Ppt presentation of pharma sector

1. By
Rajesh Narayanan
3511210125

2. What is Analysis ?
 The examination and evaluation of the relevant
information to select the best course of action from
among various alternatives.
 The methods used to analyze securities and make
investment decisions fall into two very broad
categories:
 Fundamental analysis
 Technical analysis.

3. Technical Analysis vs Fundamental
Analysis
 Technical analysis is a method of evaluating securities
by analyzing the statistics generated by market
activity, such as past prices and volume. Technical
analysts use charts and other tools to identify patterns
that can suggest future activity.
 Fundamental analysis involves analyzing the
characteristics of a company in order to estimate its
value.

4. OBJECTIVE OF STUDY
 The main objective of project is to do fundamental analysis of a
pharmaceutical of companies.
 Secondly to study the present scenario of a pharmaceutical
industry.
 Analyze the information collected on sales, profit, earning per
share, market price etc.
 To do Ratio Analysis for the selected companies and make
necessary comments on it so as to provide complete idea and
core ideology of the company. So that investors can easily get
idea about the fundamental analysis of pharmaceutical
companies.
 To carry out financial and non-financial analysis of Pharma
Sector as a whole for the selected period

5. Why Fundamental Analysis?
 Fundamental Analysis involves examining the
economic, financial and other qualitative and
quantitative factors related to a security in order to
determine its intrinsic value.
 It attempts to study everything that can affect the
security's value, including macroeconomic factors
(like the overall economy and industry conditions) and
individually specific factors (like the financial
condition and management of companies).

6. How does fundamental analysis works?
 Fundamental analysis is carried out with the aim of
predicting the future performance of a company. It is
based on the theory that the market price of a security
tends to move towards its 'real value' or 'intrinsic
value.' Thus, the intrinsic value of a security being
higher than the security’s market value represents a
time to buy. If the value of the security is lower than its
market price, investors should sell it.

7. Reliance Group
 Reliance Communications
 Reliance Capital Ltd
 Reliance Energy
Reliance Capital Limited is a financial service
company and part of a Reliance Anil Dhirubhai
Ambani Group.

8. Reliance Capital has interests in:
 Asset management.
 Mutual funds.
 Life and general insurance.
 Private equity and proprietary investments.
 Stock broking.
 Reliance PMS.
 Depository services and financial products.
 Consumer finance and other activities in financial
services.

9. Reliance Securities Ltd.
 Reliance Securities, the broking arm of Reliance
Capital is the one of the India’s leading retail broking
houses in India, providing customers with access to
equities, equity options and commodities
futures, wealth management, wealth management
services, mutual funds, IPOs and investment banking.

10. Components of Fundamental
Analysis(EIC Approach)
 Economy Analysis
 Industrial Analysis
 Company Analysis
 Financial Analysis of company’s Balance Sheet is being
done to find performance of the company
 Valuation.
The valuation of any security is done through the discounted
cash flow (DCF) model, which takes into consideration:
1. Dividends received by investors
2. Earnings or cash flows of a company
3. Debt, which is calculated by using the debt to equity ratio
and the current ratio (current assets/current liabilities)

11. Economy Analysis of India
 India's Q4 GDP at 4.8%; FY 2013 GDP is worst in a
decade , due to the widespread weakness in
farm, mining and manufacturing output
 India’s Inflation rate rose to 5.79 percent from 4.86
percent in June, mainly driven by higher food prices
and more expensive imports due to a falling rupee
 Foreign Direct Investment in India decreased to 1954
USD Million in May of 2013 from 2802 USD Million in
April of 2013.
 Reserve Bank of India decided on July 30th to leave
the repo rate unchanged at 7.25 percent, to support the
rupee and citing increasing risks to growth outlook.

12. Industrial Analysis –
India Pharma Sector
 India Pharmaceutical industry is the world's third-largest
in terms of volume & 14th in terms of value.
 By 2015 it is expected to reach top 10 in the world beating
Brazil, Mexico, South Korea and Turkey.
 Indian pharmaceutical industry is projected to show
double-digit growth in the near future owing to a rise in
pharmaceutical outsourcing and rising investments by
multinational companies.
 Indian Pharam Sector is booming ,Drug sales to retailers
in India registered a growth of 7.7 per cent in February
2013. Net Profit growth has increased very much so investor
can invest with low risk.

13. Company Analysis
1. Sun Pharmaceutical Industries
2. Dr Reddys Laboratories
3. Lupin
4. Cipla
5. Ranbaxy

14. Ratio Analysis of Sun Pharma
RATIOS 2012 2011 2010 2009 2008
Per Share Ratios
E.P.S 18.62 13.36 43.39 61.09 48.96
D.P.S 4.25 3.5 13.75 13.75 10.5
Profitability ratios
GP Ratio(%) 41.90 4.58 9.86 0.79 6.01
NP Ratio(%) 44.23 42.46 33.99 31.43 31.01
ROE 26.07 21 17.05 24.57 24.21
ROA 78.3 64.51 276.08 248.72 203.15
D/P Ratio 0.228249 0.261976 0.316893 0.225078 0.214461
P/E Ratio 31.80 34.50 43.50 18.90 26.10
PEG Ratio 0.8077 -0.498486 -1.501367 0.76287 0.51628
Liquidity &
Solvency Ratios
Current Ratio 4.86111 2.635022 2.9593 1.704541 1.736204
Quick Ratio 2.379213 2.207513 2.424353 1.976578 2.247963
Debt Equity Ratio 0.00497 0.007564 0.005157 0.004581 0.024365

15. Ratio Analysis of Dr. Reddy’s Lab
RATIOS 2012 2011 2010 2009 2008
Per Share Ratios
E.P.S 53.81 52.78 50.11 33.29 28.26
D.P.S 13.75 11.25 11.25 6.25 3.75
Profitability ratios
GP Ratio(%) 23.34 18.72 19.70 14.11 12.58
NP Ratio(%) 13.51 16.84 18.48 13.20 13.57
ROE 19.22 14.20 15.87 13.46 10.55
ROA 396.19 355.69 350.30 312.17 286.12
D/P Ratio 0.255529 0.213149 0.224506 0.187744 0.132696
P/E Ratio 24.50 34.10 32.10 26.50 15.20
PEG Ratio 1255.445 639.979 63.53202 148.8848 -25.2739
Liquidity &
Solvency Ratios
Current Ratio 2.192075 1.852734 1.299262 1.924783 2.042105
Quick Ratio 1.327381 1.17346 0.717969 1.292874 1.227046
Debt Equity Ratio 0.228259 0.239992 0.095222 0.121751 0.096078

16. Ratio Analysis of Lupin
RATIOS 2012 2011 2010 2009 2008
Per Share Ratios
E.P.S 18.01 18.51 72.96 50.35 54.02
D.P.S 3.20 3.00 13.50 12.50 10
Profitability ratios
GP Ratio(%) 20.01 19.75 20.58 17.18 18.83
NP Ratio(%) 14.96 18.03 17.52 14.09 16.30
ROE 22.94 21.51 22.49 22.04 27.58
ROA 83.61 70.66 284.51 166.06 160.46
D/P Ratio 0.177679 0.162075 0.185033 0.248262 0.185117
P/E Ratio 22.90 30.30 23.50 23 14.30
PEG Ratio -847.834 -40.6003 52.33189 -338.534 32.74544
Liquidity &
Solvency Ratios
Current Ratio 2.121251 2.344134 2.121662 1.552979 2.237978
Quick Ratio 1.215987 1.410501 1.213207 0.777864 1.134731
Debt Equity Ratio 0.265812 0.311892 0.358345 0.687057 0.733116

17. Ratio Analysis of Cipla
RATIOS 2012 2011 2010 2009 2008
Per Share Ratios
E.P.S 14 11.96 13.47 9.99 9.02
D.P.S 2 2.80 2 2 2
Profitability ratios
GP Ratio(%) 19.15 16.65 21.68 20.88 17.16
NP Ratio(%) 15.92 14.98 18.97 14.58 16.43
ROE 18.74 16.22 22.16 22.39 18.17
ROA 94.04 82.36 73.66 55.97 48.32
D/P Ratio 0.142857 0.234114 0.148478 0.2002 0.221729
P/E Ratio 22.30 27.90 25.70 22.80 25.30
PEG Ratio 130.7389 -248.885 73.7768 212.0161 -32.3215
Liquidity &
Solvency Ratios
Current Ratio 2.606644 2.922492 2.513486 2.422141 2.394898
Quick Ratio 1.321092 1.373575 1.370331 1.605769 1.503015
Debt Equity Ratio 0.001616 0.066746 0.000857 0.21611 0.154568

18. Ratio Analysis of Ranbaxy
RATIOS 2012 2011 2010 2009 2008
Per Share Ratios
E.P.S -3.84 -72.32 27.28 13.61 -24.85
D.P.S -- 0.00 2.00 -- --
Profitability ratios
GP Ratio(%) 4.07 13.10 18.31 10.52 2.07
NP Ratio(%) -2.47 -39.11 19.74 11.72 -22.02
ROE 7.68 17.81 12.82 8.03 2.52
ROA 45.42 45.60 121.74 94.16 34.24
D/P Ratio 0 0 0.073314 0 0
P/E Ratio 0.0 0.0 22.20 38.10 0.0
PEG Ratio 0 0 22.10255 -24.6173 0
Liquidity &
Solvency Ratios
Current Ratio 1.859948 1.049325 1.12601 0.905219 0.591889
Quick Ratio 1.323317 0.728399 0.527912 0.506087 0.279784
Debt Equity Ratio 2.478362 2.251383 0.830161 0.809844 1.002314

19. Financial Analysis Interpretation
 DR.REDDY and SUNPHARMA both have good earnings per share so both indicates good
sign for investors while other companies have not so good condition compare to above
mentioned companies.
 SUNPHARMA has declared highest dividend and DR.REDDY has declared little less
amount to the share holders. So both the firm are operating in very good condition and
both are good to invest money from the investor’s point of view.
 SUNPHARMA liquidity is very good and it is able to meet short-term obligation,
DR.REDDY has also very good condition so far as liquidity is concerned. so it reflects that
both firm’s position is good.
 · SUNPHARMA and Cipla have minimum Debt Equity Ratio indicating less risk to share
holders so both are good to invest.
 SUNPHARMA’s profit is highest compare to other companies. Even DR.REDDY also have
very good profit earned comparing other companies. So the both the companies having
good condition as far as profit is concerned.
 SUNPHARMA has earned maximum ROE. So it shows that they are in very good
position.
 The dividend payout ratio of DR.REDDY and SUNPHARMA are almost equal, so
investors can invest these two companies.

20. SUGGESTIONS FOR INVESTORS
 Pharmaceutical companies have lots of room to grow; so invest in
theses type of industries helps the investors at long time.
 High returns usually mean high risk. It is useful to think in terms of
the risk premium.
 Buy shares of reputed companies backed by top class management.
 Before investing we should undertake a deeps study on the net
sales, net profits in relations to equity capital employed & should
attempt to forecast for the coming years.
 Do not over pay for growth.
 The investors should analyze the price movement.
 Economic performance is greatly affected to the performance of the
industries of the country, so investors should know economic
performance of the country while investing.

21. Findings
 Indian economic growth is in a bad condition now and
current position shows that this is the not a good time
to invest.
 Indian Pharma Sector is booming and its right choice
to invest in Pharma Sector because there will be a
constant balance in demand and supply of product
 SUNPHARMA & DR.REDDY got highest favourable
ratio ,it indicates good sign for the investors to invest.
comparing others companies.

22. Thank You