CHAPTER-1 INTRODUCTION

INTRODUCTION
Indian Securities markets are touching new heights as it has surpassed 15,000 marks. More and more investors are attracting towards equity investment and trading. But this is not always the case that no one can assure you certain returns there is always essence of uncertainty and risk in investment and that push investors on back seats. Sometimes it becomes very difficult for investors to predict the share price of the particular company in this very volatile market. It raises questions in investors mind that At what price I should buy? When to sell it... hold? But as trading and investments are increasing on the markets as SEBI had taken stern steps to disclose important information to its Shareholder and investor. So they can get as possible as information about the companies of which they are holding the shares or going to buy. And now-a-days brokers and some analyst providing some future predictions of stocks price movements. So now investment has become somewhat easy for investors. How they get it? This is done with a Stock Analysis getting the information about company and its price movements on stock markets and try to predict how would behave on stock markets. So, there is great importance of stock analysis among investors done brokers, experts, analyst, etc. Steel is crucial to the development of any modern economy and is considered to be the backbone of human civilisation. The level of per capita consumption of steel is treated as an important index of the level of socioeconomic development and living standards of the people in any country. It is a product of a large and technologically complex industry having strong forward and backward linkages in terms of material flows and income generation. All major industrial economies are characterised by the existence of a strong steel industry and the growth of many of these economies has

been largely shaped by the strength of their steel industries in their initial stages of development.

Steel industry was in the vanguard in the liberalisation of the industrial Sector and has made rapid strides since then. The new Greenfield plants represent the latest in technology. Output has increased, the industry has moved up i n the value chain and exports have risen consequent to a greater integration with the global economy. The new plants have also brought about a greater regional dispersion easing the domestic supply position notably in the western region. At the same time, the domestic steel industry faces new challenges. Some of these relate to the trade barriers in developed markets and certain structural problems of the domestic industry notably due to the high cost of commissioning of new projects. The domestic demand too has not improved to significant levels. The litmus test of the steel industry will be to surmount these difficulties and remain globally competitive.

HISTORY OF STEEL
Steel was discovered by the Chinese under the reign of Han dynasty in 202 BC till 220 AD. Prior to steel, iron was a very popular metal and it was used all over the globe. Even the time period of around 2 to 3 thousand years before Christ is termed as Iron Age as iron was vastly used in that period in each and every part of life. But, with the change in time and technology, people were able to find an even stronger and harder material than iron that was steel. Using iron had some disadvantages but this alloy of iron and carbon fulfilled all that iron couldnt do. The Chinese people invented steel as it was harder than iron and it could serve better if it is used in making weapons. One legend says that the sword of the first Han emperor was made of steel only. From China, the process of making steel from iron spread to its south

and reached India. High quality steel was being produced in southern India in as early as 300 BC. Most of the steel then was exported from Asia only. Around 9th century AD, the smiths in the Middle East developed techniques to produce sharp and flexible steel blades. In the 17th century, smiths in Europe came to know about a new process of cementation to produce steel. Also, other new and improved technologies were gradually developed and steel soon became the key factor on which most of the economies of the world started depending.

THE GLOBAL STEEL INDUSTRY

The current global steel industry is in its best position in comparing to last decades. The price has been rising continuously. The demand expectations for steel products are rapidly growing for coming years. The shares of steel industries are also in a high pace. The steel industry is enjoying its 6th consecutive years of growth in supply and demand. And there is many more merger and acquisitions which overall buoyed the industry and showed some good results. The subprime crisis has lead to the recession in economy of different countries, which may lead to have a negative effect on whole steel industry in coming years. However steel production and consumption will be supported by continuous economic growth.

CONTRIBUTION OF COUNTRIES TO GLOBAL STEEL INDUSTRY

The countries like China, Japan, India and South Korea are in the top of the above in steel production in Asian countries. China accounts for one third of total production i.e. 419m ton, Japan accounts for 9% i.e. 118 m ton, India accounts for 53m ton and

South Korea is accounted for 49m ton, which all totally becomes more than 50% of global production. Apart from this USA, BRAZIL, UK accounts for the major chunk of the whole growth.

Country Wise Crude Steel Production

Country Crude Steel Production (mtpa) CHINA JAPAN UNITED STATES RUSSIA SOUTH KOREA [Link] UKRAINE BRAZIL INDIA 272.5 112.7 98.9 65.6 47.5 46.4 38.7 32.9 32.6

ITALY

28.4

STEEL INDUSTRY IN INDIA

Steel has been the key material with which the world has reached to a developed position. All the engineering machines, mechanical tools and most importantly building and construction structures like bars, rods, channels, wires, angles etc are made of steel for its feature being hard and adaptable. Earlier when the alloy of steel was not discovered, iron was used for the said purposes but iron is usually prone to rust and is not so strong. Steel is a highly wanted alloy over the world. All the countries need steel for the infrastructural development and overall growth. Steel has a variety of grades i.e. above 2000 but is mainly categorized in divisions steel flat and steel long, depending on the shape of steel manufactured. Steel flat includes steel products in flat, plate, sheet or strip shapes. The plate shaped steel products are usually 10 to 200 mm and thin rolled strip products are of 1 to 10 mm in dimension. Steel flat is mostly used in construction, shipbuilding, pipes and boiler applications. Steel long Category includes steel products in long, bar or rod shape like reinforced

rods made of sponge iron. The steel long products are required to produce concrete, blocks, bars, tools, gears and engineering products. After independence, successive governments placed great emphasis on the development of an Indian steel industry. In Financial Year 1991, the six major plants, of which five were in the public sector, produced 10 million tons. The rest of India steel production, 4.7 million tons, came from 180 small plants, almost all of which were in the private sector. India's Steel production more than doubled during the 1980s but still did not meet the demand in the mid-1990s, the government was seeking private-sector investment in new steel plants. Production was projected to increase substantially as the result of plans to set up a 1 million ton steel plant and three pig-iron plants totalling 600,000 tons capacity in West Bengal, with Chinese technical assistance and financial investment. The commissioning of Tata Iron & Steel Company's production unit at Jamshedpur, Bihar in 1911-12 heralded the beginning of modern steel industry in India. At the time of Independence in 1947 India's steel production was only 1.25 Mt of crude steel. Following independence and the commencement of five year plans, the Government of India decided to set up four integrated steel plants at Rourkela, Durgapur, Bhilai and Bokaro. The Bokaro plant was commissioned in 1972. The most recent addition is a 3 Mt integrated steel plant with modern technology at Visakhapatnam. Steel Authority of India (SAIL) accounts for over 40% of India's crude steel production. SAIL comprises of nine plants, including five integrated and four special steel plants. Of these one was nationalized and two were acquired; several were set up in collaboration with foreign companies. SAIL also owns mines and subsidiary companies.

DEMAND OF STEEL IN INDIA

Driven a booming economy and concomitant demand levels, consumption of steel has grown by 12.5 per cent during the last three years, well above the 6.9 percent envisaged in the National Steel Policy. Steel consumption amounted to 58.45 mt in

2006-07 compared to 50.27 mt in 2005-06, recording a growth rate of 16.3 per cent, which is higher than the world average. During the first half of the current year, steel consumption has grown by 16 per cent. A study done by the Credit Suisse Group says that India's steel consumption will continue to grow by 17 per cent annually till 2012, fuelled by demand for construction projects worth US$ 1 trillion. The scope for raising the total consumption of steel in the country is huge, as the per capita steel consumption is only 35 kgs compared to 150 kg in the world and 250 kg in China. With this surge in demand level, steel producers have been reporting encouraging results. For example, the top six companies, which account for 70 percent of the total production capacity, have recorded a year-on-year growth rate of 13.4 per cent, 15.7 per cent and 11.7 per cent in net sales, operating profit and net profit, respectively, during the second quarter of 2007-08 We expect strong demand growth in India over the next five years, driven by a boom in construction (43%-plus of steel demand in India). Soaring demand by sectors like infrastructure, real estate and automobiles, at home and abroad, has put India's steel industry on the world steel map.

OBJECTIVES OF THE STUDY:

To find out the intrinsic to estimate underpriced or over prised securities in the steel sector To find out the most performing stock based on the growth of market prise To recommend the scrip for investor to invest To calculate a company's credit risk To make the company's stock valuation and predict its probable price evolution.

And aid investors in assessing the worth of the securities. Assess the future potential of the companies in the industry.

RESEARCH METHODOLOGY
RESEARCH Research is a systematic method of finding solutions to problems. It is a search for knowledge. The systematic approach relating to generalization and formulation of theories is called research. The adoption of a proper methodology is an essential step in conducting any survey research study. Research can be defined as systematic and purposive investigation of facts with an object of determining cause and effective relationship among such facts and research relationship between two or more phenomena.

RESEARCH DESIGN A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. It is a comprehensive plan of the series of operation that a researcher intends to carry out to accomplish the research objectives. It is the blue print of the study.

TYPES OF DATA USED The source of data is secondary in nature. The secondary data are collected from historical data of closing price of selected equities in the websites of the exchanges and the other links and the journals magazines etc.

LIMITATIONS OF THE STUDY

The data collected is secondary in nature. Only selected companies from the industry are taken for the study Data for only five years were taken for study A detailed study was not possible due to shortage of time. Project duration was limited to 45 days.

CHAPTER-2 REVIEW OF LITERATURE

RATIO ANALYSIS
Ratio is defined formally as "indicated quotient of two mathematical expressions". Ratio analysis is the process of determining and interpreting numerical relationship of different items of financial statements. It provides a yardstick to measure the relationship between variables or figures. Some of the important ratios usually used in company analysis include, Earnings per share, Price to earnings ratio, Price to Book value, Dividend yield ratio, Dividend Payout ratio, return on equity, etc.

. THE INTRINSIC VALUE CALCULATION

Ratios Used Earnings per share = Profit after tax No. of equity shares

Dividend per share

Amount declared as dividend No. of equity shares

Payout ratio

Dividend per share Earnings per share

Return on equity

Profit after tax Net worth

Net worth

Share Capital + Reserves and surplus

Price Earnings Rati o

Market price of share Earnings per share

Price earning average

Average of price earning range

Dividend Payout Ratio

Market price of share Earnings per share

Average DPOR for five years

Sum of DPOR for five years 5

Average Retention Ratio

1 Average DPOR

Average Return on Equity =

Sum of ROE for five years 5

Long Term Growth Rate in Dividend and Earnings(g)

Average Retention Ratio x Average Return on Equity

Normalized average price = Earnings Ratio

Sum of PE ratio for five years 5

Projected Earnings per share for 2010-2011

EPS for current year x (1 + Growth Rate)

Intrinsic Value Price Ratio

Projected Earnings x Normalized Average per share earnings

Projected Dividend per share

Dividend for the current year x (1 + Growth Rate)

CALCULATION OF BETA The systematic risk of the security is measured by statistical measure called beta. The input data required for the calculation of beta are the historical of all the returns of a respective stock market index.

nXY - XY nX2 (X)2

CALCULATION OF ALPHA The alpha parameters indicate what the return of the security would be when the market return is zero.

- x

CALCULATION OF EXPECTED RETURNS

Ri

+ Rm

CHAPTER 3 INDUSTRY AND COMPANY PROFILE

INDUSTRY PROFILE
The capital market is a market for financial assets, which have longer or indefinite maturity. Generally, it deals with long-term securities which have maturity period of above one year. The capital market may be further divided into three namely. 1. 2. 3. Industrial securities market Government securities market Long-term loan market The industrial market, which deals with shares and debentures, can further be divided into: 1. 2. Primary market Secondary Market

PRIMARY MARKET

In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. Secondary market is an equity trading avenue in which already existing/pre- issued securities are traded amongst investors. Secondary market could be either auction or dealer market. While stock exchange is the part of an auction market, Over-the-Counter (OTC) is a part of the dealer market. In addition to the traditional sources of capital from family and friends, startup firms are created and nurtured by Venture Capital Funds and Private Equity Funds. According to the Indian Venture Capital Association Yearbook (2003), investments of $881 million were injected into 80 companies in 2002, and investments of $470 million were injected

into 56 companies in 2003. The firms which received these investments were drawn from a wide range of industries, including finance, consumer goods and health. The growth of the venture capital and private equity mechanisms in India is critically linked to their track record for successful exits. Investments by these funds only commenced in recent years, and we are seeing a rapid build-up in a full range of channels for exit, with a mix of profitable and unprofitable outcomes. This success with exit suggests that investors will allocate increased resources to venture funds and private equity funds operating in India, who will (in turn) be able to fund the creation of new firms.

SECONDARY MARKET
Secondary Market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets. For the general investor, the secondary market provides an efficient platform for trading of his securities. For the management of the company, Secondary equity markets serve as a monitoring and control conduitby facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating

information (via price discovery) that guides management decisions.

Main financial products/instruments dealt in the secondary market

Equity: The ownership interest in a company of holders of its common and preferred stock. The various kinds of equity shares are as follows

 Equity Shares: An equity share, commonly referred to as ordinary share also represents the form of fractional ownership in which a shareholder, as a fractional owner, undertakes the maximum entrepreneurial risk associated with a business venture. The holders of such shares are members of the company and have voting rights. A company may issue such shares with differential rights as to voting, payment of dividend, etc. Rights Issue/ Rights Shares: The issue of new securities to existing shareholders at a ratio to those already held. Bonus Shares: Shares issued by the companies to their shareholders free of cost by capitalization of accumulated reserves from the profits earned in the earlier years. Preferred Stock/ Preference shares: Owners of these kind of shares are entitled to a fixed dividend or dividend calculated at a fixed rate to be paid regularly before dividend can be paid in respect of equity share. They also enjoy priority over the equity shareholders in payment of surplus. But in the event of liquidation, their claims rank below the claims of the companys creditors, bondholders / debenture holders. Cumulative Preference Shares: A type of preference shares on which dividend accumulates if remains unpaid. All arrears of preference dividend have to be paid out before paying dividend on equity shares. Cumulative Convertible Preference Shares: A type of preference shares where the dividend payable on the same accumulates, if not paid. After a specified date, these shares will be converted into equity capital of the company. Participating Preference Share: The right of certain preference shareholders to participate in profits after a specified fixed dividend contracted for is paid. Participation right is linked with the quantum of dividend paid on the equity shares over and above a particular specified level.

Security Receipts: Security receipt means a receipt or other security, issued by a securitisation company or reconstruction company to any qualified institutional buyer pursuant to a scheme, evidencing the purchase or acquisition by the holder thereof, of an undivided right, title or interest in the financial asset involved in securitisation. Government securities (G-Secs): These are sovereign (credit risk-free) coupon bearing instruments which are issued by the Reserve Bank of India on behalf of Government of India, in lieu of the Central Government's market borrowing programme. These securities have a fixed coupon that is paid on specific dates on half-yearly basis. These securities are available in wide range of maturity dates, from short dated (less than one year) to long dated (up to twenty years). Debentures: Bonds issued by a company bearing a fixed rate of interest usually payable half yearly on specific dates and principal amount repayable on particular date on redemption of the debentures. Debentures are normally secured/ charged against the asset of the company in favour of debenture holder. Bond: A negotiable certificate evidencing indebtedness. It is normally unsecured. A debt security is generally issued by a company, municipality or government agency. A bond investor lends money to the issuer and in exchange, the issuer promises to repay the loan amount on a specified maturity date. The issuer usually pays the bond holder periodic interest payments over the life of the loan. The various types of Bonds are as followsZero Coupon Bond: Bond issued at a discount and repaid at a face value. No periodic interest is paid. The difference between the issue price and redemption price represents the return to the holder. The buyer of these bonds receives only one payment, at the maturity of the bond. Convertible Bond: A bond giving the investor the option to convert the bond into equity at a fixed conversion price.

Commercial Paper: A short term promise to repay a fixed amount that is placed on the market either directly or through a specialized intermediary. It is usually issued by companies with a high credit standing in the form of a promissory note redeemable at par to the holder on maturity and therefore, doesnt require any guarantee. Commercial paper is a money market instrument issued normally for a tenure of 90 days. Treasury Bills: Short-term (up to 91 days) bearer discount security issued by theGovernment as a means of financing its cash requirements

NSE
The broad objective for which the exchange was set up has made it to play a leading role in enlarging the scope of market reforms in securities market in India. During last one decade it has been playing the role of a catalytic agent in reforming the markets in terms of market microstructure and in evolving the best market practices keeping in mind the investors. The Exchange is set up on a demutualised model wherein the ownership, management and trading rights are in the hands of three different sets of people. has completely eliminated any conflict of interest. This has helped NSE to aggressively pursue policies and practices within a public interest framework. NSE's nationwide, automated trading system has helped in shifting the trading

platform from the trading hall in the premises of the exchange to the computer terminals at the premises of the trading members located at different geographical locations in the country and subsequently to the personal computers in the homes of investors and even to hand held portable devices for the mobile investors. It has been encouraging corporatization of membership in securities market. It has also proved to be instrumental in ushering in scrip less trading and providing

settlement guarantee for all trades executed on the Exchange. Settlement risks have also been eliminated with NSE's innovative endeavours in the area of clearing and settlement viz., establishment of the clearing corporation (NSCCL), setting up a settlement guarantee fund (SGF), reduction of settlement cycle, implementing on-line, real-time risk management systems, dematerialization and electronic transfer of securities to name few of them. As a consequence, the market today uses state-of-the-art information technology to provide an efficient and transparent trading, clearing and settlement mechanism. In order to take care of investors interest, it has also created an investors protection fund (IPF), that would help investors who have incurred financial loss due to default of brokers.

Ownership and Management the NSE

NSE is owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries. It is managed by a team of professional managers and the trading rights are with trading members who offer their services to the investors. The Board of NSE comprises of senior executives from promoter institutions and eminent professionals, without having any representation from trading members. While the Board deals with the broad policy issues, the Executive Committees which include trading members, formed under the Articles of Association and the Rules of NSE for different market segments, set out rules and parameters to manage the dayto-day affairs of the Exchange. The ECs have constituted several committees, like Committee on Trade Related Issues (COTI), Committee on Settlement Issues (COSI) etc., comprising mostly of trading members, to receive inputs from the market participants and implement suggestions which are in the best interest of the investors and the market.

The day-to-day management of the Exchange is delegated to the Managing Director and CEO who is supported by a team of professional staff. Therefore, though the role of trading members at NSE is to the extent of providing only trading services to the investors, the Exchange involves trading members in the process of consultation and participation in vital inputs towards decision making.

Market Segments and Products

NSE provides an electronic trading platform for of all types of securities for investors under one roof - Equity, Corporate Debt, Central and State Government Securities, TBills, Commercial Paper, Certificate of Deposits (CDs), Warrants, Mutual Funds units, Exchange Traded Funds, Derivatives like Index Futures, Index Options, Stock Futures, Stock Options, Futures on Interest Rates etc., which makes it one of the few exchanges in the world providing trading facility for all types of securities on a single exchange. The Exchange provides trading in 3 different segments viz. Wholesale debt market (WDM) Capital market (CM) segment and The futures & options (F&O) segment. The Wholesale Debt Market segment provides the trading platform for trading of a wide range of debt securities which includes State and Central Government securities, T-Bills, PSU Bonds, Corporate Debentures, CPs, CDs etc. However, along with these financial instruments, NSE has also launched various products (e.g. FIMMDA-NSE MIBID/MIBOR) owing to the market need. A reference rate is said to be an accurate measure of the market price. In the fixed income market, it is the interest rate that the market respects and closely matches. In response to this, NSE started computing and

disseminating the NSE Mumbai Inter-bank Bid Rate (MIBID) and NSE Mumbai Inter- Bank Offer Rate (MIBOR). Owing to the robust methodology of computation of these rates and its extensive use, this product has become very popular among the market participants. Keeping in mind the requirements of the banking industry, FIs, MFs, insurance companies, who have substantial investments in sovereign papers, NSE also started the dissemination of its yet another product, the Zero Coupon Yield Curve. This helps in valuation of sovereign securities across all maturities irrespective of its liquidity in the market. The increased activity in the government securities market in India and simultaneous emergence of MFs (Gilt MFs) had given rise to the need for a well defined bond index to measure the returns in the bond market. NSE constructed such an index the, NSE Government Securities Index. This index provides a

benchmark for portfolio management by various investment managers and gilt funds. The Capital Market segment offers a fully automated screen based trading system, known as the National Exchange for Automated Trading (NEAT) system. This

operates on a price/time priority basis and enables members from across the country to trade with enormous ease and efficiency. Various types of securities e.g. equity shares, warrants, debentures etc. are traded on this system. The average daily turnover in the CM Segment of the Exchange during 2004-05 was nearly Rs. 4,506 crs. NSE started trading in the equities segment (Capital Market segment) on November 3, 1994 and within a short span of 1 year became the largest exchange in India in terms of volumes transacted. Trading volumes in the equity segment have grown rapidly with average daily turnover increasing from Rs.17 crores during 1994-95 to Rs.6,253 crores during 2005-06. During the year 2005-06, NSE reported a turnover of Rs.1,569,556 crores in the equities segment. The Equities section provides you with an insight into the equities segment of NSE and also provides real-time quotes and statistics of the equities market. In-depth

information regarding listing of securities, trading systems & processes, clearing and settlement, risk management, trading statistics etc are available here. Futures & Options segment of NSE provides trading in derivatives instruments like Index Futures, Index Options, Stock Options, Stock Futures and Futures on interest rates. Though only four years into its operations, the futures and options segment of NSE has made a mark for itself globally. In the Futures and Options segment, trading in Nifty and CNX IT index and 53 single stocks are available. W.e.f. May 27 2005, futures and options would be available on 118 single stocks. The average daily turnover in the F&O Segment of the Exchange during 2004-05 was nearly Rs. 10,067 crs.

Company Analysis
Edelweiss is one of the leading financial services company in India. Its current businesses include investment banking, securities broking, and investment management. It provides a wide range of services to corporations, institutional investors and high net-worth individuals.

Evolution of the company:

The Edelweiss Group is a conglomerate of 31 entities including 28 Subsidiaries and 2 Associate companies, engaged in the business of providing financial services, primarily linked to the capital markets. It operates from 43 other offices in 19 Indian cities. Since its commencement of business in 1996, it has grown into a diversified Indian financial services company organized under agency and capital business lines operated by the Company and its thirteen subsidiaries. The Managing Director and

C.E.O of the company is [Link] Shah. Edelweiss Capital Limited ([Link]), incorporated in 1995, today has emerged as one of Indias leading integrated financial services conglomerates. The Edelweiss group offers one of the largest ranges of products and services spanning varied asset classes and diversified consumer segments. Its businesses are broadly divided into Investment Banking, Asset Management, Broking Services and Loans. The companys research driven approach and consistent ability to capitalize on emerging market trends has enabled it to foster strong relationships across corporate, institutional and HNI clients. Edelweiss Capital Limited employs over 1500 employees, leveraging a strong partnership culture and unique model of employee ownership.

Organizational structure

The Board comprises of four independent and two non-executive directors out of a total of eight directors, each of whom brings in his own expertise in diverse areas. The focus is on strong corporate governance. There is an Independent Risk Committee headed by an external director.

BOARD OF DIRECTORS
The Board comprises of four independent and two non-executive directors out of a total of eight directors, each of whom brings in his own expertise in diverse areas. The focus is on strong corporate governance. There is an Independent Risk Committee headed by an external director.

healthy position whereby the balance sheet can be further levered easily for improving the ROEs. Business Overview
Edelweiss operations are broadly divided into Agency and Capital business lines. The strategies employed ensure that the divide would broadly remain equal among the two. The Agency business line includes Investment Banking, Broking - both Institutional and HNI, Asset management and Investment advisory services. The Capital business line includes Lending and Treasury Operations.

Investment Banking
Edelweiss has one of the most extensive product offerings within Investment Banking in India, catering to different market and client segments. The verticals within Investment Banking include Equity Capital Markets, Mergers & Acquisitions Advisory, Private Equity Syndication, Structured Finance Advisory, Real Estate Advisory and Infrastructure Advisory.

Broking Institutional Equities

Edelweiss has one of the leading institutional equities businesses in India backed by a large and experienced research team and a large and diversified client base. Intense servicing, seamless execution and innovative research products have helped Edelweiss build strong relationships with over 300 institutional investors, including FIIs and domestic institutional investors. Research coverage presently extends to over 200 companies across 19 sectors.

Private Client Broking

Edelweiss offers dedicated brokerage services to high net-worth individuals with a strong emphasis on building long-term relationships with clients. Product offerings include specialized trading execution for active trading clients and structured products like equity linked capital protection products.

Wealth Management
The Primary focus is on understanding each HNI client's profile including life style, risk appetite, growth expectations, current financial position and income requirements to create comprehensive and tailored investment strategies. Edelweiss offers

customized products along with practice models and advisory teams specializing in servicing the underserved NRI segment. The broad range of offerings includes asset allocation advisory to Structured Products, Portfolio Management, Mutual Funds, Insurance, Derivatives Strategies, Direct Equity, Private Equity, and Real Estate Funds etc.

Asset Management
Alternative Asset Management focuses on advisory/management expertise for Private Equity Fund, India focused Multi-Strategy Fund, Real Estate Fund and a Bonds Fund. Recent Initiatives that have been announced include setting up an ARC and a Distressed Assets Fund. On the Domestic AMC side, Edelweiss Mutual Fund has launched two Debt Funds, one Liquid Fund and one ELSS Fund.

Treasury
The Treasury Operations in Edelweiss is similar to that of a Treasury in a Commercial Bank and focuses on liquidity management and yield optimization. This division has adopted a multistrategy/multi-book approach to diversify and grow its portfolio while imparting liquidity in the balance sheet. The Company follows a disciplined and conservative approach to cash management with emphasis on strong risk policies and capital preservation.

Lending
With a deep knowledge and understanding of capital markets, the Companys primary offering in the lending business includes products such as promoter funding, loan

against shares, IPO financing, Loan against ESOPs etc. Its prudent financing norms and a conservative margin of safety ensures low or nil nonperforming loans.

Financial Products Distribution

Among the recent initiatives, Financial Products Distribution focuses on giving advice and analyzing the best financial product options available in the market. It involves the distribution of the full range of third party financial products and services for the retail customer.

CHAPTER 4 DATA ANALYSIS AND INTERPRETATION

TATA STEEL LIMITED

Tata Steel (earlier known as Tata Iron & Steel Company or Tisco) was established in 1907. It represents the country's single largest, integrated steel plant in the private sector. The company has a wide product portfolio, which includes flat and long steel, tubes, bearings, ferro-alloys and minerals as well as cargo handling services. While in terms of size,Tata Steel ranks 34th in the world; it was ranked first (for the second time) among 23 world class steel companies by World Steel Dynamics in June 2005. With its plant located in Jamshedpur (Jharkhand) and captive iron ore mines and collieries in the vicinity,Tata Steel enjoys a distinct competitive advantage. The main plant at Jamshedpur manufactures 5 MTPA of flat and long products, while its recently acquired Singapore-based company, NatSteel Asia, manufactures 2 MTPA of steel across Singapore, China, Philippines, Malaysia and [Link] from the main steel division, Tata Steel's operations are grouped under strategic profit centres like tubes, growth shop, bearings, ferro alloys and minerals, rings, agrico and wires.

Incorporation Year

1907 Bombay House, 24 Homi Mody Street Fort, Mumbai 400001, Maharashtra 91-22-66658282 91-22-66658113/66657725 Steel - Large Tata Ratan N Tata

Registered Office

Telephone Fax Industry House Chairman

Managing Director Company Secretary Auditor Face Value Market Lot Listing

B Muthuraman J C Bham Deloitte Haskins & Sells 10 1 Kolkata, Luxembourg, Mumbai, NSE TSR Darashaw Ltd 6-10 Haji Moosa, Patrawala [Link], DrEMoses Rd Mahalaxm, Mumbai - 400 011

Registrar

Business Results
The Company achieved the best ever sales turnover and profitability during the year under review. A robust Indian economy, firm steel prices, higher volumes and several improvement initiatives contributed to the record performance. Finished steel sales were higher by 11.33% at 4.51 million tones over the previous year. Export turnover was lower by about 5% due to lower volumes. Average price realization improved mainly due to higher prices of hot rolled coils/sheets. Operating profit was higher by over Rs.1,000 crores at Rs. 6,973 cores (2005-06: Rs. 5,938 crores), an increase of 17% over the previous year. Net interest charges were higher at Rs. 174 crores (200506: Rs. 125crores),due to additional borrowings for the Companys domestic expansion programs and funding Companys contribution for financing the acquisition of Corus Group plc. After providing for Rs. 819 crores for depreciation (2005-06: Rs. 775 crores) and Rs. 152 crores towards employee separation scheme (2005 06: Rs. 53 crores), the profi t before tax rose by 20% to Rs. 6,262 crores (200506: Rs. 5,240 crores). Net Profit after taxes was higher at Rs. 4,222 crores (2005-06:

Rs. 3,506 crores), an increase of 20% compared to the previous year. The record financial results would not have been possible without a matching performance by the operating departments including the raw materials division. The year witnessed the best ever crude steel production by the Company at 5.05 million tonnes, an increase of 6.7% over the previous year. Jamshedpur Plant became the fi rst plant in India to produce more than 5 million tonnes of crude steel in a year. The upgraded G Blast Furnace produced over 2 million tonnes of hot metal, as against its rated capacity of 1.8 million tonnes. Among the Finishing Mills, the output at the Cold Rolling Mill and the Hot Strip Mill exceeded their rated capacities. The all-round increase in production was backed by improvements in operating practices and productivity resulting in a reduction in consumption of raw materials, energy, refractoriness etc. The Companys Collieries, for the first time, produced 1.9 million tonnes of clean coal at a reduced level of ash content, which has contributed significantly in substituting the more expensive imported low ash coal. A modern beneficiation plant for iron ore fines has been set up to reduce the aluminum content in iron ore.

Share Holding Pattern

Item Foreign Holdings Govt. / Financial Institutions Corporate Bodies(not covered above) Directors and their Relatives Other including Indian Public

% 17.42 21.85 3.98 30.52 25.32

Share Holding

18% 26%

Foreign Holdings Govt. / Financial Institutions Corporate Bodies(not covered above) Directors and their Relatives Other including Indian Public

22%

30%

4%

EPS AND DPS

Item Market: High 2006-07 745 2007-08 1048 2008-09 957 2009-10 627.9 2010-11 739

399.15 Market :Low EPS DPS 63.33 13

399.15

137.5

148.7

449.10

72.71 15.5

64.14 16

71.18 16

56.87 8

PAY OUT RATIO

Item EPS DPS PAY OUT RATO 2006-07 63.33 13 0.2052 2007-08 72.71 15.5 0.2131 2008-09 64.14 16 0.2494 2009-10 71.18 16 0.2247 2010-11 56.87 8 0.1406

PAY OUT RATIO

0.25

0.2

0.15

0.1

0.05

0 2006 2007 2008

2009

2010

RETURN ON EQUITY
Item Equity share capital 2006-07 553.67 2007-08 580.67 2008-09 730.78 2009-10 730.79 2010-11 887.41

Reserves and 9201.63 surplus Net worth PAT ROE 9755.3 3506.38 12.06

11368.42

21097.43

23501.15

36281.34

11949.09 4222.15 35.33

24231.93 4687.03 1.34

24231.94 5201.74 21.46

37168.75 5046.80 13.57

RETURN ON EQUITY
40 35 30 25 20 15 10 5 1.34 0 2006 2007 2008 2009 2010 12.06 13.57 21.46

35.33

ROE

AVERAGE P/E RATIO

Item EPS Market: High 2006-07 63.33 745 2007-08 72.71 1048 2008-09 64.14 957 2009-10 71.18 627.9 2010-11 56.87 739

Market :low Market:High/EPS

399.15 11.76

399.15 14.41

137.5 14.92

148.7 8.82

449.10 12.99

Market:Low/EPS Average P/E Ratio

6.30 9.03

5.48 9.94

2.14 8.53

2.08 5.45

7.89 10.44

AVERAGE P/E RATIO

12 10 9.94 8 9.03 8.53

10.44

6 5.45 4

AVERAGE P/E RATIO

0 2006 2007 2008 2009 2010

INTERINIC VALUE CALCULATION:-

Dividend Pay Out Ratio

= Dividend Declared / EPS

Average Dividend Pay Out Ratio

= Dividend Pay Out for 5 Years / 5

(0.2052+0.2131+0.2494+0.2247 + 0.1406) / 5 = 0.2066

Average Retention Ratio ratio

= 1 - Average Dividend Pay Out

= 1 - 0.2066 = 0.7934

Average Return On Equity

= Sum of ROE for 5 years / 5

(35.94+35.33+19.34+21.46+1 3.5) / 5 = 25.11

Long Term Growth Rate in Equity (g) ROE

= Average Retention ratio *Average

= 0.7934 * 0.2511 = 0.1992

Normalized Average P/E Ratio years / 5

= Sum of price Earnings Ratios for 5

= (9.03+9.94+8.53+5.45+10.44) / 5 = 8.678 Projected EPS for = EPS for Current Year * (1+ Long Term Growth Rate in Equity)

= 56.87 *1.199 = 68.22

Intrinsic Value Ratio Average P/E

= Projected EPS * NORMALIZED

= 68.22 * 8.67 = 591.90

INTERPRETATION
The stock is said to be underpriced as the intrinsic value of the security (591.9) is higher than the current market price. This means the investor should buy the share as the price of the security may come up in the future

SAIL
SAIL's Background and History The Precursor SAIL traces its origin to the formative years of an emerging nation - India. After independence the builders of modern India worked with a vision - to lay the infrastructure for rapid industrialisaton of the country. The steel sector was to propel the economic growth. Hindustan Steel Private Limited was set up on January 19, 1954. The President of India held the shares of the company on behalf of the people of India. Expanding Horizon (1959-1973) Hindustan Steel (HSL) was initially designed to manage only one plant that was coming up at Rourkela. For Bhilai and Durgapur Steel Plants, the preliminary work was done by the Iron and Steel Ministry. From April 1957, the supervision and control of these two steel plants were also transferred to Hindustan Steel. The registered office was originally in New Delhi. It moved to Calcutta in July 1956, and ultimately to Ranchi in December 1959.

A new steel company, Bokaro Steel Limited, was incorporated in January 1964 to construct and operate the steel plant at Bokaro. The 1 MT phases of Bhilai and Rourkela Steel Plants were completed by the end of December 1961. The 1 MT phase of Durgapur Steel Plant was completed in January 1962 after commissioning of the Wheel and Axle plant. The crude steel production of HSL went up from .158 MT (1959-60) to 1.6 MT. The second phase of Bhilai Steel Plant was completed in September 1967 after commissioning of the Wire Rod Mill. The last unit of the 1.8 MT phase of Rourkela - the Tandem Mill - was commissioned in February 1968, and the 1.6 MT stage of Durgapur Steel Plant was completed in August 1969 after commissioning of the Furnace in SMS. Thus, with the completion of the 2.5 MT stage at Bhilai, 1.8 MT at Rourkela and 1.6 MT at Durgapur, the total crude steel

production capacity of HSL was raised to 3.7 MT in 1968-69 and subsequently to 4MT in 1972-73.

Holding Company
The Ministry of Steel and Mines drafted a policy statement to evolve a new model for managing industry. The policy statement was presented to the Parliament on December 2, 1972. On this basis the concept of creating a holding company to manage inputs and outputs under one umbrella was mooted. This led to the formation of Steel Authority of India Ltd. The company, incorporated on January 24, 1973 with an authorized capital of Rs. 2000 crore, was made responsible for managing five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel Plant. In 1978 SAIL was restructured as an operating company. Since its inception, SAIL has been instrumental in laying a sound infrastructure for the industrial development of the country. Besides, it has immensely contributed to the development of technical and managerial expertise. It has triggered the secondary and tertiary waves of economic growth by continuously providing the inputs for the consuming industry.

Company Profile
Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets. Ranked amongst the top ten public sector companies in India in terms of turnover, SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railway

products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines. The company has the distinction of being Indias largest producer of iron ore and of having the countrys second largest mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are inputs for steel making. SAIL's wide range of long and flat steel products are much in demand in the domestic as well as the international market. This vital responsibility is carried out by SAIL's own Central Marketing Organisation (CMO) and the International Trade Division. CMO encompasses a wide network of 34 branch offices and 54 stockyards located in major cities and towns throughout India. With technical and managerial expertise and know-how in steel making gained over four decades, SAIL's Consultancy Division (SAILCON) at New Delhi offers services and consultancy to clients world-wide. SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which helps to produce quality steel and develop new technologies for the steel industry. Besides, SAIL has its own in-house Centre for Engineering and Technology (CET), Management Training Institute (MTI) and Safety Organisation at Ranchi. Our captive mines are under the control of the Raw Materials Division in Kolkata. The Environment Management Division and Growth Division of SAIL operate from their headquarters in Kolkata. Almost all our plants and major units are ISO Certified.

Growth of SAIL
Maintaining thrust on production to meet the growing demand for steel in the domestic market, Steel Authority of India (SAIL) achieved best-ever February performance by producing 1.1 million tons of saleable steel, a growth of 7% over February `07, with capacity utilization of the SAIL plants going up to 122%. The company also recorded best-ever February production of hot metal at 1.24 million tons and 1.14 million tons of crude steel, both showing 6% growth over the corresponding period last year (CPLY).

Consequently, during the period April `07-February `08 of the current financial year, SAIL produced 11.8 million tonnes of saleable steel, an increase of over 4 lakh tonnes

over CPLY, with an average capacity utilisation of 117%. Key techno-economic parameters also improved in February`08. Coke rate at 524 kg per tonne of hot metal was 3% lower and energy consumption at 7.05 giga calories per ton of crude steel reduced by 1% over CPLY. Production through the energyefficient continuous casting route crossed 7.5 million tonnes, 9% higher than February`07. With thrust maintained on production of value-added and special steels, the SAIL plants produced nearly 3.6 million tonnes of such items in February`08, an increase of 49% over CPLY. The captive mines of SAIL produced 2.2 million tons of iron ore in February`08 and met 100% requirement of the plants. Coal production from captive collieries was increased during the year (April `07-February`08) by 50% over CPLY.

During February `08, SAIL`s Central Marketing Organisation achieved sales of 1.03 million tonnes, 3.7% higher than CPLY. With SAIL entering its 50th year of production, February 08 was a memorable month for the company. The month`s other highlights included payment of Rs 6,734.9 million to the Government by SAIL as interim dividend for the financial year 2007-08, inauguration of Bhilai Steel Plant`s Rs 112.62 billion expansion and modernisation programme by Union Minister for Chemicals & Fertilisers and Steel Mr Ram Vilas Paswan, presentation of the FICCI Annual Award 2006-07 to SAIL for outstanding achievement in the category of Rural & Community Development Initiatives.

Share Holding Pattern

SAIL is a public sector undertaking of the Government of India which holds 85.82% of equity. Other major shareholders are Domestic Financial institutions with 4.73% stake and Foreign Institutional Investor with 5.08 % individuals with 3.16% stake and others 1.21% Category of Share Holders Govt. of India Domestic Financial Institute Foreign Institutional Investor Individuals (Incl. Employees, NRIs, GDRs) Others % Holding 85.82 4.73 5.08 3.16 1.21

Share Holding Pattern

Govt. of India Domestic Financial Institute Foreign Institutional Investor Individuals (Incl. Employees, NRIs, GDRs) Others

1% 5% 3% 5%

86%

DPS AND EPS

Item Market high 2006-07 96.2 2007-08 293 2008-09 290.40 2009-10 243.8 2010-11 267

Market low EPS DPS

49.55 68.28 2

82.45 83.11 3.10

55.25 96.7 3.70

69.5 106.04 2.6

166 98.29 3.3

PAY OUT RATIO

Item EPS DPS PAY OUT RATIO

2006-07 68.28 2 0.029

2007-08 83.11 3.10 0.037

2008-09 96.7 3.70 0.038

2009-10 106.04 2.6 0.0245

2010-11 98.29 3.3 0.033

PAY OUT RATIO

0.04 0.035 0.03 0.025 0.02 0.015 0.01 0.005 0 2006 2007 2008 2009 2010

RETURN ON EQUITY
Item Equity share capital Reserves and ssurplus Net worth PAT ROE 2006-07 4130.14 2007-08 4130.14 2008-09 4130.14 2009-10 4130.14 2010-11 4130.14

8471.01

13182.7

18933.17

23853.7

29186.3

12601.15 4012.97 31.84

17312.84 6202.29 35.82

23063.31 7536.78 32.67

27983.84 6174.87 22.06

33318.44 6754.37 20.27

Return On Equity
40 35 30 25 20 15 10 5 0 2006 2007 2008 2009 2010 22.06 20.27 31.84 35.82 32.67

ROE

AVERAGE P/E RATIO

Item EPS Market High 2006-07 68.28 96.2 2007-08 83.11 293 2008-09 96.7 290.40 2009-10 106.04 243.8 2010-11 98.29 267

Market Low Market High/EPS

49.55 1.40

82.45 3.525

55.25 3.003

69.5 2.29

166 2.72

Market Low/EPS AVERAGE P/E RATIO

0.725 1.06

0.992 2.25

0.572 1.78

0.650 1.47

1.69 4.41

AVERAGE P/E RATIO

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2006 2007 2008 2009 2010 1.06 2.25 1.78 1.47 AVERAGE P/E RATIO 4.41

INTERINIC VALUE CALCULATION

Dividend Payout Ratio

= Dividend Declared / EPS

Average Dividend Pay Out Ratio

= Dividend Pay Out for 5 years / 5 = (0.029+0.037+0.038+0.0245+0.033) / 5 = 0.0323

Average Retention Ratio

= 1 - Average Dividend Pay Out Ratio = 1 - 0.0323 =0.967

Average Return on Equity

= sum of ROE for 5 years/5 = (31.84+ 35.82+ 32.67+22.06+20.27) / 5 = 28.53

Long Term Growth Rate in Equity (g) = Average Retention Ratio * Average ROE = 0.2853 * 0.967 = 0.27.59 Normalized Average P/E ratio = Sum of Price Earnings Ratios for 5 years / 5 = (1.06+2.25+1.78+1.47+4.41) / 5 = 2.19

Projected EPS for Growth rate in Equity)

= EPS for current year * ( 1+ Long Term

= 98.23 * 1.27 = 124.46

Intrinsic Value Ratio P/E

= Projected EPS * NORMALIZED Average

= 124.46 *2.19 = 272.56

INTERPRETATION
The stock is said to be underpriced as the intrinsic value of the security (272.56) is higher than the current market price. This means the investor should buy the share as the price of the security may come up in the future

STERLITE INDUSTRIES

Sterlite Industries (India) Limited operates as a non-ferrous metals and mining company in India. The company operates in three primary businesses of copper, zinc and aluminum. It also develops a commercial power generation business in India. COPPER BUSINESS The companys copper business is principally one of custom smelting and its operations include a a copper smelter, two copper refineries, three copper rod plants, a dore anode plant, sulphuric and phosphoric acid plants, and captive power plants at its facilities in Silvassa and Tuticorin in India, as well as a metal refinery at Fujairah in the UAE. It owns the Mt. Lyell copper mine in Tasmania, Australia, which provides its copper concentrate requirements. As a custom smelter, the company buys copper concentrate at LME-linked prices for copper less a TcRc that is negotiated with suppliers. The company sells refined copper at LME-linked prices in the domestic and export markets. Principal Products Copper Cathode: The companys copper cathodes are square shaped with 99.99% copper. The uses of copper cathodes are in the manufacture of copper rods for the wire and cable industry and copper tubes for consumer durable goods. Copper cathodes are also used for making alloys like brass, bronze, and alloy steel, with applications in defense and construction. Copper Rods: The companys copper rods are used primarily for power and communication cables, transformers, and magnet wires. Sulphuric Acid: The company produces sulphuric acid at its sulphuric acid plant through conversion of sulphur dioxide gas that is generated from the copper smelter. The sulphuric acid is consumed by its phosphoric acid plant in the production of phosphoric acid, and the remainder of the sulphuric acid is sold to fertilizer manufacturers and other industries. Phosphoric Acid: The company produces phosphoric acid at its phosphoric acid plant by chemical reaction of sulphuric acid and rock phosphate, which the company imports. Phosphoric acid is sold to fertilizer manufacturers and other industries. Dore Anodes: The company produces dore anodes at its dore anode plant by treating anode

slimes produced as a by-product of its copper smelting operations. The dore anodes are shipped to its precious metal refinery at Fujairah in the UAE where they are refined to extract gold, silver, platinum, and palladium. Other By-products: Other byproducts of its copper smelting operations are gypsum and anode slimes, which the company sells to third parties. Sales and Marketing: The companys copper sales and marketing head office is located in Mumbai, and the company has field sales and marketing offices in most major metropolitan centers in India. It sells its copper rods and cathodes in both the domestic and export markets. Its export sales were primarily to China, Japan, the Philippines, Singapore, South Korea, Taiwan, Thailand, and various countries in the Middle East. It also sells phosphoric acid and other byproducts in both the domestic and export markets. ZINC BUSINESS The companys zinc business is owned and operated by HZL. HZLs zinc operations include four lead-zinc mines, four hydrometallurgical zinc smelters, one lead smelter, one leadzinc smelter, four sulphuric acid plants, one silver refinery in the State of Rajasthan in Northwest India, one hydrometallurgical zinc smelter, one sulphuric acid plant in the State of Andhra Pradesh in Southeast India, and one zinc ingot melting and casting plant at Haridwar in the State of Uttrakhand in North India. HZLs mines supply its concentrate requirements and allow HZL to also export surplus zinc and lead concentrates. The company has a 64.9% ownership interest in HZL, with the remainder owned by the government of India (29.5%) and institutional and public shareholders (5.6%). Principal Products Zinc: The company produces and sells zinc ingots in all three international standard grades: special high grade (SHG 99.994%), high grade (HG 99.95%), and prime western (PW 98%). The company sells majority of its zinc ingots to Indian steel producers for galvanizing steel. Some of its zinc is also sold to alloy, dry ce

Share Holding Pattern

% Foreign Holdings Govt. / Financial Institutions Corporate Bodies(not covered above) Directors and their Relatives Other including Indian Public 13.71 5.14 5.72 52.8 22.63

60 50 40 30 20 Series1 10 0 Foreign Holdings Govt. / Financial Institutions Corporate Directors and Other Bodies(not their Relatives including covered Indian Public above)

EPS AND DPS

Item Market high 2006-07 2939.8 2007-08 1149.95 2008-09 1082.4 2009-10 904 2010-11 928.9

Market low EPS DPS

257 45.72 3.13

412 14.04 4

165.10 13.43 4

215.20 17.45 3.5

149 9.89 3.75

Pay Out Ratio

Item EPS DPS PAY OUT RATIO 2006-07 45.72 3.13 0.068 2007-08 14.04 4 0.2849 2008-09 13.43 4 0.2978 2009-10 17.45 3.5 0.2005 2010-11 9.89 3.75 0.379

PAY OUT RATIO

0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2006 2007 2008

2009

2010

RETURN ON EQUITY
Item Equity share capital Reserves and surplus Net worth PAT ROE 2006-07 55.87 2007-08 111.70 2008-09 141.70 2009-10 141.70 2010-11 168.08

4044.66

4346.23

13014.6

1397.32

22067.4

4100.53 511.12 12.46

4457.93 784.03 17.58

1539.02 951.69 61.79

1539.02 1236.43 80.31

2235.408 831.5 37.18

RETURN ON EQUITY
90 80 70 60 50 40 30 20 10 0 2006 2007 2008 2009 2010 17.58 12.46 37.18 ROE 61.79 80.31

AVEARGE P/E RATIO

Items EPS Market High 2006-07 45.72 2939.8 2007-08 14.04 1149.95 2008-09 13.43 1082.4 2009-10 17.45 904 2010-11 9.89 928.9

Market Low Average market High

257 65.31

412 82.07

165.10 80.74

215.20 51.95

149 93.83

Average Market Low AVERAGE P/E RATIO

5.71 35.51

29.42 55.74

12.32 46.53

12.64 32.29

16.55 55.19

AVERAGE P/E RATIO

60 50 40 30 20 10 0 2006 2007 2008 2009 2010 33.51 55.74 46.53 55.19

32.29

AVERAGE P/E RATIO

INTERINIC VALUE CALCULATION

Dividend Payout Ratio = Dividend Declared / EPS

Average Dividend Pay Out Ratio

= Dividend Pay Out for 5 years / 5 = (0.068+0.2849 +0.2978+0.2005+0.379) / 5 = 0.2460

Average Retention Ratio

= 1 - Average Dividend Pay Out Ratio = 1- 0.2460 =0 .754

Average Return On Equity

= Sum of Return On Equity for 5 years = (12.46 +17.58+61.79+80.31+37.18) / 5 = 41.92

Long term growth rate in equity (g)

= Average Retention Ratio * Average ROE = 0.4192* 0.754 =0. 3160

Normalized Average P/E Ratio

= Sum of Price Earnings Ratios for 5 years/5 = (35.5+55.74+46.53+32.29+55.19) / 5 = 46.3

Projected EPS Growth Rate in Equity)

= EPS for current year* ( 1+ Long Term

9.89* 1.31 = 13.74 Intrinsic value ratio Average P/E = Projected EPS * NORMALIZED

= 13.74 * 46.3 = 636.49

INTERPRETATION
The stock is said to be underpriced as the intrinsic value of the security (636.49) is lover than the current market price. This means the investor should not buy the share as the price of the security may come down in the future

JINDAL STEEL

Jindal Steel is amongst the largest corporate groups in India. Jindal Group is presently a US $5 billion conglomerate and ranks fourth amongst the top Indian Business Houses in terms of assets. Jindal Steel is one of the largest steel producers in India with 12 plants in India and 2 in USA. O.P. Jindal is the founder of Jindal Group. He started by trading in steel pipes in Nalwa, a village in the present-day Haryana. In 1952, O.P. Jindal set up the group's first factory at Liluah, near Calcutta for the manufacturing of steel pipes, bends and sockets. Soon thereafter, he set up a similar manufacturing unit at Hisar. In the early 1960s Jindal Steel achieved a breakthrough when it developed India's first 100% indigenous pipe mill at Hisar. In 1970, O.P. Jindal established Jindal Strips Limited and set up a mini steel plant at Hisar to manufacture coils and plates through the electric and furnace route. Since then, Jindal Steel has not looked back and has gone from strength to strength. Today, the group has developed into a multi-faceted organization with revenues in excess of US $5 billion. Background
Jindal Steel and Power Limited (JSPL), part of the O P Jindal group was formed in April, 1998 by hiving off the Raigarh and Raipur manufacturing facilities of Jindal Strips Limited (JSL) into a separate company. Currently the company is engaged in manufacture of sponge iron, steel, pig iron, ferro-chrome and power. JSPL is largest, and amongst the lowest cost, coal based producer of sponge iron in India with an installed capacity of 1,370,000 MTPA. JSPLs operations are headed by Mr. Naveen Jindal, Executive Vice Chairman and Managing Director of the company.

Operations of the company

JSPL is engaged in manufacturing of iron & steel products and power. JSPLs product mix includes sponge iron, power and value added steel products, such as rounds, billets, beams, blooms and slabs. During FY06, JSPL undertook capacity expansions across various divisions at Raigarh. Post expansions, the installed capacities of various products include 1,370,000 tpa of sponge iron, 24,00,000 tpa of mild steel, 36,000 tpa of ferro Alloy, hot metal capacity of 250,000 tpa, power generation of 295 MW, coal washery with capacity of 60 lakh tpa and a Rail and Universal Beam Mill (RUBM) of 750,000 tpa capacity. The company has mining rights for coal in Gare area in Raigarh with estimated reserves of 62 mn tonnes and iron ore at Tensa mines Orissa (estimated reserves 20 mn tonnes). Sales of the company registered an 18% rise to Rs 2877 cr in FY06 over previous year. Capacity augmentation coupled with improved realizations, on account of increase in sales of value added products, helped the company achieve the growth. Sponge iron had been the major contributor to the total sales (23%) followed by beams and columns (22%) and iron ore/fines (18%). Export sales registered 14% rise and stood at Rs 371 cr in FY06, mainly made to UAE, China & Korea. JSPLs coal requirement is met through companys own mines. JSPLs requirement of iron ore is partially sourced from captive iron ore mine in Tensa and balance through term contract from external source. Currently, company imports its entire requirement of coke from China and is setting up an in-house coke oven plant to reduce its costs. Captive power generation plant is based on the utilization of waste heat of the flue gases from the sponge iron kilns as well as steam from coal fired FBC boilers, which in turn utilizes the ejects from the coal washery and char generated from the sponge iron plants. The power generation apacity as on December 31, 2006 stood at 315 MW. Apart from captive use, JSPL sells power to hattisgarh State Electricity Board, through a firm PPA, and neighboring industrial units.

Registered Office Telephone Fax Industry House Chairman Managing Director Company Secretary Auditor Face Value Market Lot Listing

O P Jindal Marg, Hisar - 125005, Haryana 91-01662-222471-75 91-01662-222476 Steel - Sponge Iron Jindal Om Prakas Savitri Jindal

T K Sadhu S S Kothari Mehta & Co 1 1 Mumbai, NSE Alankit Assignments Ltd

Registrar

2E/21 Alankit House, Anarkali Market, Jhandewalan Extn, New Delhi - 110055

Share Holding Pattern

% Foreign Holdings Govt. / Financial Institutions Corporate Bodies(not covered above) Directors and their Relatives Other including Indian Public 24.49 4.55 1.88 59.05 9.93

Share Holding Pattern Foreign Holdings

10% 25%

Govt. / Financial Institutions Corporate Bodies(not covered above) Directors and their Relatives Other including Indian Public

5% 2% 58%

EPS AND DPS

Item Market: High 2006-07 2290 2007-08 16540 2008-09 16875 2009-10 3622 2010-11 796.1

Market :Low EPS DPS

1152 186.07 15.00

2003 228.30 18.00

518.10 80.34 4.00

500 99.35 5.50

574.35 15.89 1.25

PAY OUT RATIO

Item EPS DPS PAY OUT RATO 2006-07 186.07 15.00 0.0806 2007-08 228.30 18.00 0.078 2008-09 80.34 4.00 0.05 2009-10 99.35 5.50 0.056 2010-11 15.89 1.25 0.078

PAY OUT RATIO

0.09

0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0 2006 2007 2008

2009

2010

RETURN ON EQUITY
Item Equity share capital Reserves and surplus Net worth PAT ROE 2006-07 15.40 2007-08 15.40 2008-09 15.40 2009-10 15.47 2010-11 93.12

1,829.31 1844.4 572.94 31.01

2,481.33 4021.33 702.99 17.45

3,740.98 5280.98 1,236.96 23.40

5,399.85 5415.32 1,536.48 28.36

6,652.88 6746 1,479.68 21.92

RETURN ON EQUITY
35 30 25 23.4 20 15 10 5 0 2006 2007 2008 2009 2010 17.45 21.92 RETURN ON EQUITY

31.01 28.36

AVERAGE P/E RATIO

Item EPS Market: High 2006-07 186.07 2290 2007-08 228.30 16540 2008-09 80.34 16875 2009-10 99.35 3622 2010-11 15.89 796.1

1152 Market :low Market: High/EPS 12.31

2003

518.10

500

574.35

72.44

210.04

36.45

53.07

6.19 Market: Low/EPS AVERAGE P/E RATIO 9.20

8.77

6.44

5.03

36.14

40.60

108.22

20.24

44.92

AVERAGE P/E RATIO

120

108.22 100

80

60

AVERAGE P/E RATIO

40

44.92 40.6

20 20.24

9.2 0 2006 2007 2008 2009 2010

INTERINIC VALUE CALCULATION

Dividend Pay Out Ratio = Dividend Declared / EPS

Average Dividend Pay out Ratio

= Dividend Pay-Out for 5 years / 5 = (0.0806 +0.078+0.05+0.056+0.078) / 5 = 0.068

Average Retention Ratio

= 1- Average Dividend Pay Out Ratio = 1- 0.068= 0.931

Average Return on Equity

= Sum of ROE for 5 years/5 = (31.01+17.45+23.40+28.36+21.92) / 5 = 24.41

Long Term Growth Rate in Equity (g) ROE

= Average Retention Ratio * Average

= 0.2441*O.931= 0.2272

Normalized Average P/E ratio years / 5

= Sum of Price Earnings Ratios for 5

= (9.20+40.60+108.22+20.24+44.92) / 5 = 44.63

Projected EPS Term Growth Rate in Equity)

= EPS for Current Year* (1+ Long

= 15.89 *1.2272 = 19.27 Intrinsic Value Ratio Average P/E = Projected EPS * NORMALIZED

= 19.27 * 44.63 = 860.28

INTERPRETATION
The stock is said to be underpriced as the intrinsic value of the security (860.28) is higher than the current market price. This means the investor should buy the share as the price of the security may come up in the future

HINDALCO INDUSTRIES
Hindalco Industries Limited, the metals flagship company of the Aditya Birla Group, is an industry leader in aluminium and copper. A metals powerhouse with a consolidated turnover of Rs.600, 128 million (US$ 15 billion), Hindalco is the worlds largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia. Its copper smelter is the worlds largest custom smelter at a single location.

Established in 1958, Hindalco commissioned its aluminium facility at Renukoot in Eastern U.P. in 1962. Later acquisitions and mergers, with Indal, Birla Copper and the Nifty and [Link] copper mines in Australia, strengthened the companys position in value-added alumina, aluminium and copper products, with vertical integration through access to captive copper concentrates.

In 2007, the acquisition of Novelis Inc. a world leader in aluminium rolling and can recycling marked a significant milestone in the history of the aluminium industry in India. With Novelis under its fold Hindalco ranks among the global top five aluminium majors, as an integrated producer with low cost alumina and aluminium facilities combined with high-end rolling capabilities and a global footprint in 12 countries outside India. Its combined turnover of US$ 15 billion, places it in the Fortune 500 league. COMPANY PROFILE

Hindalco Industries Ltd. is the Flagship Company of Aditya Birla Group. The Aditya Birla Group is Indias second largest business house with a turnover of Rs. 280 billion, and Assets are valued at over Rs. 265 billion. The group has nearly 72000 employees in 18 countries.

Hindalco Industries Limited was incorporated in 1958 and commercial production commenced in 1962. The Company was set up in technical collaboration with Kaiser Aluminium & Chemicals Corporation, USA. Hindalco is today one of Indias premium corporate, contributing significantly to economic growth, generating employment and setting high standards in respect of fulfilling of obligations to all stakeholders. The Company prizes its Human Capital, and employees have been reciprocating by turning in a sterling performance for the Company, year after year. Hindalco has an enviable record of harmonious Industrial Relations, with not a single man day lost since the past 30 years on account of industrial strife. Companys principal products comprise of Aluminium Ingots, Aluminium Billets, Aluminium Wire Rods, Sheet Products, Extrusions, Aluminium Foils and Aluminium Alloy Wheels. The Companys by products include Gallium Metal, Vanadium Sludge and Aluminium Dross. Hindalco Industries Limited, one of the major producer of Aluminium metal and its semis in the country as well as a premier flagship company of A.V. Birla group in the biggest industrial enterprise of Uttar Pradesh. It is a public limited company in the private sector having about 39000 shareholders. It is the largest integrated Aluminium plant in India with all its production facilities viz. Alumina, Aluminium & Fabrication located at Renukoot near Rihand Dam in Sonebhadra (Uttar Pradesh). Hindalcos power division is situated at Renusagar about 35 km from Renukoot. In September 1959, an industrial license was granted by the Government for setting up an integrated Aluminium plant at Renukoot, with an initial installed capacity of 20000 MT. The construction work was completed with 18 months, a record for a major job of this kind. The dream of the great visionary Syt. G.D. Birla to locate an Aluminium plant near Rihand power house came true. The late Prime Minister Pt. Jawaharlal Nehru, formally inaugurated the plant in January 1963. From the modest beginning in 1962,

Hindalco has now become an industrial giant with capacity to produce 242000 MT of Aluminium per annum. Renukoot a fast growing & thriving industrial township, which is now humming with activities & providing all the basic amenities of modern life to the inhabitants. From being one of the most backward areas of U.P., it has now carved a place for itself on the industrial map of India as well as World. Lying in the foothills of the Vindhya range, Renukoot is about 165 km from Varanasi and 154 km from Mirzapur. The expansion programme of plant from the initial capacity of 242000 MT took place in the stages during the last thirty five years. Apart from catering to the internal demand of Aluminium in the country, Hindalco is also exporting Aluminium semis to various countries including U.S.A., Germany, Japan etc. Renusagar power, a division of Hindalco is the major supplier of power to Hindalco. The power generating capacity of Renusagar power division has increased to 575 MW since last year. Now Renusagar is able to meet the full requirement of Hindalco. Hindalco is an ISO-9002 company since 1994. Recently in July 1998 it has also received the certification of ISO-14001 for environment maintenance system. The company has been able to continuously enhance the quality and range of the product and provide customer satisfaction. In 1962 when production started, the company had on its roll about 900 staff and workmen and the present strength of employees is about 14000. The office and works site is located at Renukoot and there are zonal offices at Bangalore, Bombay, Delhi and Calcutta.

Share Holding Pattern

% Foreign Holdings Govt. / Financial Institutions Corporate Bodies(not covered above) Directors and their Relatives Other including Indian Public 30.91 10.49 4.90 32.06 21.64

35 30 25 20 15 10 5 0 Foreign Holdings Govt. / Financial Institutions Corporate Directors and Other including Bodies(not their Relatives Indian Public covered above) Series1

EPS AND DPS

Item Market: High

2006-07 251.3

2007-08 240

2008-09 221.4

2009-10 163

2010-11 247.4

138.65 Market :low EPS DPS 14.28 2.20

120

38

36.75

129.35

22.12 1.70

23.31 1.85

13.12 1.35

10.01 1.35

PAY OUT RATIO

Item EPS DPS PAY OUT RATO 2006-07 14.28 2.20 0.157 2007-08 22.12 1.70 0.076 2008-09 23.31 1.85 0.079 2009-10 13.12 1.35 0.1028 2010-11 10.01 1.35 0.1348

PAY OUT RATIO

0.16

0.14

0.12

0.1

0.08

0.06

0.04

0.02

0 2006 2007

2008

2009

2010

RETURN ON EQUITY
Item Equity share capital Reserves and surplus Net worth PAT ROE 2006-07 98.57 2007-08 104.33 2008-09 122.65 2009-10 170.05 2010-11 191.37

9,507.69 9605.57 1,655.55 17.23

12,313.71 12417.51 2,564.33 20.65

17,173.67 17296.32 2,860.94 16.54

23,584.69 23754.74 2,230.27 9.38

27,715.61 27906.98 1,915.63 6.86

RETURN IN EQUITY
25

20 17.23

20.65 16.54 RETURN IN EQUITY

15

10 9.38 5 6.86

0 2006 2007 2008 2009 2010

AVERAGE P/E RATIO

Item EPS Market: High 2006-07 14.28 251.3 2007-08 22.12 240 2008-09 23.31 221.4 2009-10 13.12 163 2010-11 10.01 247.4

Market :Low Market:High/EPS

138.65 17.92

120 10.84

38 9.49

36.75 12.42

129.35 24.71

Market:Low/EPS AVERAGE P/E RATIO

9.70 13.8

5.42 8.13

1.63 5.23

2.80 7.61

12.92 18.76

AVEARAGE P/E RATIO

20 18 16 14 13.8 12 10 8 6 4 2 0 2006 2007 2008 2009 2010 5.23 18.76

AVEARAGE P/E RATIO 8.13

7.61

INTERINIC VALUE CALCULATION

Dividend Pay Out Ratio = Dividend Declared / EPS

Average Dividend Pay Out Ratio

= Dividend Pay Out for 5 years / 5 = (0.157+0.076+0.079+0.1028+0.1348) / 5 = 0.1099

Average Retention Ratio

= 1 - Average Dividend Pay Out Ratio = 1- 0.1099 = 0.890

Average Return on Equity

= Sum of ROE for 5 years / 5 = (17.23+20 .65+16.54+9.38+6.86) / 5 = 14.13

Long Term Growth Rate in Equity (g) = Average Retention Ratio * Average ROE = 0.1099 * 0. 1413= 0.1552

Normalized Average P/E Ratio

=Sum of Price Earnings Ratios for 5 years / 5 = (13.8+8.13+5.23+7.61+18.76) / 5 = 10.70

Projected EPS Growth Rate in Equity)

= EPS for Current Year * ( 1+ Long Term

10.01 * 1.15 =11.51

Intrinsic Value Ratio P/E

= Projected EPS * NORMALIZED Average

11.51 *10.70 = 134.68

INTERPRETATION
The stock is said to be underpriced as the intrinsic value of the security (134.68) is loverr than the current market price. This means the investor should not buy the share as the price of the security may come down in the future

AVERAGE SHARE PRICE

ITEM TATA STEEL SAIL JINDAL STEEL STERLITE HINDALCO

2006 486.34 73.3 1528.4 1012.08 179.91

2007 631.5 156.5 4881.05 1196 163.41

2008 590.23 166.73 1784.83 1336.58 145.66

2009 357.61 126.003 1648.25 1089.666 84.33

2010 564.59 208 670.25 866.83 173.35

6000 5000 4000 Axis Title 2006 3000 2000 1000 0 TATA STEEL SAIL JINDAL STEEL Axis Title STERLITE HINDALCO 2007 2008 2009 2010

From the above diagram we can see that the companies like Tata steel, SAIL, Hindalco are moving more or less stable and there is a large degree of fluctuation happened in the Sterlite and Jindal steel so these companies are very risky to invest.

NIFTY STOCK VALUES

YEAR 2006 2007 4,007 2008 6,144 2009 3,033 2010 5,232

NIFTY VALUES 2,835 PERCENTAGE INCREASE IN NIFTY VALUES

00

41.34

53.33

-50.63

72.50

PERCENTAGE INCREASE IN NIFTY VALUES

80 72.5 60 53.33 40 41.34

20 PERCENTAGE INCREASE IN NIFTY VALUES 0 2006 -20 2007 2008 2009 2010

-40 -50.63 -60

Form the above diagram we can see that the nifty index has gone down in the year 2009 and from then it is showing an upcoming trend. It is a good sign for the investors to invest their money in the stock market.

PERCENTAGE GROWTH COMPARISON WITH NIFTY VALUES

TATA STEEL WITH NIFTY VALUES ITEM 2007 2008 2009 2010

PERCENTAGE INCREASE IN 29.85 TATA STEELS SHARE PRICE PERCENTAGE INCREASE IN 41.34 NIFTY VALUES

-6.99

-39.41

57.87

53.33

-50.63

72.50

COMPARISON OF TATA STEEL'S SHARE PRICE WITH NIFTY VALUES.

80 60 40 20 0 2006 -20 -40 -50.63 -60 2007 2008-6.99 2009 41.34 29.85 53.33 39.41 PERCENTAGE INCREASE IN TATA STEELS SHARE PRICE 2010 PERCENTAGE INCREASE IN NIFTY VALUES 72.5 57.87

From the above diagram we can see that the fluctuations in the nifty index not affected the Tata steel .The share price of the company shows an upward trend when the total nifty index gone down.

SAILS SHARE PRICE WITH NIFTY VALUES

ITEM PERCENTAGE INCREASE IN SHARE PRICE PERCENTAGE INCREASE IN NIFTY VALUES 2007 2008 2009 2010

113.50

6.53

-24.42

65.07

41.34

53.33

-50.63

72.50

COMPARISON OF SAIL'S SHARE PRICE WITH NIFTY VALUES.

140 120 100 80 60 40 20 0 2006 -20 -40 -50.63 -60 2007 6.53 2008 2009 -24.42 2010 41.34 53.33 72.5 65.07 113.5

PERCENTAGE INCREASE IN SAILS SHARE PRICE PERCENTAGE INCREASE IN NIFTY VALUES

From the above diagram we can see that the moment of nifty index directly affected the stock price of SAIL. The moment of stock price is just like the nifty index.

JINDAL STEEL WITH NIFTY VALUES

ITEM PERCENTAGE INCREASE IN JINDALS SHARE PRICE PERCENTAGE INCREASE IN NIFTY VALUES 2007 2008 2009 2010

219.35

-63.43

-7.65

-59.33

41.34

53.33

-50.63

72.50

COMPARISON OF JINDAL'S SHARE PRICE WITH NIFTY VALUES.

250 200 150 100 50 0 2006 -50 -100 2007 2008 -63.43 41.34 53.33 72.5 PERCENTAGE INCREASE IN JINDALS SHARE PRICE PERCENTAGE INCREASE IN NIFTY VALUES 219.35

-7.65 2009 2010 -50.63 -59.33

From the above table we can see that the stock price and nifty index moves in an opposite direction. The increase of nifty value is not leads to the increase of share price.

STERLITE SHARE PRICE WITH NIFTY VALUES

ITEM PERCENTAGE INCREASE IN STERLITES SHARE PRICE PERCENTAGE INCREASE IN NIFTY VALUES 2007 2008 2009 2010

18.17

11.754

-18.47

-20.44

41.34

53.33

-50.63

72.50

COMPARISON OF STERLITE'S SHARE PRICE WITH NIFTY VALUES.

80 60 40 20 0 2006 -20 -40 -50.63 -60 2007 2008 2009 -18.47 2010 -20.44 41.34 18.17 PERCENTAGE INCREASE IN STERLITES SHARE PRICE PERCENTAGE INCREASE IN NIFTY VALUES 53.33 72.5

11.75

From the above diagram we can see that the stock value of Sterlite industries shows a decreasing trend so it is not advisable for the investors in invest in that share.

HINDALCO SHARE PRICE WITH NIFTY VALUES

ITEM PERCENTAGE INCREASE IN HINDALCOS SHARE PRICE PERCENTAGE INCREASE IN NIFTY VALUES 2007 2008 2009 2010

-9.17

-10.86

-42.10

105.56

41.34

53.33

-50.63

72.50

COMPARISON OF HINDALCO'S SHARE PRICE WITH NIFTY VALUES.

120 100 80 60 40 20 0 -20 -40 -60 2006 2007-9.17 2008-10.86 2009 -42.1 -50.63 2010 41.34 53.33 105.56 72.5 PERCENTAGE INCREASE IN HINDALCOS SHARE PRICE PERCENTAGE INCREASE IN NIFTY VALUES

The above diagram shows that the moment of nifty affects stock price of Hindalco. So it is advisable for the investors to invest in that share. The share price is showing a very good increasing trend as comparing to nifty.

CALCULATION OF BETA, ALPHA AND EXPECTED RETURNS

TATA STEEL
Return(y) = [Closing Opening] * 100 Opening

YEARS 2006 2007 2008 2009 2010

RETURN(Y) 43.72 27.71 17.11 15.01 13

Calculation YEARS 1 2 3 4 5 Total Y 43.72 27.71 17.11 15.01 13 116.55 X(Index Return) -3.62 19.46 18.42 -25.28 3.68 12.66 X2 XY 13.1044 -158.266 378.6916 539.2366 339.2964 315.1662 639.0784 -379.453 13.5424 47.84 1383.713 xy=364.5236

= =

nXY (X)(Y) NX2-(X)2 5 *364.55 - 116.55*12.66 5 *1383.71- 160.27

0.063

CALCULATION OF ALPHA = = = = - x (116.55/5) - 0.0633 * (12.66/5) 23.31- 0.063*2.532 21.63

The expected return from Tata steel can be calculated as follows: Ri = = = a + Rm 21.63 + (0.033 * 2.4) 21.70

HINDALCO

Return(y)

[Closing Opening] * 100 Opening

YEARS 2006 2007 2008 2009 2010

RETURN(Y) 15.37 19.077 12.44 9 6.48

Calculation YEARS 1 2 3 4 5 Total Y X(Index Return) X2 XY 3.61 -29.203 218.1529 281.7673 5905.9225 956.014 40405.02 -1809.09 2256.25 307.8 =48788.956 xy = 292.712

15.37 -1.9 19.077 14.77 12.44 76.85 9 -201.01 6.48 47.5 x = -63.79 y=62.367

= =

nXY (X)(Y) NX2-(X)2 5 *292.712 - 62.3*63.79 5 *48788.9- 3969

0.010

CALCULATION OF ALPHA = = = - x 12.47- 0.010* 12.75 12.34

The expected return from Hindalco industries can be calculated as follows: Ri = = = a + Rm 12.34 + (0.010 * 12.47) 13.58

JINDAL STEEL

Return(y)

[Closing Opening] * 100 Opening

YEARS 2006 2007 2008 2009 2010

RETURN(Y)
14.68 22.89 18.76 11.53 15.08

Calculation YEARS 1 2 3 4 5 Total Y

14.68 22.89 18.76 11.53 15.08

X(Index Return)
15.13 12.53 17.21 5.4 18.9

X2
228.9169 157.0009 296.1841 29.16

XY
222.1084 286.8117 322.8596 62.262

y=82.94

x=69.17

357.21 285.012 =1068.4719 xy=1179.054

nXY (X)(Y) NX2-(X)2

5 * 1179.05 (82.9469) * (69.172) (5 * 1068.3) (69.17)2

0.36

CALCULATION OF ALPHA

- x

(y/5) - * (x/5)

16.58 0.36 *13.83

11.61

The expected return from Jindal steel can be calculated as follows: Ri = = = a + Rm 11.61+0.36* 13.83 16.58

SAIL
INDEX RETURN (X) 51.85 201.1 74.38 206.35 -23.2 x=510.48

xy

2006 2007 2008 2009 2010

2688.4225 38.85 40441.21 44.94 5532.3844 44.03 42580.323 27.61 538.24 20.46 =91780.57 y=175.89

1509.323 2014.373 2019.604 9037.434 1938.641 3274.951 762.3121 5697.324 418.6116 -474.672 =6648.49 xy=19549.41

CALCULATION OF CORRELATION

[ ]

Correlation (r) =

= 0
CALCULATION OF STANDARD DEVIATION OF INDEX RETURN

Standard Deviation (

= = 0.94
CALCULATION OF STANDARD DEVIATION OF STOCK RETURN

Standard Deviation (

= = 0
CALCULATION OF BETA

rim * im

2m

=
CALCULATION OF ALPHA

= = = =

- x (y/5) - * (x/5) 35.17 - *102.09 0

STERLITE
INDEX RETURN (X) 2006 2007 2008 2009 2010

Y 13.75 14.5 7.86 8.31 5.03 y=49.45

189.0625 210.25 61.7796 69.0561 25.3009

xy

24.82 616.0324 92.46 8548.8516 -75.04 5631.0016 197.38 38958.864 -89.86 8074.8196 x=149.76 =61829.57

341.275 1340.67 -589.814 1640.228 -451.996 =555.4491 xy =2280.363

CALCULATION OF CORRELATION

Correlation (r) =

= 0.34
CALCULATION OF STANDARD DEVIATION OF INDEX RETURN

Standard Deviation (

= = 0
CALCULATIONOF STANDARD DEVIATION OF STOCK RETURN

Standard Deviation (

= = 0
CALCULATION OF BETA

rim * im

2m

=
CALCULATION OF ALPHA

= =

- x (y/5) - * (x/5)

= =

9.89 - *29.95 0