A Summer Internship Project Report on

Fundamental Analysis of Selected Power and Energy Sector

Companies

Submitted in partial fulfillment of the requirement for the degree of

Master of Business Administration

(Affiliated to Savitribai Phule Pune University)

By
Niraj Pendor

Roll No.D1F-10

Under the guidance of

Amrita Karnawat

A study conducted for

Millionminds Consultancy Pvt. Ltd

At

Indira School of Business Studies

Tathawade, Pune – 411033

2019-2021

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Acknowledgement

I, Niraj Pendor, MBA Finance Roll No D1F10 would like to express profound gratitude to
my guide Prof. Amrita Karnawat for her invaluable support, encouragement, supervision
and useful suggestions throughout this project work. Her moral support and continuous
guidance enabled me to complete my work successfully.

I am grateful to the cooperation from all the industrial experts who helped me during the
entire process, without their help it would have never been possible to complete the research.
Last but not the least, I am thankful and indebted to all those who helped me directly or
indirectly in completion of this project work.

I would be failing in my duty if I didn’t express my gratitude to Mr. Suyog Chachad (Founder
& CEO) who provide facilities, data and information required to prepare the report. Also, I
express my thanks to all personnel of Millionminds Consultancy who extended their co-
operation and timely help without which this study program would not have been successful.

Student Name: - Niraj Pendor

Roll No. / Batch: - D1F-10 (2019 - 2021)

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Certificate from ISBS

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Certificate from the Company

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Executive Summary
Fundamental analysis is a method of evaluating the intrinsic value of a stock. This form of
analysis combines external events and influences, as well as financial statements and industry
trends. Remember the intrinsic value/fair value of a stock does not change every day. To
understand what is that fair value, you should take the help of fundamentals, which are what
drives prices up and down.

This project paper is segmented to explore concept, purpose of fundamental analysis in equity
research & also study on Realty sector. To start with, the first section deals with the
introductory part of the paper by giving an overview of the Fundamental analysis and Equity
research. and company profile. This section also talks about the analysis.

In the second section, an attempt is made to analyze and compare the performance of the Realty
sector of 10 years. And it also discusses, economic analysis, industry analysis and sector
analysis of realty. At the end, it illustrates the suggestions and findings based on the analysis
done in the previous sections and finally it deals with conclusion part.

The third section details on the need, Company analysis. It also discusses about company
Millionminds consultancy. Also discusses about swot analysis, pestle analysis of the company.
It also deals with the data interpretation and analysis part wherein all the key Challenges related
to risk and return are done with the interpretation of the results.

Analyze and compare the performance of the Realty sector of 10 years. And it also discusses vision
mission and value of the company. At the end, it illustrates the suggestions and findings based on the
analysis done in the previous sections and finally it deals with conclusion part.

During the internship period we go through 3 learning i.e.

1. Introduction Fundamental analysis,

2. Study on realty sector and

3. Company analysis which is very helpful to gain knowledge about the financial sector and Indian
economy.

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Index / Table of Contents

Sr. No. Contents Pg. No.

1 Introduction 7-9

2 Sector Analysis 10-18

3 Company Analysis 19-26

4 News Analysis (w.r.t selected sector & company) 26-31

5 Review of Literature/ Theoretical Background 32-37

6 Objectives 38-39

7 Research Methodology 40-42

8 Data Analysis/ Data visualization, Results and 43-62

Interpretation

9 Conclusions / Learnings from the Project 63-65

10 Limitations of the project 66-67

11 Recommendations 68-69

12 -Bibliography 70-71

-Appendices

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Chapter 1: Introduction/ Project
Outline

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Introduction
Fundamental analysis is the cornerstone of investing. In fact, some would say that you aren't really investing if
you aren't performing fundamental analysis. Because the subject is so broad, however, it's tough to know where
to start. There are an endless number of investment strategies that are very different from each other, yet almost
all use the fundamentals.

The biggest part of fundamental analysis involves delving into the financial statements. Also known as
quantitative analysis, this involves looking at revenue, expenses, assets, liabilities and all the other financial
aspects of a company. Fundamental analysts look at this information to gain insight on a company's future
performance. A good part of this tutorial will be spent learning about the balance sheet, income statement, cash
flow statement and how they all fit together

MEANING

In this section we are going to review the basics of fundamental analysis, examine how it can be broken down
into quantitative and qualitative factors, introduce the subject of intrinsic value and conclude with some of the
downfalls of using this technique.

When talking about stocks, fundamental analysis is a technique that attempts to determine a security's value by
focusing on underlying factors that affect a company's actual business and its future prospects. On a broader
scope, you can perform fundamental analysis on industries or the economy as a whole. The term simply refers to
the analysis of the economic well-being of a financial entity as opposed to only its price movements.

What is the Project?

Fundamental Analysis: What Is It?

The Very Basics When talking about stocks, fundamental analysis is a technique that
attempts to determine a security's value by focusing on underlying factors that affect a
company's actual business and its future prospects. On a broader scope, you can perform
fundamental analysis on industries or the economy as a whole. The term simply refers to the
analysis of the economic well-being of a financial entity as opposed to only its price
movements.

Fundamental analysis serves to answer questions, such as:

• Is the company's revenue growing?

• Is it actually making a profit?

• Is it in a strong-enough position to beat out its competitors in the future?

• Is it able to repay its debts?

• Is management trying to "cook the books"?

Of course, these are very involved questions, and there are literally hundreds of others you
might have about a company. It all really boils down to one question: Is the company's stock
a good investment? Think of fundamental analysis as a toolbox to help you answer this
question.

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 Note: The term fundamental analysis is used most often in the context of stocks, but you can
perform fundamental analysis on any security, from a bond to a derivative. As long as you
look at the economic fundamentals, you are doing fundamental analysis

Fundamentals: Quantitative and Qualitative

You could define fundamental analysis as "researching the fundamentals", but that doesn't
tell you a whole lot unless you know what fundamentals are. As we mentioned in the
introduction, the big problem with defining fundamentals is that it can include anything
related to the economic well-being of a company. Obvious items include things like revenue
and profit, but fundamentals also include everything from a company's market share to the
quality of its management.

Definition of concept
Fundamental analysis is the process of looking at the basic or fundamental financial level of a
business, especially sales, earnings, growth potential, assets, debt, management, products, and
competition.
This type of analysis examines key ratios of a business to determine its financial health and
gives you an idea of the value its stock.
Many investors use fundamental analysis alone or in combination with other tools to evaluate
stocks for investment purposes. The goal is to determine the current worth and, more
importantly, how the market values the stock. Usually fundamental analysis takes into
consideration only those variables that are directly related to the company itself, rather than
the overall state of the market or technical analysis data.

Purpose & Objectives of the project

Fundamental analysis (FA) is a method of measuring a security's intrinsic value by examining

related economic and financial factors.
The end goal is to arrive at a number that an investor can compare with a security's current
price in order to see whether the security is undervalued or overvalued.
Fundamental analysts’ study anything that can affect the security's value, from
macroeconomic factors such as the state of the economy and industry conditions to
microeconomic factors like the effectiveness of the company’s management.
If the fair market value is higher than the market price, the stock is deemed to be undervalued
and a buy recommendation is given.
The end goal is to arrive at a number that an investor can compare with a security's current
price in order to see whether the security is undervalued or overvalued.

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Scope of the project

The major work in the concept of equity research lies in identification of variables that
influence the stock prices which will be helpful for the investor to generate better returns on
the investment.

Since the study is based on only the quantitative variables confined to only BSE Sensex, it is
not clear as to how the results would generalize to sample of firms from different industries
with varied characteristics.

So, the results of the study can be reinforced to assess the performance with the inclusion of
few more variables and applying to different indices or firms or industries also.
By including more variables and applying to varied sample, one can determine the universal
acceptability of its findings which gives scope for more in-depth research in this direction

Outline of the project report

The objectives of the Industry Analysis

Porter’s Five Forces Framework
Industry & Market Boundaries
Identify Key Success Factors

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Chapter 2: Sector Analysis

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Porter’s 5 Forces Model
What is Porter’s Five Forces Model?
In any market, there are fundamental interactions at play that drive supply and demand:
between buyers and sellers, between vendors and buyers, between competing products and
between companies targeting the same customers.

The dynamics at play in these interactions sometimes get in the way of an effective
conversion of the value created by a company into profits, and must be taken into account
when creating your business strategy.

As an example, let’s take a look at the solar industry which, through the lenses of Porter’s
five forces model is a zero-star industry.

 Powerful Buyers:

Companies developing and operating solar projects face powerful customers who can buy
clean energy from many other sources at very low prices. From the largest utilities to the
smallest individual homeowners, they all have plenty of options to choose from when looking
for vendors of solar energy solutions.

 Serious Threat of New Entrants:

In the solar industry, competition is coming from companies of all sizes including
aggressive, deep-pocketed players, large power corporations and even oil majors now
jumping on the wagon. The technology and the economics of solar power is well-known by
now, so there’s nothing preventing serious players from entering the space.

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 Solid Substitutes:

The final product, solar energy, also faces serious and credible substitute products such as
wind power and clean-fuels-based generation. Solar power is becoming so cheap that many
utilities are trying to de-incentivize its installation to prevent the instability problems that a
large proportion of intermittent energy resources could create in the power grid.

 Power Vendors:

Move one slot upstream in the solar value chain, and you’ll face the most aggressive market
– in the manufacturing of the solar modules. Many of these companies, mostly from Asia,
have been working in the red (at losses) for years hoping that it will get better at some point.

In the meantime, the panel manufacturing industry is inundated with excess capacity and
sunk costs, imposing bitter exit costs. Incumbents prefer to stay in the fight, waiting and
hoping that consolidation and bankruptcies will clear the space at some point.

 Fierce Rivalry:

Prices for solar panels have been consistently declining for the last 20 years with
an accelerated decline over the last decade. Analysts predict that prices will continue to
drop an additional 20 percent annually over the next 5 years.

The price of solar panels has been dropping so fast that project developers won’t place their
orders until the time of installation (usually a few months after beginning of construction),
afraid that ordering too early would leave money on the table.

But none of this has stopped aggressive competitors that still seek to grow fast in this
market, even if that means taking lower returns on new projects. In fact, companies in this
space are reportedly making low one-digit returns, sometimes under 5 percent.

Solar developers are clearly playing the scale game, trying to build huge portfolios that
create sufficient economies of scale through centralized operations, in the hope that it will
reduce unit costs in the long term. However, this decision comes at a huge financial cost in
the short term and creates a lot of uncertainty for the people involved in those efforts.

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Pestal Analysis

 Economic Analysis

 US$ 41.73 billion opportunity in the solar energy market in India till 2022.
 Emerging market in the power/infrastructure sector
 Financially viable option – Subsidies
 In 2011, India received $2 billion funding for solar projects in 2011
 Openness towards renewable energy
 Effect on flora and fauna
 Air and Water pollution
 Waste Management Environmental Laws
 Poor health level

 Social Analysis

 Social Media has high impact

 Low awareness for solar energy
 1/5th Energy is consumed in lighting
 Increased concern for the environment
 Different geographical levels with man remote/unreachable areas
 Changing trends of Brand Loyalty

 Technological Analysis

 Increased emphasis for green technology

 Cost-effective solution where electricity supply is expensive or problematic
 Ease of installation and low maintenance
 Immunity to power outages
 High colour index, providing bright, true colors, during nightimes hours

 Political/Government policies Analysis

 Government Subsidiaries
 Tie ups with developed countries to develop non-polluting sources
 Capacity addition of 72,400 MW by 2022, with solar will contribute 28%
 Government mandate for SERCs to promote renewable sources of energy
 The low allocation of budget in power sector hampered the rural & urban
electrification and power generation capacity

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Sub sector & Main Players in the subsector/sector

Market Size

 Indian power sector is undergoing a significant change that has redefined the industry
outlook. Sustained economic growth continues to drive electricity demand in India. The
Government of India’s focus on attaining ‘Power for all’ has accelerated capacity addition
in the country. At the same time, the competitive intensity is increasing at both the market
and supply sides (fuel, logistics, finances, and manpower).
 Wind energy is estimated to contribute 60 GW, followed by solar power at 100 GW by
2022 and 15GW from biomass and hydropower. The target for renewable energy has
been increased to 175 GW by 2022.
 Total installed capacity of power stations in India stood at 368.68 Gigawatt (GW) as of
January 2020. Electricity production reached 1,050.78 BU in FY20 (up to January 2020).

Top Companies

1. NTPC Ltd

 Total Sales: Rs 95,742 Cr

 Installed Capacity: 55,126 MW
 Market Share: 15%

2. Tata Power Company Ltd

 Total Sales: Rs 30,022 Cr

 Installed Capacity: 10,957 MW.
 Market Share: 3.2%

3. Adani Power Limited

 Total Sales: Rs 28,013 Cr

 Installed Capacity: 10,440 MW
 Market Share: 3%

4. Torrent Power Ltd

 Total Sales: Rs 13,359 Cr

 Installed Capacity: 3600 MW
 Market Share: 1%

5. JSW Energy Ltd

 Total Sales: Rs 9,189 Cr

 Installed Capacity: 4,541 MW
 Market Share: 1.4%
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6. SJVN Ltd

 Total Sales: Rs 2,959 Cr

 Installed Capacity: 1,959.6 MW
 Market Share: Below 1 %

7. Adani Green Energy Ltd

 Total Sales: Rs 2,486 Cr

 Installed Capacity: 2,220 MW
 Market Share: Below 1 %

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Govt. Initiative
National Policy on Biofuels – 2018

 In May 2018, the Government of India approved National Policy on Biofuels 2018.
 Benefits of this policy were related to health, clean environment, employment generation,
reduced import dependency, and boost to infrastructural investment in rural areas

Ultra-Mega Power Projects (UMPPs)

 Launch of UMPP scheme through tariff-based competitive bidding.

 Ease of land possession, provision of fuel, water and necessary clearances for enhancing
investor confidence

R-APDRP

 Linking disbursement of central Government funds (to states), with actual reduction in
transmission and distribution losses. Sanctioned projects of more than US$ 5.8 billion.
 In June 2019, the state administrative council sanctioned Rs 173 crore (US$24.3 million)
for Supervisory Control and Data Acquisition (SCADA) and Distribution Management
System (DMS) under R-APDRP Scheme for Jammu and Srinagar cities

Global Issues

Five Key Challenges facing the Energy Sector

 Fuel Security Concerns:

Thermal capacity addition is plagued by the growing fuel availability concerns faced by the
Industry. While a significant gas-based capacity of more than 20,000 MW is idle due to non-
availability of gas. Coal supplies by CIL is restricted to around 65% of actual coal
requirement by coal based thermal plants, leading to increased dependence on imported coal
with the cascading result of high-power generation costs.

 Financial Health of State Discoms:

Years of populist tariff schemes, mounting AT&C losses and operational inefficiencies have
adversely affected the financial health of State Discoms which are currently plagued with
humongous out-standing debts.

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 Under-procurement of Power by States:

Increasing power generation costs due to limited fuel availability, poor financial health of
State Discoms, high AT&C losses have contributed in suppressed demand projections by
State Discoms.

 Inimical Financing Environment:

Over the last 4-5 years, the leading rates have increased significantly from the time of project
appraisal resulting in project cost overrun and hence higher end tariffs.

 Policy Paralysis:

The micro level policies governing the fuel cost pass-through, mega power policy,
competitive bidding guidelines are not in consonance with the macro framework like The
Electricity Act 2003 and the National Electricity Policy.

Three issues facing the global energy industry

Adapting business models to low-carbon energy generation

COP21 in December 2015 has identified an ambitious set of goals which were agreed by
nearly 200 countries. The headline target to put the brakes on global warming so the earth
does not heat up by more than two degrees requires business and government to work hand in
hand.

It is critical for the global economy that these businesses adapt; such is the importance of the
energy industry that if companies don’t innovate and adapt, the future of the planet is at risk.

Ensuring access and affordability

Whilst more people than ever have access to energy, the question of long-term affordability
remains less certain. Access to, and the affordability of energy are key development issues,
and recently incorporated into the UN Sustainable Development Goals. At the Congress we
will look at real solutions to address these issues on day one, in the ‘Scenarios for the Future’
sessions and also on day three in the ‘Embracing the Trilemma’ sessions

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Africa: Embracing the new frontier

Africa is the chief example of a developing continent impacted by the way in which energy
intersects the poverty and climate change debate. As such, Africa will be a special focus for
the 23rd World Energy Congress with a whole day at the event dedicated to questions
surrounding the continent’s energy future. The fourth day of the Congress will see an
impressive gathering of African energy leaders, discussing methods to secure a sustainable
energy future for Africa.

Regulatory bodies in the sector and their role

 Bureau of Energy Effective (BSE) 2002

 National Thermal Power Corporation (NTPS) 1975
 Rular Electrification Corporation (REC)
 Power Grid Corporation of India
 North Eastern Power Corporation (NEEPCO)
 National Hydroelectric Power Corporation (NHPC)
 Power Finance Corporation (PFC)
 Central Electricity Regulatory Commission (CERC)
 State Electric Regulatory Commission (SERC)

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Chapter 3: Company Analysis

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Brief of the Company:

We are new generation Finance, investment & insurance management Consultancy

Company, based in Pune we provide tailor-made financial services to our customers &
achieve their dreams we have unique way to understand the financial need of the customers.
Our innovative products and services help the customers for Wealth Creation and
Preservation. In addition. In addition, we also provide the complete financial protection plan
to family, so that, in case of any emergency the family is financially secured
At Million minds, we thoroughly analyse our clients’ data, business processes and costs and
then design targeted solutions that consider optimal lane expenses, capacity shifts, and
warehouse rationalization. Whether a client requires management of all or part of its process,
our full attention and expertise is applied to every solution we provide.

We not only satisfy our customer but our focus is to satisfy customer’s customer so that the
business has a holistic development. Due to our specialized approach our customers have
experience sustainable growth in their business and maintained better cash flow.

Million Minds offer tailor made service for our customer depending upon requirements. Our
business designer team takes systematic steps to understand our customer’s business and
accordingly provide right solution to the customer. Our smart business solution and
systematic approach towards business has documentarily decreased expenses of the customer
and generated more value for money.

We are working with Top notch organizations where we are providing Managed services:

1. Dedicated Warehouse provided to the customer.

2. Manpower outsourced and manage output.
3. Inventory Management.
4. Distribution Management.
5. Data Management.

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Vision, Mission and Values:

Vision

 Financial Services will be recognized as proactive, results-oriented leaders who work in

collaboration with their clients to offer excellence in operational and strategic financial
management to support the achievement of Queen’s objectives.

 We aim to be the most respected financial services provider that reaches out to the
millions of people pan-India.
 We aspire to live up the expectations of our clients, our people, our investors, and the
society
 To encourage ideas, talent and value systems.

Mission

 Financial Services provides excellence in client service and compliance through our
unwavering commitment to our staff, our understanding of university operations, and a
continued focus on process improvement.
 To consistently achieve high growth and the highest levels of productivity. To be a
technology-driven, efficient and financially sound organization.
 To contribute towards community development and nation-building.
 To be a responsible corporate citizen nurturing human values and concern for society, the
environment and, above all, the people.
 To promote a work culture that fosters individual growth, team spirit and creativity to
overcome challenges and attain goals.
 To uphold the guiding principles of trust, integrity and transparency in all aspects of
interactions and dealings.

Values

 Professional Excellence and Stewardship

We value innovative, timely, efficient, solution-oriented, and cost-effective services and

systems. We are committed to achieving the highest levels of customer satisfaction. We
provide leadership to the community in delivering proactive financial solutions and
services that encompass sound financial controls and the effective and efficient use of
University resources.

 Integrity

We provide services in an honest, ethical, open, courteous, caring and concerned manner,
respecting people and the free exchange of ideas.

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 Employee Focus

We are committed to the success of our employees as they are our most valuable
resource.

 Teamwork

We value the contribution our employees make in achieving our mission and we support
and encourage teamwork and personal development to ensure a high level of competence,
expertise, and satisfaction.

 Collaborative Relationships

We welcome opportunities to add value to our stakeholders’ business. We actively seek

collaborative opportunities and solicit employee and community input to respond to their
concerns. We communicate with the community and each other to manage expectations
and assure the highest levels of satisfaction

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Product and Services:

Product

The number of financial products and services in India has increased multifold. It requires a
lot of patience and skill to pick up the best suited option from this huge list of financial
products available with us. Here are some of them:

1. SIP & Mutual Plans

A mutual fund is formed when capital collected from different investors is invested in
company shares, stocks or bonds.

2. Share Trading & Demat Account

Share trading involves buying and selling of stocks through the online platform. Using the
online share trading account.

3. Fire/Home/Shop Insurance
Fire Insurance that offers protection of your property against fire-related damages

4. Life & Health Insurance

Health insurance is insurance that covers the whole or a part of the risk of a person incurring
medical expenses.

5. FD/Bonds & NPS/Home Loan

Open a fixed deposit account online and get the best interest rate on your fixed deposit
scheme.

Services

We at Million minds Consultancy Pvt Ltd are well equipped with a team of dedicated
financial professionals and software to carry financial planning. We cater personalized wealth
management services like Crorepati Yojana, Sampoorna Samrudhi Yojana, Sampoorna
Suraksha Yojana, Nivrutti Vetan Yojana & Masik Utpanna Yojana.

1. Mutual Fund Services

It is an investment vehicle made up of a pool of money collected from many investors.

2. Financial Planning

It is the process of meeting your financial goals through the proper management.

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3. Income Tax Planning

Tax planning is the analysis of a financial situation or plan from a tax perspective.

4. Insurance Planning

Life insurance is a financial resource for your family in case of your death.

5. Retirement Planning

Retirement planning is the process of determining retirement income goals.

Key Challenges:

1. Changing client behavior

Corporate buyers of professional services have become more demanding, pushing back against
concepts such as billable hours, and requiring fixed fees and with greater transparency on costs.
In an increasingly agile environment, intensified by rapid digital innovation, clients now expect
more value, a higher quality of work, and a faster delivery of solutions and services.

2. Profitability

As clients are more willing to shop around for consulting services, they understandably hold
more sway than in the past, and are demanding greater value and flexibility at lower prices. In
Deltek’s survey, 54% of chief operating officers said their biggest challenge caused by
“changing client behaviour” was that of providing more value at the same cost.

3. New competition

Buoyed by innovative new technologies enabling them to do more with less, new players are
entering the consulting market, and alternative, digital-savvy business structures are being
deployed. In Deltek’s survey, 55% said that addressing the increasing competition in the sector
was a major business priority, while 33% of chief operating officers said “defining competitive
advantage” was among their top three priorities for the next five years.

4. Project complexity

Consulting firms are facing an increasingly complex macro macro-environment in which they
must continue to provide the best advice. The global nature of the industry adds to the problem,
as firms deliver more projects overseas, in many cases also working with subcontractors,
partner companies and/or independents. Delivering a project itself is not the issue – the

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challenge is doing so faster, more efficiently and to tighter budgets, while continuing to satisfy
customer needs.

5. Cybersecurity

Consulting firms handle an enormous volume of confidential client information. This ranges
from strategic information (used for strategic engagements, or mergers & acquisitions) to
commercial (sales & marketing information for pricing engagements) and personal data
(employee data as part of reorganisation and cost-cutting exercises). Such high-value
information can be very damaging if it falls into the wrong hands. That makes professional
service firms obvious targets for hackers, and data breaches, therefore, pose a particularly
serious threat to consultancies.

SWOT Analysis

Strength

 Things you are good at

 Experience, Knowledge
 Unique characteristic
 Resources
 Geographical location
 Compactness, Capabilities
 Quality, Reputation
 Flexibility on Product, Pricing, Distribution

Weakness

 Things you need to improve

 Gap in skills, knowledge
 Financial Issues
 Market awareness and reputation
 Right people doing the right job
 Poor location

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Opportunity

 Strategic alliances, acquisition

 Diversify the business
 Take advantage of new trends (PESTAL)
 New product management

Threats

 Change in the environment (PESTLE)

 Loss of major customer
 Raw material, and energy transport costs
 Strong competition
 Change in technology

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Chapter 4: News Analysis

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Impact of COVID-19 on the Power Sector

Impact of Covid-19

COVID-19 cases are on an exponential rise around the world, however in India with an
efficient, 40-day lockdown being imposed at the early stage of the outbreak, it appears that
we have somehow managed to keep the impact to a moderate level. While this lockdown is
effective, it has certainly brought the economic activity for quite a few sectors to a grinding
halt.

With the early signs of recovery in India’s business activity in January 2020 post sluggish
growth in GDP in the first nine months of FY20, Indian Government would have hoped for a
turnaround to close the fiscal year on a high.

The Covid-19 coronavirus was first identified in China’s Hubei province in December 2019
and has since become a global health threat, impacting 140 countries and triggering the
World Health Organisation (WHO) to declare it a global pandemic.

The Covid-19 coronavirus was first identified in China’s Hubei province in December 2019
and has since become a global health threat, impacting 140 countries and triggering the
World Health Organisation (WHO) to declare it a global pandemic.

The central government has enforced a nation-wide lockdown between March 25 and May 3
as part of its measures to contain the spread of COVID-19. During the lockdown, several
restrictions have been placed on the movement of individuals and economic activities have
come to a halt barring the activities related to essential goods and services. The restrictions
are being relaxed in less affected areas in a limited manner since April 20. In this blog, we
look at how the lockdown has impacted the demand and supply of electricity and what
possible repercussions its prolonged effect may have on the power sector.

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Power supply saw a decrease of 25% during the lockdown (year-on-year)

As electricity cannot be stored in large amount, the power generation and supply for a given
day are planned based on the forecast for demand. The months of January and February in
2020 had seen an increase of 3% and 7% in power supply, respectively as compared to 2019
(year-on-year). In comparison, the power supply saw a decrease of 3% between March 1 and
March 24. During the lockdown between March 24 and April 19, the total power supply saw
a decrease of about 25% (year-on-year).

% change in power supply position between March 1 and April 19 (Y-o-Y from 2019 to
2020)

If we look at the consumption pattern by consumer category, in 2018-19, 41% of total

electricity consumption was for industrial purposes, followed by 25% for domestic and 18%
for agricultural purposes. As the lockdown has severely reduced the industrial and
commercial activities in the country, these segments would have seen a considerable decline
in demand for electricity. However, note that the domestic demand may have seen an uptick
as people are staying indoors.

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COVID-19 impact on the power market

As seen in Figure 1, the trade on the wholesale power market comprises just 4.3 per cent of
the total electricity transactions. However, the transactions through the power exchanges have
grown over the last decade. The Indian Energy Exchange (IEX) has seen a growth from 2616
MU in FY 2009 to 52,241 in FY 2019.

Until now, the trade in the wholesale market is in four market segments 1) Day-Ahead
Market 2) Term Ahead Market and 3) Renewable Energy Certificates 4) Energy-saving
certificates. Recently, the Central Electricity Regulatory Commission (CERC) finalized the
regulations for implementing real-time markets. This half-hourly market will enable intra-day
trade of electricity, allowing adjustment of generation and consumption profile during the
day. Before the COVID-19 pandemic, it was announced by CERC that the real-time market
would be operational from April 1st, 2020.

30
 However, the starting date has now been delayed by two months to June 1st,
2020. According to media reports, due to the COVID-19 pandemic, some required trials
could not be completed. This delay in the real-time market implementation is likely to have a
serious, adverse impact on the Indian power market.

Another impact of the COVID-19 pandemic on the power markets is in terms of the market
dynamic. It can be observed that there is a dip in the clearing volume and the market-clearing
price, which coincides with the gradually increasing shutdown measures taken by the
government as a response to COVID-19 (See Figure 2). Thus, the reduction in demand due to
the lockdown is reflected in the volumes traded on the electricity market and the clearing
price.

Another point of reference is the price and clearing volume in 2019. On March 22nd, 2020,
the day of voluntary lockdown, the clearing volume was 97.05 GWh, and the clearing price
was 2195.48 ₹ /MWh. In comparison, on the same day in 2019, the clearing volume was
107.98 GWh, and the clearing price was 2816.18 ₹ /MWh. From the start of the lockdown, on
March 25nd to April 1st 2020, the average clearing volume was 104.27 GWh compared to
130.24 GWh in 2019 during the same period. Similarly, the average market clearing
price was 2155.93 ₹ /MWh in 2020 as compared to 3371.025 ₹ /MWh in 2019 for the same
period.

31
Chapter 5: Review of Literature/ Theoretical
Background

32
Theoretical Background

Theoretical framework, background theory.

 The prominent nature of capital market instruments forces investors to depend
strongly on fundamental factors in their investment decisions.
 These fundamental factors relate to the overall economy or a specific industry or a
company.
 The performance of the securities that represent the company can be said to depend on
the performance of the company itself.
 However, as companies are a part of industrial and business sector, which in turn are a
part of overall economy, so even the economic and industry factors can affect the
investment decision.
 Fundamental analysis examines the economic environment, industry performance and
company performance before making an investment decision.
 One of the livelier and long-lasting debates in securities research is the relative merits
of fundamental research and technical research.
 Fundamental research focuses on identifying and analyzing the factors that influence
security prices whereas technical analysis is solely concerned with analyzing market
behaviour, without concern for trying to explain it.

 India is a developing country. Nowadays many people are interested to invest in

financial markets especially on equities to get high returns, and to save tax in honest
ways.
 Equities are playing a major role in contribution of capital to the business from the
beginning of capital markets.
 Since the introduction of the concept of shares, large numbers of investors have
shown interest to invest in the stock market.
 In industries plagued with scepticism and a stock market increasingly difficult to
predict and contend with, if one looks hard enough there may still be a genuine aid for
the Day Trader and Short-Term Investor.
 The price of a security represents a consensus. It is the price at which one person
agrees to buy and another agrees to sell.

33
 The price at which an investor is willing to buy or sell depends primarily on his
expectations. If he expects the security's price to rise, he will buy it; if the investor
expects the price to fall, he will sell it.
 These simple statements are the cause of a major challenge in forecasting security
prices, because they refer to human expectations. As we all know first-hand, human
expectations are neither easily quantifiable nor predictable.
 If prices are based on investor expectations, then knowing what a security should sell
for becomes less important than knowing what other investors expect it to sell for.
That's not to say that knowing what a security should sell for isn't important, it still is.
 But there is usually a fairly strong consensus of a stock's future earnings that the
average investor cannot disprove. Fundamental analysis and technical analysis can co-
exist in peace and complement each other.

34
Review Literature

Literature on Problems and Challenges of Power Sector in terms of Generation,

Transmission, Distribution, etc. Partha [Link]. (1996)16 wrote on issues and challenges in
power sector in India. They examined the various facilities and place them in the perspective
of physical and financial achievements in the Power Sector and highlight the major issues
that are presently engaging attention of policymakers in this sector. They also tried to
prioritize the challenges sop that various impediments could be overcome as early as
possible. Amulya [Link]., (1997)17 analyzed “Karnataka Power Sector's present situation and
looked at the trend of electricity demand and supply, Karnataka Electricity Board's financial
problems, the important policy and technical milestones in the development of Karnataka
Power Sector and the winners and losers from the pattern of development of Power Sector
and thus picturise the way forward. They expressed the view that Karnataka Power Sector
hide many of its technical and commercial short comings, in particular its Transmission and
Distribution losses. They also justified the invitation to private power company with all
associated benefits 18 including in the case of foreign private power player. According to the
authors, what required are not only realistic and small measures on the institutional demand
and supply sides for the immediate and near term but also needs a vision of a sustainable
future”.

Introduction Here the review of already available literature related to the topic has been done.
Renewable Energy Sector has been gaining attention of scholars due to various reasons. Most
of these studies have been conducted abroad in International context although many of these
studies have been India centric also. Of late Indian Scholars have also conducted studies
exploring the Renewable Energy Sector and its dynamics. Literature related to the topic in
hand includes books, thesis, research articles and various reports published by academicians,
researchers and various government and nongovernmental agencies worldwide.

Review of Studies

conducted in Indian Context Jain (1986)48 estimated while forecasting the demand for non-
conventional source of energy that approximately after every fifteen year the demand of
energy doubles its present consumption rate. Devdas (1988)49 stated that plenty of sunshine
is available in India for approx. 8 months in a year. It comes out to be around 3000 hour of
sunshine per annum. Thus India has significant chance of producing solar energy. Moorthy
R.C (1990)50 has discussed the technological development in India in the various
nonconventional sources of energy such as Solar, Wind, Ocean, Thermal, Biogas etc.

35
Researcher Observations

From review of the above work done in the field of Renewable Energy, it is very clear that
RE sector is gaining attention from the scholars all over the world. There is a unanimous
opinion that within the RE sector, solar is a viable option. In Global context significant work
has been done in the area of Renewable Energy in general and Solar in Particular. Approach
of finance sector is same when it comes to RE investment or any other investment and that is
the concept of risk and return. Thus, Effective Risk Management is key for deployment of
fund in this sector.

Electricity is an important input for all types of economic development related activities
especially in the field of agriculture, industries and commercial. It has a critical role to play in
the field of economic development and revenue generation for a particular country. It is
extensively used as a source of light, heating, ventilation and air-conditioning (HVAC).
Electricity is the driving force and has a special place in the modern household appliances,
thereby considerably improving the quality of life of individuals. Electricity also has an
overall positive impact on education, health and the environment – in reducing both emission
and the pressure on forests. Lighting alone could not provide an economical market for
electricity because its use was confined to the hours of darkness. Successful commercial
generation depended upon the development of other uses for electricity and particularly on
electric traction. There are number of studies which cover the working pattern of the State
Electricity Board’s and their contribution in the economic development of a particular state
and country. A large number of particular studies have tried to conduct covering of the
performance and the contribution in the promotion of economic development by the State
Electricity Boards. The Venkataraman Committee (1964) analyzed the working pattern of the
State Electricity Boards. It emphasized upon the requirement of improvement in the rate of
return, organizational effectiveness and efficiency of the State Electricity Boards.

The available literature related to the present research work studied by the researcher is
divided into the following subcategories: -

 Prior studies on power sector

 Power sector scenario in India
 Recent issues & challenges of Indian power sector
 Overview of Indian power sector performance
 Power sector reforms in Madhya Pradesh
 The concept of performance & its measurement
 Approaches of performance measurement
 KPI approach of performance measurement
 KPIs for a power distribution utility
 The Concept of Customer satisfaction
 Summary and research gaps

36
According to the report of the working group on Power for Twelfth Plan (2012-17)

Govt. of India, Ministry of Power, New Delhi (January, 2012) as per the report on power for
twelfth plan following has been introduced:

Introduction of data base, analysis and its evaluation for Energy Conservation (EC) Award
participating agencies.

 Strengthening and up gradation of process of Energy Conservation (EC) Awards and

paintings competition in the field of conservation of energy.
 Accumulation and propagation of best-practices in infrastructure and industrial sectors.
 Awareness on conservation in energy with the help of electronic and print media for the
general public of the country.
 The Reform of the Electricity Sector in Uganda 46 Besides the HRD activities undertaken
in each of the scheme, the following initiatives are also proposed to be started in the 12th
Five Year Plan.
 To start training programmes for the employees of Power plants.
 To initiate energy efficiency training programme with the introduction of
Interorganisational networking systems.
 To initiate refresher courses and technical skill up gradation programmes for energy
auditors and energy
 To start refresher courses, training programmes and upgradation of skill programmes for
operators who handle boilers and fuel fired furnaces
 To initiate awareness programs amongst students.
 To start training programmes for energy managers and auditors

Climate change mitigation can be achieved with the use of renewable energy sources
(Abdulla et al., 2014 and Ibrahim, 2008) and the sustainable choice of selection requires
consideration of various factors like: economic, environmental, social and technical (Klein et
al., 2015 and Chatzimouratidis et al., 2009). AHP is capable of breaking complex problems
into smaller parts which can be easily handled (Saaty, 2008). Chatzimouratidis et al. (2009)
used AHP for assessment of power plants.

37
Chapter 6: Objectives

38
Objective

Primary Objectives

 To analysis the Power & Energy Sector stocks Fundamentally.

 To Find the intrinsic value of the Power & Energy Sector
 To analyze whether the shares of Power & Energy Sector stock are overpriced or under-
priced in the secondary market
 To Provide investment Decision

Secondary Objectives

 To study the Various of Fundamental Analysis for Power & Energy Sector stock that are
given
 To understand the movement and performance of stock to take decision to invest
 Understanding and analyzing the factors that effect the movement of stock prices in the
Indian Stock Markets

39
Chapter 7: Research Methodology

40
Research methodology

Research methodology is the specific procedures or techniques used to identify, select,

process, and analyse information about a topic. In a research paper, the methodology section
allows the reader to critically evaluate a study’s overall validity and reliability.

Title of Study

The research has been based on secondary data analysis. The study has been exploratory as it
aims at examining the secondary data for analyzing the previous researches that have been
done in the area of fundamental analysis of stocks. The knowledge thus gained from this
preliminary study forms the basis for the further detailed Descriptive research. In the
exploratory study, the various technical indicators that are important for analyzing stock were
actually identified and important ones short listed.

SAMPLE DESIGN

The sample of the stocks for the purpose of collecting secondary data has been selected on
the basis of Random Sampling. The stocks are chosen in an unbiased manner and each stock
is chosen independent of the other stocks chosen.

SAMPLE SIZE

The sample size for the number of stocks is taken as 10 fundamental analysis of stocks as
fundamental analysis. is very exhaustive and requires detailed study. Companies selected on
the basis of Market cap)

Type of Research: Descriptive & Analytical Research

Data Type: Secondary Data

41
Data collection tools:

Secondary Data Collected (For Past 10 Years from FY 2010-11 to FY 2019-20) from

 Annual Reports of Companies

 Websites
 Data Analysis Tool:
 Ratio analysis
 For the purpose of the study following ratios have been used

Ratio Formula

EPS (Earning Per Share) 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒

𝑁𝑜. 𝑜𝑓 𝑂𝑢𝑡𝑠ℎ𝑡𝑎𝑛𝑑𝑖𝑛𝑑 𝑆ℎ𝑎𝑟𝑒
PE Ratio (Price to Earnings Ratio) 𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝𝑖𝑡𝑎𝑙𝑖𝑠𝑎𝑡𝑖𝑜𝑛
𝐸𝑃𝑆
ROCE (Return on Capital Employed 𝐸𝐵𝐼𝑇
Ratio) (𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦)
Interest Coverage Ratio 𝐸𝐵𝐼𝑇
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
Current Ratio 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
Quick Ratio (𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦)
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
Debt on Equity Ratio 𝐷𝑒𝑏𝑡
𝐸𝑞𝑢𝑖𝑡𝑦

42
 Chapter No.8
Data Analysis/ Interpretation

43
 Data Analysis

1. Power Grid Corporation of India

Number of Years
Ratio 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019- Average
11 12 13 14 15 16 17 18 19 20

Earnings
Per Share 5.47 6.78 8.84 8.22 9.21 10.94 14.24 15.68 19.18 20.25 11.881
(EPS)

Price to
Earnings
18.58 16.79 12.71 11.77 15.44 13.53 14.1 13.09 12.48 5.27 13.376
Ratio
(PE)

Current
0.92 0.56 0.43 0.47 0.36 0.40 0.38 0.40 0.62 0.98 0.552
Ratio

Debt on
Equity 2.1 1.14 2.09 2.4 2.31 2.37 2.39 2.26 2.27 2.29 2.162
Ratio

Quick
0.88 0.52 0.39 0.43 0.33 0.36 0.35 0.34 0.59 0.93 0.512
Ratio

Return
on
Capital 8.58 9.08 8.83 8.93 8.29 8.01 8.67 9.73 10.04 10.58 9.074
Employed
(ROCE)

Interest
Coverage 3.3 3.37 3.21 2.97 2.58 2.47 2.49 2.37 2.32 2.34 2.742
Ratio

44
 2. Tata Power Ltd

Number of Years
Ratio 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019- Average
11 12 13 14 15 16 17 18 19 20

Earnings
Per Share 3.33 3.42 4.18 3.68 3.68 3.44 3.62 4.97 1.47 3.76 3.555
(EPS)

Price to
Earnings
36.54 27.4 22.08 22.45 20.95 17.19 24.66 16.03 48.97 9.11 24.538
Ratio
(PE)

Current
0.89 1.32 0.83 0.46 0.59 0.72 0.52 0.58 0.45 0.51 0.687
Ratio

Debt on
Equity 1.8 1.68 2.64 2.97 2.96 2.71 3.31 2.25 2.86 2.78 2.596
Ratio

Quick
0.69 1.1 0.67 0.37 0.49 0.62 0.46 0.55 0.51 0.55 0.601
Ratio

Return
on
Capital 13.5 10.69 8.31 9.72 8.99 9.77 11.14 8.08 7.57 6.99 9.476
Employed
(ROCE)

Interest
Coverage 13.5 10.69 8.31 9.72 8.99 9.77 11.14 8.08 7.57 6.99 9.476
Ratio

45
 3. BGR Energy

Number of Years
Ratio 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019- Average
11 12 13 14 15 16 17 18 19 20

Earnings
Per Share 29.98 47.26 33.21 25.25 17.95 9.32 6.92 9.44 7.96 7.88 19.517
(EPS)

Price to
Earnings
32.4 17.9 7.8 6.4 5.4 8.7 9.2 57.2 12.1 16.9 17.4
Ratio
(PE)

Current
1.25 1.57 1.33 1.35 1.51 1.52 1.28 1.13 1.05 1.02 1.301
Ratio

Debt on
Equity 1.33 1.4 1.57 1.8 1.54 1.57 1.69 1.4 1.51 1.5 1.531
Ratio

Quick
1.25 1.56 1.32 1.34 1.49 1.51 1.28 1.12 1.04 1.01 1.292
Ratio

Return
on
Capital 29 31 20 13 10 4 10 11 10 8 14.6
Employed
(ROCE)

Interest
Coverage 6.68 8.95 3.42 2.39 1.93 0.55 1.13 1.38 1.20 1.10 2.873
Ratio

46
 4. Reliance Power Ltd

Number of Years
Ratio 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019- Average
11 12 13 14 15 16 17 18 19 20

Earnings
Per Share 2.71 3.09 3.61 3.67 3.69 3.19 3.94 3.00 0 0 2.69
(EPS)

Price to
Earnings
44.83 55.11 14.76 18.08 15.02 14.94 12.14 12.3 0 0 18.718
Ratio
(PE)

Current
4.27 55.11 1.15 0.64 0.47 0.74 0.46 0.72 0.26 0.22 6.404
Ratio

Debt on
Equity 0 0.1 0 0.11 0.15 0.26 0.29 0.4 0.41 0.53 0.225
Ratio

Quick
2.54 1.56 1.34 0.77 0.7 0.7 0.69 0.6 0.28 0.24 0.942
Ratio

Return
on
Capital 1.94 1.72 1.93 3.05 0.33 0.14 7.27 1.95 2.05 1.97 2.235
Employed
(ROCE)

Interest
Coverage 10.02 4.52 4.2 3.05 2.81 2.2 1.5 1.5 1.33 1..07 3.458
Ratio

47
 5. Adani Power Ltd

Number of Years
Ratio 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019- Average
11 12 13 14 15 16 17 18 19 20

Earnings
-
Per Share 0.95 3.23 1.18 -3.4 6.21 2.83 3.7 2.17 -0.39 0.369
12.79
(EPS)

Price to
Earnings
20 143.4 31.4 0 23.5 13.4 19 25.86 35.6 24.5 33.666
Ratio
(PE)

Current
0.55 0.49 0.37 0.32 0.41 0.42 0.23 0.43 0.15 0.14 0.351
Ratio

Debt on
Equity 1.68 2.74 4.11 5.31 2.87 2.71 2.66 5.41 1 2.05 3.054
Ratio

Quick
0.47 0.42 0.26 0.25 0.33 0.38 0.17 0.42 0.5 0.14 0.334
Ratio

Return
on
Capital 1.1 2.35 -1.15 -7.29 2.28 -0.27 0.35 -24 -0.2 3.96 -2.287
Employed
(ROCE)

Interest
Coverage 6.38 4.22 1.26 -0.08 0.66 0.74 1.06 0.63 0.63 0.83 1.633
Ratio

48
 6. JSW Energy

Number of Years
Ratio 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019- Aveage
11 12 13 14 15 16 17 18 19 20

Earnings
Per Share 4.97 0.96 5.17 4.26 7.82 8.45 3.86 0.48 4.24 3.76 4.397
(EPS)

Price to
Earnings
14.49 61.85 10.29 12.88 15.38 8.44 16.02 15.29 10.01 13.55 17.82
Ratio
(PE)

Current
1.74 1.12 0.93 1.00 1.08 0.42 0.51 0.48 0.53 0.1 0.791
Ratio

Debt on
Equity 0.39 0.87 0.81 0.71 0.63 0.47 0.5 0.35 0.26 0.20 0.519
Ratio

Quick
1.46 0.90 0.81 0.93 0.9 0.32 0.36 0.33 0.40 0.79 0.72
Ratio

Return
on
Capital 11.3 7.81 2.08 8.52 5.25 17.28 10.02 1.67 -3.45 6.33 6.681
Employed
(ROCE)

Interest
Coverage 4.81 4.19 1.87 3.47 2.89 3.37 3.43 1.63 1.76 1.95 2.937
Ratio

49
Comparative Analysis:

Power Grid Reliance Adani JSW Tata BGR Higher

Corporation Power Power Energy Power Energy the
of India Ltd Ltd Ltd better

Earnings
Per Share 11.881 2.69 0.369 4.397 3.555 19.517 19.517
(EPS)

Price to
Earnings 13.376 18.718 33.666 17.82 24.538 17.4 33.666
Ratio (PE)

Current
0.552 6.404 0.351 0.791 0.687 1.301 6.404
Ratio

Debt on
Equity 2.162 0.225 3.054 0.519 2.596 1.531 3.054
Ratio

Quick
0.512 0.942 0.334 0.72 0.601 1.292 1.292
Ratio

Return on
Capital
9.074 2.235 -2.287 6.681 9.476 14.6 14.6
Employed
(ROCE)

Interest
Coverage 2.742 3.458889 1.633 2.937 9.476 2.873 9.476
Ratio

Considering all the factors analyzed above, it is represented that Indian Economy is at a good
stage for someone to invest in. Considering the factors of Power and Energy Sector
specifically, the analysis shows that Indian Power and Energy Sector is constantly growing
and leading the global market. At that stage, it is always preferred to go for such industry
when it comes to investment, because the risk factor decreases and profitability factor arises.

When we decide that we are going to invest in Indian Power and Energy Sector in Indian
Economy, it becomes important for us to gather data of various companies and analyze that
which company should we prefer. Above mentioned Company analysis which is followed by
a Comparative Analysis of the selected 6 Power and Energy Sector companies of Indian
Market, shows various factors which an investor keeps in mind before going for investment.
50
Since the parameters like Earning Per Share (EPS), Price to Earnings Ratio (PE), Current
Ratio, Debt to Equity Ratio, Quick Ratio, Return on Capital Employed (ROCE), Interest
Coverage Ratio, all are higher the better, it results into a company which should be most
preferable for investment because it is giving higher return and higher feedback. So, the
above comparative analysis considering 6 companies with 10 parameters and analyzing the
data of last 10 financial years, results into the fact that Swan Energy is the best option to go
for investing in Power and Energy Sector in Indian Economy. Swan is giving highest average
(in last 10 years) Earnings Per Share (EPS), Price to Earnings Ratio (PE), Current Ratio, Debt
to Equity Ratio, Quick Ratio, Return on Capital Employed (ROCE), Interest Coverage Ratio

among all the other companies show that the condition of Adani Power. is far better than any
other company because Adani Power has more assets than its liabilities and it shows that its
condition is at a stage where anyone can go for investing in this company.

Our fundamental analysis of Power and Energy Sector in Indian Economy shows Adani
Power as the best option.

51
 Interpretation of all the given ration of Adani Power

Number of Years
Ratio 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019- Average
11 12 13 14 15 16 17 18 19 20

Earnings
-
Per Share 0.95 3.23 1.18 -3.4 6.21 2.83 3.7 2.17 -0.39 0.369
12.79
(EPS)

Price to
Earnings
20 143.4 31.4 0 23.5 13.4 19 25.86 35.6 24.5 33.666
Ratio
(PE)

Current
0.55 0.49 0.37 0.32 0.41 0.42 0.23 0.43 0.15 0.14 0.351
Ratio

Debt on
Equity 1.68 2.74 4.11 5.31 2.87 2.71 2.66 5.41 1 2.05 3.054
Ratio

Quick
0.47 0.42 0.26 0.25 0.33 0.38 0.17 0.42 0.5 0.14 0.334
Ratio

Return
on
Capital 1.1 2.35 -1.15 -7.29 2.28 -0.27 0.35 -24 -0.2 3.96 -2.287
Employed
(ROCE)

Interest
Coverage 6.38 4.22 1.26 -0.08 0.66 0.74 1.06 0.63 0.63 0.83 1.633
Ratio

52
Ratio Analysis of Adani Power
Earnings Per Share (EPS)

GRAPHICAL REPRESENTATION OF EPS

Earnings Per Share (EPS)

10
6.21
5 3.23 2.83 3.7
1.18 2.17
0.95
0
-0.39
-5 -3.4
-10

-15 -12.79
Earnings Per Share (EPS)

GRAPHICAL REPRESENTATION OF % CHANGE IN EPS

Earnings Per Share (EPS)

10

-5

-10

-15
2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019-
11 12 13 14 15 16 17 18 19 20
Earnings Per Share (EPS) 0.95 3.23 1.18 -3.4 6.21 2.83 3.7 -12.79 2.17 -0.39

Interpretation: -
Earnings per share indicates the earnings of common shares in a year. This ratio enables
investors to actually quantify the income earned by a share, and to determine whether it is
reasonably priced the ratio is arrived at by dividing the income attributable to common to
shareholders by the weighted average of common shares.

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
Earnings Per Share = = 6.21
𝑁𝑜. 𝑜𝑓 𝑂𝑢𝑡𝑠ℎ𝑡𝑎𝑛𝑑𝑖𝑛𝑑 𝑆ℎ𝑎𝑟𝑒

53
PE Ratio
GRAPHICAL REPRESENTATION OF PE Ratio

Price to Earnings Ratio (PE)

160
143.4
140
120
100
80
60
31.4 35.6
40 25.86 24.5
20 23.5 19
20 13.4
0
0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Price to Earnings Ratio (PE)

GRAPHICAL REPRESENTATION OF % CHANGE IN PE Ratio

Price to Earnings Ratio (PE)

160
140
120
100
80
60
40
20
0
2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019-
11 12 13 14 15 16 17 18 19 20
Price to Earnings Ratio (PE) 20 143.4 31.4 0 23.5 13.4 19 25.86 35.6 24.5

Interpretation: -

The most common quoted ratio. This helps the investors, analysts, advisors this ratio tells to
justify or support their contention. The reason for its popularity is that reduces to an
arithmetically figures the relation between market price and earnings per share and there by
allows on the opportunity to determine whether a share is overpriced and check the time it
would take to recover once investments.

𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝𝑖𝑡𝑎𝑙𝑖𝑠𝑎𝑡𝑖𝑜𝑛
Price to Earnings Ratio = = 143.4
𝐸𝑃𝑆

54
Current Ratio

GRAPHICAL REPRESENTATION OF Current Ratio

Current Ratio
0.6 0.55
0.49
0.5
0.41 0.42 0.43
0.4 0.37
0.32
0.3
0.23
0.2 0.15 0.14
0.1

0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Current Ratio

GRAPHICAL REPRESENTATION OF % CHANGE IN Current Ratio

Current Ratio
0.6

0.5

0.4

0.3

0.2

0.1

0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Current Ratio 0.55 0.49 0.37 0.32 0.41 0.42 0.23 0.43 0.15 0.14

Interpretation: -

The current ratio is the most commonly used ratio to measure liquidity. Its purpose is to
check whether a company’s current assets are enough to meet its immediate liabilities, that is
those that mature within one year. The ratio is arrived at by dividing current assets by current
liabilities:

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
Current Ratio = = 0.55
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦

55
Debt to Equity Ratio

Graphical Representation of Debt to Equity Ratio

Debt on Equity Ratio

6 5.41
5.31
5
4.11
4

2.74 2.87 2.71 2.66

3
2.05
2 1.68
1
1

0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Debt on Equity Ratio

Graphical Representation of % Change in Debt to Equity Ratio

Debt on Equity Ratio

6

0
2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019-
11 12 13 14 15 16 17 18 19 20
Debt on Equity Ratio 1.68 2.74 4.11 5.31 2.87 2.71 2.66 5.41 1 2.05

Interpretation: -

The debt to equity ratio compares a company’s total liabilities to its shareholders equity and
can be used to evaluate how much leverage a company is using. Higher leverage ratios tend
to indicate a company or stock with higher risk to shareholders.

𝐷𝑒𝑏𝑡
𝐷𝑒𝑏𝑡 𝑡𝑜 𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 = = 5.41
𝐸𝑞𝑢𝑖𝑡𝑦

56
Quick Ratio

GRAPHICAL REPRESENTATION OF Quick Ratio

Quick Ratio
0.6
0.5
0.5 0.47
0.42 0.42
0.4
0.38
0.33
0.3 0.26 0.25

0.2 0.17
0.14
0.1

0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Quick Ratio

GRAPHICAL REPRESENTATION OF % CHANGE IN Quick Ratio

Quick Ratio
0.6

0.5

0.4

0.3

0.2

0.1

0
2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019-
11 12 13 14 15 16 17 18 19 20
Quick Ratio 0.47 0.42 0.26 0.25 0.33 0.38 0.17 0.42 0.5 0.14

Interpretation: -

The swan Energy ratio is 2.58, its favorites and creditors. This ratio is used to check whether
a company has enough cash or cash equivalents to meet its current liabilities. In others words
company could lose when converting these to cash in an emergency. This ratio is arrived at
by dividing cash, marketable investment and debtors by current liabilities.
(𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦)
Quick Ratio = = 0.5
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦

57
ROCE
GRAPHICAL REPRESENTATION OF Return on ROCE

Return on Capital Employed (ROCE)

10
3.96
5 2.35 2.28
1.1 0.35
0
2010-11 2011-12 2012-13
-1.15 2013-14 2014-15 2015-16
-0.27 2016-17 2017-18 2018-19
-0.2 2019-20
-5

-10 -7.29
-15

-20

-25
-24
-30

Return on Capital Employed (ROCE)

GRAPHICAL REPRESENTATION OF % CHANGE IN ROCE

Return on Capital Employed (ROCE)

10
5
0
-5
-10
-15
-20
-25
-30
2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019-
11 12 13 14 15 16 17 18 19 20
Return on Capital
1.1 2.35 -1.15 -7.29 2.28 -0.27 0.35 -24 -0.2 3.96
Employed (ROCE)

Interpretation: -

Return on Capital Employed (ROCE) is a financial ratio that can be used in assessing a
company profitability and capital efficiency. ROCE is one of several profitability ratios that
used when analyzing a company financials for profitability performance.

𝐸𝐵𝐼𝑇
ROCE Ratio = = 3.96
(𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦)

58
Interest Coverage Ratio
GRAPHICAL REPRESENTATION OF Return on Interest coverage Ratio

Interest Coverage Ratio

7 6.38
6

5
4.22
4

2 1.26 1.06 0.83

1 0.66 0.74 0.63 0.63

0
2010-11 2011-12 2012-13 2013-14
-0.08 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
-1

Interest Coverage Ratio

GRAPHICAL REPRESENTATION OF % CHANGE IN Return coverage Ratio

Interest Coverage Ratio

7
6
5
4
3
2
1
0
-1
2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019-
11 12 13 14 15 16 17 18 19 20
Interest Coverage Ratio 6.38 4.22 1.26 -0.08 0.66 0.74 1.06 0.63 0.63 0.83

Interpretation: -

An important factor that investors must ascertain is whether a company’s profits are adequate
to meet its interest dues. If not, the interest I’ll have to be paid from either from the
company’s reserves, additional borrowings, or from a from a fresh issue of capital and these
are a sure financial weakness.

𝐸𝐵𝐼𝑇
Intrest Coverage Ratio = = 6.38
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠

59
Chapter No. 9: Finding and Conclusion

60
Finding and Conclusion

Investment in equity markets is a risky proposition if undertaken without background

understanding and careful analysis.

Investments done with the sole objective of making margins in the short run that rely on gut
feeling/intuition or herd behaviour can often be disastrous.

On the other hand, investment decisions made on the foundation of extensive scanning and
information and built with the help of tested analytical techniques result in favourable
outcomes.

Fundamental analysis is one such tool that helps in gathering useful and relevant information
and thereafter helping in arriving at the right (in context of the investment goals) company
stocks to build the investment portfolio.

Since the analysis rests on the use of fundamental indicators of the economy, industry and
the company, there is more evidence in favour than against the usefulness Fundamental
Research

Analysis of Power ana Energy Sector of the technique in understanding the possibilities of
investment in equity market and making judicious choices

To analyze and compare the performance of the Power ana Energy sector of 10 years. And it
also discusses, economic analysis, industry analysis and sector analysis of realty.

Company analysis. It also discusses about company Millionminds consultancy. Also

discusses about swot analysis, pestle analysis of the company. It also deals with the data
interpretation and analysis part wherein all the key Challenges related to risk and return are
done with the interpretation of the results.

When we decide that we are going to invest in Indian Power ana Energy Sector in Indian
Economy, it becomes important for us to gather data of various companies and analyze that
which company should we prefer. Above mentioned Company analysis which is followed by
a Comparative Analysis of the selected 6 Power ana Energy Sector companies of Indian
Market, shows various factors which an investor keeps in mind before going for investment.

Analysis of the selected 6 Power ana Energy Sector companies of Indian Market, shows
various factors which an investor keeps in mind before going for investment.

Since the parameters like Earnings Per Share (EPS), Price to Earnings Ratio (PE), Current
Ratio, Debt to Equity Ratio, Quick Ratio, Return on Capital Employed (ROCE), Interest
Coverage Ratio all are higher the better, it results into a company which should be most
preferable for investment because it is giving higher return and higher feedback.

61
Adani Power is giving highest average (in last 10 years Earnings Per Share (EPS), Price to
Earnings Ratio (PE), Current Ratio, Debt to Equity Ratio, Quick Ratio, Return on Capital
Employed (ROCE), Interest Coverage Ratio all the other companies show that the condition
of Swan Energy. is far better than any other company

Because Adani Power has more assets than its liabilities and it shows that its condition is at a
stage where anyone can go for investing in this company. Our fundamental analysis of Power
ana Energy Sector in Indian Economy shows Adani Power as the best option

To adapt to rising marketplace pressures, to get ahead and stay there, they will have to adopt
an array of marketing techniques. But deep in the forge of adversity lies opportunity — to
build resilient and robust brands

62
Chapter No. 10: Limitation

63
Limitation

 The Study was confined only to one particular sector

 The study was more confined with secondary data
 The study assumes no changes in the tax rates in the country

1. Time Constrain
Fundamental Analysis may offer excellent insights, but it can be extraordinary time
consuming. Time consuming models often produce valuations that are
contradictory to the current price prevailing on the exchange.

2. Industry specific
Fundamental analysis has been done under one industry (Power & Energy sector) and
some specific companies.

3. Inadequacies of Date
While making analysis one has to often wrestle with inadequate date. While deliberate
falsification of data may be rare, subtle misrepresentation and concealment are
common.

4. Future Uncertainties
Future changes are largely unpredictable; more so when the economic and business
environment id buffeted by frequent winds of change. In an environment
characterized by discontinuities, the past record is a poor guide to future performance.

64
Chapter No. 11: Recommendation

65
Recommendation

Fundamental analysis is a method of valuing a security that entails attempting to measure its
intrinsic value by examining related economic, financial and other qualitative and
quantitative factors

The end goal is to arrive at a number that an investor can compare with a security's current
price in order to see whether the security is undervalued or overvalued.

This method of stock analysis is considered to be in contrast to technical analysis, which

forecasts the direction of prices through an analysis of historical market data such as price
and volume.

Fundamental analysis is a method of determining a stock's real or "fair market" value.

Fundamental analysts search for stocks that are currently trading at prices that are higher or
lower than their real value.

If the fair market value is higher than the market price, the stock is deemed to be undervalued
and a buy recommendation is given.

In contrast, technical analysts ignore the fundamentals in favor of studying the historical price
trends of the stock.

66
Chapter No. 12: Bibliography

67
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68