INTRODUCTION

Fundamental analysis is the examination of the underlying forces that affect the well being of the company, industry groups and companies. As with most analysis the goal is to develop a forecast of future price movement and profit from it. At the company level, fundamental analysis may involve examination of financial data, management , business concept and competition. At the industry level their might be an examination of supply and demand forces of the products. For the national economy fundamental analysis might focus on economic data to asses the present and future growth of the economy. Fundamental analysis is a method of evaluating a security by attempting to measure its intrinsic value by examining related economy, financial and other qualitative and quantitative factors. Fundamental analysis attempt to study every thing that can effect the securities value including macro economic factors and individual specific factors. Three phase of the fundamental analysis A. Understanding of the Macro Economic environment and developments (Economy analysis) B. Analyzing the prospectus of the industry to which the firm belongs(Industry analysis) C. Assessing the projected performance of the company( Company analysis)

ECONOMY ANALYSIS
The purpose of analyze economic condition of the country in fundamental analysis to asses the general economic situation both within the country and inter nationally. The economy is like the tide and the various industry groups and individual companies are like boats. When economy expands most industry groups and companies benefits and grows. When the economy decline, most sectors and companies usually suffer. The stock market does not operate in a vacuum it is an integral part of the whole economy of a country, more so in a free economy that of United States and to some extent in mixed economy like ours. To gain an insight into the complexities of stock market. One needs to develop a sound economic understanding and be able to interpret the impact of important economic indicators on stock markets. The following are some important factors which should be taken into account while doing fundamental analysis: Economic Growth Per capita income Industrial Production Inflation Interest Rates Foreign Exchange Reserves Budgetary Deficit Domestic Savings and Investment Tax Rates Infrastructure Political Situation

INDIAN ECONOMY ANALYSIS

India GDP Growth Rate
India Gross Domestic Product (GDP) expanded 6.10% over the last 4 quarters. The India Gross Domestic Product is worth 1217 billion dollars or 1.96% of the world economy, according to the World Bank. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force. India GDP Growth Rate chart Year Mar 2010 8.6 Jun 8.8 8.6 6.5 Sep Dec Average GDP 8.7 6.75 7.48 9.30

2009 5.80 6.10

2008 8.60 7.80 7.70 5.80 2007 9.70 9.20 9.00 9.30

. INTERPETATION:As we can see that Indias GDP growth is increasing as compared to the last two years which shows good prospects for investors in future and the investor can get benefits by investing in Indian company.

INDUSTRY ANALYSIS
The purpose of industry analysis is to review prevailing conditions within specific industry and its segments. The company's industry obviously influences the outlook for the company. Even the best stocks can post mediocre returns if they are in an industry that is struggling. It is often said that a weak stock in a strong industry is preferable to a strong stock in a weak industry. To assess the industry group potential, an investor would want to consider the overall growth rate, market size, and its importance to economy. While the individual company is still important, its industry group is likely to exert as much as, or more, influence on the stock price. When stock move the usually move as groups; there are very few lone guns out there. An understanding of the industry sector involved, including the maturity of the sector and any cyclical effects that the overall economies have on it, is also necessary. The followings are some important factors which should be considered in fundamental Analysis Growth: A growing industry gives room for profitability. Profitability: Average profitability of the industry should be attractive. Demand-Supply: the wider demand supply gap, the better is the industrys fortune in the future Entry barrier Competition and Market share: Technology trends Government Policy Capacity Utilization Bargaining power of buyers

INDIAN TELECOMMUNICATION INDUSTRY

Indian Telecommunication industry, with about 464.82 million mobile phone connections (June 2009) , is the third largest telecommunication network in the world and the second largest in terms of number of wireless connections. For the past decade or so, telecommunication activities have gained momentum in India. Efforts have been made from both governmental and non-governmental platforms to enhance the infrastructure. The idea is to help modern telecommunication technologies to serve all segments of Indias culturally diverse society, and to transform it into a country of technologically aware people. Telecom Industry in India is regulated by 'Telecom Regulatory Authority of India' (TRAI). It has earned good reputation for transparency and competence. Two types of players exist in ' Telecom Industry India ' community State owned companies like - BSNL and MTNL. Private companies like - Reliance Infocomm and Tata Teleservices, Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, Spice Communications etc. Telecom industry in India has a big market potentiality and is a fast growing sector. Government of India is eager to reconstitute this telecom industry by enacting effective policies for more investments from foreign companies, which results in a very competitive and deregulated market in the world.

POLICIES OF TELECOM INDUSTRY IN INDIA

Government of India implemented the unified access licensing regime, which enables basic and cellular mobile service to use any modern technology. In 1997, Telecom Regulatory Authority of India (TRAI) was formed to facilitate the growth of the telecom sector in India.

MAJOR SERVICES AND MARKET POTENTIALITY OF TELECOM INDUSTRY IN INDIA

Telecommunication sector in India is primarily subdivided into two segments, which are Fixed Service Provider (FSPs) and Cellular Services Telephone Radio Television Internet GSM( Global System for Mobile Communications) CDMA(Code Division Multiple Access) Fixed Line and WLL (Wireless Local Loop)

Telecom industry in India constitutes some essential telecom services like

Telecom industry in India is specifically emphasizing on latest technologies like

GROWTH OF TELECOM INDUSTRY IN INDIA

Indian telecom industry continued to register significant growth in 2008-09. Indian telecom network, with about 414 million connections in February 2009, is the third largest in the world, while it is credited with the second largest wireless network in the world. At the current pace, the target of 500 million connections by 2010 is well within reach .The Government of India has reiterated its commitment to reach out to the remote and uncovered areas and to augment the broadband facilities in rural areas.

Economic Survey 2009-10 Growth

Growth of telephones over the years
March 07 Fixed lines CDMA 40.23 March 08 40.77 March 09 39.41 (in million) Feb. 10 37.73

32.67

44.62

68.38

92.14

GSM Wireless (CDMA & GSM)

69.19 101.86

120.47 165.09

192.70 261.08

283.98 376.12

Gross Total

142.09

205.86

300.49

413.85

Source : Department of Telecommunications point to point

450 400 350 300 250 200 150 100 50 0

7 8 9 00 00 00 /3 /2 /3 /2 /3 /2 /3 /2 01 0

Fixed line CDMA GSM Wireless(CDMA &GSMA Gross Total

31

31

31

INTERPRETATION: Graph shows that India telecom industry is growing in CDMA, GSMA and wireless (CDMA & GSMA) sectors. It shows overall upward trend of growth rate in these sectors. It will beneficial for investors to invest in telecom industry because it is growing industry.

31

Future prospects are good in this industry.

COMPANY ANALYSIS
The purpose of company analysis to analyze the financial and non-financial aspects of a company to determine whether to buy, sells, or holds onto the shares of a particular company After determining the economic and industry conditions, the company itself is analyzed to determine its financial health. This is usually done by studying the company's financial statements. From these statements a number of useful ratios can be calculated. The ratios fall under five main categories: profitability, price, liquidity, leverage, and efficiency. When performing ratio analysis on a company, the ratios should be compared to other companies within the same or similar industry to get a feel for what is considered "normal." These are quantitative factors of company analysis; there are also some qualitative factors which should be considered also. Following are some more important aspects about company Shareholding pattern Growth Technology Expansion Plan Profitability Capital History Marketing Capabilities Most important its financial statement So fundamental analysts use different tools and ratios to compare all sorts of companies no matter what business they are in or what they do.

FINANCIAL RATIOS
A financial ratio is an expression of the relationship between two selected items from the income statement or the balance sheet. Ratio analysis helps you to evaluate the weak and strong points in your financial and managerial performance. Financial ratio analysis is calculation and comparison of ratio which are derived from the information in a companys financial statements. The level and historical trends of these ratios can be used to make inferences about a companys financial condition its operations and attractiveness as an investment. 1. Balance sheet ratio analysis Current ratio Quick ratio Gross margin ratio Net profit margin ratio Inventory turnover ratios Account receivable ratio Return on assets ratio Return on investment ratio Earning per share

2. Income statement ratio analysis

3. Management/efficiency ratios

4. Overall profitability analysis

5. Market test or valuation ratios

COMPANY ANALYSIS OF BHARTI AIRTEL

With this, Bharti is now the world's third-largest, single-country mobile operator and sixth-largest integrated telecom operator. It also offers fixed line services and broadband services. It offers its telecom services under the Airtel brand and is headed by Sunil Bharti Mittal. The company also provides telephone services and Internet access over DSL in 14 circles. It also acts as a carrier for national and international long distance communication services. The company has a submarine cable landing station at Chennai, which connects the submarine cable connecting Chennai and Singapore. The businesses at Bharti Airtel have always been structured into three individual strategic business units (SBU's) The mobile business provides mobile & fixed wireless services using GSM technology across 23 telecom circles. The Airtel Telemedia Services business offers broadband & telephone services in 95 cities and has recently launched a Direct-to-Home (DTH) service, Airtel digital TV. The company provides end-to-end data. Enterprise services to the corporate customers through its nationwide fiber optic backbone, last mile connectivity in fixed-line and mobile circles, VSATs, ISP and international bandwidth access through the gateways and landing station. Globally, Bharti Airtel is the 3rd largest in-country mobile operator by subscriber base, behind China Mobile and China Unicom

MARKET SHARE OF DIFFERENT TELECOM INDUSTRIES IN INDIA

In India, the company has a 24.6% share of the wireless services market, followed by 17.7% for Reliance Communications and 17.4% for Vodafone Essar.

Bharti Airtel 24.6 40.3 Reliance Communicationa Vodafone Essar 17.7 17.4 Others Slice 5

COMPANY ANALYSIS OF BHARTI AIRTEL BY USING DIFFERENT RATIOS

1. BALANCE SHEET RATIO ANALYSIS YEAR RATIOS LIQUIDITY RATIOS
Current Ratio Quick Ratio 0.44 0.45 0.47 0.47 0.57 0.55 0.69 0.65 0.72 0.72

March 06

March 07

March 08

March 09

March 10

0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Mra06 Mar07 Mar08 Mar09 Mar10

CURRENT RATIOS

0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Mra06 Mar07 Mar08 Mar09 Mar10

Quick ratios

INTERPRETATION:Bharti airtels both current and quick ratios are moving upward means shows increasing trends. These shows company has good liquidity position and Company is able to pay day to obligations of company.

2. INCOME STATEMENT RATIO ANALYSIS

YEAR RATIOS
Income statement Ratios Gross profit Ratio Net profit Ratio

March 06

March 07

March 08

March 09

March 10

23.14 17.80

27.47 22.46

29.08 23.99

29.33 22.58

27.97 26.40

35 30 25 20 15 10 5 0 Mra- Mar- Mar- Mar- Mar06 07 08 09 10 Gross Profit Ratio

30 25 20 15 10 5 0 Mra- Mar- Mar- Mar- Mar06 07 08 09 10 Net profit ratio

INTERPRETATION:High income ratio shows company is at good profitability condition. As we see that net profit ratio in 2009 decline. But this is minor decline. This is due to high inflation rate and global meltdown. But company did not affected very much.

3. MANAGEMENT/EFFICIENCY RATIOS YEAR RATIOS

Management /efficiency

March 06

March 07

March 08

March 09

March 10

Ratios Inventory Ratio Account receivable ratio

634.52 12.57

373.35 14.31

453.06 12.28

547.83 12.78

1307.05 15.30

1400 1200 1000 800 600 400 200 0 Mra- Mar- Mar- Mar- Mar06 07 08 09 10

Inventory turnover ratio

18 16 14 12 10 8 6 4 2 0 Mra- Mar06 07 Mar- Mar- Mar08 09 10

Account receivable artio

INTERPRETATION:High inventory turnover ratio and high debtor turnover ration shows the managements efficiency in using inventory and collecting debts respectively. Bharti airtels both ratios are high in 2009 as compare to previous years. Company is efficient in using inventory properly and company able to collecting cash from debtors on time. In this way it shows good prospectus for investors to invest in this company in future.

4. OVERALL PROFITABILITY ANALYSIS

YEAR RATIOS
Overall profitability analysis Return on asset Ratio Return on investment ratio

March 06

March 07

March 08

March 09

March 10

634.52 0.72

373.35 0.75

453.06 1.03

547.83 1.00

1307.05 0.81

1400 1200 1000 800 600 400 200 0 Mra06 Mar07 Mar08 Mar09 Mar10

Return on assets ratio

1.2 1 0.8 0.6 0.4 0.2 0 Mra06 Mar07 Mar08 Mar09 Mar10 Return on investment ratio

INTERPRETATION:-

High return on asset ratio shows that companys overall profitability is goods. Bharti airtels this ratios is high in 2009 as compare to previous years. So its overall profitability is good whether its return on inventment ratio has reduced by .03 point. It may be due to inflation and global meltdown reason.

5. MARKET TEST OR VALUATION RATIOS YEAR RATIOS

Market test or valuation ratio Earning per share ratio 10.62 21.27 32.90 40.79 42.82

March 06

March 07

March 08

March 09

March 10

45 40 35 30 25 20 15 10 5 0 Mar- Mar- Mar- Mar- Mar06 07 08 09 10

Earning per share ratio

INTERPRETATION:High earning per share is considered good from investors point of view. Bharti airtels this ratio is increasing year by year. It shows that investors has good prospectus in Bharti airtel if they will purchase is share.

CALCULATION OF INTRINSIC VALUE FOR MARCH FY2010

o EXPECTED EPS = 26.52 o EXPECTED PE RATIO= 14.28 o INTRINSIC VALUE FOR MARCH 2010= 26.52*14.28=378.70

Market Price 299.70

Intrinsic value is greater than market price therefore investor are suggested to buy bharti airtels share at current level on 299.70.

CONCLUSION
On the basis of this assignments data we can say that there will be benefit to investors to invest their money in telecom industry because telecom industry is growing industry. And Indian government is also providing various facilities in the development of telecom industry. In India BHARTI AIRTEL is growing company. On the basis of its various ratios like Current ratio, Quick ratio, Net profit margin ratio, Inventory turnover ratios, Account receivable ratio, Return on assets ratio, Return on investment ratio, Earning per share we can say that company has good profitability condition, good liquidity position, good market condition because earning per share is increasing every year and on the basis of intrinsic value we can say that investor can take benefit in future by purchasing bharti airtels share.

REFRENCES:

WEBSITES:

en.wikipedia.org/wiki/Fundamental_analysis www.investopedia.com stocks.about.com/od/evaluatingstocks/a/Fundanatool s1.htm www.finpipe.com/equity/fundanl.htm www.airtel.in/ www.bharti.com/ www.moneycontrol.com/financials/bhartiairtel/ratios/ BA08