Data Analysis

END TERM PROJECT

CHAPTER-4DATA ANALYSIS AND INTERPRETATIONSUAE EXCHANGE

The Indian banking industry: sector overview

With the economic growth picking up pace and the investment cycle on the way to recovery, the banking sector has witnessed a transformation in its vital role of intermediating between the demand and supply of funds

Public sector banks have been very proactive in their restructuring initiatives be it in technology implementation or pruning their loss assets. Windfall treasury gains made in the falling interest rate regime were used for writing off the doubtful and loss assets.

Retail lending (especially mortgage financing) formed a significant portion of the portfolio for most banks and they customized their products to cater to the diverse demands.

Apart from streamlining their processes through technology initiatives such as ATMs, telephone banking, online banking and web based products, banks also resorted to cross selling of financial products such as credit cards, mutual funds and insurance policies to augment their fee based income.

PORTERS FIVE FORCES MODEL FOR THE BANKING INDUSTRY

1) BARRIERS TO ENTRY:

a. Economies of scale: Since the existing players in the market are well established and already have a customer base, they are able to bear the cost of using the advantages of technology to their maximum advantage.

b. Capital requirement for entry:

i. The Banking Regulation Act prescribes the minimum capital requirements for a bank Moreover, banks have to maintain a capital adequacy ratio of 9% under the Basel I norms.

ii. Government has declared that the foreign banks will be permitted to establish their presence in India by way of setting up a wholly owned banking subsidiary (WOS) with a minimum capital of Rs.300 crore.

c. Access to distribution channels: Since banks have to set up their own distribution channels, all the cost has to be directly born by them.

d. Cost advantage independent of size: Existing banks have huge databases of customers which they use when they want to sell a new product launched by them.

e. Legislation or Government action: Banks are governed by Banking Regulation Act, 1949 which specifies the rules and regulations applicable to banks. RBI is the governing body of banks in India.

2) BARGAINING POWER OF BUYERS:

Due to increased competition, the services offered by banks to customers have improved considerably.

3) BARGAINING POWER OF THE SUPPLIERS:

Suppliers to banks can be both - the customers and RBI.

a. Customers of banks provide money to banks in the form of deposits and in return earn some interest on that.

b. RBI acts as a supplier to banks by selling govt. securities, treasury bills, govt. bonds, etc.

c. Call money market: Banks sometimes have to borrow from other banks to meet CRR and SLR requirements, or other capital requirements as provided by RBI.

4) THREAT OF SUBSTITUTES:

a. Product-for-product substitution:

i. Banks provide interest on deposits made by people. Similar services are offered by post offices which may act as substitutes to the deposit schemes of banks.

ii. Some banks offer locker services to customers for yearly rates. Similar services are provided by many post offices.

b. Generic substitution: People who deposit their savings in banks can invest their money in other sources like mutual funds, shares and other securities and life insurance schemes.

5) COMPETITIVE RIVALRY:

a. Extent of competitor balance: b. Market growth rates:.c. High Exit BarriersPEST Analysis for Banking Industry.1. Political factors-: The major factors affecting the banking sector are the following.

Banking sector reforms As per the RBI roadmap for reforms in the first stage from 2005 to 2009 foreign banks will be allowed to set up wholly owned subsidiaries as well as get greater freedom to set up new branches.

Fulfilling the minimum priority sector credit -The government mandation of fulfilling the minimum priority sector credit (of which 18 per centis food credit) has forced the domestic banks to cater to this segment despite the low profitability and vulnerability of asset quality.

Banks have also been allowed to set up Offshore Banking Units in SEZs

2. Economic factors-:

Basell II norms for the risk management in banking sector - The new Basel Accord have its foundation on three mutually reinforcing pillars. The first pillar is compatible with the credit risk, market risk and operational risk. The second pillar gives the bank responsibility to exercise the best ways to manage the risk specific to that bank.

Concurrently, it also casts responsibility on the supervisors to review and validate banks risk measurement models. .

Consolidation and merger and acquisitions in the banking sector-. HDFC bank also acquired TIMES BANK in 2001 which increased its customer base by 3 lakh customers.

Universal Banking has been introduced. ICICI Bank ,HDFCs closest competitor is already into Universal Banking so HDFC is also getting into it as now it is providing retail banking and also depository facilities in the form of demat account.

3. Social factors-

Big and growing middle class in India -: This has been a major factor in the growth of the retail loans like consumer loans in the form of home loans, car loans, education loans, auto loans etc. Retail loans have grown from 19% in FY99 to 51% FY06.Consumer credit accounts for a meager 28.6 per centof the country's GDP and the buoyancy in the economy offers sufficient scope for it to grow.

Geographical and Cultural diversity- This is leading to a greater demand for financial products and customization by the customers.

4. Technical factors-

The Indian Financial Network (INFINET) was inaugurated in June 1999. It is based on satellite communication using VSAT technology and would enable faster connectivity within the financial sector.

Banks (All): No of players = 40

Sector statistics:

Table No: 4.1We see the sector aggregates and make a financial comparison for the major banks

Top Players

FY2014

Based on Total Income Based on OPBDT

Total IncomeChangeOPBDTChange

(Rs Mn)(%)(Rs Mn)(%)

ICICI BANK 63161.954.50 ICICI BANK 3717419.36

PNB2921814.91 PNB22205.239.36

WESTER UNION MONEY TRANSFER27709.523.78 WESTER UNION MONEY TRANSFER16882.519.53

BANK OF INDIA 2331725.43 BANK OF INDIA 76352.8-1.29

UAE EXCAHNGE18550.860.24 UAE EXCHANGE1432427.48

% change - indicates the change between current and corresponding quarter.

TOP FOREIGN REGIONAL BANKS COMPANIES BY MARKET CAP

CompanySymbolPriceChangeMarket CapP/E

Banco Bilbao Vizcaya ArgentariaBBV22.400.09%75.96B14.83

Lloyds TSB Group plcLYG39.590.13%55.45B21.52

ABN AMRO Holding NVABN27.721.65%52.45B12.89

SanPaolo IMI SpAIMI40.952.38%32.40BN/A

Banco Bradesco S.A.BBD31.221.51%30.50B10.10

UAE ExcahngeUAE55.580.79%5.83B30.04

Quarterly AggregatesNo: of Players - 29

Previous QuarterLatest Quarter

Total Income (Rs Mn)317927305290

OPBDT (Rs Mn)74296.881622.6

PAT (Rs Mn)30481.732705.4

Equity Capital (Rs Mn)12643577730.1

UAE Exchange Vs Industry Leaders

Statistic

Industry Leader

UAEUAEBank

Market CapitalizationBBV75.96B

5.83B

13 / 24

P/E Ratio (ttm)BMA84.36

30.04

2 / 24

PEG Ratio (ttm, 5 yr expected)BCA3.22

0.64

16 / 24

Revenue Growth (Qtrly YoY)BFR29.70%

45.60%

4 / 24

EPS Growth (Qtrly YoY)IRE154.00%

33.90%

6 / 24

Long-Term Growth Rate (5 yr)KB44.5%

30.0%

2 / 24

Return on Equity (ttm)BFR91.21%

N/A

N/A

Long-Term Debt/Equity (mrq)N/A

Dividend Yield (annual)LYG6.20%

0.70%

18 / 24

COMPANY ANALYSIS:1. UAE Exchange (UAE)Key Highlights

Symbol: UAESector: Financial

Industry: Foreign Regional Banks

Market Cap: 43882 Cr

Data Since: 2014-01-02

Last close: 2710

Full time employees: 10030

UAE Exchange is a remittance and currency exchange company headquartered in the United Arab Emirates with operations in a number of countries. . UAE EXCHANGE is a leading global remittance and foreign exchange brand trusted by millions of customers and partners, across the world. A peoples brand, UAE EXCHANGE is known for quality and customer centric approach. Started over 30 years ago, UAE EXCHANGE provides world class services and earned trust of over 3.5 million customers, worldwide. With 570 + direct offices in 30 countries across five continents makes the company the only brand in the segment to own a global network of this magnitude. It is the largest remittance companies and has extensive network in the Middle East and Asia.

2. TATA MOTORS

Market/ Economy Analysis

It covers the macro economy analysis and the various macro economic factors on the national level like GDP, Monetary policies of India, Fiscal Policies and Inflation and money supply etc.

GDP

Real GDP growth accelerated from 7.5 per cent during 2011-12 to 8.4 per cent during 2012-13 on the back of buoyant manufacturing and services activity supported by a recovery in the agricultural sector. Real GDP growth has, thus, averaged over eight per cent during the last three years and over seven per cent in the first four years (2002-03 to 2005-06) of the Tenth Five Year Plan.

Strengths of India today are:

A well diversified industrial base which profits from self-reliance in all core industries .A large & sophisticated financial architecture - The robust capital Markets today have over 9000 listed companies and boast of a massive Market capitalization.

A healthy GDP composition with agriculture contributing 22%, Industry 22% and services, which have gone strength to strength, accounting. For 56% of the GDP an acknowledged strength in knowledge driven industries like Information technology, biotechnology, entertainment Software etc

India has Over 3 million scientific & technical manpower, Over 0.6 million S&T post graduates, Over 0.7 million graduate engineers, Over 3500 doctorates in sciences every year.

Assuming trend growth in agriculture under normal monsoon conditions and barring domestic or external shocks, the Reserve Bank in its Annual Policy Statement for 2014-15 (April 2014) placed real GDP growth, for policy purposes, in the range of 7.5-8.0 per cent during 2014-15 Growth prospects are, however, subject to a number of downside risks. The risks emanating from the global economy are: potential escalation and volatility in international crude oil prices, firming up of overall inflationary pressures and expectations, and a hardening of international interest rates along with the withdrawal of monetary accommodation.

Indias demographic advantage In contrast to developed Countries, India will have a younger population for the next 50 years. Hence India would be the hub for R&D.

Inflation

Inflation was contained to 6.3 per cent by end-March 2014 within the indicative trajectory of 5.0-5.5 per cent during 2014-15. The actual inflation was considerably lower than the indicative trajectory and this could be mainly attributed to the deferred pass-through of even the cognisable permanent component of international crude oil prices.

Money Supply

Monetary and liquidity conditions remained largely comfortable during 2013-14 reflecting proactive liquidity management operations by the Reserve Bank under the liquidity adjustment facility, flexible management of issuances under the market stabilisation scheme, and some private placement of Government securities

In short, the Indian economy is exhibiting strong fundamentals and displaying considerable resilience. At the same time, there are continuing signs of demand pressures, especially high credit growth that could exert upward pressure on prices when associated with supply shocks such as from oil. These pressures have the potential for impacting stability and inflation expectations. While domestic developments continue to dominate the economy, global factors tend to gain more attention now than before. The global outlook for growth is positive but downside risks in regard to inflation also RBI is applying new repo and reverse repo for the balance of inflation and monetary policies.

The following are macroeconomic policies, generally found as part of government-directed industrial auto policies

(a) Restrictions on domestic and foreign investment.

(b) Domestic content requirements

(c) High tariff walls(d) Auto export requirements

(e) National production to sales ratios

(f) Distribution controls

(g) Quotas and licensing requirements that significantly restrict imports

(h) Government approval for product related decisions, including vehicle make, body type, engine size, etc.

(i) Special government categories for auto taxes

INDUSTRY ANALYSISSince, 1991 opening of the economy has changed the face of auto industry. Today, it is amongst the main drivers of growth of Indian economy with an output multiplier of 2.24(for every Re.1 invested, auto sector gives back Rs.2.24 to the economy). In recent years we have seen increasing number of global players entering Indian market by way of Joint ventures, collaborations or wholly owned subsidiary

The automobile industry is torn between trying to reduce costs on the one hand and, on the other, dealing with the high price of performance-enhancing technology and environmental compliance. Key drivers in the automotive industry are:

Reducing air pollution

Reduction of weight

Recyclability

Safety

Better performance and engine efficiency

Aesthetics

Longer service Life

INDUSTRY LIFE CYCLE:

The automobile market is at the maturity stage of the life cycle, locally and globally, due to an increased number of competitors from domestic and foreign markets. The automobile market is characterized by a low potential for market growth, but high sales and profit potential as the products have still not saturated the market as a whole.

MAJOR COMPETITORS OF TATA MOTORS ARE

Maruti Udyog Ltd.

General Motors India

Ford India Ltd.

Eicher Motors

Bajaj Auto

Hero Motors

Hindustan Motors

Hyundai Motor India Ltd.

Royal Enfield Motors

Telco

TVS Motors

Opportunities and Threats

a) Opportunities

Road Development: The ongoing road development program would improve connectivity to ports, cities and villages through a network of highways and interconnecting roads by 2013-14. Improved road network would help in faster movement of goods between various cities and towns. The Company launched TATA Novus range of vehicles in the heavy segment and TATA ACE for last mile distribution.

Car penetration in India: Car penetration in India is 7 cars per 1,000 persons.

International: In FY 2013-14, the Company increased share of its overseas vehicle sales from 7.6% last year to record high of 11.1% (as % of its total sales) and has planned further increase in this year.

b) Threats

Global Competition: India is increasingly attracting global players to set up manufacturing facility for producing cars, especially small cars. Global automobile manufacturers are also entering India in commercial vehicle segment to leverage Indias low cost production advantage to their favor.

Fuel Prices: The continuing fuel price increase in the domestic market could significantly impact demand of commercial and passenger vehicles.

Input costs: Commodity items particularly steel, non-ferrous metals, rubber and engineering plastics have witnessed huge price increases in the past. These prices are expected to increase further affecting the Companys profitability.

Interest rate hardening and other inflationary trends: With interest rates hardening and liquidity crunch in the system, growth in sales may be adversely impacted.

Government Regulations: Stringent emission and safety requirements could bring new complexities for automotive and component manufacturers impacting the Companys business.

Risks and Concerns:

Interest Rates: FY 2013-14 started with increasing interest rate regime and tightening liquidity position in the economy. Increasing interest rates could further affect vehicle demand which could have an adverse impact on the Companys revenues and profits.

Exchange rates: The Company exports vehicles to many countries and exchange rate fluctuations in the order execution period could impact the Companys business.

Freight rates: In FY 2012-13 freight rates in road transport sector moved up mainly due to surge in construction activity, ongoing road development projects and severe restriction on over-loading. Demand for commercial vehicles could be impacted by further change in freight rates and change in fuel prices.

Domestic market: The Company plans to reduce the impact of this cyclicality on its business, by strengthening its less cyclical businesses like buses, light trucks, small commercial vehicles.

Overseas market: In overseas markets, the Company competes with global players which have multiple vehicle platforms, large financial capability and global branding.

Manufacturing: The Company manufactures vehicles at multiple locations and given the geographical dispersion of its suppliers it faces Logistics Problems.

New Competition: Competitive activity is expected to increase in commercial vehicle and passenger vehicle domestic market in coming years.

New projects: The Company currently is in midst of executing many new projects ranging from launch of new car platforms to development of new Truck models.

III Company Analysis

Key Highlights

Symbol: TTL

Sector: Consumer Goods

Industry: Auto Manufacturers Major

Market Cap: Rs.29232 crores

Data Since: 1945

Last close: Rs. 742.90

Brief Summary of the company

Tata Motors is one of the largest companies in the Tata Group with a total income of US$ 2.35 billion*. More than 3 million Tata vehicles ply on Indian roads making Tata a dominant force in the Indian automobile industry. Joint Venture with Fiat and Hitachi

Tata Motors has decided to enter into a 50-50 JV with Fiat, at Pune, for manufacturing passenger vehicles, engines and transmissions for both, domestic and international markets.. The Company has also entered into a JV with Hitachi, to set up a new plant in Kharagpur

Product Mix

Tata Motors is India's only fully integrated automobile manufacturer with a portfolio that covers trucks, buses, utility vehicles and passenger cars. It would be no exaggeration to say that Tata Motors provides the wheels for India's growth.

Segmental Overview

Commercial Vehicle Segment

The Company registered 69.6% volume growth in the domestic CV segment during 4QFY13 from 37,228 units in Q3FY12 to 63,082 units in Q3FY06. The market share in this segment was 65.8% in Q4FY06, as compared to 55.2% in Q1FY13. The M/HCV goods-carrier segment registered a 54.4% growth YoY, with sale of 33,515 units and a market share of 64.5%, up by around 410 bps, driven by infrastructure development and increase in international trade.

Passenger Vehicle Segment

The Company reported a growth of 21.2% YoY, to 49,907 vehicles, in the domestic passenger vehicle segment and a market share of 16.2% in the quarter. The passenger vehicle industry registered a volume growth of 20.4% during Q4FY13Plants

Tata Motors owes its leading position in the Indian automobile industry to its strong focus on in digenisation. Their manufacturing plants are situated at Jamshedpur in the East, Pune in the West and Lucknow in the North.Charts showing Key Statistics of tata motors. SOURCS OF REVENUE

20013-14

2012-13

Share holding pattern as on 31-MarFigure No: 4.3 RATIO ANALYSIS

Ratios201420132012

Debt/equity0.560.490.44

Current ratio1.080.870.76

Operating profit margin %12.1111.5112.38

Gross profit margin10.8710.4311.04

ROCE %31.2532.7633.77

total assets turnover ratio3.153.533.43

ROE %27.6130.0922.57

Dividend-equity497.94453.73282.11

Retention Ratio67.4363.3265.19

DPS (Rs.) 13.0112.57.99

EPS (Rs.)253441

Dividend Payout Ratio0.390.420.37

CAGR of EPS0.177

CAGR of Dividend Payout Ratio-0.017

Average ROE25.74

average retention63.54

Growth % (g = Avg. RR Avg. ROE )16.36

Market return14.54%

P/E ratio (on the basis of historical analysis) = 18.12

Therefore, the Weighted P/E ratio = (18.12+24.24)/2 = 21.181Projected EPS = EPS OF 2006 + CAGR of EPS*EPS OF 2006

= Rs.48.271

Value of Share at the end of financial year 06-07

= Projected EPS * Weighted P/E Ratio

= Rs.1022

HPCL

Globalization and the Indian Petroleum IndustryIndian petroleum industry in the post independent period (1947-2001) it may be divided into three distinct phases

(i) early phase (1947 to 1969)- when the government consolidated its control over the industry with Soviet assistance;

(ii) development phase (1970 to 1989)- in this period the US companies played dominant role replacing the Soviets and

(iii) the economic liberalisation phase of 1990s.Figure No: 4.4PORTERS MODEL

SWOT ANALYSIS

STRENGHS

Favourable production sale mix.

Entry on petrochemicals and gas sector will reduce dependence on R&M sector.

Second largest refining capacity and pipeline infrastructure in the industry.

Good presence in high demand regions of west and north India.

WEAKNESSES

Dependence on refining function high.

Moderate share in high profitable retail segment.

Diversifications in petrochemicals could trouble the company.

High burden of subsidy loss on cooking gas and kerosene.

OPPORTUNITIES

Per capita energy consumption low in country.

Deficiency of coal will benefit oil and gas sector.

Growing domestic market for gas.

Overseas presence in upstream and downstream will determine growth.

THREATS

Rising oil prices could dampen demand.

High regulatory risk.

Loss of market share to private players.

Entrance of private players in pipelines will take away monopoly of company in north India.

COMPANY ANALYSISThe Annual Report is broken down into the following specific parts:

A) The Director's Report,

B) The Auditor's Report,

C) The Financial Statements, and

D) The Schedules and Notes to the Accounts.

.

A.The Directors ReportThe Directors Report is a report submitted by the directors of a company to its shareholders, advising them of the performance of the company under their stewardship.

B. The Auditor's ReportThe auditor represents the shareholders and it is his duty to report to the shareholders and the general public on the stewardship of the company by its directorsC. Financial StatementsIt comprises of Balance Sheet, Profit and Loss account, Cash Flows. Its analysis would be discussed later.

D.SCHEDULES

The schedules detail pertinent information about the items of Balance Sheet and Profit & Loss Account. It also details information about sales, manufacturing costs, administration costs, interest, and other income and expenses

1. THE MANAGEMENT

HPCL is a public sector undertaking. Thus it is a professionally managed company. There are some parameters of management on which a company is analysed :

a. integrity of management

b. past record of management

c. how highly is the management rated by its peers in the same industry

d. how the management fares in adversity

e. the depth of the knowledge of management

f. open and innovative management

On all these parameters HPCL scores good.

2. COMPANYMany times a company has made losses in the previous years but that does not mean that the company is bad to invest. Thus many factors are studied while studying a company.

a) perception of competitors

HPCL is the second largest petroleum company after IOCL. Thus it is a competitor of IOCL and it is trying hard to compete with IOCL on every front. That is why now it has decided to diversify itself in the oil exploration sector

b) company policies

As this is a PSU thus the policies are made by the government. The oil sector is one which is highly regulated by government. Thus from time to time it is required to watch out the various policies changed.

3. ANNUAL REPORTThe most primary and most important source of information about a company is its Annual Report. This is prepared every year and distributed to its shareholders.Figure No: 4.5

Ratio AnalysisTable No: 4.3

Evaluation of Intrinsic Value of the Security

STDEV MKT0.011934

STDEV SEC0.03831Average

RETENTION RATIO0.60504

CORRELATION0.485958ROE0.19842

BETA1.56765G0.120052

RISK FREE RATE6.50%

MKT RATE14%

K18.26%

Hence we see that here our g is less than k .Thus we see that as per Dividend Discount Model our Intrinsic value is div=22(1+.012)=24/.0626= 387

Price= Projected EPS + Weighted P/E ratio

Using CAGR EPS = 43.468

Weighted P/E Ratio = 7.5+665/2=336.25

Price = 43.468+336.25 = 381

JET AIRWAYS

MARKET

Figure 4.6Currently the market scenario is as shown:1) ACC LIMITED

AIRLINECURRENT ACQUISITION INVESTMENTS

FLEETPLANSUS $Bn

Jet Airways5330 by 20192

Air Deccan2979 by 20182.7

Kingfisher11100 by 2017 4.5

Spice Jet 638 by 20161.9

GoAir433 by 20152.4

Table No: 4.4Currently the market scenario of aviation share marketSTATE OF THE INDUSTRY

High growth potential due to economic boom and highly under penetration in the market

0.02 trips per capita per annum

Long-term GDP growth at 8% annually

It is forecasted that India would be the second fastest growing travel and tourism economy in the world

ATF (Aviation Turbine Fuel) prices and airport charges in India are among the highest in the world

Regulatory and infrastructure bottlenecks have prevented accelerated growth in the industry

The government is proactively looking to address the bottlenecks

MACRO ENVIRONMENT

Refers to the factors which influence an industry but are beyond its control. Main factors are:

POLITICAL

ECONOMIC

SOCIO-CULTURAL

TECHNOLOGICAL

Other Factors

DEMOGRAPHIC

NATURAL ENVIRONMENTPOLITICALOPEN SKY POLICY

DEREGULATIONS IN DIFFERENT SPHERES

LESS ENTRY BARRIERS

REDUCTION IN FDI LIMIT: 49% for airlines

100% for airport

SOCIO-CULTURAL

Growing Middle Class

1997to 2003: 39.5 million to 56.7m households

2009: 300 million

2014: 400 million estimates

Increase in leisure travel by tourists by 15% in 2014 3.2 million Foreign tourists visited India last year; tourism industry grew 8.8 per cent over 2003, the highest growth rate in the world.

SOCIAL

TECHNOLOGICAL

MODERNISATION OF AIRPORTS

ILS-INSTRUMENT LANDING SYSTEMS

DEMOGRAPHIC

CHANGING STRUCTURE OF CONSUMERS

HIGHEST % PEOPLE IN 20-50 AGE GROUP

EDUCATIONAL GROUPS

SHIFT TOWARDS NUCLEAR FAMILIES

(Source NCAER)

Middle class income over Rs. 90,000 p.a.

NATURAL ENVIRONMENTHIGH ENERGY COSTS

The cost of aviation turbine fuel ATF in India for domestic airlines is almost double for international market.

Govt. Increased prices by 7.5%. From 32.56 to 35/litre.

ATF price in Feb soared by 3.5% to the price in Jan 06.

PORTERS FIVE FORCE ANALYSIS

THREAT OF NEW ENTRANTS

Easy entry but execution doubtful

The capital requirement-a min of 30cr capitalization before takeoff

Network & time slots of existing players

Expected retaliation

Legislation or government action: equity capital for floating an airline

Differentiation

Exit barriers

Inadequate airport infrastructure, shortage of pilots, high fuel costs

Compulsion to operate on uneconomical routes, no subsidy

POWER OF BUYERS

Large number of buyers: Business travelers sector intensified by GDP growth, leisure customer market too a huge growth opportunity Alternative source- large number of options available

Cost of switching- Minimal

No differentiation among the players in the same segment

POWER OF SUPPLIERS

ATF AIRCRAFT MFG PILOT

Switching costs- options of switching is very limited

Brand value- high

Forward integration- no history in past but possible

Shortage of pilots

High fuel costs

AVAILABILITY OF SUBSTITUTE

Product for product substitution- consumers can choose between the various options such as road and rail.

Substitution for need- with technology the need to travel has reduced but it is not possible to totally do away with it. It is marginally possible.

COMPETITIVE RIVALRY

Increased competitive pressures due to new entrants

Growth rates- high projected to be 22%

High fixed costs

Extra capacity

Acquisition of weaker companies

High exit barriers

Differentiation

S.W.O.T of the Industry Key Attractions:

Low entry barrier.

Attraction of foreign shores.

Foreign equity allowed.

Rising income levels and demographic profile.

Key Problems:

Crippling Oil Shock. Absence to Institutionalized Funding.

Acute shortage of trained Pilots, severely limiting growth prospects.

Unplanned location of Airports.

Key Developments that may Influence the future:

Average growth of about 25%-30%

Air Freight segment is growing faster than the Passengers segment.

Duties slashed on ATF and IATT.

Pilot license applications have tripled.

Expecting investments - US $30 billion by 2012 and about US $50 billion by 2015.

Expected Market Size is projected to be about 50 million by 2010.

JET AIRWAYSMarket Share: 35%

Strengths Virtual monopoly on Corporate Accounts

Membership of IATA

One of the Youngest Fleets in the World

Debt-Equity Ratio of almost one is to one

Weaknesses

Required 1000 pilots in next two years.

Concentrates only most profitable routes.

Failed attempts at Merger.

Opportunities

Hugh untapped international sectors

Increase in domestic flight density

Expanding operations into Air Freight business

Integrate more long haul aircrafts

Threats

Stiff competition in the Economy class from Low Cost Carriers.

Competition in the Business Class form newcomers like KingFisher

Hugh investments locked in future fleet expansion plans

Single source of revenue

Growth Forecast World Passenger traffic grew to 52.12 million in the last fiscal, from 43.47 million in 2008-09, to register a growth of 19.9 percent.

In the last fiscal, the Indian aviation industry logged a robust growth of 24 percent and experts say the sector will expand by at least 16 percent annually for the next five years, riding on the overall economic growth of eight percent.

The Positive StepsGreenfield airports Bangalore/Hyderabad

J/Vs for Ground Handling and MRO facilities

Highly advanced GPS aided Geo augmented navigation (GAGAN) system operational this year.

AAI set up more radar stations to bring entire Indian airspace under radar monitoring.

Training more Pilots and Air Traffic Controllers.

Raising retirement age of pilots to 65 from 61.

New EntrantsThe aviation sector is likely to see the launch of many new airlines, including:

Premier Airways

Star Air

East West Airlines

Indigo

II TECHNICAL ANALYSIS OF STOCKS

1) ACC LIMITEDFigure No: 4.7

ANALYSIS: -Trend:-

The stock after correcting to 50% of the long bull run [Bottom 676 Top 1197] prices reversed back and are now in intermediary upward trend.

Moving Averages:-

The stock is currently trading above all the important trading moving averages. The moving average crossover of 13 days & 40 days is observed on 22nd Dec. 2013 triggering price trend reversal and buy at current levels.

13 days: = 1037.70 40 days: = 1060.84

30 days: = 1078.65 100 days: = 991.62

Moving Average Channels:-

The stock on giving a close above 1070 levels has given a breakout above the moving averagechannel signaling buy at current levels.

Relative Strength Index (RSI):-

RSI on falling to 34 levels in the profit booking mode bounced back to bull zone at 53.46 showing synchronization with price movement.

Pitchfork:-

The stock have broken the upper arms and moved out (at 1072) of the corrective trend pitchfork signaling positive trend & buy at current levels.

The stock is now moving towards the median of the major pitchfork which is around 1160 levels.

Oscillators:-

Osc (10,70) trading favorably in positive zone indicating presence of long term traders.

Osc (5,35) are pulling back to zero from negative, indicating entry of short term traders.1) INFOSYS TECHNOLOGIES LIMITED

The Trend refers to the daily trend of the stock and not intraday but one may trade intraday based on it. If you are a slightly longer term investor, you may go on holding the stock in long if trend is up or you may go on holding the stock in short position if trend is down. If you are a short term trader you may use the below paragraph information and play for small moves.

How to trade according to the data mentioned aboveIf an entry is made in front of support and the close is above the support, it means that one can buy the stock intraday during market hours at support and put an appropriate stop loss mentioned below. Once you have bought the stock intraday, put the Stop Loss accordingly mentioned and sell it before the market closes.

If an entry is made in front of resistance and the close is less then resistance, it means that one can short the stock intraday during market hours at resistance and put an appropriate stop loss mentioned below. At close one should cover if one is an intraday trader.If we do not find the stock giving clear signal for intraday trading, than we will leave the support or resistance field empty.

2) CIPLA LIMITED


If an entry is made in front of resistance and the close is less then resistance, it means that one can short the stock intraday during market hours at resistance and put an appropriate stop loss mentioned below. At close one should cover if one is an intraday trader.

If we do not find the stock giving clear signal for intraday trading, than we will leave the support or resistance field empty.

If you are a slightly longer term investor, you may go on holding the stock in long if trend is up or you may go on holding the stock in short position if trend is down. If you are a short term trader you may use the below paragraph information and play for small moves.

2) BHARAT PETROLEUM CORPORATION LIMITED




4) RANBAXY LABORATORIES LIMITED




5) TATA MOTORS LIMITED




6) RELIANCE INDUSTRIES LIMITED




7) MAHINDRA & MAHINDRA LIMITED




8) STATE BANK OF INDIA




10) MARUTI UDYOG LIMITED




Figure No: 4.1

Figure No: 4.2

INFOSYS TECH

Date

12th

February

2014

Close

2351.25

Trend

Up

Support

2340

Resistance

2380

Stop loss

2317

CIPLA

Date

12th

February

2014

Close

248.35

Trend

Not Clear

Support

220

Resistance

260

Stop loss

205

BPCL

Date

12th February 2014

Close

331.85

Trend

Down

Support

355

Resistance

390

Stop loss

347

RANBAXY

Date

12th

February

2014

Close

409.15

Trend

Not Clear

Support

360

Resistance

420

Stop loss

350

TATAMOTORS

Date

12th

February

2014

Close

875.05

Trend

Down

Support

810

Resistance

895

Stop loss

795

RELIANCE

Date

12th

February

2014

Close

1358.85

Trend

Not Clear

Support

1290

Resistance

1370

Stop loss

1280

M&M

Date

12th

February

2014

Close

880.80

Trend

Down

Support

930

Resistance

980

Stop loss

918

SBIN

Date

12th

February

2007

Close

1183.70

Trend

Not Clear

Support

1120

Resistance

1170

Stop loss

1105

MARUTI

Date

12thFebruary

2014

Close

912

Trend

Down

Support

950

Resistance

990

Stop loss

940

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