Fundamental Analysis PDF

Index
Chapters -
I. INTRODUCTION -
1. Selection of problem and its relevance.
2. Historical background of the problem.
3. Profile of the study area
4. Aspects.
5. Characteristics.
6. Concepts pertaining to the problem.
II. RESEARCH METHODOLOGY.
1. Objectives.
2. Hypothesis.
3. Scope of study.
4. Limitations of the study.
5. Significations of the study.
6. Selection of the problem.
7. Sample size.
8. Data collection.
III. LITERATURE VIEW .
IV. DATA ANALYSIS, INTERPRETATION AND
PRESENTATION .
V. CONCLUSION AND SUGGESTIONS.
1
CHAPTER -1
INTRODUCTION
This project contains research made on

‘TECHNICAL AND FUNDAMENTAL ANALYSIS OF BATA COMPANY ’ for
novice investors on how to select a particular stock by comparing it with other investment
opportunities by using various kinds of tools and techniques laid down by the expertise in
this field.
This book contains all the research done by collecting data from various sources ,
primary as well as secondary resources.
The study of this research is only limited to a particular sector in the stock
market(NSE) i.e. footwear sector.
But
The study conducted is versatile in nature ...
This book gives us a preview or the basic insight of the stock made up of various kinds
of risk platforms and the opportunity to earn by understanding various terms and jargons
used in the stock market. How to analyse the market condition by using various tools and
techniques and also to make a list of various things needed to invest your money . In
other words this book will help in selecting a stock and investing in an appropriate
manner to earn a higher return and how to build an efficient portfolio.
“Everyone has the power to follow the stock market if you made it through fifth grade
maths you can do it”
-Peter lynch.
2
Selection of problem and its relevance -
Problem in hand -
Confusions by a novice investor or trader in selecting an investment with the world

filled with numerous options of investment.
Selection of an investment and its health issues of the investment are not well understood
,the amount of risk complied with it is mostly neglected due to the various factors
involved .
To solve the problems below while selecting an investment and to check its health issues
and to build a healthy portfolio this project has been done
Here are some of the problems faced by an investor while building a portfolio .
❖ Poor investment skills due to inexperience.

❖ Lack of knowledge.
❖ Different terminologies and jargon used.
❖ Volatility.
❖ Inability to follow the trend.
❖ Improper market timings i.e. entry and exit by an individual.
❖ Impatient.
❖ Market myths.
❖ Being to conservative.
❖ Dependency on intuitions.
❖ Evaluation errors.
❖ Non diversification or over diversification.
❖ Uncertainty
Relevance of the project -
3
❖ To understand the basic design of the stock market.
❖ Helps in decision making.
❖ Minimizes the risk.
❖ Provides assistance with a statistical approach and various financial models.
❖ Helps to fill out the gaps kept by an investor by providing it with the tools of
technical and fundamental analysis.
❖ Provides knowledge and discipline.
Historical background of the problem.

Failed in stock selection.
Being a newbie and not knowing all the What? When ? Where ? Why? How? Questions
while selecting the stock is the toughest part of an investment and due to which we suffer
losses.
Before getting started with portfolios and investments and all the other stuff it is very
important for us to know the root of the problem and why does it even exist ?
Stock market is an interesting animal not only we take risks but also invest our money
,time , patience etc. Stock market teaches us to make sacrifices of our present resources to
preserve it for the future. No matter how volatile and complex it may seem to be we are
still as learners curious to take a hit. Because risk is not an interesting word for many of
us to avoid the risk of our hard earned money in future and try to beat inflation. But we
do take risks while investing and most of the time forget about our risk to reward
proportion.
Why do we invest anyways ?
Investment may seem to be a child play if you are ignorant enough about the risk
associated with it .
4
Let's take an example
Suppose you are an average working person in a service sector in a fixed income group
category of an age of 40 and you are going to retire at age 50 and your monthly income is
Rs. 50000 after taking into account all the expenses and tax liability you save Rs. 5000
monthly.
Lets take two

scenarios into
account ,
Scenario 1 --
You save monthly Rs.

5000 and retain it
with your self -
600000 is the total

saving after 10 years in scenario 1 .
Scenario 2 --
You save monthly Rs. 5000 and invest it in any of the market segment depending upon
the risk capability and income . Suppose you are risk averse and deposit it in a fixed
return category ,invested at 8 % per annum.
5
648000 is the total saving after 10 years in scenario 2.
Conclusion -
When you invest your money in any market segment the amount multiplies into a greater
amount rather than retaining it with yourself in above two scenarios there’s a total
difference of 48000 Rs.
So is it worth it ? Obviously yes .
For -
❖ Wealth creation.
❖ Fighting inflation.
❖ safety .
❖ Uncertainty.
In order to earn rewards by the stock market one should take risk of investing in it
without it there are no returns.
This problem is particularly faced by me also in order to cope with it and to earn
efficiently this problem has been selected and research is conducted.
6
Profile of the study area.
● Stock exchange - NSE
● Market segment - Equity segment
● Sector - Footwear
● Companies selected - Bata India ltd .
● Analysis - technical and fundamental.
● Qualitative and quantitative approach.
7
CHAPTER -2
RESEARCH METHODOLOGY
Objectives of research -
● To provide assistance in selecting stocks in equity market
● To understand the functioning of the stock market.
● To reduce losses.
● To provide knowledge and discipline
● To discover how to follow the trends.
● To reduce evaluation errors.
● To avoid the risk of buying an overpriced share.
● To understand the business of the company.
● To learn how to read financial statements.
● To learn how to use candlesticks and its various patterns.
● To understand the platform of trading and investing.
● To avoid over diversification and under diversification of a portfolio.
● To maximise earnings of an individual.
Hypothesis of the problem-
Null Hypothesis-
Market does not move in an uptrend or downtrend it rhythms.
8
Alternative hypothesis -
Market does not rhythm, it always moves in an upward direction or downtrend direction.
Scope of study -
● BATA INDIA LTD.
● Fundamental analysis of bata india ltd.
Performing analysis on financial statements.
● Technical analysis of bata india ltd.
Using moving averages and candlesticks.
-RSI.
-MACD.
-BOLLINGER BANDS.
Limitations of the study -

● A single analysis may not work.
● Data driven analysis.
● It only gives clues about the strength and weakness of the company.
● No reliability and accuracy on the data analysed.
● In Depth study is not taken into consideration.
Selection of problem -
● To check the fundamentals of the company &
● Analyse its technicals
Sample size -
● Period of five years for data collection from
-annual report
-p&l statement.
-cash flow statement.
9
-balance sheet of the company.
● Period of last 20 years for data collection from
- Moving averages
- Bollinger bands
- MACD.
DATA COLLECTION
EQUITY RESEARCH FOR STOCK SELECTION -

Data collection-
FUNDAMENTALS & TECHNICALS
Step 1 - Business of the company.
Step 2 - Data collection from the annual report and the moneycontrol website of the
company.
Which involves -
- profit and loss company.
- balance sheet of the company.
- cash flow statement.
STEP 3 - Data collection from the technical section of the company .
Name of the company - Bata india Ltd

Step 1 - Business of the company.
Understanding the business we dwell deep into the business with a perspective of
knowing the company inside out. We need to make a list of questions for which we need
to find answers to. A good way to start would be by posting a
very basic question about the company – What business is the company involved
in?
10
1. What does a company do?
Bata India Ltd is the company incorporated in India Calcutta in 1931 which manufactures
footwear for men, women and children.The Company manufactures shoes of various
quality such as leather, rubber, canvas and PVC shoes.Currently the company owns
brands like Hush Puppies, Dr Scholls, North Star, Power, Marie Claire, Bubblegummers,
Ambassador, Comfit and Wind..The company also in the business segment of Footwear.
2. What do they manufacture?

Footwear and accessories.
3. What are the raw materials required ?
Leather , textile , saddlery and harness ,chemicals , packaging materials , rubber,
rawhide, footwear plastic and other materials.
4. Who are their competitors ?

Relaxo footwear , khadim footwear , liberty shoes, mirza intl,amin tannery.
5. How many manufacturing plants and retail stores do they have and where are
they located?
● In India -
Retail stores- 1415.
Manufacturing units - 4
● Globally -
Retail stores - 5300.
Manufacturing units- 23.
6. Headquarters - Netherlands.
7. Business carried out in - Europe, asia, africa and latin america.
8. Who are the holding/subsidiaries/associates of the company?
11
9. Shareholding pattern of the company?
10. Who are the company's client and end user?

End users mostly from - metro and mini cities and the fastest growing user are
womens and kids.
11. How many employees do company have?
12
12. Who are the bankers and auditors?
BANKERS -
Sbi and HDFC.
Auditors -
M/S BSR and co LLP
13. Does the company have any labour issues?
Last year there was no report on labour issues.
14. Is the company making cheap products that can be easily replicated inn the
country with cheap labour ?
No , products can be duplicated like me too products but the bata company is
more reliable and no 1 brand of india.
Step 2 - Data collection from the annual report and from the moneycontrol
website of the company.
❖ Step a -balance sheet of the company company.

❖ Step b - profit and loss of the company.
❖ Step c- cash flow statement.
13
Step a - Balance sheet of the company .
Bata India Previous

Years »
Standalone Balance Sheet -----------------

-- in Rs. Cr.
-----------------
--
19-Mar 18-Mar 17-Mar 16-Mar 15-Mar
12 mths 12 mths 12 mths 12 mths 15 mths
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 64.26 64.26 64.26 64.26 64.26
Total Share Capital 64.26 64.26 64.26 64.26 64.26
Revaluation Reserves 0 0 0 26.79 26.79
Reserves and Surplus 1682.27 1414.45 1261.02 1091.97 931.09
14
Total Reserves and Surplus 1682.27 1414.45 1261.02 1118.76 957.88
Total Shareholders Funds 1746.53 1478.71 1325.28 1183.02 1022.15
NON-CURRENT LIABILITIES
Other Long Term Liabilities 100.24 103.74 103.97 102.87 97.76
Long Term Provisions 2.28 2.19 0 0 0
Total Non-Current Liabilities 102.52 105.93 103.97 102.87 97.76
CURRENT LIABILITIES
Trade Payables 515.65 479.23 407.22 324.86 356.74
Other Current Liabilities 98.27 70.67 81.78 74.27 85.04
Short Term Provisions 15.67 10.32 4.35 61.41 75.75
Total Current Liabilities 629.59 560.22 493.35 460.53 517.53
Total Capital And Liabilities 2478.64 2144.87 1922.6 1746.42 1637.43
ASSETS
NON-CURRENT ASSETS
Tangible Assets 310.78 292.91 264.58 301.52 305.74
Intangible Assets 3.79 1.55 1.38 0.6 0.94
Capital Work-In-Progress 17.25 12.12 24.23 13.43 16.58
15
Intangible Assets Under 0 0 5.61 5.61 31.59
Development
Fixed Assets 331.82 306.58 295.79 321.15 354.86
Non-Current Investments 4.95 4.95 4.95 4.95 4.95
Deferred Tax Assets [Net] 109.78 105.39 100.43 101.92 87.62
Long Term Loans And Advances 108.62 99.31 98.09 178.34 176.29
Other Non-Current Assets 86 81.06 73.76 0 0
Total Non-Current Assets 641.17 597.28 573.02 606.36 623.71
CURRENT ASSETS
Inventories 839.09 762.11 705.44 678.9 704.7
Trade Receivables 65.3 88.63 67.15 69.64 58.42
Cash And Cash Equivalents 839 588.49 520.91 340.51 209.97
Short Term Loans And Advances 3.76 3.77 3.24 40.86 31.94
OtherCurrentAssets 90.33 104.58 52.83 10.16 8.7
Total Current Assets 1837.47 1547.58 1349.58 1140.06 1013.73
Total Assets 2478.64 2144.87 1922.6 1746.42 1637.43
OTHER ADDITIONAL Nil Nil Nil Nil Nil
16
INFORMATION
CONTINGENT LIABILITIES,
COMMITMENTS
Contingent Liabilities 73.38 77.33 68.65 101.45 130.88
CIF VALUE OF IMPORTS
Raw Materials 0 0 0 3.95 4.99
Stores, Spares And Loose Tools 0 0 0 0.2 0.24
Trade/Other Goods 0 0 0 121.52 173.33
Capital Goods 0 0 0 4.16 7.48
EXPENDITURE IN FOREIGN
EXCHANGE
Expenditure In Foreign Currency 341.99 264.84 203.48 53.6 44.22
REMITTANCES IN FOREIGN
CURRENCIES FOR
DIVIDENDS
Dividend Remittance In Foreign - - - 22.12 22.12

Currency
EARNINGS IN FOREIGN
EXCHANGE
FOB Value Of Goods 10.98 16.1 20.18 13.97 27.66
17
Other Earnings 12.98 - - - -
BONUS DETAILS
Bonus Equity Share Capital 9.8 9.8 9.8 9.8 9.8
NON-CURRENT
INVESTMENTS
Non-Current Investments Quoted - - - - -

Market Value
Non-Current Investments 4.95 4.95 4.95 4.95 4.95

Unquoted Book Value
CURRENT INVESTMENTS
Current Investments Quoted - - - - -

Market Value
Current Investments Unquoted - - - - -

Book Value
18
&L STATEMENT
STEP b-P
Bata India Previous

Years »
Stand alone Profit & Loss ------------

account ------- in
Rs. Cr.
------------
-------
INCOME
Revenue From Operations 2926.4 2634.9 2495.67 2450.16 2735.7

[Gross]
Less: Excise/Service Tax/Other 0 7.05 30.08 33.21 43.6

Levies
Revenue From Operations [Net] 2926.4 2627.86 2465.59 2416.95 2692.09
Other Operating Revenues 2.04 1.41 1.57 1.1 1.9
Total Operating Revenues 2928.44 2629.27 2467.16 2418.05 2694
Other Income 68.54 50.84 46.65 30.08 43.23
Total Revenue 2996.99 2680.12 2513.81 2448.14 2737.23
19
EXPENSES
Cost Of Materials Consumed 280.72 269.52 291.42 302.79 428.37
Purchase Of Stock-In Trade 1086.13 984.23 887.82 839.62 920.03
Changes In Inventories Of -82.52 -57.9 -26.35 13.61 -110.58

FG,WIP And Stock-In Trade
Employee Benefit Expenses 331.08 295.38 272.7 262.69 311.93
Finance Costs 3.55 4.2 4.03 1.72 1.76
Depreciation And Amortisation 64.02 60.42 65.01 75.25 79.23

Expenses
Other Expenses 835.75 784.25 763.95 728.75 809.35
Total Expenses 2518.72 2340.1 2258.56 2224.43 2440.09
Profit/Loss Before Exceptional, 478.27 340.01 255.24 223.71 297.14

Extraordinary Items And Tax
Exceptional Items 0 0 -21.67 74.71 31.53
Profit/Loss Before Tax 478.27 340.01 233.58 298.42 328.67
Tax Expenses-Continued
Operations
Current Tax 172.92 121.4 92.47 92.75 117.02
20
Deferred Tax -4.39 -4.96 -11.36 -13.08 -19.53
Tax For Earlier Years -19.93 0 -6.28 0 0
Total Tax Expenses 148.61 116.44 74.83 79.67 97.5
Profit/Loss After Tax And 329.66 223.58 158.75 218.75 231.17

Before Extraordinary Items
Profit/Loss From Continuing 329.66 223.58 158.75 218.75 231.17

Operations
Profit/Loss For The Period 329.66 223.58 158.75 218.75 231.17
OTHER ADDITIONAL
INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) 25.65 17.4 12.35 17.02 35.97
Diluted EPS (Rs.) 25.65 17.4 12.35 17.02 35.97
VALUE OF IMPORTED AND

INDIGENIOUS RAW
MATERIALS
Imported Raw Materials 0 0 0 5.68 4.86
Indigenous Raw Materials 0 0 0 297.11 423.51
STORES, SPARES AND

LOOSE TOOLS
21
Imported Stores And Spares 0 0 0 0.13 0.32
Indigenous Stores And Spares 0 0 0 2.97 4.33
DIVIDEND AND DIVIDEND

PERCENTAGE
Equity Share Dividend 51.41 44.99 44.99 44.99 41.77
Tax On Dividend 10.57 9.16 9.16 10.55 7.1
Equity Dividend Rate (%) 125 80 70 70 65
STEP C-CASH FLOW STATEMENT
Bata India Previous Years

»
Cash Flow ------------------

- in Rs. Cr.
------------------
-
22
Net Profit/Loss Before 0 478.27 340.01 233.58 298.42
Extraordinary Items And
Tax
Net CashFlow From 0 344.59 155.69 261.56 204.36

Operating Activities
Net Cash Used In 0 -277.04 -107.39 -232.93 -115.96

Investing Activities
Net Cash Used From 0 -63.14 -55.56 -55.7 -51.88

Financing Activities
Net Inc/Dec In Cash And 0 4.41 -7.25 -27.07 36.52

Cash Equivalents
Cash And Cash 0 55.73 62.99 90.05 53.53

Equivalents Begin of Year
Cash And Cash 0 60.15 55.73 62.99 90.05

Equivalents End Of Year
Stand alone ratios
Key Financial Ratios of Bata 19-Mar 18-Mar 17-Mar 16-Mar 15-Mar

India (in Rs. Cr.)
Per Share Ratios
Basic EPS (Rs.) 25.65 17.4 12.35 17.02 35.97
23
Diluted EPS (Rs.) 25.65 17.4 12.35 17.02 35.97
Cash EPS (Rs.) 30.63 22.1 17.41 22.87 48.3
Book Value 135.89 115.05 103.11 89.96 154.88

[ExclRevalReserve]/Share (Rs.)
Book Value 135.89 115.05 103.11 92.04 159.05

[InclRevalReserve]/Share (Rs.)
Dividend / Share(Rs.) 6.25 4 3.5 3.5 6.5
Revenue from Operations/Share 227.84 204.57 191.96 188.13 419.21

(Rs.)
PBDIT/Share (Rs.) 42.47 31.48 25.23 23.39 58.84
PBIT/Share (Rs.) 37.49 26.78 20.17 17.54 46.51
PBT/Share (Rs.) 37.21 26.45 18.17 23.22 51.14
Net Profit/Share (Rs.) 25.65 17.4 12.35 17.02 35.97
Profitability Ratios
PBDIT Margin (%) 18.63 15.38 13.14 12.43 14.03
PBIT Margin (%) 16.45 13.09 10.5 9.32 11.09
PBT Margin (%) 16.33 12.93 9.46 12.34 12.2
Net Profit Margin (%) 11.25 8.5 6.43 9.04 8.58
Return on Networth / Equity (%) 18.87 15.11 11.97 18.91 23.22
24
Return on Capital Employed (%) 26.05 14.1 11.1 17.01 20.64
Return on Assets (%) 13.3 10.42 8.25 12.52 14.11
Total Debt/Equity (X) 0 0 0 0 0
Asset Turnover Ratio (%) 118.14 122.58 128.32 138.45 164.52
Liquidity Ratios
Current Ratio (X) 2.92 2.76 2.74 2.48 1.96
Quick Ratio (X) 1.59 1.4 1.31 1 0.6
Inventory Turnover Ratio (X) 3.49 3.45 3.5 3.56 3.82
Dividend Payout Ratio (NP) (%) 15.59 20.12 28.33 20.56 18.06
Dividend Payout Ratio (CP) (%) 13.05 15.83 20.1 15.3 13.45
Earnings Retention Ratio (%) 84.41 79.88 71.67 79.44 81.94
Cash Earnings Retention Ratio 86.95 84.17 79.9 84.7 86.55

(%)
Valuation Ratios
Enterprise Value (Cr.) 17264.1 8794.06 6772.41 6176.51 6799.63

7
EV/Net Operating Revenue (X) 5.9 3.34 2.75 2.55 2.52
EV/EBITDA (X) 31.63 21.73 20.88 20.54 17.98
25
MarketCap/Net Operating 6.18 3.57 2.96 2.7 2.6
Revenue (X)
Retention Ratios (%) 84.4 79.87 71.66 79.43 81.93
Price/BV (X) 10.37 6.35 5.5 5.64 7.04
Price/Net Operating Revenue 6.18 3.57 2.96 2.7 2.6
Earnings Yield 0.02 0.02 0.02 0.03 0.03
STEP 3 - DATA COLLECTION FROM THE TECHNICAL SECTION

OF THE COMPANY.
Candlestick pattern of last 20 years -
26
Candlestick pattern with moving averages of last 20 years -
27
28
Chapter -3
Literature view
The overall data has been collected from the moneycontrol website of the
company from the fundamental section and the technical section of the
company as well as from the annual report of the company to investigate
about the company's fundamentals and their intrinsic value to decide
whether the company is suitable for the long term investment or not as well
as some of the financial ratios are applied to check the profitability and the
growth of the company .
The technical part of the study ensures us the value of the company by the
market participants because the market discounts everything. The analysis is
done by using MACD indicator , relative strength index and the moving
averages over a period of time
to check the technical rating of the company.
29
Chapter- 4
DATA ANALYSIS, INTERPRETATION AND PRESENTATION.
Data interpretation of the above financial statements and technicals of bata India
Ltd.
Data analysis can be done in 5 parts depending upon the need of an investor.
As it tells the value of the company.
1. Per share ratios.
2. Profitability ratios.
3. Leverage ratios.
4. Valuation ratios.
5. Technical analysis of shares over a period of time.
Per share ratios of bata india ltd-
Data analysis
1. Earnings per Share -

The earnings per share ratio (EPS ratio) measures the amount of a
company's net income that is theoretically available for payment to the
holders of its common stock. A company with a high earnings per share
ratio is capable of generating a significant dividend for investors, or it may
plow the funds back into its business for more growth; in either case, a
high ratio indicates a potentially worthwhile investment, depending on the
market price of the stock. This measure is only used for publicly-held
companies, since they are the only entities required to report earnings per
share information.
It is very worthwhile to track a company's earnings per share ratio on a

trend line. If the trend is positive, then the company is either generating an
30
increasing amount of earnings or buying back its stock. Conversely, a
declining trend can signal to investors that a company is in trouble, which
can lead to a decline in the stock price.it is also called as net profit per
share.
Calculation of basic EPS -

(Net income after tax - Preferred stock dividends) ÷
Average number of common shares outstanding.
Interpretation -
It can be noticed by the following figures given below that the year 2015 has the
highest EPS from the last five years and there is a decrease in the EPS of the
shareholders till year 2017 and as well as we can see thereafter the eps of the
company has been increasing. But only eps of the company won't give us the
whole pitcher of the company we should otherwise comprare it with other
competitors as well.
25.65 17.4 12.35 17.02 35.97
Presentation -
31
Data analysis
Diluted Earnings per Share -
Dilutive securities are financial instruments - usually stock options,
warrants, convertible bonds - which increase the number of common
shares if exercised; this then reduces, or "dilutes", the basic EPS
(earnings per share). Thus, only where the diluted EPS is less than the
basic EPS is the transaction classified as dilutive.
Diluted EPS is more detailed than EPS as it portrays the true shareholder
value based on which the earnings per share are allocated. Furthermore,
the diluted EPS affects a firm price to earnings (P/E) ratio as well other
valuation measures. And its mostly used by Conservative investors.
The Formula for Diluted Earnings per Share
Diluted EPS = net income – preferred dividends /WASO + CDS
where:WASO=Weighted Average Shares OutstandingCDS=Conversion of
dilutive securitiesDilutive Securities=In-the-money options, warrants and other
securities.
32
Interpretation -
There are no diluted securities seen in the last five years of the company history
so the dps and eps interpretation will be the same.
Presentation -
Data analysis-
Cash eps - Cash Earnings Per Share

Cash flow that a company has generated on a per share basis
Cash earnings per share (cash EPS) is the operating cash flow generated by a
company divided by the number of shares outstanding. Cash earnings per share
(Cash EPS) is different from traditional earnings per share (EPS), which takes
the company’s net income and divides it by the number of shares outstanding. In
other words, the latter measures how much of the company’s profit can be
allocated to each share of stock, while the former measures how much cash flow
can be allocated to each share of stock.
33
A company with higher cash EPS is considered to have better financial
performance and a better ability to generate cash flow. Cash EPS can be used
to compare the company against its peers or against its own past
results/guidance.
Interpretation -

30.63 22.1 17.41 22.87 48.3
The company's ability to generate cash flows has fallen since 2015 but is slowly
recovering as seen in 2019.
Presentation -
Data analysis
34
Book value per share -
Book value per share is basically the firms leftover amount after it pays off all its
obligations.
It can be exclusive of revaluation reserve or inclusive of it.
Bv = share capital +( exclusive or inclusive of revaluation reserve) /total no
of shares.
Interpretation -
Book value per share exclusive of revaluation reserve-
135.89 115.05 103.11 89.96 154.88
Book value inclusive of revaluation reserve-
135.89 115.05 103.11 92.04 159.05
As you can see in both the cases the book value of the company has been
highest in the year 2015 and the decrease in the years after but
company's value has been increasing the from last four years exclusive of
the fifth year which was the highest.
35
Presentation -
36
Data analysis
Dividend per share-
DPS is the number of declared dividends issued by a company for every ordinary
share outstanding. It is the number of dividends each shareholder of a company
receives on a per-share basis.it calculates the portion of a company's earnings
that is paid out to shareholders.
DPS = (total dividends paid out over a period - any special dividends) ÷
(shares outstanding).
Interpretation -
6.25 4 3.5 3.5 6.5
The dividend are quite attractive when seen on a trendline which tells us
although the year 2015 was the most profitable year but accordingly the dividend
has fallen as well as grown up to that point in year 2019.
Presentation -
37
Data analysis
Revenue from operations per share-

Revenue from operation per share is a ratio that computes the total revenue
earned per share over a designated period, whether quarterly, semi-annually,
annually, or trailing twelve months (TTM). It is calculated by dividing total
revenue by average shares outstanding.
The sales-per-share ratio is useful as a quick glance at a company's business
activity strength. Obviously, the higher the ratio, the stronger the business seems
to be, at least in terms of the top line.
Interpretation -
227.84 204.57 191.96 188.13 419.21
Revenue from operation has shown a gradual decrease from last 5 years but
the good thing about it is that it has been slowly and steadily increasing.although
it is almost half from the year 2015.
Presentation -
38
Data analysis -
PBDIT per share -
PBDIT, which stands for Profit Before , Depreciation,Interest and tax, it is a
financial calculation that measures a company’s profitability before deductions
that are often considered irrelevant in the decision making process.
Interpretation -
42.47 31.48 25.23 23.39 58.84
Most of the time investors consider it as use less but still the earnings overall for
the company has shown an increase compared to the last year it still has to beat
the year 2015.
Presentation -
39
Data analysis -
PBIT per share-
PBIT is frequently used by creditors to measure a company’s earning and paying
capacity.whereas it stands for profit before interest and tax.it is same as PBDIT
but does not include depreciation.
Interpretation -
37.49 26.78 20.17 17.54 46.51
The interpretation of PBDIT can be applied to this because it only excludes

depreciation.
The highest is the 2015 compared to all the years and its growing steadily.as well
as 2016 was the worst year.
Presentation -
40
Data analysis-
PBT per share -

PBT stands for profit before tax. It shows the company's earning capacity before
paying the taxes to the government. Normally it would be greater compared to
the PBIT.
Interpretation -
37.21 26.45 18.17 23.22 51.14
Same interpretation as for PBIT
Presentation -
41
PROFITABILITY RATIOS -
Data analysis
PBDIT margin %-
The profits before depreciation interest and tax Margin indicates the efficiency of
the management. It tells us how efficient the company’s operating model is. Pbdit
Margin tells us how profitable (in percentage terms) the company is at an
operating level. It always makes sense to compare the PBDIT margin of the
company versus its competitor to get a sense of the management’s efficiency in
terms of managing their expense.
In order to calculate the PBDIT Margin, we first need to calculate the PBDIT
itself.
PBDIT = [Operating Revenues – Operating Expense]
Operating Revenues = [Total Revenue – Other Income]
42
Operating Expense = [Total Expense – Finance Cost – Depreciation &
Amortization]
PBDIT Margin = EBITDA / [Total Revenue – Other Income]
It tells us in percentage terms how much the company has retained out of its
profits from operation and how much it has spent.
Interpretation-
15.38% 13.14% 12.43% 14.03%

18.63%
The margin conveys that the company has retained greater percentage with
respect to last five years of profit in 2019 although there was a slight decrease in
2016 but 2019 has outperformed comparatively.
It tells us that out of 100% of revenue from the operations 81.37% was spend on
the expenses towards generating revenue and 18.63% was retained.
presentation -
43
Data analysis -
PBIT margin-
The PBIT margin is a financial ratio that measures the profitability of a company
calculated without taking into account the effect of interest and taxes. It is
calculated by dividing PBIT (earnings before interest and taxes) by sales or net
income. PBIT margin is also known as operating margin.
PBIT margin = EBIT (Net profit + Tax + Interest) / Net income.
Interpretation -
16.45% 13.09% 10.5% 9.32% 11.09%
The PBIT and associated margin are not figures required by generally accepted
accounting figures. However, the PBIT margin is very useful as a means of
comparing the operating efficiency of a company from one year to the next or to
compare the firm's operating efficiency to other businesses in the same
industry.When you are looking at the PBIT margin for the current year as
44
compared to earlier years, you want to see a percentage that is equal to or
greater than that of the previous year.
The same is true when comparing the firm's PBIT margin to that of another
company. A lower PBIT may indicate problems with the business's operating
efficiency.It can been seen that the company margin has been increasing
compared to last 3 years excluding the 5th year
Presentation
Data analysis -
45
PBT Margin-
EBT is the money retained internally by a company before deducting tax

expenses. It is an accounting measure of a company's operating and
non-operating profits. All companies calculate EBT in the same manner, and it is
a "pure ratio," meaning it uses numbers found exclusively on the income
statement.
Interpretation -
16.33% 12.93% 9.46% 12.34% 12.20%
The company's pbt margin has increased rhythmically.
Presentation-
46
Data analysis -
Net profit margin-
Net profit margin is the percentage of revenue remaining after all operating
expenses, interest, taxes and preferred stock dividends (but not common stock
dividends) have been deducted from a company's total revenue.
(Total Revenue – Total Expenses)/Total Revenue = Net Profit/Total Revenue =

NetProfit Margin.
Interpretation -
47
25.65% 17.4% 12.35% 17.02% 35.97%
The company's net profit margin has been at an increasing rate from the year
2016 Net profit margin is often used to compare companies within the same
industry, in a process known as "margin analysis." Net profit margin is a
percentage of sales, not an absolute number, so it can be extremely useful to
compare net profit margins among a group of companies to see which are most
effective at converting sales into profits.
Presentation -
48
Data analysis -
Return on equity %-
The return on equity (ROE) ratio tells you how much profit the company can earn
from your money. The formula is this one: ROE Ratio = Net Income/
Shareholder's Equity. This ratio tells you how much money the company earns
on an investor's dollar. The higher the ROE ratio, the higher the profitability.ROE
is considered a measure of how effectively management is using a company’s
assets to create profits.
Interpretation-
49
18.87% 15.11% 11.97% 18.91% 23.22%
A good or bad ROE will depend on what’s normal for the industry or company peers. Its
reasonable to wonder why an average or slightly above average ROE is good rather
than an ROE that is double, triple, or even higher the average of their peer group. Aren’t
stocks with a very high ROE a better value?
Sometimes an extremely high ROE is a good thing if net income is extremely large
compared to equity because a company’s performance is so strong. However, more
often an extremely high ROE is due to a small equity account compared to net income,
which indicates risk.
Presentation -
Data analysis -
Return on capital employed -ROCE is the primary measure of how efficiently a

company utilizes all available capital to generate additional profits. It can be more
50
closely analyzed with ROE by substituting net income for EBIT in the calculation
for ROCE.
ROCE works especially well when comparing the performance of companies in

capital-intensive sectors, such as utilities and telecoms, because unlike other
fundamentals, ROCE considers debt and other liabilities as well. This provides a
better indication of financial performance for companies with significant debt.
To get a superior depiction of ROCE, adjustments may be needed. A company

may occasionally hold cash on hand that isn't used in the business. As such, it
may need to be subtracted from the Capital Employed figure to get a more
accurate measure of ROCE.
Formula - EBIT/CAPITAL EMPLOYED
Interpretation -
The long-term ROCE is an important indicator of performance. In general,

investors tend to favor companies with stable and rising ROCE numbers over
companies where ROCE is volatile year over year.
26.05% 14.10% 11.10% 17.01% 20.64%
The company is showing growth in the last year with some instability.
51
Presentation -
Data analysis -
Return on assets-
Return on Assets (ROA) is an indicator of how well a company utilizes its

assets, by determining how profitable a company is relative to its total
assets.ROA is best used when comparing similar companies or comparing
a company to its previous performance.when using ROA as a comparative
measure, it is best to compare it against a company's previous ROA
numbers or against a similar company's ROA.
The ROA figure gives investors an idea of how effective the company is in
converting the money it invests into net income. The higher the ROA
52
number, the better, because the company is earning more money on less
investment.
ROA = Net income / total assets.
Interpretation -
13.30% 10.42% 8.25% 12.52% 14.11%
The ROA has increased compared to the last four years with much
volatility, it would be better if compared with the other stocks.
Presentation-
53
Data analysis
Debt equity ratio -
The debt-to-equity ratio shows the proportion of equity and debt a company is
using to finance its assets and signals the extent to which shareholder's equity
can fulfill obligations to creditors, in the event of a business decline.The more a
company's operations are funded by borrowed money, the greater the risk of
bankruptcy, if the business hits hard times.Debt can also be helpful, in facilitating
a company's healthy expansion.
Interpretation -
0 0 0 0 0
The company has no debt which is a good indicator from last five years.
Presentation
54
Data analysis -
Asset turnover ratio -
Asset turnover is the ratio of total sales or revenue to average assets.This metric
helps investors understand how effectively companies are using their assets to
generate sales.Investors use the asset turnover ratio to compare similar
companies in the same sector or group.
It is a tool to see which firms are making the most use of their assets and to
identify weaknesses in firms.
Formula = total sales / average assets.
Interpretation -
118.14 122.58 128.32 138.45 164.52
The company has not performed well in the most recent year compared to the
last 3 year on which 2015 has greatly performed. It has been decreasing on rate.
55
Presentation
56
Liquidity ratios -
Data analysis -
Current ratio -(in times)
The current ratio compares all of a company’s current assets to its current
liabilities. These are usually defined as assets that are cash or will be
turned into cash in a year or less, and liabilities that will be paid in a year
or less.
The current ratio is sometimes referred to as the “working capital” ratio

and helps investors understand more about a company’s ability to cover
its short-term debt with its current assets.
Formula - current assets / current liabilities.
Interpretation -(in times)
2.92 2.76 2.74 2.48 1.96
If a company has the ratio between 1.5-2.5it is considered to be decent high ratio
can also suggest that too much working capital is tied in inventories or debtors.
The company is having a decent ratio among which the 2015 was the best one.
57
Presentation -
Data analysis -
58
Quick ratio -
The quick ratio is a more conservative version of another well-known liquidity

metric -- the current ratio. Although the two are similar, the quick ratio provides a
more rigorous assessment of a company's ability to pay its current liabilities.It
does this by eliminating all but the most liquid of current assets from
consideration.
Formula - liquid assets/current liabilities
Interpretation -
1.59 1.4 1.31 1 0.6
The low quick ratio of the year 2015 suggest that its is more likely to struggle to
pay debts but the next 4 years have a decent quick ratio.
Presentation-
59
Data analysis -
Inventory turnover ratio -
In the simplest terms, inventory turnover is how many times inventory is

repeatedly used or sold in a certain time period.
Formula - cost of good sold /average inventory
Interpretation
60
3.49 3.45 3.5 3.56 3.82
The company shows an inventory turnover between the range of 3 -4 which is

decent in fact the best inventory turnover is 4-6 .
Presentation -
Data
analysis -
Dividend
payout ratio -
The Dividend Payout Ratio (DPR) is the amount of dividends paid to shareholders in
relation to the total amount of
net incomethe company generates. In other words, the
dividend payout ratio measures the percentage of net income that is distributed to
shareholdersin the form of dividends.
Dividend payout ratio np =dividend /net income
Dividend payout ratio cp =dividend /net cash flows.
61
Interpretation -
Dividend payout ratio np
15.59 20.12 28.33 20.56 18.06
Dividend payout ratio cp
13.05 15.83 20.1 15.3 13.45
The higher dividend payout ratio indicates that the company is reinvesting less and
paying more whereas lower dividend payout would be vice versa.The year 2017 shows
that the company has given more dividends compared to the other five years.
Presentation -
62
Data analysis -
Earnings retention ratio -
Earning Retention Ratio is also called the Plowback Ratio. As per definition, Earning
Retention Ratio or Plowback Ratio is the ratio that measures the amount of earnings
retained after dividends have been paid out to the shareholders.
Formula =(Total Net Profit / Number of Total share) - (Dividend / Share)
Interpretation -
63
84.41 79.68 71.67 79.44 81.94
Higher the retention ratio more the growth of the company the highest retention ratio can
be seen the year 2017 compared to the other ratios.but the single ratio wont tell us much
about it we have to check out it in the trend or with peers .
Presentation -
64
Valuation ratios -
Data analysis
Enterprise value -
Enterprise value (EV) is a measure of a company's total value, often used as a more
comprehensive alternative toequity market capitalization. Enterprise value includes in its
calculation the market capitalization of a company but also short-term and long-term
debt as well as any cash on the company's balance sheet.Enterprise value is used as
the basis for many financial ratios that measure the performance of a company.
Formula -
Ev = MC+ total debt -C
Where ,
65
MC-Market capitalization ,which is current stock price *no of outstanding shares
Total debt - short term and long term
C- cash and cash equivalent but not include marketable securities.
Interpretation -
19-Mar 18-Mar 17-Mar 16-mar 15 - mar
17264.17 8794.06 6772.41 6176.51 6799.63
We can notice that the enterprise value has been increasing.
Presentation -
66
Data analysis -
Enterprise value/ net operating revenue (in times) -
A measure of the value of a stock that compares a company's enterprise value to

its revenue.Often used to determine a company's valuation in the case of a
potential acquisition.Can be used for companies that do not generate income or
profits.A lower EV/sales multiple means that a company is more attractive or
undervalued.The measurement is considered more accurate than P/S, which
doesn’t take into account a company's debt load.
The lower the better, in that, a lower EV/R multiple signals a company is
undervalued.
Interpretation -
5.9 3.94 2.75 2.55 2.52
A high EV-to-sales can be a sign that investors believe the future sales will
greatly increase. A lower EV-to-sales can signal that the future sales prospects
are not very attractive. In this company the ratio is increasing from
years.generally the ratio between 1-3 is good.
Its shows that the company is highly overvalued from last year's ratio.
Presentation -
67
Data analysis -
EV/EBITDA-
Enterprise multiple, also known as the EV/EBITDA multiple, is a ratio used

to determine the value of a company.
It is computed by dividing enterprise value by EBITDA.
Enterprise multiples can vary depending on the industry. It is reasonable

to expect higher enterprise multiples in high-growth industries and lower
multiples in industries with slow growth.
Interpretation-(in times)
68
31.36 21.73 20.88 20.54 17.98
Comparing the last five years the company has shown high growth from 2018 to
2019
And the growth of the company is moderate in 2015-2017.
Presentation -
Data analysis -
69
Market capitalization/ sales / price to sales -(in times)
Market cap to sales ratio also known as price to sales ratio indicates how the
market is valuing every rupee of the company’s sales. It is used to compare the
companies in the same sector. It is also useful for valuation of a company that is
incurring losses.
Market-cap to sales is used for spotting recovery situations or for double

checking that a company's growth has not become overvalued.
If the ratio is less than 1 then the stock is considered to be undervalued.
Interpretation -
6.18 3.57 2.96 2.7 2.6
It indicates for every rupee the following amount has to be paid in respective year
the value of the company compared to the revenue has been increasing
constantly. In the last year the value of the company has been increased at a
higher rate.
Presentation -
70
Data analysis
Price to book value ratio -
The P/B ratio compares a company's market capitalization or market value to its
book value.
PB Ratio - stock price /book value of equity.
Where book value of equity is -book value of assets - book value of liability
Traditionally, any value under 1.0 is considered a good P/B value, indicating a
potentially undervalued stock. However, value investors often consider stocks
with a P/B value under 3.0.
71
The P/B ratio should not be used as a single evaluation of a stock because, while
a low P/B can indeed reveal an undervalued stock, it can also indicate a
company with serious underlying problems. A weakness in a P/B evaluation is
that it fails to factor in things such as future earning prospects or intangible
assets. However, the P/B ratio helps to identify hyped-up companies that have
surging stock prices with no assets.
Interpretation -(in times)
10.37 6.35 5.5 5.64 7.04
In the most recent year the P/b ratio is overvalued compared to the other years.
Presentations -
72
Data analysis -
Earnings yield -(%)
Earnings Yield, in its simplest form, is earnings divided by price. It is expressed

as a percentage of the investment value and is the reciprocal of the
price/earnings (PE ratio).
In other words, earnings yield is the annual earnings of a stock, individual

company, or market index compared to the price.
Earnings Yield = Annual Earnings Per Share / Stock Price
73
or
Earnings Yield = Net Income / Market Capitalization
The earning yield is the reciprocal of the P/E ratio
The earning yield primarily focuses on the rate of return on investment.
Interpretation -(%)
0.02 0.02 0.02 0.03 0.03
Year 2015 & 2016 has give a good rate of return compared to the later years.
Presentation -
74
.
TECHNICAL ANALYSIS OF THE SHARES OF THE COMPANY -
What is technical analysis ? And its need.
Technical analysis is analysing the technical information provided by the market i.e.
through market participants it is a kind of technique mostly used by the traders to identify
the upcoming market opportunities and the main tool to use this technique are the charts .
Charts play an important role to help the traders visualize the current trend of the market
and to effectively identify the patterns in order to earn the profit in a short term .
The best feature of the technical analysis is that it can be applied in any of the market
segments , basically it provides us with the historical data it helps us to think and on
assumption that history repeats itself and the trader tries to follow trend relying on the
assumptions made by his point of view. So a trader is needed to follow the trend provided
by the market signal and not to forecast the trend given by the charts.
75
Overview of technical analysis.
● Charts.
● Candlesticks.
● Indicators
● Trends .
● . Price.
Note – Analysis is done on stocks of bata ltd from Indian stock market for research
purposes .
Things to note -
● O – OPEN
● H – HIGH
● L – LOW
● C – CLOSE.
● Indian Market timings – 9:15 am – 3:30 pm.
Moving average-
76
A moving average (MA) is a widely used indicator in technical analysis that helps
smooth out price action by filtering out the “noise” from random short-term price
fluctuations.
RSI INDEX -
● RSI (14)
Stands for Relative Strength Index. It is a momentum indicator used to
identify overbought or oversold condition in the stock.Time period
generally considered is 14 days. RSI reading below 25 is interpreted as
77
oversold. RSI between 25 & 45 is interpreted as a bearish condition. RSI
between 45 & 55 is interpreted as a neutral condition.RSI between 55 &
78
75 is interpreted as a bullish condition. RSI reading greater than 75 is
interpreted as an overbought.
Interpretation -
There are two lines given below the RSI shows the overbought and undersold
region of the shares of bata company.
MACD -
MACD(12,26,9)
Stands for Moving Average Convergence Divergence.It is a trend following
momentum indicator. For calculation three moving averages are taken which are
9 day EMA, 12 day EMA & 26 day EMA. The 26 day EMA subtracted from the 12
day EMA alongwith the 9 day EMA which is the "signal line", together give
buy/sell signals. If the MACD is above 0 and crosses above the signal line it is
considered to be a bullish signal. If the MACD is below 0 and crosses below the
signal line it is considered to be a bearish signal.
79
INTERPRETATION -
We can see the bullish signals given by the MACD line and the signal lines and
they are mostly bullish.
Bollinger Band(20,2)
Stands for Bollinger Bands. It is a technical analysis tool defined by a set of lines
plotted two standard deviations (positively and negatively) away from a simple
moving average.The upper and lower bands are typically 2 standard deviations
+/- from a 20-day simple moving average.It is believed the closer the prices move
to the upper band, the more overbought the market, and the closer the prices
80
move to the lower band, the more oversold the market. Approximately 90% of
price action occurs between the two bands. Any breakout above or below the
bands is a major event. The breakout is not a trading signal.
Interpretation -
We can see 90% of the prices of the company moving within the bollinger
bands.
81
Overall interpretation of technical analysis -
82
CONCLUSION -
It can be seen that the market moves in rhythm it does not have any specific
direction and by checking the overall technical and the fundamental analysis of
the company we can say that the company's value has been increasing
And the financial health of the company is good if one wants to invest in this
company for the long term period it should and can earn a good amount of
return over a period of time.
Bibliography -
● Moneycontrol
● Investopedia.
● wikipedia .
● Library.
83
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Index

This project contains research made on

Confusions by a novice investor or trader in selecting an investment with the world

❖ Poor investment skills due to inexperience.

Relevance of the project -

Historical background of the problem​.

Why do we invest anyways ?

Lets take two

You save monthly Rs.

600000 is the total

So is it worth it ? Obviously yes .

Hypothesis of the problem-

Limitations of the study -

EQUITY RESEARCH FOR STOCK SELECTION -

Name of the company - Bata india Ltd

2. What do they manufacture?

4. Who are their competitors ?

10. Who are the company's client and end user?

❖ Step a -balance sheet of the company company.

Bata India Previous

Standalone Balance Sheet -----------------

19-Mar 18-Mar 17-Mar 16-Mar 15-Mar

12 mths 12 mths 12 mths 12 mths 15 mths

EQUITIES AND LIABILITIES

Equity Share Capital 64.26 64.26 64.26 64.26 64.26

Total Share Capital 64.26 64.26 64.26 64.26 64.26

Revaluation Reserves 0 0 0 26.79 26.79

Reserves and Surplus 1682.27 1414.45 1261.02 1091.97 931.09

Total Shareholders Funds 1746.53 1478.71 1325.28 1183.02 1022.15

Other Long Term Liabilities 100.24 103.74 103.97 102.87 97.76

Long Term Provisions 2.28 2.19 0 0 0

Total Non-Current Liabilities 102.52 105.93 103.97 102.87 97.76

Trade Payables 515.65 479.23 407.22 324.86 356.74

Other Current Liabilities 98.27 70.67 81.78 74.27 85.04

Short Term Provisions 15.67 10.32 4.35 61.41 75.75

Total Current Liabilities 629.59 560.22 493.35 460.53 517.53

Total Capital And Liabilities 2478.64 2144.87 1922.6 1746.42 1637.43

Tangible Assets 310.78 292.91 264.58 301.52 305.74

Intangible Assets 3.79 1.55 1.38 0.6 0.94

Capital Work-In-Progress 17.25 12.12 24.23 13.43 16.58

Fixed Assets 331.82 306.58 295.79 321.15 354.86

Non-Current Investments 4.95 4.95 4.95 4.95 4.95

Deferred Tax Assets [Net] 109.78 105.39 100.43 101.92 87.62

Other Non-Current Assets 86 81.06 73.76 0 0

Total Non-Current Assets 641.17 597.28 573.02 606.36 623.71

Inventories 839.09 762.11 705.44 678.9 704.7

Trade Receivables 65.3 88.63 67.15 69.64 58.42

Cash And Cash Equivalents 839 588.49 520.91 340.51 209.97

OtherCurrentAssets 90.33 104.58 52.83 10.16 8.7

Total Current Assets 1837.47 1547.58 1349.58 1140.06 1013.73

Total Assets 2478.64 2144.87 1922.6 1746.42 1637.43

OTHER ADDITIONAL Nil Nil Nil Nil Nil

Contingent Liabilities 73.38 77.33 68.65 101.45 130.88

CIF VALUE OF IMPORTS

Raw Materials 0 0 0 3.95 4.99

Stores, Spares And Loose Tools 0 0 0 0.2 0.24

Trade/Other Goods 0 0 0 121.52 173.33

Capital Goods 0 0 0 4.16 7.48

Expenditure In Foreign Currency 341.99 264.84 203.48 53.6 44.22

Historical background of the problem.

STEP C-CASH FLOW STATEMENT