Equity Analysis of Maruti Suzuki

Topics: Maruti Suzuki, Suzuki, Technical analysis Pages: 14 (4069 words) Published: December 4, 2010
Equity Research Report
Maruti Suzuki Ltd

Equity Research refers to the study of the performance of the economy as a whole, the industry and various companies and analyzing the same. It enables to predict the future performance of a particular stock based on its past performance, the current status of the internal as well as the external environment. This include both fundamental as well as technical analysis. The internal environment includes:

* The financial performance
* The operational performance
* The future deals with the clients
* The share price trend
* The management of the company, i.e. the Board of Directors etc. * The nature of the business
The external environment includes:
* The Economy
* The global scenario with respect to the business
* General economic scenario
* Political scenario
* Performance of the stock market on the whole
* Competitors
EQUITY RESEARCH can be done by two methods:
1) Fundamental Analysis
Fundamental analysis is a method of forecasting the future price movements of a financial instrument based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the financial instrument. It takes a long term approach to analyze the market as compared to technical analysis. It often looks at data over a number of years. 2) Technical Analysis

Technical traders study the price movements of the particular company's stock in the market. Technical analysts strongly believe that the price movements follow a trend and by identifying the trend, one can accurately predict the price that might occur in future. Technical analysts use financial tools with software support. One can be overawed by the terms and studies of a technical analyst when he/she explains the rationale behind the prediction. Technical analysis is used for a time frame of weeks, days or even minutes. Main differences between the two types of analysis:

Fundamental analysis| Technical analysis|
Focuses on what ought to happen in a market | Focuses on what actually happens in a market | Factors involved in price analysis: 1. Supply and demand
2.Seasonal cycles
4. Government policy | Charts are based on market action involving: 1.Price 2.Volume
3. Open interest (futures only) |

Fundamental analysis:
1) Economy analysis
According to the estimates by the Ministry of Statistics and Programme Implementation, the Indian economy has registered a growth of 7.4 per cent in 2009-10, with 8.6 per cent year-on-year (y-o-y) growth in its fourth quarter. The growth is driven by robust performance of the manufacturing sector on the back of government and consumer spending. GDP growth rate of 7.4 per cent in 2009-10 has exceeded the government forecast of 7.2 per cent for the full year. According to government data, the manufacturing sector witnessed a growth of 16.3 per cent in January-March 2010, from a year earlier. Economic activities which showed significant growth rates in 2009-10 over the corresponding period last year were mining and quarrying (10.6 per cent), manufacturing (10.8 per cent), electricity, gas and water supply (6.5 per cent), construction (6.5 per cent), trade, hotels, transport and communications (9.3 per cent), financing, insurance, real estate and business services (9.7 per cent), community, social and personal services (5.6 per cent). The Gross National Income is estimated to rise by 7.3 per cent in 2009-10 as compared to 6.8 per cent in 2008-09. The per capita income is estimated to grow at 5.6 per cent in 2009-10. India’s industrial output grew by 17.6 per cent in April 2010. The manufacturing sector that accounts for 80 per cent of the index of industrial production (IIP) grew 19.4 per cent in April 2010, as against 0.4 per cent a year-ago. Capital goods production grew by 72.8 per cent against a contraction of 5.9...
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