FORTUNE INSTITUTE OF INTERNATIONAL BUSINESS

CORPORATE INTERNSHIP PROGRAMME

REPORT

Equity Research Report on Top-5 IT Companies & Identifying

Diversification Opportunities while investing in Nifty-50

CIP REPORT – 2021-23

POST GRADUATE DIPLOMA IN MANAGEMENT

SUBMITTED BY

Kushal Saxena
(21PGDMFM002)

CORPORATE MENTOR – SACHIN KUMAR

FACULTY MENTOR- DR. SUDHI SHARMA

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 CERTIFICATE FROM FACULTY MENTOR

This is to certify that the Project Report titled “Equity Research Report on Top-5 IT
Companies & Identifying Diversification Opportunities while investing in Nifty-50” is a
bonafide work carried out by Kushal Saxena of PGDM-FM (2021-23) Batch of Fortune Institute
of International Business, New Delhi as a fulfilment of PGDM Program.

He has worked under my guidance and satisfactorily completed his project work.

Date:

Dr. Sudhi Sharma

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 DECLARATION BY THE STUDENT

I, hereby, declare that the work presented in this report, entitled “Equity Research Report
on Top-5 IT Companies & Identifying Diversification Opportunities while investing
in Nifty-50” in fulfilment of the requirements for the PGDM-FM Program, submitted to
Fortune Institute of International Business, New Delhi is an authentic record of my own
work and is free from any type of plagiarism, carried out under the supervision of Mr.
Sachin Kumar (Corporate Mentor) and Dr Sudhi Sharma (Faculty Mentor).

I also declare that the work embodied in the present report

(i) Is my original work and has not been copied from any source, and

(ii) Has not been submitted for any other degree or diploma of any university/Institution.

Kushal Saxena

21PGDMFM002

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 ACKNOWLEDGEMENT

It gives me tremendous delight to thank numerous people for their close collaboration and
support, contributing straightforwardly or a roundabout way to set up this report.
First and foremost, I would like to express my sincere appreciation to my Summer
Internship company mentor, Mr. Sachin Kumar, for giving me priceless direction through
my most memorable undertaking in this two-month entry-level position. He politely
listened to my concerns, attempted to address them, and offered me valuable suggestions
for improving and making my project more significant.
I would also like to offer my sincere gratitude to my internship faculty mentor Dr. Sudhi
Sharma. He provided crucial advice and timely updates to ensure the project's timely
completion.
I want to end by saying how appreciative I am to FIIB, New Delhi, for giving me this
opportunity. Finally, a heartfelt expression of commitment and appreciation to everyone
who successfully helped me complete my summer internship project. This report was
produced with the help of many people, and it would not have been possible without their
cooperation and assistance.

CIP project.xlsx

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 EXECUTIVE SUMMARY

This study is to understand the concept of Equity analysis and research in the IT sector
specifically in India. The report contains not only the financial health analysis which shows
the profitability, solvency, and how efficient the firm’s working internally as well as
technically such as analysing price action while using indicators such as moving average,
relative strength index and Bollinger band. Furthermore, the stocks are also been analysed
on the basis to volatility by using R-language to see whether the stocks are volatile in short-
run or long-run or both.
The report has been conducted on selected firms, which is done on the basis of Market
capitalisation of 2022, Sales growth, EBITDA margin, ROCE, ROE, net profit margin and
gross profit margin. Afterwards top five firms have been selected. The primary and
secondary objective of the project is described below. As well, the roles and duties
maintained by me have also been describes later.
The report presents the findings based on the analysis done by utilising ratio analysis via
debt-equity ratio, earning per share, gross profit margin ratio, net profit ratio, return on
capital employed, etc. The overall conclusion drawn from all insights is also put into
words. Microsoft excel has been used for the calculations and graphical presentation that
would help in creating better understanding alongside the explanations given. The overall
exposure at the internship resulted in immense learning about the financial health of IT
company along with the equity market. There are a lot of insights gained during that period
which will help in building my career.

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 TABLE OF CONTENT
SChapter No. Contents Page No.
.
N From - To
o
1 Title Page 1
.
2 Faculty Mentor 2
. Certificate
3 Declaration by the 3
. student
4 Acknowledgement 4
.
5 Executive Summary 5
.
6 Table of Contents / List 6
. of Illustrations
7Chapter-1 Introduction to the 7-26
. Sector, Industry,
and Company
8Chapter-2 Review of the 26-28
. Assignments
9Chapter-3 Project Objectives 28
.
Chapter-4 SWOT analysis 28-30
1
0
.
1Chapter-5 Action plan 30-32
1
.
Chapter-6 Working Methodology 32-36
1 Used
2
.
1Chapter-7 Findings 36-53
3
.
1Chapter-8 Suggestions 53-55
4
.
1…………… References 56
5………
.

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 Introduction to the Industry

Financial services

The financial services industry offers financial services to both individuals and businesses. A wide
range of financial businesses, including banks, investment houses, lenders, financing companies,
real estate brokers, and insurance companies, make up this sector of the economy. The financial
services sector, which leads the globe in earnings and equity market capitalization, is perhaps the
most significant one in the economy, as was already mentioned. This industry is dominated by
huge conglomerates, although it also has a wide spectrum of smaller businesses. The International
Monetary Fund (IMF finance )'s and development division defines financial services as the
procedures via which consumers or businesses acquire financial goods. If a payment system
provider receives and distributes money between payers and recipients, for instance, it is providing
a financial service. Accounts cleared by cheques, credit and debit cards, electronic fund transfers,
and similar methods are included in this. Money is managed by businesses in the financial services
sector. For instance, a financial advisor works on behalf of a customer to manage assets and provide
recommendations. The advisor doesn't offer investments or any other products directly; instead,
they help money travel between investors and the companies that make securities and other
financial instruments. Rather than being a physical asset, this service is a transitory activity. One
of the most significant and influential areas of the economy are financial services.

Banking, investing, and insurance are just a few of the more specialised operations that fall under
the umbrella of financial services.

While financial products are the real items, accounts, or investments that these companies offer,
financial services are only the activity of financial services corporations and their professionals.

 What is stock market?

For the purpose of trading company stock (shares) and derivatives at an agreed-upon price, a stock
market or equity market is a public (a loose network of economic transactions, not a physical
facility or discrete) entity; these securities include both those listed on a stock exchange and those
that are only traded privately. At the end of 2020, the size of the global stock market was projected
to be at $93.7 trillion. On the high end, the size of the global derivatives market has been estimated
at above $1 quadrillion. At the end of June 2021, the gross market value of OTC derivatives was
$12.6 trillion, which was 20.1 percent less than year-end 2020 and 18.5 percent less than mid-year
2020. Compared to mid-year 2020, when gross market value was equal to 2.6 percent of notional
outstanding, it was 2.1 percent at mid-year 2021. Referring to the Indian stock market There are
23 stock exchanges in India, with the following prominent ones: A stock exchange in Mumbai
(BSE) United States Stock Exchange (NSE) BSE:- The brokers who prospered after the American
Civil War selected a location in a street in 1874 where they could conveniently meet and conduct
business. These days, people commonly refer to this street as DALAL STREET. They were
officially founded in Bombay in 1887 under the name "Native Shares and Stock Brokers
Association." It purchased a building on the same street in 1895, and in 1899 it was officially
opened under the name Bombay Stock Exchange (BSE). India's most prestigious stock market,
Bombay Stock Exchange (BSE), can also trace its roots back 125 years to its beginnings as a

7
voluntary non-profit organisation. Every time it makes a new high or low, you hear about it. You
also hear about it every day when you read headlines like "The BSE Sensitive Index surged 5%
today." Stocks and stock markets are crucial, as is obvious. At a stock exchange, shares of public
limited corporations can be bought and sold. What, then, are stock exchanges in reality? Also
known as Stock market news, it is often published in a variety of media. The stock market, often
known as a stock exchange, is a regulated market for securities (such as stocks, bonds, and options)
that is characterised by the concentration of supply and demand for the execution of orders by
participating brokers, on behalf of institutional and retail investors. It is simple to buy and sell on
the exchange. Early trading operations in agriculture and other commodities created a demand for
stock exchanges. Trading during the Middle Ages was made simpler by the need for supporting
documents like draughts, notes, and bills of exchange.
The National Stock Market (NSE), another significant stock exchange in India, was founded in
April 1993 with support from top financial organisations. In India's major cities, a number of stock
exchanges have been developed over the years. Currently, there are 23 stock exchanges that are
recognised, including those in Mumbai (BSE, NSE, and OTC), Calcutta, Delhi, Chennai,
Ahmedabad, Bangalore, Bhubaneswar, Coimbatore, Guwahati, Hyderabad, Jaipur, Kochi, Kanpur,
Ludhiana, Mangalore, Patna, Pune, Rajkot, Vadodara, Indore, and Meerut. NSE: - It was
determined that raising the Indian stock markets to international standards was necessary as a result
of the liberalisation of the Indian economy. The Industrial Development Bank of India, the
Industrial Credit and Investment Corporation of India, the Industrial Finance Corporation of India,
all insurance corporations, a few particular commercial banks, and others joined forces to establish
the NSE in 1992. The NSE is the largest stock market in India, serving more than 160 cities and
towns. It offers a cutting-edge, completely computerised trading system created to give investors
across the nation a secure and convenient way to buy, sell, and liquidate stocks. The establishment
of the national stock exchange was necessary because investors in numerous regions of the nation
lacked equal access to and opportunities for trading. The NSE network has been developed to give
investors from all regions of India equitable access and to be accommodating to their demands. In
April 1993, the NSE received recognition as a stock exchange under the Securities Contract Act of
1956, and in June 1994, it began operating in the Wholesale Debt Market (WDM) sector.
Operations in the capital market (equities) segment started in November 1994, while those in the
derivatives area began in June 2000. On November 3, 1994, NSE began trading in the capital
market segment. Within a year, it had surpassed all other exchanges in India in terms of number of
transactions.

List of Top 10 Brokerage Firms in India

Sr. No. Name of Stock Broker

1. ICICI Direct

2. Zerodha

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 3. Upstox

4. HDFC Securities

5. Sharekhan By BNP Paribas

6. Angel Broking

7. IIFL Securities Ltd.

8. Edelweiss

9. Kotak Securities

10. Motilal Oswal

COMPANY PROFILE

With 764 thousand active clients, Sharekhan by BNP Paribas is the eighth-largest stock broker
in India and the fifth-largest full-service retail brokerage firm. One of the innovators of online
trading in India is Sharekhan. It provides a wide range of financial services and products, such as
wealth management, loan against shares, mutual fund distribution, ESOP financing, stocks
brokerage, and loan against shares. S.S. Kantilal Ishwarlal Investors Services Pvt Ltd, a
company with more than eight decades of trust and repute in the stock market, operates a retail
brokerage division called Sharekhan Ltd. Mr. Shripal S Morakhia and Mr. Shreyas S
Morakhia promoted Sharekhan Ltd (formerly SSKI Investors Services Pvt Ltd). Right now,
it is India's biggest broking house. It participates in the Mumbai stock exchange. It participates as
a depository in both the NSDL and CDSL. Depository services, portfolio management, stock
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 broking, and derivatives are all part of its operations. Corporate finance and institutional broking
are also included in the SSKI group. The corporate finance section concentrates on specialised
industries like infrastructure, telecom, and media while the institutional broking division serves the
largest domestic and international institutional investors. In each of these markets, SSKI controls
a sizable share of the market. We offer the best research coverage among Indian broking
organisations because we pioneered investment research in the country. One of the top research
teams in the nation is ours. SSKI consistently ranks among India's top domestic brokerage houses
and was chosen four times by Asia Money Survey as the country's top domestic brokerage house.
Sharekhan.com, one of India's first internet trading pioneers, was established in 2000 and is
currently the second most popular Indian brokerage website.

NATURE OF BUSINESS CARRIED

The company Sharekhan is a stock brokerage. On the BSE (Bombay Stock Exchange) and the
NSE, the company provides a full range of pre trade, trading, and post transaction services
(National stock exchange). The company's highly qualified staff and cutting-edge equipment
guarantee seamless transactions and rapid service whether customers provide instructions over the
phone or walk into the company's conventionally positioned offices to trade in a specialised setting.
 Investment Advisory service
 Facilitation services to Retail Investors, Corporate.
 Depository services

Investment options include:

 Online trading (Includes equity, derivatives)
 Commodities trading
 Mutual funds
 Portfolio management service

Operations:
 Institutional broking

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 Investment Banking
 Retail Broking

The investor became the finished product through the trading and settlement process. For all
transactions involving equity derivative instruments on exchanges, the clearing house of the
exchange may serve as the legal counter party to all dealers. Thus, the two parties to an equity
derivative were satisfied, either by the parties themselves or, in the event of a party default, by the
clearing corporation.
Only an exchange trading member may be used by a client to conduct a transaction. A trading
member may also serve as a clearing member. Trading works in a manner akin to screen-based
trading in shares and other securities on an exchange. The exchange developed standardised
contracts in which the stock exchange specifies the settlement date and clients can enter into
contracts with various contract types.
The Clearing Corporation and trading members work to reduce the possibility that parties to a
contract won't fulfil their obligations in full. Clearing/trading members are obligated to pay margin,
and they do so by collecting it from the clients they serve.

VISION, MISSION AND OBJECTIVES

VISION: “To be the best retail broking brand in the Indian equities market”

MISSION: “To educate and empower the individual investor to make better investment decisions
through quality advice and superior service”

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 PRODUCTS AND SERVICES
PROFILE

One of India's top providers of financial

services is Sharekhan. It offers a full range
of investment solutions, including those for
equities, derivatives, commodities, initial
public offerings (IPO), mutual funds,
depository services, portfolio management
services, and insurance. offers High Net
Worth clients individualised wealth
management services as well. It targets
more than 800,000 trading consumers
thanks to its physical presence in more than
400 Indian cities through more than 800
"Share Shops" and its online presence on
Sharekhan.com, India's top online
destination. Sharekhan provides services
for portfolio management, stock trading, derivatives trading, currency trading, initial public offerings,
mutual funds, and bonds (PMS). Both NRIs and Indians can trade with Sharekhan thanks to the full-
service brokerage firm. Customers can also take use of a variety of value-added services, such as access
to Sharekhan research and recommendations, trading calls, loans secured by stocks, a tool for finding
patterns, Dial-n-trade, refer & earn, etc. To further educate consumers on the stock market, online
lessons including learning video, audio, classrooms, etc. are offered.

1. Trading Facilities Sharekhan, a member of the NSE and BSE, offers its customers both offline
and online trading facilities for trading securities in the secondary market. The company's extensive
network of locations around the nation provides the means to execute the orders in the secondary
market.
2. Derivatives: (Futures and Options) The Company also supports the trading system for
secondary market trading in the NSE and BSE's futures and options segment. The company's equity
dealers would be happy to share their knowledge of the new sets of futures and options being
introduced to the Indian Capital Market.

3. Depository services: Sharekhan uses the depository services provided by Central Depository
and Securities Limited and National Securities Depository Limited. Sharekhan will set up De-mat
accounts, allowing investors to convert their physical stock certificates into electronic account
balances.

4. Margin Financing: Sharekhan is aware of the investor's need for additional cash available for
shares purchased on a daily basis in the current rolling settlement scenario. It provides a special
financing option that allows for the affordable purchase of shares.
5. Initial Public Offerings and Mutual Funds: Sharekhan gives investors the chance to
participate in the potentially lucrative IPO market. All mutual funds are distributed through
Sharekhan. This is the company's newest programme, and it also offers programmes that are
tailored to investors with different risk and return profiles.

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6. Stock Lending and Borrowing: Sharekhan allows one to order shares. It is an authorised
intermediary for the lending or security plan. These earnings fees for all of the investors' unused
shares would be sent to the borrowers. Sharekhan therefore meets the need of the investor for
borrowing and lending of shares.
7. Equity Research: Sharekhan has a highly regarded research team that specialises in equity
research for certain industries, companies, and macroeconomic studies. The research team's
recommendations, which are based on the fundamentals of a specific firm and the industry as a
whole, will be made available as daily trading calls, quarterly investment selections, and long-term
investment picks.

8. Internet Trading: By logging into the corporate website, investors can also trade their shares
through this service. the virtual environment Sharekhan uses to provide online trading services.
9. Portfolio Management Services: Sharekhan Securities is a registered portfolio manager with
SEBI and has both discretionary and non-discretionary rights to manage client portfolios. For
individuals who might not have the time to handle their stock investments or who might need the
assistance of the company's highly specialised professional team, this service is offered.

COMPETITORS INFORMATION

Due to increased retail involvement and favourable systematic liquidity, brokerage companies are
expected to post record revenues in the current fiscal year. The industry is anticipated to generate
a total revenue of Rs 27,000–28,000 crore in FY2022, representing a year-over-year (y-o-y) rise
of 28–33 percent, according to rating agency ICRA. However, with an anticipated total industry
turnover of Rs 28,500–29,000 crore in FY2023, the revenue growth rate is anticipated to reduce to
5-7 percent.
Since the start of the epidemic, there has been a spike in activity on equities markets, which experts
attribute to strong corporate results, favourable liquidity in both local and international markets,
increased internet use, and retail engagement. The overall number of demat accounts rose from 55
million in March 2021 to 80 million as of December 2021. According to Icra in the paper, the net
monthly accounts addition climbed from 11.9 lakh in FY2021 to 28.33 lakh in the current fiscal
year, compared to only 4.1 lakh per month in FY2020. In addition, the average daily turnover
surged 126 percent, from Rs. 27.92 trillion in FY2021, to Rs. 63.07 trillion in the nine months that
ended FY2022.

Some of the competitors of Sharekhan by BNP Paribas are:

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KOTAK SECURITIES

One of the top financial organisations in India, Kotak Mahindra provides comprehensive financial
solutions that cover all aspects of life. The organisation offers a range of financial services to meet
the needs of both individuals and businesses, including commercial banking, stock broking, mutual
funds, life insurance, and investment banking. The organisation employs about 6000 people across
its many operations, has a net worth of about Rs. 2000 crore, and an AUM of about 120 billion. It
serves a clientele of over 100,000 and has offices in New York, Landon, Dubai, and Mauritius in
addition to being present in 216 Indian cities. The organisation focuses on providing elite financial
services to all industry segments.

INDIA INFOLINE:
The parent firm of the India Infoline Group, India Infoline Ltd, owns and operates the websites
www.indiainfoline.com and www.5paisa.com. Additionally, it conducts both customised and pre-
made research. IndiaInfoline.com, which went live on May 11th, 1999, is the largest and most
authoritative source of business and financial information in India. The website offers the general
public free access to high-quality information and analysis that was previously only available to a
select group of people.

ZERODHA:
One of Share Khan's main rivals is Zerodha, according to analysts. The headquarters of Zerodha
were established in 2010 and are located in Bengaluru, Karnataka. In the investment banking and
securities sector, Zerodha is a competitor. 4.40 percent of Share Khan's earnings comes from
Zerodha.

ICICIdirect
One of Share Khan's main opponents is ICICIdirect. ICICIdirect was established in 2000, and New
York, New York serves as its corporate headquarters. ICICIdirect operates in the Diversified
Financial Services sector, just like Sharekhan. Sharekhan employs 3,870 fewer people than
ICICIdirect.

Indiabulls
The 3 opponent of Share Khan is Indiabulls. In Gurgaon, Haryana, a public corporation called
Indiabulls was established in the year 2000. Indiabulls is an industry competitor in asset and
investment management. in contrast to Sharekhan. Indiabulls has a market value of approximately
$1 billion and a combined net worth of approximately $725 million. The biggest financial firms in
the world, including Fidelity Funds, Capital International, Goldman Sachs, Merrill Lynch, Lloyd
George, and Felon Capital, are some of Indiabulls' major shareholder.

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 Introduction to the Industry

Information technology sector

The global market in India continues to grow at a rapid pace compared to the IT-BPM industry.
India is a world leader, accounting for about 55% of the US $ 200-250 billion global service
delivery business in 2019-20.
India's status has improved four places to 46th in the 2021 Global Innovation Index (GII).
The IT industry accounted for 8% of India's GDP by 2020. According to STPI (Software
Technology Park of India), the export of software outside IT affiliated IT companies, for Rs.
1.20 lakh crore (the US $ 16.29 billion) in the first half of FY22.

 Future prospects of the sector?

According to the National Association of Software and Service Companies (Nasscom),

revenues from the Indian IT industry are expected to reach $ 227 billion in FY22 from $ 196
billion in FY22.

According to Gartner estimates, IT spending in India is expected to increase to the US $ 101.8

billion by 2022 from an estimated US $ 81.89 billion by 2022.

India's software product industry is expected to reach the US $ 100 billion by 2025. Indian
companies are focused on investing internationally to expand global history and improve their
delivery facilities worldwide.

India's data anchor market stands at $ 250 million in FY20, with the US market contributing
60% of the total value. The market is expected to reach US $ 7 billion by 2030 due to the
urgent domestic demand for AI.

Exports from the Indian IT industry stand at $ 149 billion by FY21. Exports of IT services
have had a significant impact, accounting for more than 51% of total IT exports (including
hardware). BPM and Engineering and R&D (ER&D) and software product deployment
accounted for 20.78% of the total IT deployment during FY21. The ER&D market is expected
to grow to $ 42 billion by 2022.

Recent trends and strategies

Global delivery model

The Indian software industry is expected to reach US $ 100 billion by 2025. Indian companies
are focused on investing.

15
internationally to expand their global track record and improve their worldwide delivery
facilities.

In line with this, in February 2021, Tata Consultancy Services announced plans to recruit
1,500 technical personnel across the UK.

next year. The development will build TCS 'capacity to deliver their services successfully to
UK customers.

Data annotation and labelling hub

India's data analytics market stands at US $ 250 million at FY20, with the US market
contributing about 60% nationwide.

The market is expected to reach US $ 7 billion by 2030 due to the urgent domestic demand
for AI.

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 INTRODUCTION TO THE COMPANY

Tata Consultancy Services was launched as part of the Tata Sons on April 1, 1968, as a
management and technology project that would create the need for computer services
downstream. FC Kohli, a brilliant technical expert, was brought to Tata Electric Companies
as General Manager to launch the initiative.

It acquired ICL in 1970 which was imported by the Calcutta Electric Supply Company but
remained unused because the unions could not represent it. However, according to India's
newly established Department of Electricity regulations, TCS had to commit to double the
number of imported computers over the next five years. This has effectively guided our view
of foreign markets. Launched software for common processes such as accounting, share
registration, sales analysis, inter-bank reconciliation, provident fund accounting et al, and
using that software on behalf of clients.

TCS signed three major deals which outline the digital transformation sector. In the largest
agreement ever signed by TCS, it has partnered with Transamerica to establish its own digital
dividing asset base, cloud-based on the TCS BaNCS Insurance platform. Two other
companies, M&S and M&G Prudential in the United Kingdom, will use digital technology to
transform their operating models to adapt to Business 4.0.

It is listed among the three most important products in the global IT services sector and was
named the fastest-growing type of IT service in a review conducted by Brand Finance. We are
also ranked as Top Employees worldwide by Top Employer Institute, and among Forbes
Employees by Forbes.

NATURE OF BUSINESS CARRIED

TCS is an information technology company. The company offers complete services as

follows.
 Cyber security.

17
 Digital engineering.
 Blockchain.
 Cloud computing.
 Analytics and insights
 Automation and AI

VISION AND MISSION

VISION: “To decouple business growth and ecological footprint from its operation to address
the environment bottom-line”
“To grow sustainably and help our customer achieve sustainable growth through our green
solutions and service offerings.”

MISSION: “To help customer to achieve their business objective by providing innovative,
best in-class consulting, IT solutions and services”

PRODUCTS AND SERVICES PROFILE

18
 Infosys is a global leader in next-generation digital services and consulting. We allow clients
in more than 50 countries to apply their digital transformation. With more than 40 years of
experience in managing systems and operations of global businesses, we guide our clients
with expertise in their digital journey. We do this by empowering the business with an AI-
powered core that helps prioritize transformation. We also empower the business with fast
digital scales to deliver unprecedented levels of performance and customer satisfaction. Our
ever-learning learning agenda enhances their ongoing development by building and
transferring digital skills, technologies, and ideas from our new ecosystem.
Since the capital of US $ 250, we have grown to a company of US $ 104.71 billion.

NATURE OF BUSINESS CARRIED

Infosys is an information technology company. The company offers complete services as
follows.
 Digital marketing.
 Digital commerce.
 Applied AI.
 Data analytics.
 Blockchain.
 Metaverse
 Engineering services.
 Digital supply chain.

VISION AND MISSION

Vision: “To be a globally respected corporation that provides best-of- breed business
solutions, leveraging technology, delivered by best-in-class people.”

19
Mission: “To achieve our objectives in an environment of fairness, honesty, and courtesy
towards our clients, employees, vendors and society”

PRODUCTS AND SERVICES PROFILE

Mphasis provides applied technology solutions, cloud services, migration and technology,
business process outsourcing services, etc. that can be customized to meet business and
industry needs.

Mphasis uses next-generation technology to help businesses transform businesses around the
world. Customer focus is at the heart of Mphasis and is reflected in Mphasis' transformational

20
Front2Back™ approach. Front2Back™ harnesses the exponential power of the cloud and
cognitive functions to deliver a hyper-personalized (C=X2C2 TM=1) digital experience to
clients and their end customers. Mphasis' Service Transformation approach helps to "shrink
the core" through the application of digital technologies across legacy environments within
the enterprise, enabling businesses to stay ahead in a changing world. Mphasis' core reference
architectures and tools, speed and innovation with domain expertise and specialization are key
to building strong relationships with marquee clients.

Mission: To be a specialized enterprise at the confluence of people, profit and the planet. With
inquisitive minds, we leverage our global talent and innovative mix of services and technology
to delight customers.NATURE OF BUSINESS CARRIED

VISION AND MISSION

VISION: “Redefining the paradigm for business success together..”

Mission: “To help create a new kind of professional services firm that works with both
business and IT executives to innovate and deliver, end-to-end solutions that create
measurable value for our clients.”

PRODUCTS AND SERVICES PROFILE

21
Mindtree Limited is an international IT consulting and implementation company that delivers
business solutions through global software development. The company is structured into four
industry verticals – Retail CPG and Manufacturing (RCM), Banking, Financial Services and
Insurance (BFSI), Technology Media and Services (TMS) and Travel and Hospitality (TH).
The company offers services in the field of agile analysis and information management of
application development and maintenance of business process management, consulting in the
field of enterprise technologies, cloud digital business, independent testing of infrastructure
management services, mobility product engineering and SAP services. The company has its
registered office in Bengaluru Karnataka India and branches in India United States of America
(US) United Kingdom Japan Singapore Malaysia Australia Germany Switzerland Sweden
South Africa United Arab Emirates Netherlands Canada Belgium France Ireland Poland and
Republic of China. Mindtree was incorporated on August 5, 1999 as MindTree Consulting
Private Limited. 10 industry professionals who came from Cambridge Technology Partners
Lucent Technologies and Wipro were promoted. In January 2000, an investment of Rs. 169
crore was done through subscription of shares of the company in the first round of funding by
LSO Investment (P) Limited, a promoter company backed by three of the promoters and
Walden Software Investments Limited (managed by Walden International) Amalgamated
Holdings Limited and Vaitarna Holdings Private Limited. After a year in August 2001
investment by Global Technology Ventures Limited Walden Software Investments Limited
and Capital International Global Emerging Markets Private Equity Fund LP in a second round
of financing. In December of the same year, 2001, the company started an IT outsourcing

22
partnership with Volvo Information Technology. MindTree was rated as a Human Capability
Maturity Model (P-CMM) Level 5 Company in 2003, and the following year in 2004, the
company was rated as a CMMi Level 5 Company. MindTree contracted AIG Offshore
Systems Service Inc in January 2004 to supply IT services. During September of the same
year 2004, the company acquired the software division of ASAP Solutions Private Limited
and Arachno Solutions Private Limited (ARPSL). The company's West Campus development
center was opened in February 2005 in Bangalore. In June of the same year, 2005, MindTree
acquired 100% equity capital of Linc Software Services Private Limited, which was engaged
in application development and maintenance of Enterprise Resource Planning (ERP) products
and web development. During 2006, the company's development center in Chennai was
launched in July. In September 2006, the Company's status was changed from a limited
liability company to a limited liability joint-stock company. The company obtained a new
listing as a result of a name change to MindTree Consulting Limited in November 2006. In
December 2006, the company signed a memorandum of understanding (MoU) to expand
facilities in the Special Economic Zone (SEZ) in Chennai.

NATURE OF BUSINESS CARRIED

VISION AND MISSION

Vision: “A federation of companies, bound by one purpose – to Rise. Inspired by this spirit,
our legacy and values, our goal to always positively impact our partners, stakeholders,
communities and the world at large, remains unshakeable.”

Mission: “Tech Mahindra represents the connected world, offering innovative and customer-
centric information technology services and solutions, enabling Enterprises, Associates and
the Society to Rise.”

23
PRODUCTS AND SERVICES PROFILE

HCL Technologies is a next-generation global technology company that helps businesses

rethink their businesses in the digital age. Our technology products and services are built over
forty years of innovation, with a world-renowned management philosophy, a strong culture of
innovation and risk-taking, and a never-ending focus on customer relationships. HCL is also
proud of its diversity, social responsibility, sustainability, and education programs. With its
global network of R&D services and innovation labs, global delivery capabilities, and more
than 208,000+ 'Ideapreneurs' in all 52 countries, HCL delivers complete services to all
verticals in the industry to leading businesses , which includes 250 Fortune 500 and 650
Global. 2000.

Businesses in all industries stand in a volatile environment today. To thrive in the digital age,
technologies such as math, cloud, IoT, and automation are taking center stage. To give
businesses the maximum benefit of these technologies to further their business objectives,
HCL provides an integrated portfolio of products and services with three business units. These
are IT and Business Services (ITBS), Engineering and R&D Services (ERS), and Products
and Platforms (P&P).

ITBS enables global businesses to transform their businesses through the Digital Foundation,
our state-of-the-art infrastructure built around cloud computing, software-defined networks,

24
digital workplace, and other features; Digital Business, a combination of our app services and
consulting power; and Digital Performance, a three-dimensional set of modern performance
and efficiency at the business level.

ERS provides engineering services and solutions to all aspects of product development and
platform engineering.

The Holist Mode 1-2-3 strategy forms the backbone of these three business units to help
businesses roam the digital age more easily. A key feature of our focus is ‘Digital Enterprise
4.0’ - which aims to provide comprehensive services to our customers to meet current
technology needs while learning to be ready for the future.

The company's DNA of innovation, its deep culture of innovation, and its culture of going
beyond what is expected to create customer value, has clearly distinguished it and given it a
unique advantage in creating value for businesses in the digital and connected world.

NATURE OF BUSINESS CARRIED

VISION AND MISSION

Vision: “Together we create the enterprises of tomorrow.” MISSION: “To provide world-
class information technology solutions and services to enable our customers to serve their
customers better.”

Mission: Conduct our business according to the highest standards of honesty and integrity.

25
 Provide a level of service and support that allows our customers to confidently view us as
their preferred solutions provider.
Create a work environment that recognizes the expertise, contributions, and teamwork of our
valued employees.

To provide innovative, professional and personalized services to clients, associates and

employees.
We shall be sensitive to the needs of individuals forming a subject of our intervention.
PRODUCTS AND SERVICES PROFILE

REVIEW OF THE ASSIGNMENTS

The assignment will be reviewed on the basis of the analysis which would be formed
throughout the assignment to know the undervalued and fundamentally strong stocks.
During the internship, the project assigned i.e. Equity Research Report on Top-5 IT
Companies & Identifying Diversification Opportunities while investing in Nifty-50 under
which the prime task is to know fundamentally good companies in terms of interpretation of
financial statements and conducting ratio analysis.
It becomes significant to know the intrinsic value of the company because no matter how
strong a company’s fundamentals are it still be considered at its fair value, also known as
intrinsic value. To begin with, the evaluation of the intrinsic value relative valuation models
will be taken into account.
The price of the stock will also be considered technically which means analysis of candlestick
charts is considered to know the price action of the stock. This will aid in time the market.

26
 Last but not least for the creation of the diversification opportunities models on R language
will be prepared to know the diversity of the portfolio.
Need of the study:
 Different investment avenues are available for the investors. Stock market also offers good
investment opportunities to the investors to meet their expected return and maximisation of
wealth.

 The objective is to help the investor in selecting the appropriate company to attain the
maximum return and to construct the portfolio in such a manner to meet the investors
expected return.

 To identify the diversification opportunity available while constructing the portfolio.

 To develop and improve the strategies in technical analysis to time the market.

 To analyse the benchmark index i.e nifty-50.

Roles and Responsibilities

Role:

Equity and Derivative Research intern for the project.

Responsibilities:

 Assures better quality performance in every sphere of activity.

 Helping in developing an adequate system of communication.
 Continuous review of progress.

The end goal of this project is to understand the information technology industry
and this internship would aid in performing the analysis on the IT industry stocks
and to know which stocks are best for long term investment and short term
investment purpose through different analysis techniques and also provide me
with a well- versed personality and would provide a valuable experience in
market research to understand the functionality of service provider companies,
their work-culture and how exactly they work in the back-end process to provide

27
 seamless services. This experience will help me to build my career as equity and derivative
research intern.

Project Objectives

 Identifying the stocks that are fundamentally sound.

 Identifying the best time to enter & exit in the stocks.
 Identifying the stocks that are undervalued.
 Identifying diversification opportunities among top five IT companies while investing in
Nifty-50.
 To study various trends in benchmark index i.e nifty-50.
 To study in detail the role of the cash and derivative market.

SWOT ANALYSIS

ORGANIZATION – SHAREKHAN BY (BNP PARIBAS)

STRENGTH

The important elements of Sharekhan's business that provide it a competitive edge in the
market are examined in the company's strengths. The strength of a brand can be attributed to
a variety of things, such as its financial standing, skilled personnel, distinctiveness of its

28
 products, and intangible assets like brand value. The Sharekhan SWOT analysis found the
following strengths:

 A variety of cutting-edge financial items

 thorough investigation of all industry sectors
 Strong infrastructure; largest branch network in the nation; presence throughout India
with more than 1,500 locations serving 950,000 consumers in 450 cities.

WEAKNESS

A brand's shortcomings are specific areas of its business that can be improved to strengthen
its position. Some flaws can be described as qualities that the business lacks or in which the
competition excels. The Sharekhan SWOT Analysis has the following weaknesses:

 confined to urban regions only.

 Trading app is not friendly.

OPPORTUNITY

Any brand has the potential to improve in certain areas in order to grow its customer base.
Opportunities for a brand can include geographic expansion, product enhancements, improved
communication, etc. The opportunities in Sharekhan's SWOT analysis are as follows:
 Growing rural market
 Earning Urban Youth
 Educating people about the benefits of investments to increase target audience

THREAT

Any firm may face risks in the form of elements that could harm its operations. Threats can
come from a variety of sources, including increased rival activity, shifting governmental
priorities, alternative goods or services, etc. The following are the threats identified in
Sharekhan's SWOT analysis:
 Stringent Economic measures by Government and RBI
 Entry of foreign finance firms in Indian Market

PROJECT SWOT

Unquestionably, energy is a major force behind human advancement. Features inside the
industry that are a good sign are identified through a SWOT analysis of the power sector's

29
 strengths. These characteristics must be reflective of areas that the industry has considerable
influence over.

STRENGTH –

 Rising rate of investment in renewable energy

 Established infrastructure.
 Increased adoption of better and energy-efficient technology
 Strong performance despite pandemic

WEAKNESS

 Growing demand for energy

 Rising costs of electric grids
 Employee attrition

OPPORTUNITY
 Increased tax incentive for energy-efficient automobiles
 Seasonal increase in the number of days of sunlight
 Lifted bans on off-shore drilling

THREAT

 Compliance and regulatory risks

 Uncertainty in climate policy and carbon pricing
Commodity price volatility
ACTION PLAN

Company analysis: Financial ratio calculations and/or complicated forecasting of earnings,

cash flows, and dividends are used in this research. The analysis provides a foundation for
valuing stocks and making decisions about whether to purchase, sell, and hold them. Ratio
analysis is one of the most common methods used in the corporate analysis.

Technical analysis: A method of appraising securities involves analyzing market activity

information such as historical prices and volume. Instead of attempting to determine a
security's fundamental worth, technical analysts utilize charts and other tools to discover
patterns that may indicate future activity. Technical analysts think that stock and market
performance in the past is a good predictor of future performance.

30
Data Collection: Secondary data is gathered from the company's annual reports, relevant
books on the subject, and the company's official website. Secondary data was gathered from
numerous organizational databases, websites, newspapers, and other essential official records,
books, and magazines for the study.

Scope of the Research: The study will aid in determining the patterns in the stock prices of
India's three largest car manufacturers. As a result, it will inform the research's readers on the
trajectory of these businesses' stock prices. In addition, the research will provide information
and conclusions about how these firms' balance sheets appear and how they differ from one
another. This will be beneficial to people who will put their money in the hands of these
vehicle manufacturers. The firms' tendencies will be compared to the industry as a whole, with
the goal of drawing anything that will aid in a better knowledge of the sector.

Economy Analysis:

Indian Economy

India's economy ranks third in the world by purchasing power parity and is the sixth-largest
by nominal GDP (PPP). The nation is a member of the G-20 major economies and was just
recently industrialized. The richest Indian state is Maharashtra, at current prices,
Maharashtra’s gross state domestic product stood at Rs. 26.62 trillion (US$ 366.67 billion) in
2020-21AE. GSDP of the state increased at a CAGR (in Rs.) of 6.42% from 2015-16 to 2020-
21AE. It is the world's largest economy with the quickest rate of growth, according to the
Central Statistics Organization (CSO) and the International Monetary Fund (IMF).
India's gross domestic product (GDP) is expected to expand by 19.4 percent to Rs. 236.44 lakh
crore (US$ 3.05 trillion) in 2021–22 from Rs. 198.01 lakh crore (US$ 2.56 trillion) in 2020–
21.
The Indian economy is anticipated to expand by 9.2 percent in real terms in 2021–22 after
contracting by 7.3 percent in 2020–21. (According to initial advanced projections).
In 2022–2023, the GDP is projected to increase by 8–8.5 percent in real terms.

Gross Domestic Product: According to verified information from the World Bank, India's
GDP was approximately 3173.40 billion US dollars in 2021. India's GDP accounts for 0.21
percent of the global economy.
Inflation Rate:

In India, the annual inflation rate decreased somewhat from 7.04 percent to 7.01 percent in
June 2022, falling short of market expectations of 7.03 percent. For the sixth consecutive
month, it nevertheless stayed over the RBI's target range of 2 percent to 6 percent. Food costs

31
 increased by 7.56 percent, especially for vegetables (17.37%), spices (11.04%), and oil and
fats (9.36 percent). Transportation and communication prices increased by 6.9%, health
expenditures by 5.47%, education costs by 4.51%, and housing costs by 4.51%. (3.93 percent).
After rising by 0.94 percent in May, consumer prices increased by 0.52 percent on a monthly
basis.
Interest Rate: After a surprise 40-bps off-cycle rate increase in May, the Reserve Bank of
India increased its benchmark repo rate by 50 basis points to 4.9 percent during its June
meeting. Surprising markets, which had anticipated a 40-bps rate increase, the move was made
to ensure that inflation stays within target moving forward while promoting growth. The board
made the decision to increase its inflation prediction from 5.7 percent to 6.7 percent for FY
2022–2023. The central bank, meanwhile, kept its forecast for FY 2022–2023 GDP growth at
7.2 percent.

Methodology adopted

My practical work initiated with first selecting the scope of analysis.

The analysis is made by taking into consideration top Five Indian companies in the IT sector.
The scope of analysis is limited for a period of five years.
The selected firms are done on the basis of Market capitalisation, excess return to beta ratio,
ROCE, ROE , EBITDA margin.
Market cap is calculated as a multiple of total no. of firms outstanding shares by current
market price of a single share.
Excess return to beta ratio = (Annualised retun – risk free rate)/Beta, excess return is simply

the return which is earned by any script and risk free rate(RF) is experienced as the govt bond
yield.

ROCE= EBIT/ Capital employed, is the efficiency of an organisation in generating profit

merely using capital

ROE= Net income/ Shareholder’s equity

EBITDA margin= (Operating profit /sales)*100.

After selection of the firms for analysis, the next step was to procure annual reports from
authentic sources and calculate their ratios for their financial analysis.

32
For the ratio analysis, I opted for profitability ratio, solvency ratio and Investorratios.

Within all these three ratios, further ratios were calculated in order to analyse their own 3 year
progress as well as with the other firms.
The following chart shows the ratios utilised from each ratio analysis.

FUNDAMENTAL RATIOS

INVESTOR RATIO PROFITABILITY SOLVENCY RATIO

RATIO

EARNING PER SHARE (EPS) GROSS PROFIT MARGIN DEBT- EQUITY RATIO

MARKET EBITDA MARGIN INTEREST COVERAGE

CAPITALISATION RATIO RATIO

PRICE EARNING RATIO NET PROFIT MARGIN

RETURN ON CAPITAL
EMPLOYED

RETURN ON EQUITY

RETURN ON ASSET

Afterwards, financial health is followed by technical analysis which is the

interpretation of the price changes of a company’s stock in the market. Technical
analysis is done by taking price action measure, indicators and oscillator

33
TECHNICAL ANALYSIS

RELATIVE STRENGTH
MOMENTUM INDEX(RSI)

TECHNICAL
TREND Moving average
ANALYSIS

VOLITILITY Bollinger band

34
Technical analysis is not merely choosing the correct scripts. However, it is more about studying
the price action of the company. The technical analysis primarily has three components.

 On the basis of momentum

 On the basis of trend
 On the basis of volatility

On the Basis of Momentum

 RELATIVE STRENGTH INDEX -RSI – It is a momentum oscillator that tracks changes

in both price and volume movements. Although it remains in the range of 0 to 100, in
practise it is utilised between 20 and 80 or 30 to 70.

On the Basis of Trend

 Moving Averages - Moving averages are trailing technical indicators that help determine
whether a trend is still present. The 10, 20, 50, 100, and 200 moving average periods are
the most widely used moving average intervals. Simple Moving Average (SMA),
Exponential Moving Average (EMA), and Weighted Moving Average are three types of
moving average (WMA). When prices move higher than the moving average, the trend is
thought to be upward, and when prices move lower than the moving average, the trend is
thought to be downward.

35
On the Basis of Volatility

BOLLINGER BAND:

Bollinger Bands are a type of price envelope developed by John Bollinger Opens in a new
window. (Price envelopes define the upper and lower levels of a price range.) Bollinger
Bands are envelopes plotted at a standard deviation level above and below a simple moving
average of price. Because the band spacing is based on the standard deviation, they adjust
to fluctuations in the volatility of the underlying price. Bollinger Bands use 2 parameters,
Period and Standard Deviation, StdDev. The default values are 20 for periods and 2 for
standard deviations, although you can customize the combinations.

Bollinger Bands help determine whether prices are relatively high or low. They are used
in pairs, in upper and lower bands and in conjunction with a moving average. Furthermore,
the pair of belts is not intended to be used independently. Use the pair to confirm signals
provided by other indicators.

36
 FINDINGS
 Investor Ratio

Earning per share: It is the per-share earnings of the company. In the IT sector TCS and Mindtree
have outperformed. The profits of the TCS have been drastically rising on year on year basis
therefore there eps shows higher valuation. On the other hand, Mindtree is improving its sales
growth which results in an improvement in there operating profit.

160
140
120 2018
100 2019
80
2020
60
2021
40
20 2022
0
HCL TECH INFOSYS MAPHASIS MINDTREE TCS

 Enterprise value: It is the firm total value in terms of equity, debt, and preferred stocks.
TCS has a significant enterprise value over its peer firms. In the EV chart we can clearly see
TCS outperforming in the market every year. This means that TCS is increasing its value .

1500000
2018
1000000
2019

500000 2020
2021
0
HCL TECH INFOSYS MAPHASIS MINDTREE TCS 2022

 Profitability ratios
Return on asset: It shows how much operating profit it generated with respect to
fixed assets. TCS has a tremendous growth

37
 160 31.49

140
28.3
120 21.36 2022
20.35 17.85
100 20.26 31.68
15.79 19.21 18.68 2021
80 16.75 17.45
19.17 21.86 30.21 2020
60 21.85 12.23
18.62 18.04 2019
17.98
40 22.43 27.72
21.29 15.85 16.42 2018
20
0
HCL TECH INFOSYS MAPHASIS MINDTREE TCS

ROCE :It shows how much profit company earned after employing its capital in its
operations. The sector is performing consistently in terms of their respective ROCE.
TCS is again outperforming among the other company.

300
60.23
250
52.75
2022
200
38.46
30.16 33.77 37.95 52.79 2021
150 27.76 32.23 31.07
32.47 2020
28.84 31.28 33.73 50.71
100 23 2019
32 31.38 29.19 29.77
32.52 41.5 2018
50 31 23.91 21.95

0
HCL TECH INFOSYS MAPHASIS MINDTREE TCS

EBITDA MARGIN
250
39.35

200
43.16 33.51
29.87 24.74 2022
150 33.61
40.99 31.33 29.64 2021
34.6 2020
28.76 36.89 23.77
100 43.14
22.69 2019
29.44 34.57
29.63 2018
45.48 14.9
50 34.41 29.94 16.43 34.52
18.14

0
HCL TECH INFOSYS MAPHASIS MINDTREE TCS

EBITDA margin is the company’s operating profit with respect to their sales.

38
In this particular ratio as we can see the HCL is outperforming as its ratios are growing
and improving consistently.

GROSSMARGIN

180 30.75

160
32.57
26.64
140
24.43 21.05
120 33.2 27.4 2022
25.76 25.32
100 2021
25.93 26.39
35.14 22.63 18.56 2020
80
17.53 26.99 2019
60 23.35 25.06
38.26 10.38 2018
40 25.65 25.25 12.82 26.86

20 11.66

0
HCL TECH INFOSYS MAPHASIS MINDTREE TCS

Gross margin is how much percentage of the sales is gross profit. In the HCL has far
more appreciable than other company’s ratio. Having high gross margin helps to
company to increase its profitability.

NET PROFIT MARGIN

160 26.75
140 23.81
24.5
120 20.43 16.76 2022
27.5 19.96 22.27
100 21 2021
27.72 25.33
80 31.46 19.66 15.7 2020
20.11 22.4 13.93 24.4
60
33.35 8.12 2019
40 26.08 22.59 10.73 25.92
11.73 2018
20
0
HCL TECH INFOSYS MAPHASIS MINDTREE TCS

This ratio informs the percentage of net profit in sales. In the light of above chart, HCL
and TCS are the two companies where the company’s ratio performed better. Moreover,
HCL’s ratio has decreased over 5 years but TCSs have grown.

39
 Interest coverage ratio

1065.37
2018
621.69

2019
2020
397.74

341.24
2021

240.44
223.62
195.26

2022
181.14
180.62

146.74
122.72

103.31
79.44
71.11

57.52
48.28
47.96

45.04
30.73
28.78
23.01

16.67
28.6
0
0

HCL TECH INFOSYS MAPHASIS M INDTREE TCS

In the year 2018 the ratio of TCS have been significantly higher than the other company
the ratio stood at 1065 times (in 2018). Over time the ratio decreases because they reduce
their debt. Currently the lowest interest coverage ratio is of MPHASIS e.g 28.6 times.

RELATIVE VALUATION OF IT COMPANIES

Relative valuation is the valuation of an asset with its peer assets.

RELATIVE VALUATION
Co. PE Industry PE Median PE PEG Ratio Co. P/BV Industry P/BV
30.1

27.9
27.8

29
26.4

25.7
25

25

25

25

25
21.3

20.4
18.6

15.6

8.99
8.39
6.86

6.86

6.86

6.86

6.86
6.01
4.07
3.84

3.03

2.27
1.98
1.02

0.92

TCS INFOSYS HCL M INDTREE MPHASIS

40
 Profitability
Sales Gr_5 EBITDA PAT
COMPANIES yrs Gr_5 yrs Gr_5yrs
TCS 10.2% 9.3% 7.8%
INFOSYS 12.2% 9.4% 9.2%
HCL 12.5% 13.5% 9.4%
MINDTREE 15.0% 26.3% 31.6%
MPHASIS 14.5% 13.6% 12.3%

The relative valuation majorly consist of Company PE, Industry PE, Median PE, PEG
ratio, Company PB ratio, Industy PB ratio, Industry PB ratio.
Indusry PE(market capitalisation/total net profit): If investors wants to invest in the
industry than how many times the investors needs to pay to earn Rs 1.
Currently the industry pe is 25, which means investors needs to pay 25 times more to earn
Rs1.
Stock PE: The stock PE of TCS is 30.1 which means that an investor needs to pay 30.1
times more earn Rs 1. If the PE is high this means that either the price of the stock is
appreciating or earnings are depreciating that is why high pe often said as overvalued.
TCS earnings are consistently rising which is reflecting in price as well therefore the stock
is not overvalued it is just trading on a premium valuation.
PEG ratio is used to bring more reality in the price and earning ratio. The peg ratio includes
growth factor in the earnings.
Mindtree has the peg ratio of 0.9 which show the most fair valuation of the company.
TCS & INFOSYS has higher peg ratio which shows that their valuation is either at a
premium or overvaluation.
Price to book value is the relation between current market price of the company and book
value of the company.
Hcl, Infosys and Tcs has p/bv ratio less than their industry p/bv ratio. Therefore they are
undervalue in terms of this ratio.

41
 TATA CONSULTANCY SERVICES(CIP project.xlsx)
RELATIVE STRENGTH INDEX

RSI provides the index between 30-70 e.g oversold zone and overbought zone respectively.
The red rectangles consist of the overbought zone and the green rectangles are the oversold
zone.
Currently, the RSI index is stood at 41. Furthermore, there is a consolidation in the RSI
index, therefore, the rsi is stable near 41 which means that if at anytime RSI crosses 30
then the stock could show a breakdown from 3100 levels.

SELL: 3100
MOVING AVERAGES

There are numerous moving averages however only two simple moving averages are
considered here:
 50 SMA(Red line)

42
 200 SMA(green line)
The two moving averages are used for cross-over and support/resistance. When 50 SMA
intersect 200 SMA from above then it shows a bearish trend and vice versa.
It is also used as support/resistance. Recently TCS share breaks it 50 SMA and the 200
SMA stood at 2670 which mean the stock could go further down at this level.
SELL: 3100

Bollinger Band

The Bollinger band is an estimation of the volatility of the stock. The TCS stock in the
weekly timeframe is trading on the lower band of the Bollinger. If the stock failed its pull
back then the stock may go further down. Furthermore, if the stock sustained its pullback
then the stock can target for the median of the band.

INFOSYS
RELATIVE STRENGTH INDEX

As we can see there is a tiny gap between the overbought and oversold zone in the weekly
timeframe which leads to the neutral view of the share. The RSI is at 41 levels which shows
the natural view. Furthermore, if we take a look at the candlestick patterns we can clearly

43
see the bearish flag which means that there is a probable chance of the stock breaking down
from its current levels.
Rating: Wait and watch, sell when the bearish flag breaks(level: below 1400).

MOVING AVERAGES

There is no conclusive evidence visible in 50 SMA and 200 SMA. Hence the perspective
over this stock using SMAs is netural.

Bollinger Band

The stock was stable before 18 April 2022 thereafter the volatility expands. Currently, the
stock is close to the band’s median and from there we might expect further selling in it.
Hence, RSI and Bollinger band is slightly on the bearish mode therefore we expect selling
out of this stock.

MINDTREE
RELATIVE STRENGTH INDEX

44
RSI is perfectly following the price action with the current index level at 45.
Having the lower low formation with bearish flag the stock could further go to form lower
low patterns.
SELL BELOW 2800

BOLLINGER BAND

If we see the price action the share is continuously forming lower lows. The stock is close
to the band’s median and from there we might see further lower low formation and expect
further selling in it.
SELL RECOMMENDATION: Entry price, 2760.

45
 MOVING AVERAGES

The price action breaks 50 SMA the next target is 200 SMA.

MPHASIS

RELATIVE STRENGTH INDEX

The RSI levels have been consistently crushing in the weekly timeframe. The stock is currently
waiting for confirmation of the pullback. At the oversold zone, there is a chance to see a strong
surge in the price. The stock strongly rejected 2800 levels. Therefore, from here we can expect
a pullback, which could surge until 2800.

Buy @ 2400
Sell @2800
BOLLINGER BAND

46
The stock is creating support within the band hence from here we could expect a further
surge in the price till the median of the band.
Buy @ 2322
Sell @ 2649

MOVING AVERAGES

47
HCL TECHNOLOGIES LTD
RELATIVE STRENGTH INDEX

The RSI levels have been consistently crushing in the weekly timeframe. The stock is
currently waiting for confirmation of the pullback. At the oversold zone, there is a chance
to see a strong surge in the price. The stock strongly rejected from 1400 levels. Therefore,
from here we can expect a pullback, as the price action is currently trading at support levels
of September 2021 as it was consolidating for several weeks.

BOLLINGER BAND

As per the above chart, we can interpret that Bollinger band is showing that the stock is
reversing from lower band, which suggest that we can go long for the target of middle
range of the band.

48
 MOVING AVERAGES

As per the above chart, we can interpret that the stock has broken 50 SMA in April and
until then the company is still trading below it showing the weakness in the stock and
further downward trajectory untill 200 SMA.

Analysis in R-language()CIP project.xlsx

DESCRIPTIVE TCS INFOSYS HCL MINDTREE MPHASIS
STATS RETURN RETURN RETURN RETURN RETURN
Nobs 1235 1235 1235 1235 1235
NAs 0 0 0 0 0
Minimum -0.09883 -0.166121 -0.089504 -0.183621 -0.101088
Maximum 0.093901 0.113627 0.105939 0.156369 0.131257
Mean 0.000823 0.000979 0.000695 0.001487 0.001172
Median 0.000833 0.001377 0.001144 0.001381 0.000389
Stdev 0.016303 0.018226 0.01817 0.024364 0.022387
Skewness -0.173154 -0.749795 0.013183 -0.405415 0.214757
Kurtosis 4.147095 10.63386 3.979776 7.016131 2.417554

The highest return provided among the stocks selected is by Mindtree. However, the
standard deviation of Mindtree is also the highest. In the light of above results, TCS is the
least risky stock. Mindtree is for those investors which are risk takers.

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 Volitility measurement using ARCH and GARCH model
H0: No ARCH effect
H1: ARCH effect
ARCH
Company P-value
TCS < 2.2e-16
INFOSYS < 2.2e-16
HCL < 2.2e-16
MINDTREE < 2.2e-16
MPHASIS 2.85E-06

ARCH effect shows the short-term volatility, if P-value is less than 0.05, then there is ARCH effect,
means that there is a short-term volatility.

 In case of return of TCS there is short-term volatility as the p-value < 2.2e-16.
 In case of return of INFOSYS there is short-term volatility as the p-value < 2.2e-16.
 In case of return of HCL there is short-term volatility as the p-value < 2.2e-16.
 In case of return of MINDTREE there is short-term volatility as the p-value < 2.2e-16.
 In case of return of MPHASIS there is short-term volatility as the p-value 2.85E-06.

GARCH EFFECT(CIP project.xlsx)

 GARCH tells us both short and long-term volatility.

EQUATION OF GARCH:

shows the constant coefficient of the variance equation

shows how the volatility reacts to new information.

shows the persistence of the volatility.

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 The overall measurement of the persistence of volatility is

The effect of a shock on volatility dies out at the rate

GARCH(TCS)
Std.
Estimate Error t-value Pr(>|t|)
alpha1 0.142517 0.02368 6.0198 0.820
beta1 0.819436 0.02855 28.70559 0

If the Value of ALPHA1 is less than 0.05 then no short-term volatility.

If the value of BETA 1 is less than 0.05 then no long-term volatility.
 TCS alpha 1 value is 0.82 hence it has short-term volatility. The beta 1 value of the stock is 0
therefore it has no long-term volatility.
Interpretation: In the light of the above fundamental analysis. The stock is good to hold for long-
term. The stock is volatile in short period because market is volatile. Therefore, I can say that the stock
is for value investors.

GARCH(INFOSYS)
Std.
Estimate Error t-value Pr(>|t|)
alpha1 0.142517 0.023675 6.0198 0.52
beta1 0.819436 0.028546 28.70559 0

 Interpretation: Infosys has short-term volatility. However, it does not have long-term
volatility. Therefore, it is stated that the stock is appreciable for investors who invest in the
company for long-term perspective.

GARCH(HCL)
Std.
Estimate Error t-value Pr(>|t|)
alpha1 0.142517 0.023675 6.0198 0.45
beta1 0.819436 0.028546 28.70559 0

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  Interpretation: HCL has short-term volatility. However, it has no long-term volatility.
Therefore, it is stated that the stock is appreciable for investors who invest in the company for
long-term perspective.

GARCH(MINDTREE)
Std.
Estimate Error t-value Pr(>|t|)
alpha1 0.142517 0.02368 6.0198 0.003
beta1 0.819436 0.02855 28.70559 0

 Interpretation: Mindtree has no short-term volatility. However, it has long-term volatility.

Therefore, it is stated that the stock is appreciable for defensive investors who wants to take
less risk.

GARCH(MPHASIS)
Std.
Estimate Error t-value Pr(>|t|)
alpha1 0.142517 0.02368 6.0198 0.76
beta1 0.819436 0.02855 28.70559 0

 Interpretation: Mphasis has short-term volatility. However, it has long-term volatility.

Therefore, it is stated that the stock is appreciable for investors who wants invest in short-run
as the stock can invest generate good return in short period. Mphasis can be good for positional
trading.

Diversification opportunity using correlation

NIFTY-
50 TCS INFOSYS HCL MINDTREE MPHASIS
NIFTY-50 1.00
TCS 0.25 1.00
INFOSYS 0.25 0.57 1.00
HCL 0.23 0.58 0.59 1.00
MINDTREE 0.25 0.44 0.45 0.48 1.00
MPHASIS 0.16 0.33 0.34 0.36 0.43 1.00

Correlation is the relationship between two variables. The two variables that have been selected is the
nifty-50 index and each company among the five. This matrix is used to see wheather the nifty-50
index is creating the diversification with IT sector.

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 Interpretation:
 The correlation between nifty-50 and Tcs is 0.25
 The correlation between nifty-50 and Infosys is 0.25
 The correlation between nifty-50 and Hcl is 0.23
 The correlation between nifty-50 and Mindtree is 0.25
 The correlation between nifty-50 and Mphasis is 0.16
As we can infer that all of the correlation is near to zero. Hence we can conclude that overall IT-
stocks are least correlated with the nifty-50 index. So, if the investors invest in the nifty-50 index
while investing in IT-stocks it will definitely create diversification holistically.

SUGGESTION
The equity research is a measure which provides the holistical view of the economy, industry,
company. The IT sector provides us with top 5 stocks after screening out of 10 stocks on the basis of
excess to beta ratio, market capitalisation, roce and roe.
The most suitable stock is TCS as it is also an India’s number 1 company in terms of market
captalisation and having tremendous growth.
HCL and Infosys provide stability in their data.
I discovered that there are numerous factors that have an impact on the IT industry after applying
economic, fundamental, and technical analysis to the Indian IT market using the top-rated companies,.
Let's discuss the state of the Indian IT sector today. In 2016-2018 and 2020-2022, I saw the IT sector
flourish incredibly, but following the impact of COVID-19, it was severely damaged and most of the
it were hit, and they are still having trouble keeping their net profit and cash. From 2018 to 2020,
Mindtree's net profit and retained earnings are both rising. Due to covid-19, the company has been
affected very much from the year 2019 to 2020 in terms of sales and after that the company shows
massive recovery and now the company has been increased by 15%. Current assets are two times more
than the current liability, which is very good for the business's short term.

On the basis of fundamental analysis and technical analysis that I have done on the 5 companies in the
IT industry, I figured out that TCS Ltd should be prioritized by the investors for the long term.

 On the other hand, with respect to net profit and gross profit margin mindtree is not improving its
margin since past 5 years as compared to other companies. HCL’s margin are appreciable however,
there are increasing at a declining rate. TCS and INFOSYS is also performing with stability as they
are in the top corner stability is required to reduce business risk.

53
 180 30.75
160 32.57 26.64
140 24.43 21.05
120 33.2 25.32 27.4
25.76 2022
100 35.14 25.93 26.39
22.63 18.56 2021
80 17.53 26.99
23.35 25.06
60 38.26 10.38 2020
40 25.65 25.25 12.82 26.86
11.66 2019
20
0 2018

160 26.75
140 24.5 23.81
20.43 16.76
120 22.27
27.5 21 19.96
100 2022
27.72 25.33
80 31.46 19.66 15.7 2021
20.11 22.4 13.93 24.4
60
33.35 8.12 2020
40 26.08 22.59 10.73 25.92
11.73 2019
20
0 2018

GROSS AND NET PROFIT MARGIN CHARTS RESPECTIVLY.

Solvency is a crucial creteria to value the riskiness in the companies. Tcs and Infosys
are zero debt companies. Their operating cash flow are at increasing at increasing rate
therefore it provides a good sign for the companies as they are robust. HCL and Mphasis
has debt in their books. However, they are also not in the risky corner as the debt is low
and manageable the reason behind is their profit margins are stable and increasing.

Considering the investors ratio in these companies. The post covid situation in the indian
economy let them to improve their earning per share and Tcs and Mindtree are on the
top corners. Tcs and Infosys having the highest enterprise value respectively.

Technically, the stocks are discounting as US market have been seen a negative GDP.
So, the whole economy have been impacting the IT sectors.

 So, in this situation, what I recommend is that to invest in the information technology,
is a good idea and may provide abundant return as the demand of the sales is increasing.
So as an investor I will suggest to invest in this sector as it is performing good and as
currently trading at lower levels as per technical analysis it can go further upside which
will provide abundant returns to the investors. Tcs is a value based company it has a
value far more than the price it is been trading currently.

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 References

Websites

● https://www.india-briefing.com/news/indias-INFORMATION-
TECHNOLOGY-industry-investment-trends-opportunities-incentives-
18300.html/#:~:text=India%20ranks%20third%20worldwide%20for,an
d%20about%2010
%2C500%20manufacturing%20units.
● 585612800&interval=1d&filter=history&frequency=1d&includeAdju
stedClose=true
● https://www.fidelity.com/learning-center/trading-investing/technical-
analysis/technical- indicator-guide/RSI
● https://www.ibef.org/industry/india-automobiles

● https://www.moneycontrol.com/india/stockpricequote/IT/MINDTRE
E/BA10
● https://www.moneycontrol.com/india/stockpricequote/auto-
carsjeeps/marutisuzukiindia/MS24
● https://www.tradingview.com/chart/tq8CHWaW/?symbol=NSE%3A
NIFTY
● https://www.tradingview.com/chart/tq8CHWaW/?symbol=NSE%3A
NIFTY
● https://www.tradingview.com/chart/tq8CHWaW/?symbol=NSE%3A
NIFTY
https://www.screener.in/company/TCS/consolidated/

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