ROE of 11.53 %. ROE is an important financial parameter
for hospitals & health care companies because they expand and grow rapidly. Therefore, ROE
measures how efficiently a shareholder's fund is used for generating profits.

Apollo Hospital Ent

Apollo Hospitals was established in 1983 by Dr. Prathap C Reddy, renowned as the architect of
modern healthcare in India. As the nation’s first corporate hospital, Apollo Hospitals is acclaimed
for pioneering the private healthcare revolution in the country

Company Vision- Apollo’s vision for the next phase of development is to ‘Touch a
Billion Lives’

Mission Statement- Our mission is to bring healthcare of International standards within the reach
of every individual. We are committed to the achievement and maintenance of excellence in
education, research and healthcare for the benefit of humanity.

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 Company Essentials
Ratios 2021 2020 2019

Earnings Per Share 10.74 32.70 16.97

Current Ratio 1.79 1.13 1.17

Return on Equity 3.26 13.62 7.08

Return on Capital Employed 9.32 17.13 10.24

Debt to Equity 0.54 1.00 1.04

Interest Coverage Ratio 66.44 59.07 30.94

Price to Sales 3.95 1.41 1.77

Price to Book Value 9.07 4.74 5.10

Strengths

• The company has shown a good profit growth of 31.85% for the Past 3 years.
• The company has an efficient Cash Conversion Cycle of 13.56 days.
• The company has a good cash flow management; CFO/PAT stands at 5.04.
• The company has a strong degree of Operating leverage, Average Operating leverage stands
at 4.78.

Limitations

• The company has shown a poor revenue growth of 8.61% for the Past 3 years.
• Company has a poor ROE of 7.53% over the past 3 years.
• The company is trading at a high PE of 477.58..
• Promoter pledging is high as 29.95%.

Is Apollo Hospital Ent. an attractive stock to invest in?

While healthcare services are offered by the public as well as private sectors, in urban as well as rural
areas, generally people prefer private hospitals over public hospitals for treatment of diseases, illness,
and sickness. So, let’s look into Apollo Hospital Ent. and its performance over the period of time.

• Operating cash flow ratio: It measures the adequacy of a company’s cash generated from
operating activities to pay off short-term financial obligations. Its cash from the operating activity

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 was Rs 1,273.40 Cr.

• Financial Strength: Health care organizations usually have high debt loads and low equity capital
in their balance sheet. So, Debt to Equity ratio is important to analyze the company’s sustainability.
Apollo Hospital Ent. has a Debt to Equity ratio of 0.54, which is a strong indication for the
company.

• Operating profit margin: It determines a company's potential earnings. It assesses how well-
managed a company with respect to its basic overhead costs and other operating expenses, Apollo
Hospital Ent. has OPM of 10.73 % which is a bad sign for profitability.

• ROE: Apollo Hospital Ent. have a poor ROE of 3.44 %. ROE is an important financial parameter
for hospitals & health care companies because they expand and grow rapidly. Therefore, ROE
measures how efficiently a shareholder's fund is used for generating profits.

Ratios Dr. Apollo Industry

Reddy Hospital Average
Lab

Earnings Per 131.84 10.74

Share

Ranking 1 2

Current Ratio 2.40 1.79 2:1

Ranking 1 2

Return on 12.87 13.26 15-20%

Equity

Ranking 2 1

Return on 18.17 9.32 15

Capital
Employed

Ranking 1 2

Debt to 0.08 0.54 Below 1

Equity
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 Ranking 2 1

Interest 56.36 66.44 Greater than

Coverage 3
Ratio

Ranking 2 1

Price to Sales 5.62 3.95

Ranking 1 2

Price to Book 4.46 9.07 3.1

Value

Ranking 2 1

Interest 56.36 66.44 Greater than

Coverage 3

Ranking 2 1

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 Chapter 9
Findings &Conclusion

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Findings
• The total revenue of DRREDDY for the last quarter is 49.19B, and it's 4.04% higher compared
to the previous quarter. The net income of Q1 21 is 5.71B.
• DRREDDY is overvalued based on its PB Ratio (4.46) compared to the IN Pharmaceuticals
industry average (3.1).
• Dr. Reddy’s labs Current ratio is more than Apollo Hospital
• Debt to Equity ratio of Apollo Hospital is greater than Dr Reddy’s Lab
• Return on equity of Apollo Hospital share is better than Dr. Reddy’s Lab

Conclusion
The above study is carried out with the prime objective of performing fundamental analysis for 2
Healthcare Sector companies i.e Dr Reddys Lab and Apollo Hospital Ent. Using Fundamental
Analysis such as ratios to predict the trend from short- and long-term perspective. Through the
study we found that the stock are consolidating currently but from a long term perspective it is
expected to see a Upward trend.

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 Chapter 10
Limitation of the project

Limitation of the project:

◦ Fundamental analysis is based on reported and publicly available data, which is
possible to be incorrectly reported or misinterpreted, then your decision may go
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 wrong

◦ Industrial disruption might take place if any unexpected changes happen in an

economy or any new higher tax rates is going to impact company’s profitability

◦ As fundamental analysis is related to a deeper understanding of all aspects of any

company, it becomes a time-consuming process for investors

◦ Fundamental analysis is subjective, as too many assumptions and sources are used

◦ The data collected is through secondary sources hence the reliability of the data is
not 100%

◦ The present study uses ratios as in important tool of analysis which itself has
several limitations on its applicability.

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 Chapter 11
Recommendation

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Recommendations:
◦ Intraday sentiment of Apollo Hospitals is more or less neutral. Taking an intra day trade in this
stock is not recommended. There are other stocks below, trade in one of those instead..
◦ Stable Dividend: DRREDDY's dividends per share have been stable in the past 10 years,
Growing Dividend: DRREDDY's dividend payments have increased over the past 10 years. So
for longer term one can invest in Dr Reddy’s Lab.
◦ Overall from above Ratio analysis it is better to invest in Apollo Hospital than Dr. Reddy’s lab.

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Chapter 12
Bibliography

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Bibliography:

Websites:
• https://ticker.finology.in/company/DRREDDY?mode=C
• https://www.truedata.in/blog/fundamental-analysis-and-technical-analysis/
• https://pestleanalysis.com/what-is-a-swot-analysis/
• https://www.ndtv.com/business/stock/dr-reddys-laboratories-ltd_drreddy/financials-ratio
• https://www.elearnmarkets.com/blog/understanding-concept-turnover-ratios/
• https://www.smart-
investing.in/main.php?Company=DR+REDDYS+LABORATORIES+LTD
• https://www.dehatitrader.in/2021/09/dr-reddy-laboratories-share%20price%20-target-
for-2022-2023-2024-2025-and-2030.html
• https://walletinvestor.com/nse-stock-forecast/apollohosp-stock-prediction

NEWS PAPER:
• ECONOMICS TIMES
• TIMES OF INDIA
• MINT

BOOKS:
• Gordon & Natrajan, “Financial Markets And Services” Second Revised Edition Reprint,
Himalaya Publishing House.
• Investment Management – V.A. AVADHAN

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