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?
Investors that analyze stocks utilizing fundamental analysis prefer to look at basic information about a company in an effort to figure out what they think is the true or fair value of a company’s stock. Fundamental Analysts look at a lot of news and perform research into data such as growth of the company’s sales and profits. SCOPE OF THE STUDY
The research carried out aims at studying the various scripts (companies) their Balance Sheet, P&L A/c, Annual A/Cs, etc. in an in-depth manner by means of ratio analysis to find out sustainability and profitability of a specific company. To study through various other tools like current news about the company, trend analysis, common size statement etc. in order to get a complete idea of fundamental analysis of pharmaceutical sector in particular. The study pertains to the financial years of 2007 to 2009.
The study has been conducted to conclude about the fundamental position of the selected companies according to the findings of ratio analysis, trend analysis and common size statement analysis of securities, so that investors can easily get an idea about the fundamental analysis of pharmaceutical companies. OBJECTIVE OF Study
The main objective of project is to do fundamental analysis of a pharmaceutical of companies, to study the present scenario of a pharmaceutical industry and analyze the information collected on liquidity, stability and profitability of the companies. Also to conduct a Ratio Analysis for the selected companies and make necessary comments on it so as to provide a complete idea and the core ideology of the company and whether or not investors should invest in the selected companies.
METHODOLOGY OF STUDY
Any study or research conducted should be done scientifically and to have a systematic appeal, a proper methodology should be used to have the proper, logical, rational and systemic analysis of data. Primary Sources:-
When any authorized organization or an investigator or an enumerator collect the data for the first time himself or with the help of an institution or an expert than the data thus collected are called primary data. No data for the analysis is collected from the primary sources. Secondary Sources:-
When an authorized organization or an investigator uses the data already collected by some other authorized agency or investigator, then such data become secondary data for the user organization or investigation. Secondary data is, by a large available at publications or periodical of authorized agencies or institutions. The main source of data collected for this project is the secondary source. The data has been collected from the Websites the companies under study from their respective uploaded Annual Reports. SELECTION OF THE SAMPLE
* Population: The entire pharmaceutical industry is the population for the study. * Sample: The three companies namely; Sun Pharmaceuticals, Ranbaxy Laboratories and Dr. Reddy’s Lab have been chosen as the sample based on their market capitalization.
Company| Market Capitalization (in Crores of Rupees)|
1. Sun Pharmaceuticals| 22644.31|
2. Ranbaxy Laboratories| 8122.93|
3. Dr. Reddy’s Lab| 7595.34|
LimitationS of the Study...