Final SIP Project.pdf

A PROJECT ON

“EQUITY RESEARCH ANALYSIS ON FMCG SECTOR”

AT ‘ADITYA BIRLA SUN LIFE INSURANCE I NSURANCE COMPANY LIMITED’

Submitted to Savitribai Phule Pune University In Partial Fulfillment of the Requirement for Award of the Degree of MASTER OF BUSINESS ADMINISTRATION By Ms. JIGYASA RAJESH KHANDELWAL Under the Guidance of PROF. PATIL MANGALGOURI

SINHGAD INSTITUTE OF MANAGEMENT (2017-2019 Batch)

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DECLARATION

I, JIGYASA RAJESH KHANDELWAL hereby declare that this project titled, “A STUDY OF EQUITY RESEARCH ON FMCG SECTOR: A COMPARATIVE STUDY OF HUL AND ITC LIMITED” is based on the original project study conducted by me under the guidance of PROF.PATIL MANGALGOURI, except the topics on organizational profile and the

conclusion drawn therein are based on the material collected by myself.

JIGYASA RAJESH KHANDELWAL MBA (2017-2019)

PLACE: Pune DATE:















ACKNOWLEDGEMENT The toughest of endeavors in the world is not possible without the support of a

hand which

guides and motivates a person to take on my challenge head on. Inputs from such helping hands are always like very essential because more often or not certain mistakes which go unnoticed from our eyes. I am thankful to Dr. Parag Kalkar, Director at Sinhgad Institute of Management, who had provided all the required facilities to carry out the project work and nurturing my skills to execute the requirements. I am heartily thankful to my guide Prof. Patil Mangalgouri whose encouragement, guidance and support from the initial to the final level enabled me to develop an understanding of the subject. I am grateful to all my Professors who supported me in every respect during the completion of the dissertation project. I also extend my sincere appreciation to my company guides Mr. Jitendra Bapna, Senior Business Mentor – Aditya Birla Group, Mr. Kumaresh Boral and Mr. Rajat Gupta who

provided his valuable suggestions and precious time in accomplishing my project report. Last but not the least, I thank my dear parents and friends who have been a source of support, strength, inspiration and encouragement for whatever I am toda y.

JIGYASA RAJESH KHANDELWAL MBA (2017 - 2019)

PLACE: Pune















INDEX

SR NO.

1.

2.

CHAPTERS

PAGE NO.

EXECUTIVE SUMMARY

1

INTRODUCTION TO STUDY

2

ORGANISATION PROFILE AND INSIGHT OF THE

11

BUSINESS ENVIRONMENT

3.

REVIEW OF LITERATURE

36

4.

RESEARCH METHODOLOGY

38

5.

DATA ANALYSIS AND INTERPRETATION

42

6.

OBSERVATIONS, FINDINGS, SUGGESTIONS AND

52

CONCLUSIONS

7.

LEARNING AND CONTRIBUTION TO THE ORGANIZATION

55





























EXECUTIVE SUMMARY The project title ‘A PROJECT OF EQUITY RESEARCH ANALYSIS ON FMCG SECTOR’ was a study conducted during my two months internship with ADITYA BIRLA SUNLIFE INSURANCE COMPANY LIMITED. The main aim of the project is to do equity

research of FMCG sector and to find out opportunities of investment in this sector where returns can be minimized. And to know what are the recent scenario of FMCG sector and knowing about the future. This report starts with a brief introduction of FMCG market along with industry Overview. It further state why FMCG sector is analyzed and why India. in this report two FMCG company “HUL and ITC” is analyzed their history their shareholding pattern with their product is being

discussed and equity research analysis is done. The company’s analysis is shown in the report. The companies are analyzed in different perspective by using different qualitative and quantitative techniques. Ratio analysis is also been done. The research methodology adopted during the making of the project was exploratory which was based on the secondary data i.e. the data which was available like Annual reports, financials statement and from various websites. The report also includes the distinguish feature of FMCG as compared to another sector and a well-defined conclusion. Different opportunities have been noted down in the report and the future scenario of the FMCG sector have been analyzed. The conclusion states that the Indian FMCG market is expected to exhibit a positive growth trend in the coming years and will provide a boom to the economy of the country.

















CHAPTER 1 INTRODUCTION TO STUDY

















1.1 INTRODUCTION TO FMCG SECTOR

AN OVERVIEW

Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as other

non-durables

such

as

glassware,

bulbs,

batteries,

paper

productsandplasticgoods.FMCGmay also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars.

Subsets of FMCGs are Fast Moving Consumer Electronics which include innovative electronic products such as mobile phones, MP3 players, p layers, digital cameras, GPS Systems and Laptops. These are replaced more frequently than other electronic products. White goods in FMCG refer to household electronic items such as Refrigerators, T.Vs, Music Systems, etc.

1.2 INDIAN FMCG SECTOR

FMCG is the 4th largest sector in the Indian economy. There are three main segments in the sector – food and beverages which accounts for 19 per cent of the sector, healthcare which

















People are gracefully embracing Ayurveda products, which has resulted in growth of FMCG major, Patanjali Ayurveda, with a revenue of US$ 1.57 billion in FY17. The company aims to expand globally in the next 5 to 10 years. Accounting for a revenue share of around 45 per cent, rural segment is a large contributor to the overall revenue generated by the FMCG sector in India. Demand for quality goods and services have been going up in rural areas of India, on the back of improved distribution channels of manufacturing and FMCG companies. Urban segment accounted for a revenue share of 55 per cent in the overall revenues recorded by FMCG sector in India.

1.3 MARKET SIZE

The Retail The Retail market in India is estimated to reach US$ 1.1 trillion by 2020 from US$ 840 billion in 2017, with modern trade expected to grow at 20 per cent - 25 per cent per annum, which is likely to boost revenues of FMCG companies. Revenues of FMCG sector reached Rs 3.4 lakh crore (US$ 52.75 billion) in FY18 and are estimated to reach US$ 103.7 billion in 2020.

1.4 INVESTMENTS

The government has allowed 100 per cent Foreign Direct Investment (FDI) in food processing and single-brand retail and 51 per cent in multi-brand retail. This would bolster employment and

















➢

Dabur is planning to invest Rs 250-300 crore (US$ 38.79-46.55 million) in FY19 for capacity expansion and is also planning to make acquisitions in the domestic market.

➢

In May 2018, RP-Sanjiv Goenka Group created a Rs 1 billion (US$ 14.92 million) venture capital fund to invest in FMCG start-ups.

➢

In August 2018, Fonterra announced a joint venture with Future Consumer Ltd which will produce a range of consumer and foodservice dairy products.

1.5 GOVERNMENT INITIATIVES

Some of the major initiatives taken by the government to promote the FMCG sector in India are as follows: ➢

The Government of India has approved 100 per cent Foreign Direct Investment (FDI) in the cash and carry segment and in single-brand retail along with 51 per cent FDI in multi brand retail.

➢

The Government of India has drafted a new Consumer Protection Bill with special emphasis on setting up an extensive mechanism to ensure simple, speedy, accessible, affordable and timely delivery of justice to consumers.

➢

The Goods and Services Tax (GST) is beneficial for the FMCG industry as many of the

















1.6 ROAD AHEAD

Rural consumption has increased, led by a combination of increasing incomes and higher aspiration levels; there is an increased demand for branded products in rural India. The rural FMCG market in India is expected to grow to US$ 220 billion by 2025 from US$ 23.6 billion in FY18. In FY18, FMCG’s rural segment contributed an estimated 10 per cent of the total income

and it is forecasted to contribute 15-16 per cent in FY 19. On the other hand, with the share of unorganized market in the FMCG sector falling, the organized sector growth is expected to rise with increased level of brand consciousness, also augmented by the growth in modern retail. Another major factor propelling the demand for food services in India is the growing youth population, primarily in the country’s coun try’s urban regions. India has a large base of young consumers

who form the majority of the workforce and, due to time constraints, barely get time for cooking. cookin g. Online portals are expected to play a key role for companies trying to enter the hinterlands. The Internet has contributed in a big way, facilitating a cheaper and more convenient means to increase a company’s reach. It is estimated that 40 per cent of all FMCG consumption in India will be online by 2020. The online FMCG market is forecasted to reach US$ 45 billion in 2020 from US$ 20 billion in 2017. It is estimated that India will gain US$ 15 billion a year by b y implementing the Goods and Services Tax. GST and demonetization are expected to drive demand, both in the rural and urban areas, and economic growth in a structured manner in the long term and improve performance of companies within the sector.



















(1)

Information that helps investors to decide where to put in their money;

(2) Information that traders require to understand whether to enter or exit a

market position; (3)

Information that financiers (bankers (bankers and firms) need to evaluate companies.

Equities or common stock comprises a big chunk in any company’s capital and

shareholders need to know whether to stay invested in the company or sell the shares and come out. Both the buy-side and the sell-side companies invest in maintaining an equity research division. This research may also include bonds and commodities. The function of the equity researcher is to present a detailed analysis of a company, enabling investors to make an informed decision. The research report is used by investment banks and private equity firms to evaluate the



















1.8 PURPOSE OF EQUITY RESEARCH

The purpose of equity research is to study companies, analyse financials and look at quantitative and qualitative aspects, helping investors of varying degrees to make an informed decision. As the name suggests, ‘research’ plays the most important role here. Over the years, research methods have changed but the sole intention of research remains the same. The number of investors is booming and so is the need for exploring the nature of investments. Investors wish to take calculated and informed decisions, and this is where the role of equity research begins.The purpose of equity research and the researcher is manifold .To begin with, one gathers and analyses industry data and financial models of a specific company or an industry .It also involves understanding current market trends, both from the perspectives of



















1.9 EQUITY RESEARCH PROCESS 1. Economic Analysis: It is a systematic practice undertaken to determine the

usability of available resources, comparison between two or more resources, accounting opportunity costs and measuring the scope or viability of an investment. 2. Industry Analysis : It is a tool used for assessing current markets and

understanding its complexities. Political, economic and market factors are reviewed to understand its influence over the development of the industry. 3. Company Analysis: It is a series of activities undertaken to analyse the

operations of a business, focusing on the cause and effect of decisions and how they are likely to benefit (or not) future investors.



















1.10 OBJECTIVE OF THE STUDY ➢

To know about the FCMG industry and how it is contributing towards Indian economy.

➢

To study the FMCG sector since last 5 years.

➢

To find out how the judgment is taken by the analyst on the basis of fundamental analysis of the company.

➢

To analyze the ratios of selected company to find out financial condition of selected companies.

1.11 LIMITATIONS

➢

The project is limited up to FMCG sector and 2 companies.

➢

Ratio analysis is used only to analyze the financial performance of the companies.



















CHAPTER 2 ORGANISATION PROFILE AND INSIGHT OF THE BUSINESS ENVIRONMENT





















COMPANY OVERVIEW 2.1 ABOUT ADITYA BIRLA GROUP Aditya Birla Group is an Indian multinational conglomerate, headquartered in Worli, Mumbai, India. The group was founded by Seth Shiv Narayan Birla in 1857. Aditya Birla Group is in the League of Fortune 500. Anchored by an extraordinary force of over 120,000 employees, belonging to 42 nationalities. Over 50 per cent of its revenues flow from its overseas operations spanning 35 countries.





















➢

FINANCIAL SERVICES: Aditya Birla Capital

➢

INSULATORS: Aditya Birla Insulators

➢

METALS: Hindalco Industries Ltd., Novelis Inc., Hindalco Almex Aerospace Ltd, Utkal

Alumina International Ltd, Cameroon Alumina Limited, ➢

MINING: Essel Mining & Industries Ltd., Bhubaneshwari Coal Mining, Rajmahal Coal

Mining Ltd., Mahan Coal Limited ➢

RENEWABLE ENERGY: Essel Mining and Industries Limited,

➢

RETAIL: Aditya Birla Retail Ltd

➢

TELECOMMUNICATIONS: Idea Cellular Limited





















➢

Passion: An energetic, intuitive zeal that arises from emotional engagement with the organization that makes work joyful and inspires each one to give his or her best. A voluntary, spontaneous and relentless pursuit of goals and objectives with the highest level of energy and enthusiasm.

➢

Seamlessness: Thinking and working together across functional groups, hierarchies, businesses and geographies. Leveraging diverse competencies and perspectives to garner the benefits of synergy while promoting organizational unity through sharing and collaborative efforts.





















2.2 ABOUT ADITYA BIRLA CAPITAL

Aditya Birla Capital Limited (ABCL) is one of the largest financial services players in India.





















Aditya Birla Capital manages, through its subsidiaries and joint ventures, aggregate assets worth Rs. 2,813 billion and has a lending book of Rs.447 billion as of 30 September 2017, placing it among the top five private diversified NBFCs in India (Source: CRISIL), the 4th largest assets management company.

Aditya Birla Capital is holding company of: ➢

Aditya Birla Finance Limited

➢

Aditya Birla Health Insurance Limited























2.3 ABOUT ADITYA BIRLA SUNLIFE INSURANCE COMPANY LIMITED























BSLI has its reach in over 500 cities with more than 600 branches, 10500 advisors and around 150 partnerships with brokers, banks and corporate agents.























VISION, MISSION, VALUES OF BIRLA SUN LIFE INSURANCE VISION























2.5 COMPANY STRUCTURE OF ADITYA BIRLA SUN LIFE INSURANCE (ABSLI)First Level of Sales























Second Level of Sales



















































































































































































































































































































































































































































































REFERENCES

WEBSITES ➢

https://www.ibef.org/industry/fmcg.aspx

➢

https://www.adityabirlacapital.com/

➢

https://lifeinsurance. https://l ifeinsurance.adityabirlacapita adityabirlacapital.com l.com

➢

https://www.hul.co.in/

➢

https://www.itcportal.com/

➢

https://www.moneycontr https://w ww.moneycontrol.com/financi ol.com/financials/hindust als/hindustanunilever/b anunilever/balancealancesheet

➢

https://www.moneycontr https://w ww.moneycontrol.com/financ ol.com/financials/itc/bal ials/itc/balance-sheet ance-sheet

➢

Wikipedia

BOOKS ➢ Financial modelling for equity research, John Moschella Cfa Cpa ➢ Equity Research Analyst, Gillian.D.Elcock















ANNEXURES

Final SIP Project.pdf

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