By

Shivam Bajaj
130085
GDGWI Lancaster University

GMSI 413
Investment and
Portfolio
management
project report

CONTENTS
Introduction..........................................................................................................................2
Objectives..........................................................................................................................................................................................2
Portfolio...............................................................................................................................3
List of companies traded in:..............................................................................................................................................................3
Analysis tools.......................................................................................................................4
Fundamental analysis........................................................................................................................................................................4
Technical Analysis............................................................................................................................................................................4
Findings...............................................................................................................................5
ITC....................................................................................................................................................................................................5
Yes Bank...........................................................................................................................................................................................6
Kotak Mahindra Bank.......................................................................................................................................................................7
HDFC Bank.......................................................................................................................................................................................8
Apollo Tyres......................................................................................................................................................................................9
Sun Pharma ltd................................................................................................................................................................................10
Mahindra and Mahindra..................................................................................................................................................................11
Outcomes & Conclusion....................................................................................................12
References..........................................................................................................................13

INTRODUCTION
This assignment pertains to application of theoretical learnings in real case scenario. However, it was a simulation and not an
actual exercise. The simulation involved a sum of Rs. 1 million of virtual money that we used to invest only in NSC equity
market.
For the same purpose one should start with the industries one is familiar with or the companies whose products are popular or they
provide good services. Then the companys financial statements should be run through for a minimum of five years of historical
data. Information like valuation ratios, profitability ratios, revenue growth, dividend record, stability in balance sheet and cash
flow statement et cetera should be given importance to while skimming through data. Then a person should go through the
charting of the company stock that we are interested to buy. We should employ technical analysis tools in order to come to a sound
decision. After that if everything checks out fine we should decide how much money you are willing to risk in terms of return. But
before all these steps we should go through the ideology and strategies of accomplished investors like Warren Buffett, Benjamin
Graham et cetera.
We should only go for stocks that are easy to understand in accordance with our knowledge and experience in the subject. Then
we should only go for best in breed companies as we are just beginning are studies and should not go for obscure companies. And
we should not rely solely on the historical charting and even the historical financials and also pay heed to the current scenario for
the company as the past results may not guarantee a performance in future. And as a beginner we should limit the scope to large
cap to mid-cap companies and try to avoid the small cap companies.

OBJECTIVES
Learn and gain experience in equity market.
Invest with only proper analysis and not news or speculation.
Henceforth we can invest for ourselves or act as an investment consultant for other people.
Understand how to create value by trading ethically.
Also to understand the lingo of trading like going long, going short, resistance, trough et cetera.

PORTFOLIO
My portfolio was a relatively small one, the rationale behind having such small portfolio was as I am a beginner in investment in
marketable securities, I preferred to select and monitor the smaller pool of companies so that I can reflect better to my learnings.
The industries I invested in included banking industry, automobile industry, FMCG industry, pharmaceutical industry.

LIST OF COMPANIES TRADED IN:

1.
2.
3.
4.
5.
6.
7.

Apollo tyres
HDFC bank
ITC
Kotak Mahindra bank
Mahindra and Mahindra Ltd
Sun pharmaceuticals Ltd
Yes bank

The final portfolio before liquidation looked like:

Net returns ~ 1%
Portfolio final value Rs. 1,009,964/ITC was the main profit maker, while Kotak Mahindra bank was the main loss maker.

ANALYSIS TOOLS
The companies were selected on the basis of the qualitative fundamental analysis and looking at business news.

FUNDAMENTAL ANALYSIS
It is a well-known saying that investing without fundamental analysis is not the really investing. There are innumerable different
methods of investing yet the use of fundamentals is ubiquitous. It involves going through profit and loss statement, balance sheet
and the cash flow statement and analyzing various quantitative figures to fathom the real value of a companys stock. There are
both qualitative and quantitative factors under the fundamental analysis. While doing this analysis we should keep in mind that we
are looking for a steady trend in companys revenue, profit making, debt coverage or simply looking for any window dressing. It
is a highly comprehensive task and involves virtually unlimited perspectives and techniques to find out what is called the intrinsic
value.
This analysis is criticized by proponents of technical analysis and efficient market hypothesis.
The ratios taken into consideration included EPS, P/E, D/E, yield, current ratio, return on equity, return on assets, prize by book
value et cetera.

TECHNICAL ANALYSIS
The tool is mainly used were:

Trend line: it is one of the simplest indicators, there are important for identifying the direction of the trend and also can
facilitate forecasting of the resistance and support and hence isolate important movements and significant points.
Simple moving average: they are lagging indicators which give another perspective to the trendline but reflect a better
view in the momentum of the trend.
Bollinger bands: they are basically a measure of volatility in moving average which is basically based on standard
deviation. The bands widen as the volatility increases and become narrow when it decreases. This way we can have an
indication of an upcoming major change.
Volume: volume can also be a good indicator as it can measure buying and selling interest by recording the ups and
downs in the volume in respect to price. Which can indicate the stability of a stock.
OHLC charting: open high low close chart is a little more accurate as it shows the price movement for the day. The same
principles apply for daily, weekly or monthly timeframes. The | displays the high low price movement and the tick on the
left represents the opening price and tick on the right represents the closing price. The red bar represents that the closing
price of the previous timeframe was higher than the current one and for the blue one vice versa.

FINDINGS
ITC
Buy date: 30 Oct 2014 09:31
Profit/loss: 16,780/-

It can be observed that the trend since 2000 to 2014 has been on a steady rise. Also analyzing the Bollinger bands and weighted
average, for the period of this six months ITC has been steadily performing and the share price have been rising with a clear trend.

ITC
Earnings Per
Share (Rs)
DPS(Rs)
ROA (%)
ROE (%)
Price / Book(x)
Yield (%)
Net Profit
Growth

2010
10.64

2011
6.45

2012
7.88

2013
9.39

2014
11.05

10
19.1
29.33
7.17
3.8
24.43

4.45
20.59
33.35
8.83
2.45
22.82

4.5
22.65
35.58
9.46
1.98
23.55

5.25
23.55
36.21
10.98
1.7
20.38

6
23.99
36.27
10.71
1.7
18.42

Although the net profit has been diminishing for ITC, the earning per share has been rising and so is the return on assets and
return on equity. ITC is one of the most stable counters and should be invested in for long-term.

YES BANK
Buy date: 28 Oct 2014 09:32
Profit/loss: 8,550/-

As we can see the volume of shares traded in yes bank has been vigorous and active. Also there is clear rising trend and it is not
very difficult to forecast for the rise in intra-year timeframe. The analysis from the Bollinger band is quite obvious in the month of
October that there would be a steep rise in mid-October.

Yes Bank
Earnings Per
Share (Rs)
DPS(Rs)
ROA (%)
ROE (%)
Price / Book(x)
Yield (%)
Net Profit
Growth
Total Debt /
Equity(x)
Current Ratio(x)
Quick Ratio(x)

2010
14.06

2011
20.95

2012
27.68

2013
36.27

2014
44.86

1.5
1.61
20.27
2.8
0.59
57.23

2.5
1.52
21.13
2.84
0.81
52.2

4
1.47
23.07
2.77
1.09
34.36

6
1.51
24.81
2.65
1.4
33.13

8
1.55
25.02
2.09
1.93
24.38

0.07

0.07

0.05

0.05

0.06

0.38
17.72

0.41
14.56

0.56
28.8

0.64
31.25

0.55
28.73

Yes bank has a promising future, the news pertaining to yes bank has been flamboyant with the performance of yes bank. EPS is
on a phenomenal rise and there is stability in the rest of the fundamental tools.

KOTAK MAHINDRA BANK

Buy date: 21 Nov 2014 09:31
Profit/loss: -10,200/-

The six-month trend looks promising for Kotak Mahindra, yet the reason for making such a loss was bad timing in the investment
buying and also selling. If I had stuck to the analysis, the stock would have been one of the profit makers.

KTB
Earnings Per
Share (Rs)
DPS(Rs)
ROA (%)
ROE (%)
Price / Book(x)
Yield (%)
Net Profit Growth
Total Debt /
Equity(x)
Current Ratio(x)
Quick Ratio(x)
Total Debt to
Owners Fund

2010
16.12

2011
11.1

2012
14.65

2013
18.23

2014
19.51

0.85
1.7
13.52
5.81
0.11
103.2
3
0.09

0.5
1.85
14.5
4.95
0.11
45.82

0.6
1.86
14.72
5.06
0.11
32.62

0.7
1.82
15.65
5.15
0.11
25.41

0.8
1.75
13.83
4.88
0.1
10.42

0.07

0.05

0.04

0.05

0.52
25.71
5.26

0.59
40.07
4.31

0.56
43.06
4.85

0.57
40
5.4

0.43
21.83
4.81

We can see that the EPS has been steadily increasing since 2011, also return on assets are fairly stable. The total debt to equity has
been fluctuating but on the long run is more or less the same. We can see that the price to book ratio has been decreasing which
can indicate a future increase in the intrinsic value.

HDFC BANK
Buy date: 26 Nov 2014 14:03
Profit/loss: -5,160/-

Although HDFC bank made a loss in my portfolio, if the time duration were longer it would have proved for profitable as well,
since 2008 end, the share price have been increasing and has shown an increasing trend in the past six months as well. Is that the
timing of selling off the share was inappropriate.

HDFC
Earnings Per
Share (Rs)
DPS(Rs)
ROA (%)
ROE (%)
Price / Book(x)
Net Profit Growth
Total Debt /
Equity(x)
Current Ratio(x)
Quick Ratio(x)
Yield (%)

2012
22.02

2013
28.27

2014
35.34

4.3
1.68
18.69
4.08
31.6
0.06

5.5
1.82
20.34
4.1
30.18
0.05

6.85
1.9
21.28
4.13
26.05
0.07

0.4
9.67
0.83

0.38
11.14
0.88

0.33
10.74
0.91

The fundamentals of HDFC bank stabilized in the year 2012 since then the EPS has been on a steady increase. The return on
assets and return on equity have been proportionally increasing as well. The net profit is growing but at the slightly diminishing
rate. Overall the fundamentals looked solid and the company seems to be worthwhile for safe investment in the long run.

APOLLO TYRES
Buy date: 09 Dec 2014
Profit/loss: ~ (was not able to be given due time to reflect profit or loss due to closure of the project duration)

Again looking at the long-term trend since 2009 it has been on a rising trend and in 2014 the rate of increase augmented. The
weighted average trend suggests stab sustainable increases and also in the month of December if you look at the Bollinger bands,
the band are narrower which again portrays a stable return.

10
8.23

11
3.93

12
3.6

13
6.2

14
8.78

0.75
10.93
26.98
0.66

0.5
3.87
10.97
1.01

0.5
2.98
9.21
1.05

0.5
4.83
14.3
0.81

0.75
6.54
17.52
0.33

Current Ratio

0.95

0.83

0.81

0.86

0.81

Quick Ratio

0.74

0.61

0.54

0.48

0.36

2.07
1.06

1.85
0.72

1.96
0.63

1.81
0.6

2.95
0.47

Apollo tyres
Earnings Per
Share (Rs)
DPS(Rs)
ROA (%)
ROE (%)
Total Debt to
Owners Fund

Price / Book(x)
Yield (%)

Since 2012 the EPS has been on the rise and so have been the return on assets and return on equity. The debt content has been
decreasing which might be favorable in the eyes of the creditors and a few stakeholders.

SUN PHARMA LTD

Buy date: 09 Dec 2014
Profit/loss: ~ (was not able to be given due time to reflect profit or loss due to closure of the project duration)

Sun pharmaceuticals have a favorable long-term trend since 2008 and the six month charts suggests increase in trend.

Sun Pharma
Earnings Per
Share (Rs)
DPS(Rs)
ROA (%)
ROE (%)
Price / Book(x)
Yield (%)
Debt Equity
Ratio

2010
43.39

2011
13.36

2012
16.39

13.75
13.96
16.54
6.48
0.77
0.01

3.5
19.32
22.32
6.85
0.79
0.01

4.25
19.96
23.32
7.49
0.75
0.01

Although the EPS was quite high in 2010, but it has been increasing since 2011 and 12 it might also suggest a split in the shares in
2010 end. Because the return on assets and return on equity have been increasing in the same time. Sun pharmaceuticals has been
involved in various mergers and acquisitions which has led to a strong standing as far as fundamentals are concerned.

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MAHINDRA AND MAHINDRA

Buy date: 09 Dec 2014
Profit/loss: ~ (was not able to be given due time to reflect profit or loss due to closure of the project duration)

Although the six-month charting of M&M has not been very stable but the long-term charts suggest steady gains. Not to ignore
the weighted average as the time for buying this was ninth December, hence if we look at the chart since December, the moving
average suggests steady increase and the Bollinger bands as they are narrower suggest stability.

M&M
Earnings Per
Share (Rs)
DPS (Rs)
ROA (%)
ROE (%)
Price / Book(x)
Yield (%)
Long Term Debt
Equity Ratio

2010
30.69

2011
36.89

2012
45.33

2013
48.87

2014
56.8

10
6.88
17.56
2
2.61
0.46

9.5
13.81
32.07
3.95
1.74
0.22

11.5
14.92
29.46
4
1.65
0.26

12.5
13.29
25.88
3.43
1.79
0.22

13
13.09
25.3
3.5
1.51
0.22

M&M is vastly diversified, it is a company that beat companies like Tata, et cetera in the bidding for acquisition of SsangYong.
Hence, a domestic company acquiring a foreign company reflects the strong foundation of itself. It is a market leader in tractors
and is diversified into industries like aerospace, IT, agriculture et cetera. If we look at the EPS again on a stable rise, the ROA and
ROE have been increasing too. The debt equity ratio has been comparatively stable and hence the companies quite worthwhile as
far as fundamentals are concerned.

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OUTCOMES & CONCLUSION

In the duration of pursuing this exercise, there were a number of learnings. Firstly one should have a rational for the rate of return
expected to be in line with the time duration and the nature of investment. Then, investment is the game of patience and analysis.
Ideally, there should not be investment in two companies from a same industry. There should not be investment based on
speculation. Even the implications of news should also be analyzed carefully before coming to a conclusion.
Even after diligently performing analysis and investing, there is no guarantee that the market such as India has would go as per the
forecasts.
This was a very interesting and fruitful exercise where the expected outcome not only pertains to analysis but also to sound
decision making and development of virtues like non-impulsive buying and patients.

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