1. BUSINESS
ANALYTICS
Group No.-8
SANTOSH, PREM SAGAR & ANIMESH
BUSINESS ANALYTICS
SECURITY ANALYSIS & PORTFOLIO MANAGEMENT

2. 2
CONTENTS
Introduction about Engineers India Limited 3-4
Collection of Historical Stock Price of E.I.L 4
Calculation of Historical Return and Historical risk of EIL’s Stock and interpretation 5
Collection of Suitable Market Return for the same period 6
Calculations of average monthly market return, historical variance and standard
deviation of the market
6-7
Calculation of beta of the stock and co-variance 7
Calculation and Explanation about the systematic risk and unsystematic risk of the
company
8-9
Characteristic Line between stock and market 9-10
Investment in Portfolio with risk free asset and calculation of portfolio return and risk,
Interpretation
11-12
Introduction of negative correlation stock (JSW Ispat Steel limit) 12-14
Calculation of Historical Return, risk,variance, correlation and co-variance of JSW Ispat
steel’s Stock:
15-16
Portfolio return, risk and result of the diversified portfolio 16-17
Statistics of Stocks return and Market movement 17
Analysis part of company’s sales and expected growth of return 18-22
CONCLUSION AND FUTURE PERFORMANCE 22-23

3. 3
Introduction:-
Engineers India Limited
Engineers India Limited (EIL) was set up in 1965 to provide engineering and related technical services for
petroleum refineries and other industrial projects. EIL is working under the administrative control of Ministry
of Petroleum and Natural Gas (MoP&NG), Government of India. In addition to Petroleum Refineries, with
which EIL started initially, over the years it has diversified and excelled in various other fields. EIL today has
emerged as Asia’s leading design, engineering and turnkey contracting company providing a complete range of
project services needed to conceptualize, plan, design, engineer and construct projects to meet the specific
requirements of its clients in the following fields:
 Petroleum Refining
 Petrochemicals
 Pipelines
 Offshore Oil & Gas
 Onshore Oil & Gas
 Terminals & Storages
 Mining & Metallurgy
 Infrastructure
EIL is capable to provide services from concept to commissioning in all the sectors listed above and its
association with clients extend beyond the commissioning of their plants through monitoring the operation of
each plant and accumulating feedback on its performance. EIL can provide its services in the following modes:
a) Project Implementation Services (EPCM) such as Conceptual Studies, Feasibility Studies, Detailed
Project Reports, FEED Package, Basic Design Engineering Package (BDEP) Project Management, Planning &
Scheduling, Cost Engineering, Process Design, Detailed Engineering, Procurement Services, Construction
Management & Supervision, Commissioning and plant start‐up assistance etc.
b) Project Management Consultancy (PMC) Services
c) Specialist Services such as Heat & Mass Transfer Equipment Design, Engineering & Technology
Development and Design, Environmental Engineering, Information Technology Services, Specialist Materials
and Maintenance Services, Energy Conservation Services, Plant Operations & Safety including HAZOP
Studies, Safety Integrity Levels (SIL) studies and Risk Analysis, Yield and Energy and Optimisation Studies.
d) Engineering, Procurement & Construction (EPC) / Lump sum Turnkey (LSTK) Contracts
e) Open Book converted LSTK Projects
EIL has been involved in setting up of almost all the large projects that have come up in India in the Oil & Gas
Sector in the last four decades and has also successfully executed several assignments in the middle‐east and
south‐east Asia. EIL has to its credit more than 400 major projects successfully completed and operating
smoothly at the rated capacity, creating an array of satisfied clients.
In the course of setting up various projects, EIL has worked with a large number of process licensors and

4. 4
engineering/construction/contracting companies worldwide and is well versed with the latest engineering codes
and practices followed internationally.
EIL is a strong technology based and technology oriented company and has developed extensive data bank,
computerized design tools, flexible yet integrated project control systems.
Stock Details of the E.I.L. is as follows;
Mkt.cap.
(crs.)
8025.83 Price
/book
3.86 Dividend 100% Div Yield (%) 2.10
Book
value(Rs.)
61.69 Face
value
5.00 Industry P/E 12.36 52 Weeks
(High-Low)
294.80-195.00
EPS(TTM) 18.89 P/E 12.61 P/C 12.24
Part-I,
(A) Collection of Historical Stock Price of E.I.L;
HISTORICAL STOCK PRICES
Company: Engineers India Limited
Period:-(June-2011 to May-2012)
Month
Open High Low Close No. of No. of
Total
Turnover
* Spread
Price Price Price Price Shares Trades (Rs.) (Rs.)
H-
L
C-O
Jun-11 266 290.9 261 274.1 6,21,342 15,991 17,29,69,469 29.9 8.1
Jul-11 276.9 294.8 274 286.15 5,46,287 14,425 15,60,67,598 20.8 9.25
Aug-11 290.7 294 252.1 253.4 7,25,033 11,911 19,11,23,992 41.9 -37.3
Sep-11 253 270 245 247.05 5,06,583 15,484 13,03,83,219 25 -5.95
Oct-11 245.1 250 231.1 241.55 3,59,627 8,675 8,74,13,129 19 -3.55
Nov-11 243.1 253.7 203.1 211.85 6,71,291 10,844 15,86,08,028 50.7 -31.3
Dec-11 216.1 220.1 195 205.65 3,23,572 12,408 6,64,55,909 25.1 -10.5
Jan-12 208 248 201 230.85 26,56,953 66,252 61,60,15,723 47 22.85
Feb-12 232 288.5 230 272.8 30,53,172 68,038 80,99,55,937 58.5 40.8
Mar-12 274.8 284.2 251 254 13,77,044 24,026 36,94,20,619 33.2 -20.8
Apr-12 255 266 245.1 251.95 5,36,693 9,349 13,97,06,863 21 -3.05
May-12 254 257.6 220.4 221.3 2,42,043 9,948 5,63,13,776 37.2 -32.7

5. 5
(B) Calculation of Monthly Return of E.I.L;
Calculation of Historical Return and Historical risk of EIL’s Stock:
S.NO MONTHS
O/P PRICE C/S
PRICES RETURN
Mean
return R-¯R (R-¯R)2
1 Jun-11 266 274.1 3.045112782 -1.7503 4.79541 22.99595
2 Jul-11 276.9 286.15 3.340556157 -1.7503 5.090853 25.91679
3 Aug-11 290.7 253.4 -12.8310973 -1.7503 -11.0808 122.7841
4 Sep-11 253 247.05 -2.35177865 -1.7503 -0.60148 0.36178
5 Oct-11 245.1 241.55 -1.44838841 -1.7503 0.301909 0.091149
6 Nov-11 243.1 211.85 -12.8547922 -1.7503 -11.1045 123.3098
7 Dec-11 216.1 205.65 -4.83572420 -1.7503 -3.08543 9.519861
8 Jan-12 208 230.85 10.98557692 -1.7503 12.73587 162.2025
9 Feb-12 232 272.8 17.58620691 -1.7503 19.3365 373.9004
10 Mar-12 274.8 254 -7.56914119 -1.7503 -5.81884 33.85895
11 Apr-12 255 251.95 -1.19607843 -1.7503 0.554219 0.307158
12 May-12 254 221.3 -12.8740157 -1.7503 -11.1237 123.7371
Total return: -21.0035635
∑(R-
¯R)2
998.9856
(C)
Avg. Monthly return = -21.0035635/12
= -1.750297 %
(D)
Standard deviation(σ2
) =
=
= ± 9.529788%
 According to above standard deviation and Avg. return the range of Return will be -11.28 % to 7.78 %.
It means in worst situation stock will give us 11.28 % negative return and in best circumstances stock
will give us 7.78 % positive return.
Historical Variance = σ2
= 90.816872 %
(E)
Collection of Suitable Market Return for the same period;

6. 6
HISTORICAL MARKET MOVEMENT
Indices :BSE 200
For the period: June 2011 to May 2012
Month
Open High Low Close P/E P/B.V. Dividend Yield
June 2011 2,303.82 2,319.15 2,155.87 2,314.65 18.26 3.61 0.98
July 2011 2,325.75 2,361.08 2,253.99 2,256.48 18.51 3.22 1.31
August
2011 2,269.53 2,284.75 1,955.28 2,061.08 16.60 2.96 1.43
September
2011 2,086.41 2,131.58 1,968.11 2,028.27 16.42 2.92 1.46
October
2011 2,011.86 2,167.52 1,947.72 2,155.58 16.31 2.89 1.47
November
2011 2,141.49 2,163.27 1,880.74 1,953.03 17.30 2.84 1.50
December
2011 1,991.63 2,053.99 1,819.80 1,850.89 16.79 2.69 1.58
January
2012 1,857.46 2,102.54 1,835.84 2,097.94 17.36 2.81 1.53
February
2012 2,096.51 2,289.67 2,087.61 2,190.92 19.08 3.09 1.38
March 2012 2,186.05 2,237.66 2,092.37 2,157.89 18.82 3.04 1.41
April 2012 2,161.45 2,197.57 2,100.07 2,136.82 18.63 2.79 1.56
May 2012 2,148.08 2,150.62 1,953.17 2,003.10 17.42 2.50 1.71
(F)
Calculations of average monthly market return, historical variance and standard
deviation;
S.NO MONTHS
O/P
PRICE
C/S
PRICES RETURN
Mean
return R-¯R (R-¯R)2
1 Jun-11 2,303.82 2,314.65 0.470089 -1.24417 1.714259 2.938683
2 Jul-11 2,325.75 2,256.48 -2.978394 -1.24417 -1.73422 3.007533
3 Aug-11 2,269.53 2,061.08 -9.184721 -1.24417 -7.94055 63.05235
4 Sep-11 2,086.41 2,028.27 -2.786605 -1.24417 -1.54243 2.379105
5 Oct-11 2,011.86 2,155.58 7.143638 -1.24417 8.387808 70.35533
6 Nov-11 2,141.49 1,953.03 -8.800415 -1.24417 -7.55624 57.09683
7 Dec-11 1,991.63 1,850.89 -7.066574 -1.24417 -5.8224 33.90038
8 Jan-12 1,857.46 2,097.94 12.94671 -1.24417 14.19088 201.3811
9 Feb-12 2,096.51 2,190.92 4.503198 -1.24417 5.747368 33.03224
10 Mar-12 2,186.05 2,157.89 -1.288168 -1.24417 -0.044 0.001936
11 Apr-12 2,161.45 2,136.82 -1.139513 -1.24417 0.104657 0.010953
12 May-12 2,148.08 2,003.10 -6.749283 -1.24417 -5.50511 30.30627
Total return: -14.93003 ∑(R- 497.4628

7. 7
¯R)2
Standard deviation (σ2
) =
=
= ± 6.7248710700%
Historical Variance = σ2
= 45.22389090%
 Like our stock Market Avg. return is also negative as -1.24417. So, we can say that there is a positive
correlation between Stock and Market return. Here the standard deviation of the Market movement is 6.7248 %.
So, we can see that the range of market movement is -7.9690 to 5.480701. It means in any circumstances
Market return will fluctuate from 7.9690 % negative to 5.480701 % positive.
(G)
Calculation of beta of the stock (E.I.L.)
S.NO MONTHS
stock return market
return
1 Jun-11 3.045112782 0.470089
2 Jul-11 3.340556157 -2.978394
3 Aug-11 -12.8310973 -9.184721
4 Sep-11 -2.35177865 -2.786605
5 Oct-11 -1.44838841 7.143638
6 Nov-11 -12.8547922 -8.800415
7 Dec-11 -4.8357242 -7.066574
8 Jan-12 10.98557692 12.94671
9 Feb-12 17.58620691 4.503198
10 Mar-12 -7.56914119 -1.288168
11 Apr-12 -1.19607843 -1.139513
12 May-12 -12.8740157 -6.749283
correlation coff.(r)= 0.774706294
Co-variance= r× σstock× σmaket
=0.774706294×9.529788×6.72487107
=49.64828899 %
Beta (ß) =

8. 8
=
=1.09783320
 Here the Beta of the stock is 1.09783320. Means stock volatility is equal to 109 %.In other word. If the Market
would go up 100 %, than stock would also go up to109 % and vise-versa. We can also say that stock has higher
market risk.
(H)
Calculation of total and systematic variance of the stock (E.I.L)
Total variance of the stock= 90.816872 %
Systematic Variance = ß2
×Market variance
= (1.09783320)2
×45.2238909
= 54.505539 %
Hence, Systematic risk is equal to 7.38 %.
 The total risk of the stock is 9.53 %, out of which systematic risk is 7.38 %. So we can say that the unsystematic
risk of the stock is (9.53-7.38) equal to 2.15 %.
(I)
Explanation about the systematic risk and unsystematic risk of the company;
The systematic risk is also called as Non-Diversifiable risk. Because it’s cannot be eliminated. It is the relevant portion
of an asset’s risk attributable to market factors that affect all firms such as war, inflation, international incidents, and
political events.
Unsystematic risk is due to factors specific to an industry or a company like labor unions, product category,
research and development, pricing, marketing strategy etc. It can be eliminated through diversification
 These may be the reason of unsystematic risk of a company
o 80.401 % of the total share capital of the company’s is held by the president of India in the Company.
So, the Govt Decision for this company may be affected.

9. 9
o The Decision of CIEL may also be affected to this company because CIEL is the wholly owned
subsidiary company of EIL.
o EIL has executed a large number of modernization projects for most of the refining companies in India.
These include the project of IOCL, HPCL, BPCL, CPCL, KRL, Essar, MRPL, BRPL etc. so the risk
involved in these companies may be partly affected to the EIL also.
o Share Price may be affected by the Quarterly Report of the Company.
 These may be Systematic Risk of Engineers India Limited:-
o The Crude Oil Policy of the Govt.
o Steel Price and foreign steel Exporter companies Prices
o Export Policy of Indian Government
o There has been slow down in investment in infrastructure sector.
o Overseas client interest in Indian Service provider for infrastructure consultancy and project service.
(J)
Characteristic Line, using SHARPE SINGLE INDEX MODEL
(Historical Characteristic Line)
S.NO MONTHS
stock return market
return
1 Jun-11 3.045112782 0.470089
2 Jul-11 3.340556157 -2.978394
3 Aug-11 -12.8310973 -9.184721
4 Sep-11 -2.35177865 -2.786605
5 Oct-11 -1.44838841 7.143638
6 Nov-11 -12.8547922 -8.800415
7 Dec-11 -4.8357242 -7.066574
8 Jan-12 10.98557692 12.94671
9 Feb-12 17.58620691 4.503198
10 Mar-12 -7.56914119 -1.288168
11 Apr-12 -1.19607843 -1.139513
12 May-12 -12.8740157 -6.749283

10. 10
Part-II,
Interpretation: - I invested Rs.10, 000 in Engineers India Limited. At the End of May-12 this Investment gave me a
return of -1.7502975% returns. Means I loosed my money .My assets value after 12 months is Rs.9824.97 .In order to
minimize my risk and loss I will make a Portfolio with two assets and I’ll add one risk free asset.
Fixed Deposit in Axis Bank Ltd.
Period :-( 5 Years)
Return: - 8.4 % yearly
y = 0.5467x - 0.2873
R² = 0.6002
-15
-10
-5
0
5
10
15
-20 -10 0 10 20
Securityreturn
Market(BSE 200) Return
Characteristic Line
market
return
Linear
(market
return)
Rs.10000PortfolioMy
60% 40%
Investment Investment
In Fixed in Stock (EIL)
Deposit

11. 11
Months June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May
Returns 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7%
 Average Return of Portfolio :
w1r1+w2r2= (0.40*-1.75) + (0.60*0.70), = -0.28 %
 Portfolio risk:
Because Fixed Deposit is a Risk free Investment .so, the Slandered Deviation of the F.D will be ZERO (0).
Whether price of EIL’s share is goes up and goes down the return on F.D will be stable. So, we can say that
there is no correlation between F.D and EIL’S share and the correlation coefficient of these two investments
will be ZERO (0). If the correlation coefficient is zero than the co-variance will also be ZERO (0). Than the
risk in Stock will only the risk in Portfolio. So, Portfolio risk is:
=6.0271671 %
So, here when I invest my saving in more than one stock or one risky and one risk free asset than my negative
return has decrease and reached a level of -0.28 %. My risk in investment is also come down from 9.529% to
6.0271671%.
Hence we can say that diversification is very useful and important and it minimizes our risk.
Part-III,
Introduction:
JSW Ispat Steel limited
Ispat Industries Limited (IIL) is one of the leading integrated steel makers and the largest private sector
producer of hot rolled coils in India. Set up as Nippon Denro Ispat Limited in May 1984 by founding
chairman Mr M L Mittal, IIL has steadily grown into a Rs 9,400-crore company, assuming its position as
flagship of the reputed Ispat Group. A corporate powerhouse with operations in iron, steel, mining, energy and
infrastructure, the Group today figures among the top 20 business houses in the country.
Headquartered at Mumbai, IIL employs a total of 3000 people and is the leader in the national speciality steel
market. The company's core competency is the production of high quality steel, for which it employs cutting
edge technologies and stringent quality standards. It produces world-class sponge iron, galvanized sheets and
cold rolled coils, in addition to hot rolled coils, through its two state-of-the art integrated steel plants, located
at Dolvi and Kalmeshwar in the state of Maharashtra.
The sprawling 1,200 acres Dolvi complex houses the 3 million tonne per annum hot rolled coils plant, that
combines the latest technologies - the Conarc process for steel making and the compact strip process (CSP) -

12. 12
introduced for the first time in Asia.
The complex also has a 1.6 million tonne per annum sponge iron (DRI) plant, which was
commissioned in 1994 as the world's largest and most efficient gas-based single mega module plant.
Moreover, the Dolvi complex is home to a 2 million tonne blast furnace and also boasts a mechanised multi-
functional jetty situated nearby, that facilitates the automation of raw material handling. A new 2.24 million
tonnes per annum sinter plant; a 1260 tonnes per day oxygen and a new electric arc furnace have also been
commissioned at IIL Dolvi.
Ispat is the only steel maker in India and among a few in the world to have total flexibility in
choice of steel making route, be it the conventional blast furnace route or the electric arc furnace route. Its
dual technology allows Ispat the freedom to choose its raw material feed, be it pig iron, sponge iron, iron ore,
scrap or any combination of various feeds. It also has total flexibility in choosing its energy source, be it
electricity, coal or gas.
The Kalmeshwar complex houses Ispat's 0.4 million tonnes cold rolling complex, which also includes
the galvanized plain/ galvanized corrugated (GP/GC) lines and India's first colour coating mill.
Technology and innovation have always been the cornerstones of IIL's quest for excellence and these state-
of-the-art plants facilitate the company's mission to attain and sustain market leadership, through
technological and product superiority.
The company's strengths lie in its integrated process management, knowledge management and control
systems. And its seamless supply chain management systems further the efficient use of raw materials, while
its staff of highly skilled engineers, technicians and managers with specialised domain knowledge, ensure the
choice of the relevant technology and the ability to produce international quality products at a competitive
price.
In line with its vision for the future, IIL is expanding its HRC capacity to 3.6 million. Moreover, it aims
to complete its vertical integration process, increase the proportion of high-grade and value-added steel
products in its product mix and leverage the advantage the modern design and the size of the facilities offers.
With investments of over US $2 billion, IIL is the seventh largest Indian private sector company in
terms of fixed assets. It aims to consolidate its market leadership in the national specialty steel market by
capitalising on the proximity of its manufacturing facilities to major consumers of flat steel products in
Maharashtra, while increasing its presence in international markets by using its convenient port location.
In the short span of time since its inception, Ispat Industries has steadily raised the bar - in terms of its
relentless pursuit of technological advancement, unwavering focus on innovation, strident emphasis on quality
products and its constant initiatives aimed at ensuring customer satisfaction. As it rapidly forges ahead on all
these fronts, IIL has successfully reinforced its position as market leader, while simultaneously making
technological breakthroughs and setting even higher standards for itself.
Stock Details of the JSW Ispat Steel is as follows;
Mkt.cap.
(crs.)
2650.22 Price
/book
17.26 Dividend 0.00 % Div Yield (%) -
Book
value(Rs.)
0.61 Face
value
10.00 Industry P/E 8.34 52 Weeks
(High-Low)
18.25-9.06
EPS - P/E - P/C 8.56

13. 13
 Investment in the stocks of Engineers India Limited & JSW Ispat steel Limited
Historical Price of JSW Ispat Steel Limited
Period: - June 2011 to May 2012
Month Open High Low Close
No. of No. of
Total
Turnover
* Spread
Shares Trades
H-L
C-
O
Jun-11 21.9 22.2 18.05 22.10 1,45,29,709 21,362 29,25,81,420 4.15 -2.8
Jul-11 19.6 20.8 17.85 20.20 2,12,01,787 23,181 41,17,30,993 2.95 -1.7
Aug-
11 18.1 20.80 13 20.15 3,24,31,003 36,315 49,70,71,863 5.25 -3.5
Sep-11 14.7 17 13.01 16.82 1,76,48,178 27,429 25,80,82,458 2.99 -1.7
Oct-11 13 13.79 12.25 13.42 1,29,39,538 21,363 16,74,70,201 1.54 0.42
Nov-
11 13.42 15.10 9.65 14.52 1,39,08,636 19,355 15,90,60,670 3.95 -3.1
Dec-11 10.6 13.78 9.06 12.15 1,21,35,152 15,946 12,16,97,214 1.94 -1.3
Jan-12 9.75 13.94 9.14 10.80 2,80,55,140 41,955 34,53,29,047 4.8 3.49
Feb-12 13.25 15.9 13 14.58 3,54,29,252 52,803 51,84,07,481 2.9 1.33
Mar-12 14.55 15.39 11.95 15.30 1,70,17,045 27,649 23,10,51,036 2.87 -2
Apr-12 12.8 13.27 11.3 12.86 81,81,988 14,090 10,18,60,912 1.97 -0.9
May-
12 12.08 14.82 9.5 13.70 1,12,41,176 21,062 11,81,23,514 2.59 -2.1
Rs. 10,000.00PORTFOLIOVALUEMY
70%
30%
EIL
JSW ISPAT STEEL

14. 14
Calculation of Historical Return and Historical risk of JSW Ispat steel’s Stock:
S.NO MONTHS
O/P
PRICE
C/S
PRICES RETURN
Mean
return R-¯R (R-¯R)2
1 Jun-11 21.9 22.1 0.913242 7.967774 -7.05453 49.76642
2 Jul-11 19.6 20.2 3.061224 7.967774 -4.90655 24.07423
3 Aug-11 18.1 20.15 11.32597 7.967774 3.358193 11.27746
4 Sep-11 14.7 16.82 14.42177 7.967774 6.453995 41.65405
5 Oct-11 13 13.42 3.230769 7.967774 -4.737 22.43921
6 Nov-11 13.42 14.52 8.196721 7.967774 0.228947 0.052417
7 Dec-11 10.6 12.15 14.62264 7.967774 6.654868 44.28726
8 Jan-12 9.75 10.8 10.76923 7.967774 2.801457 7.84816
9 Feb-12 13.25 14.58 10.03774 7.967774 2.069962 4.284742
10 Mar-12 14.55 15.3 5.154639 7.967774 -2.81313 7.913728
11 Apr-12 12.8 12.86 0.46875 7.967774 -7.49902 56.23536
12 May-12 12.08 13.7 13.4106 7.967774 5.442822 29.62431
Total return: 95.61329
∑(R-
¯R)2
299.4574
Avg. Monthly return = 95.61329/12
=7.967774 %
Standard deviation (σ2
) =
=
= ± 5.2176048%
Historical Variance = σ2
= 27.2234 %
 Here the range of return of JSW Ispat steel is 2.7501692 to 13.1853788. It means the stock may give
us the return of 2.75 % in worst circumstances whereas 13.1853 % in best circumstances.
 Correlation coff. And Covariance of these two Companies
S.NO MONTHS EIL JSW
1 Jun-11 3.045112782 0.913242
2 Jul-11 3.340556157 3.061224
3 Aug-11 -12.8310973 11.32597

15. 15
4 Sep-11 -2.35177865 14.42177
5 Oct-11 -1.44838841 3.230769
6 Nov-11 -12.8547922 8.196721
7 Dec-11 -4.8357242 14.62264
8 Jan-12 10.98557692 10.76923
9 Feb-12 17.58620691 10.03774
10 Mar-12 -7.56914119 5.154639
11 Apr-12 -1.19607843 0.46875
12 May-12 -12.8740157 13.4106
correlation coff.(r)= -0.177408398
Co-variance = r× σeil× σjsw
=-0.177408398×9.529788×5.2176048
=-8.8212188 %
 Here the correlation coefficient of these two companies is negative. Which means if the EIL’s price
will goes down than JSW’s Price may goes up and vise-versa.
Portfolio Return = W1r1 + W2r2
= (0.70×-1.750297) +(0.30×7.967774)
= 1.1651243 %
Portfolio risk =
= 0 4 0 81 8 0 0 4 0 0 0 0 8 8 1 188
= 44 00 4 010 04 11
=
=±6.576127
Result of the Portfolio:-
We can see that through diversification of investment into two stocks which have negative correlation, not
only risk can be minimize but also one company’s negative return can compensate with others positive return.

16. 16
In above case the Individual risk of EIL’s is very high i.e. . 88 % but when we diversified my
Investment with JSW’s stock which has 5.2176048 % risk, than my Portfolio is left with only 6.576127 %
risk.
Not only risk but my EIL’s return was negative i.e. -1.750297 %, but when we increase the stock in
my portfolio my portfolio returns has gone up to 1.1651243 %.Hence, I can say that Diversification is such
type of useful tool, that can save our fund and capital investment effectively.
 Statistics of Stocks return and Market movement :
MONTHS
EIL'S
RETURN
JSW'S
RETURN
BSE 200'S
MOVEMENT
Jun-11 3.045112782 0.913242 0.470089
Jul-11 3.340556157 3.061224 -2.978394
Aug-11 -12.8310973 11.32597 -9.184721
Sep-11 -2.35177865 14.42177 -2.786605
Oct-11 -1.44838841 3.230769 7.143638
Nov-11 -12.8547922 8.196721 -8.800415
Dec-11 -4.8357242 14.62264 -7.066574
Jan-12 10.98557692 10.76923 12.94671
Feb-12 17.58620691 10.03774 4.503198
Mar-12 -7.56914119 5.154639 -1.288168
Apr-12 -1.19607843 0.46875 -1.139513
May-12 -12.8740157 13.4106 -6.749283
-20
-10
0
10
20
30
40
BSE
200'S
MOVE
MENT
JSW'S
RETUR
N
EIL'S
RETUR
N

17. 17
 Analysis part of company’s sales and expected growth of return
Govt. Bond:-
India sold Rs 150 billion ($2.7 billion) of bonds on 27th
July 2012. The Reserve Bank of India set a cut-off
of 8.1148 per cent or Rs 100.22 on the 8.15 per cent 2022 paper, lower than 8.1222 per cent forecast in a
Reuter’s poll. The cut-off price for 8.07 per cent 2017 bonds was Rs 100.03, yielding 8.06 per cent, the RBI
said, higher than the poll forecast of 8.02 per cent. For the 8.97 per cent 2030 bonds, the cut-off price was Rs
104.7, yielding 8.4590 per cent; lower than the poll forecast of 8.4695 per cent. For the 8.33 per cent 2036
bonds, the cut-off price was Rs 97.80, yielding 8.5458 per cent; lower than the poll forecast of 8.5654 per cent.
 Calculation of expected return of the stock(through CAPM Method);
CAPM = Rf+ß (Rm-Rf)
= 8.1148+1.09783320(9.5-8.1148)
= 9.6355 %
 Company EIL is a zero debt company. So there is no Long term liability in company’s balance sheet
except share capital. Hence we can say that the cost of equity will be the total cost or weighted average
cost of capital.
WACC = 9.64 %
(A)
 Following are the Investment of company in fixed assets;
Particulars 2007-08 2008-09 2009-10 2010-11
Fixed Assets 5035.89 6077.39 7189.38 8201.26
Capital expenditure 57702.15 123351.90 151619.05 219334.16
Turn over 73775.21 153246.28 199379.70 282328.44
 In the above table we can see that company has increased his investment year by year as 20.68 %,
18. % and 14.0 % .Similarly Company’s capital expenditure has also increased by 11 . %, .
% and 44. %. By this company’s sales income has also increased by 10 . %, 0 % and 41. 1 %.
On 23rd
Mar. 2010 the company had split its share into 1:2 ratio and the face value of the company’s
share become Rs. 5 from Rs. 10. And on same date company also issued bonus share into 2:1 ratio to
their existing stock holders.

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The company’s flow of dividend is as under:
Announcement Date Effective Date Dividend Type Dividend (%)
01-02-12 15-02-12 Interim 40.00
26-05-11 26-08-11 Final 80.00
09-03-11 22-03-11 Interim 20.00
28-01-10 26-03-10 Interim 1,000.00
26-11-09 21-12-09 Interim 60.00
12-06-09 09-09-09 Final 140.00
11-12-08 29-12-08 Interim 45.00
03-06-08 10-09-08 Final 70.00
06-12-07 26-12-07 Interim 40.00
31-05-07 05-09-07 Final 60.00
16-01-07 05-02-07 Interim 35.00
28-05-12 28-05-12 Final 80.00
(B)
Dividend payout ratio:-
Total dividend distributed during the year/PAT
=
=32.24 %
Expected return of the stock:-
According to CAPM method: = 9.6355 %.
According to Dividend Yield Method (Ke) = D1/P
= 9.25/238
= 3.89 %
According to Dividend growth model (Ke) = (D1/P)+g

19. 19
= (9.25/238)+.06
= 9.887 %
(C)
Earnings per Share of the company as per the company’s annual report is equal to 1 . 1(Basic and Diluted)
(D)
Company’s Sales growth rate: - (according to Higgins’s sustainable growth model)
(p) Profit margin of the company: (PBT/Net sales) 78453.46/298365.07 =0.2629
(d)Dividend payout ratio =0.3224
(L) Debt equity ratio of the firm = Nil
(T) The ratio of total assets/total sales of the firm 340152.76/298365.07 =1.14
=
=0.1852 or 18.52 % growth rate
 It means we can expect that if this year company’s PBT is 78453.46 lakhs than next year company’s
PBT may be with 18.52 % growth 92983Lakhs.
(E)
Management Discussion and analysis report:-
Business overview:
A. The Company was able to maintain a healthy order book and gained business worth 4055
crores.
B. The Hydrocarbon sector continues to play a dominant role in the Company's overall
business scenario.

20. 20
C. EIL strengthened its presence in the Infrastructure sector by winning new orders like
contracts from Unique
Identification Authority of India (UIDAI) for office buildings at Delhi & Bangalore, Rajiv
Gandhi Institute of Petroleum Technology (RGIPT) for development of Assam Centre for
RGIPT at Sibsagar, Ministry of Home Affairs, New Delhi for Third Party Inspection
Services for Indo-China Border Road Works, IIIT-Delhi for construction of IIIT-D
Campus.
D. EIL also entered in strategic alliances in Oman and UAE for partnering in execution of
turnkey projects.
E. EIL continues to provide a large number of value added specialized services in filed
relating to Project Feasibility Studies, Risk Analysis, Environment Management, Energy
Efficiency Management, Refinery Optimization and Materials and Maintenance Services.
Business Environment, Risk and opportunities,
A. Oil supply shall remain sluggish in near future due to slow grow th in supply from non-
OPEC countries and unrest in oil producing countries. As a consequence crude oil prices
are expected to remain at higher levels for the next 2 years.
B. The impact of crude prices and certain policy issues such as gas pricing and fuel subsidy
release may influence the schedule for the upcoming projects.
C. To marginalize such industry risks and sustain steady long term growth, diversification in
related sectors namely Fertilizer, City Gas, Nuclear and Renewable were planned.
D. EIL is acquiring new clients and expansion to markets with growth potential will be
pursued aggressively.
(F)
Risk perception of the management:

21. 21
A. Based on the probability, impact of the risk and cost of controls, the company’s risks are
prioritized.
B. Risks, their root causes, controls and action plans are prepared by process owners and
updated regularly.
 These may be the reason of unsystematic risk of a company:
a. 80.401 % of the total share capital of the company’s is held by the president of India in the
Company. So, the Govt Decision for this company may be affected.
b. The Decision of CIEL may also be affected to this company because CIEL is the wholly
owned subsidiary company of EIL.
c. EIL has executed a large number of modernization projects for most of the refining
companies in India. These include the project of IOCL, HPCL, BPCL, CPCL, KRL, Essar,
MRPL, BRPL etc. so the risk involved in these companies may be partly affected to the
EIL also.
d. Share Price may be affected by the Quarterly Report of the Company.
 These may be Systematic Risk of Engineers India Limited:-
i. The Crude Oil Policy of the Govt.
ii. Steel Price and foreign steel Exporter companies Prices
iii. Export Policy of Indian Government
iv. There has been slow down in investment in infrastructure sector.
v. Overseas client interest in Indian Service provider for infrastructure consultancy and
project service.
(G)
CONCLUSION AND FUTURE PERFORMANCE:
 Engineers India Limited is India’s leading publicly held company engaged in the areas of hydrocarbon,
metal, mining and infrastructure consultancy.
 According to ministry of petroleum and natural gas, domestic crude oil refining sector is likely to
significant capacity in twelfth five year plan.EIL is likely to be benefit from this as it enjoys
entrenched relationship with PSU majors like HPCL, BPCL, IOC etc.

22. 22
 In order to widen its spectrum of offering, company has entered into various favourable joint venture
with domestic as well as international players.
 We believe that the company is well poised to post 21 % CAGR in revenues and 13% CAGR in Net
profit between FY 11-13. We recommend BUY on EIL with one year DCF based price target of
RS.320.

23. 23