A Summer Internship Project (Sip) PDF

A Summer Internship Project on
“EQUITY RESEARCH ON SELECTED COMPANIES OF INDIAN TEXTILE

SECTOR”
For
ADITYA BIRLA CAPITAL Ltd.
Submitted in partial fulfilment of the
Requirements for the award of
POST GRADUATE DIPLOMA IN MANAGEMENT
(2017-19)
Submitted by
SNEHA KANDOI
(ESCI/PGDM-GEN/17/07-198)
Under the Guidance of

Mr.Niranjan Pandey
(Faculty – Dept. of Finance)
SCHOOL OF POST GRADUATE STUDIES

Approved by AICTE, Ministry of HRD, Govt. of India
Phone: +91-40-66304100 / +91-40-23000465
Fax: +91-40-23000336 /fax@escihyd.org
Web Site: www.escihyd.org
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DECLARATION
I hereby declare that the SIP REPORT titled “EQUITY RESEARCH ON SELECTED COMPANIES
OF INDIAN TEXTILE SECTOR” is bonafide work duly completed by me.
It does not contain any part of the SIP REPORT or thesis submitted by any other candidate to this or any
other institute of the university.
All such materials that have been obtained from other sources have been duly acknowledged.
SNEHA KANDOI
ESCI/PGDM-GEN/17/07-198
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To whom so ever it may concern:
This is to certify that SNEHA KANDOI, a student of Engineering Staff College of India, has successfully
completed an SIP REPORT on the topic “Equity Research on Selected Companies of Indian Textile Sector” in
our organization under the guidance of Mr. Yusuf Khan.
During this period, her work has been found Excellent/Good/ Satisfactory.
We wish her the very best in her future endeavors.

Authorized Signatory
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CERTIFICATE
This is to certify that the SIP REPORT Report titled “EQUITY RESEARCH ON SELECTED
COMPANIES OF INDIAN TEXTILE SECTOR” submitted by SNEHA KANDOI in partial fulfilment of Post
Graduate Diploma in Management at ENGINEERING STAFF COLLEGE OF INDIA, Hyderabad is a record of
bonafide work carried out by her under my guidance and supervision.
Mr. Niranjan Pandey

Faculty – Dept. of Finance
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ACKNOWLEDGEMENT
I would like to extend my sincere gratitude towards Mr. Mohd. Yusuf Khan, Managing Partner of
Aditya Birla Capital Ltd., for providing me with an opportunity to join Aditya Birla Capital as an intern and
carry out this project. This internship has given me a lot of practical knowledge about the functioning of
financial markets in India.
I am also extremely grateful to my Faculty Guide, Mr. Niranjan Pandey, who always guided me and
gave me very useful insights which helped me finish my project with full satisfaction. His inputs, feedback,
suggestions and support were very valuable. It was a pleasure to work on this project under his guidance.
Last but not the least, I would like to acknowledge the support of the college management without which
this project could not have been possible.
SNEHA KANDOI
ESCI/PGDM-GEN/17/07-198
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TABLE OF CONTENTS:
Sl.No Particulars Page No.

1. Introduction
- History 7
- Importance of the study 8
2. Research Methodology
- Objectives of the study 9
- Limitations of the study 9
- Research methodology 10
- Review of Previous Literature 11
3. Company and Industry Profile
- About the Company – Aditya Birla Capital Ltd. 12
- About the Textile Industry 14
- Market size 16
- Investments 17
- Government Initiatives 17
4. Data Collection and Analysis
- Selected Companies in Textile Sector 19
Fundamental Analysis 23
- Debt to Equity Ratio 25
- Current Ratio 27
- Net Profit Margin 29
- Return on Equity 31
- Revenue Growth 33
- EPS Growth Rate 34
- Price-Earning Ratio 35
- Price-to-Book Ratio 36
- Dividend Payout Ratio 37
- Summary 39
- Interpretation 40
Technical Analysis 41
- Moving Averages 43
- Trading Strategies 49
- MACD 54
- MACD Histogram 55
- Bollinger Band 60
- Interpretation 66
5. Findings and Conclusion
- Findings 67
- Conclusion 68
6. Bibliography 69
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INTRODUCTION
HISTORY OF EQUITY RESEARCH:
Equity Research primarily means analyzing company’s financials, performing Ratio Analysis and forecast the
market prices of equity securities with an objective of making BUY or SELL recommendations. It’s all about
finding valuation of companies listed in stock exchanges like BSE and NSE.
For an accurate equity research, economic aspects like GDP, growth rates, market size of the industry,
competition aspects, inflation rates, fiscal policies, monetary policies etc, are being evaluated. Once the
economics behind the business is understood, perform the financial statement analysis of the historical balance
sheet, cash flows and income statement to form an opinion on how the company did in the past.
Fair Price is calculated using various models and is compared to the price in the market i.e., Stock exchanges
like BSE and NSE.
 If the Fair Price < Current Market Price, then the company stocks are overvalued and should
be recommended as a SELL.
 If the Fair Price > Current Market Price, then the company shares are undervalued and should
be recommended as a BUY.
In simple words, Equity research is the act of gathering information:
 Information that helps investors to decide where to put in their money.
 Information that traders require to understand whether to enter or exit a market position.
 Information that financiers (bankers and firms) need to evaluate companies.
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IMPORTANCE OF THE STUDY:
As the title suggests, this project is about Equity research on selected companies of Textile sector in India.
Equity Reasearch basically comprises of two analysis – Fundamental analysis and Technical analysis. I have
chosen seven random companies from the textile sector in India that are traded in Bombay Stock Exchange
(BSE) and performed the above two analysis to understand the stocks of the selected companies and the trends
in its market prices.
Fundamental Analysis is done to understand which among the seven selected companies is best to invest for
long term. The data on nine financial ratios which are considered crucial to understand the financial health of a
company, is extracted from reliable sources for a period of five years from 2014 to 2018. Five years “Weighted
Average” for each of the nine ratios is calculated for all the seven selected companies and companies are ranked
accordingly. The company that has least total of all ranks is deemed to be the best option for investment.
Technical Analysis is done to understand when to ‘Buy’ or ‘Sell’ a share by predicting future price movements.
Two major techniques are used to perform Technical Analysis – Moving Average Convergence Divergence
(MACD) and Bollinger Band. Both these techniques are applied on the seven selected companies by collecting
data on the close prices of these stocks for 100 days starting from April 1st 2018. The results are graphically
represented in Line charts and recommendations are made thereof.
This project helps an investor on two fronts:-

1) Fundamental analysis – It helps to understand the financial health of the seven selected companies
and their performances over the last five years and compare these companies on the basis of
financial ratio analysis and interpret which company is the best option for long term investment.
2) Technical Analysis – It helps to make decisions on short term stock trading, i.e., it uses certain tools
and techniques like MACD and Bollinger Bands to understand when to ‘Buy’ a particular stock and
when to ‘Sell’ it, so that one can make maximum profits or avoid losses.
In short, it helps both the types of investors. The ones who are looking for long term investment options to get
regular returns from the company, and the ones who are interested in earning profits by buying and selling of
shares.
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OBJECTIVES OF THE STUDY:
1) To perform Financial Ratio Analysis on the selected seven companies for a period of five years from
2014 to 2018 using Weighted Average method.
2) To rank these seven companies according to each ratio and understand which company is the best to
invest for a long term.
3) To predict the future movement of the prices of the selected seven companies on the basis of techniques
like MACD and Bollinger Band.
4) To recommend whether to Buy or Sell the shares of the selected companies for short term trading on a
particular date.
LIMITATIONS OF THE STUDY:
 All the observations are limited to the selected seven companies only.
 Seven Textile Companies are selected at random to perform the research.
 Rankings are given to the companies from a rational investor’s point of view and may vary from person
to person.
 Technical Analysis is carried out on a data of 100 days only, starting from 1st April 2018.
 Fundamental Analysis is performed on nine financial ratios that seemed crucial to determine the true
value of the company.
 Weighted Average of ratios is used on the basis of the assumption that “The recent year data is more
relevant to the current period and hence should have a higher weightage than that of the former years.”
 In Fundamental Analysis, the Economy and the Industry Analysis have been ignored.
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RESEARCH METHODOLOGY:
For the purpose of Equity Research, only secondary data has been used. All the sources used to collect the data
have been duly mentioned in the Bibliography.
Steps used to conduct this research on Indian Textile Sector: Seven companies in Indian Textile sector were
chosen at random, that were trading in Bombay Stock Exchange (BSE).
Fundamental Analysis:
 To perform Fundamental Analysis, Nine financial ratios were selected that are believed to be crucial to
understand the true value of the company and risk element involved.
 The data on all the nine ratios was collected for the selected seven companies and rankings were given
based on the weighted average of the ratios for five years (2014-18).
 All the rankings were added to arrive at the final ranking.
 The company with the least total was deemed to be the best option to invest when compared to the other
six selected companies.
Technical Analysis:
 To perform Technical Analysis, Historical data of the seven companies was collected for 100 days,
starting from April 1st 2018, in Microsoft Excel.
 Simple Moving Average and Exponential Moving Average was calculated for 12 days and 26 days
using their respective formulas.
 Line charts are used to show the difference in the SMA and EMA curves for different time frames.
 Moving Average Convergence Divergence (MACD) and Signal Line (9) are also calculated for the
seven companies in Excel using their formulas.
 MACD curve and Signal line is represented in Line charts for better understanding.
 Line charts help to understand the movement in the Moving Averages curves and assist us in making the
‘BUY’ or ‘SELL’ decisions.
 Bollinger Band technique is also used by calculating upper, lower and middle bands for the selected
companies.
 Graphical representation of these bands helps to make Buy and Sell decisions.
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Review of Previous Literature:
Marimuthu, Karnataka (2012) “Financial performance of Textile industry: A study of listed company of
Tamil nadu” states that Coimbatore is known as Manchester of South India. 76% of India's total textile market
is from Erode (Tex-City or Loom-City of India) and 56% of knitwear exports come from Tirupur. Each
company could invest on the basis of current performance compared with previous year or with other company.
Decision making, additional investment, liquidity position changes in working capital depend upon the
performance & return of company reports. Funds are highly required for day-to-day business operations of the
firm and how to utilize it and in what way should avoid loses from the investment are discussed here plus, it
happens by ineffective management. The objective of the paper is to analyze the performance of textile industry
in the selected companies from Tamil Nadu.”
Rakesh and Kulkarni (2012) analyzed the Gujarat textile industry working capital evaluation on selected five
company for the eleven years and performed ratio analysis, descriptive statistics etc. The study concluded with
all the company financial performance with sound effective as well as current and quick ratio, current asset on
total asset, sales, turnover etc. are analyzed with the help of hypothesis and used ANOVA.
Dr. Meenakshi Anand (2014) “The textile industry of India plays a substantive role in the economy. This is
one of the largest industries in India in terms of employment generation, and earning foreign exchange. The
paper focuses on the financial strength of the textile sector in India. And to know that up to what extent textile
sector has used their available resources effectively. For this purpose profitability, liquidity and solvency
position of textile companies has examined. In this paper comparative ratio analysis technique has used to know
the financial soundness of textile companies. The result shows the profitability margins has slightly different
due to volatile textiles market and volatility in raw material prices. The liquidity and solvency position is almost
same in all the textile companies.”
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About the Company – Aditya Birla Capital Ltd.:
Aditya Birla Capital Limited (ABCL) is the holding company for all financial service businesses of the Aditya
Birla Group and is a Non-Banking Financial Institution (NBFC).
The company is a subsidiary of Grasim Industries and manages assets worth ₹2.46 trillion (US$36 billion) and
had over 12,000 employees as of March, 2017. Through various subsidiaries, Aditya Birla Capital is in the
business of life insurance, asset management, private equity, corporate finance, structured finance, insurance
broking, wealth management, equity broking, currency broking, commodity broking, financial advisory
services, housing finance, pension fund management and health insurance.
Aditya Birla Capital got into the insurance sector in India after the government allowed entry of private
companies in the sector. In 2001, Birla Sun Life Insurance Company Limited was founded as a joint venture
between Aditya Birla Group and Sun Life Financial of Canada with Aditya Birla Nuvo (then Indian Rayon) and
Birla Global Finance together holding 74% of the company's equity shares and Sun Life Financial holding
26%. In 2016, Sun Life Financial had increased its shareholding to 49% in Birla Sun Life Insurance and Aditya
Birla Group continued to have 51% controlling stake. As of 2016, the company had approximately 400
branches across India and approximately 57,000 agents.
In 2016, Aditya Birla Capital launched Aditya Birla Health Insurance Company, a standalone health
insurance provider in India. The company is a joint venture with Aditya Birla Capital holding 51% of the
company and MMI Holdings of South Africa holding the remaining 49%. As of 2017, the company had 60
branches spread across 34 cities in India.
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Aditya Birla Group set up Birla Sun Life Asset Management to enter the mutual fund business as an equal joint
venture with Sun Life Financial of Canada in 1994. In 2012, Aditya Birla Nuvo acquired an additional 1% stake
in the company making it a subsidiary, with Sun Life Financial holding 49% in the venture. In 2014, the mutual
fund crossed INR 1 trillion in assets under its management. It is the fourth largest mutual fund in India. In the
same year, Birla Sun Life Mutual Fund bought out ING Mutual Fund, the Indian mutual fund business of ING
Group. In 2017, the company added the prefix "Aditya" and became Aditya Birla Sun Life Mutual Fund.
In 2009, Aditya Birla Capital acquired a controlling stake Apollo Sindhoori Capital Investments, a securities
broking firm. The company was later renamed Aditya Birla Money. Aditya Birla Capital decided to get into
the Mortgage loan sector in 2015.
In the year 1986, Aditya Birla Group incorporated Birla Growth Fund. The company operated four divisions;
Capital Market, Corporate Finance, Retail Finance and General Insurance Advisory. In the year 1994, the
company changed its name from Birla Growth Fund Limited to Birla Global Finance Limited and the company
was listed on The National Stock Exchange and Bombay Stock Exchange. In 2006, the company was delisted
from Bombay stock exchange after its amalgamation with Aditya Birla Nuvo. In 2010, the company was
renamed Aditya Birla Finance Limited.
The company runs a private equity business under the name Aditya Birla Private Equity. In 2017, Aditya Birla
Capital received a license to set up an asset reconstruction company.
The Aditya Birla Group announced a plan to restructure its business in 2016. As part of this plan, it was
announced that the financial services business would be listed as a separate entity on stock exchanges. In
September 2017, Aditya Birla Financial Services was restructured as Aditya Birla Capital Limited listed on
the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) after demerging from its parent
entity, Grasim Industries (Aditya Birla Nuvo merged into Grasim Industries prior to the Aditya Birla Capital
demerger).
In 2017, all financial services of the Aditya Birla Group came under one brand, Aditya Birla Capital. The
company came out with a strategy of a single brand, single point of contact for clients and focus on money in
general in place of individual products.
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About the Textile Industry:
India’s textiles sector is one of the oldest industries in Indian economy dating back several centuries. Even
today, textiles sector is one of the largest contributors to India’s exports with approximately 13 per cent of total
exports. The textiles industry is also labour intensive and is one of the largest employers. The textile industry
has two broad segments. First, the unorganised sector consists of handloom, handicrafts and sericulture, which
are operated on a small scale and through traditional tools and methods. The second is the organised sector
consisting of spinning, apparel and garments segment which apply modern machinery and techniques such as
economies of scale.
The textile industry employs about 105 million people directly and indirectly. India's overall textile exports
during FY 2017-18 stood at US$ 37.74 billion.
The Indian textiles industry is extremely varied, with the hand-spun and hand-woven textiles sectors at one end
of the spectrum, while the capital intensive sophisticated mills sector at the other end of the spectrum. The
decentralised power looms/ hosiery and knitting sector form the largest component of the textiles sector. The
close linkage of the textile industry to agriculture (for raw materials such as cotton) and the ancient culture and
traditions of the country in terms of textiles make the Indian textiles sector unique in comparison to the
industries of other countries. The Indian textile industry has the capacity to produce a wide variety of products
suitable to different market segments, both within India and across the world.
The Indian textile sector had all the tailwinds the businesses needed, over the last two to three years, to grow
and become more profitable. Right from higher export demand to lower cotton prices to falling interest rates to
favourable exchange rates, the companies had everything going in their favour. The industry employs about 40
million workers directly and 60 million indirectly.
According to the Ministry of Textiles, the domestic textile and apparel industry in India is estimated to reach
US$ 223 bn by 2021 from US$ 108 bn in 2015. India enjoys a significant lead in terms of labour cost per hour
over developed countries like US and newly industrialised economies like Hong Kong, Taiwan, South Korea
and China.
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Market Size:
CAGR – Compound Annual Growth Rate. The estimated Market size for Indian textile sector in 2019 is $250
billion.
The Indian textiles industry, currently estimated at around US$ 150 billion, is expected to reach US$ 250 billion
by 2019. The Indian Textile Industry contributes approximately 2 per cent to India’s Gross Domestic Product
(GDP), 10 per cent of manufacturing production and 14 per cent to overall Index of Industrial Production (IIP).
The production of cotton in India is estimated to increase by 9.3 per cent year-on-year to reach 37.7 million
bales in FY 2017-18. The total area under cultivation of cotton in India is expected to increase by 7 per cent to
11.3 million hectares in 2017-18, on account of expectations of better returns from rising prices and improved
crop yields during the year 2016-17.
Indian exports of locally made retail and lifestyle products grew at a compound annual growth rate (CAGR) of
10 per cent from 2013 to 2016, mainly led by bedding bath and home decor products and textiles.
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Investments:
The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed
and printed) attracted Foreign Direct Investment (FDI) worth US$ 2.82 billion during April 2000 to December
2017.
Some of the major investments in the Indian textiles industry are as follows:
 The Cabinet Committee on Economic Affairs (CCEA), Government of India has approved a new skill
development scheme named 'Scheme for Capacity Building in Textile Sector (SCBTS)' with an outlay
of Rs 1,300 crore (US$ 202.9 million) from 2017-18 to 2019-20.
 Future Group is planning to open 80 new stores under its affordable fashion format, Fashion at Big
Bazaar (FBB), and is targeting sales of 230 million units of garments by March 2018, which is expected
to grow to 800 million units by 2021.
 Raymond has partnered with Khadi and Village Industries Commission (KVIC) to sell Khadi-marked
readymade garments and fabric in KVIC and Raymond outlets across India.
 Max Fashion, a part of Dubai based Landmark Group, plans to expand its sales network to 400 stores in
120 cities by investing Rs 400 crore (US$ 60 million) in the next 4 years.
 In May 2018, textiles sector recorded investments worth Rs 27,000 crore (US$ 4.19 billion) since June
2017.
Government Initiatives:
The Indian government has come up with a number of export promotion policies for the textiles sector. It has
also allowed 100 per cent FDI in the Indian textiles sector under the automatic route.
Initiative will be taken into consideration by Government of India.
 The Union Ministry of Textiles, Government of India, along with Energy Efficiency Services Ltd
(EESL), has launched a technology upgradation scheme called SAATHI (Sustainable and Accelerated
Adoption of Efficient Textile Technologies to Help Small Industries) for reviving the powerloom sector
of India.
 The Government has planned to connect as many as 5 crore (50 million) village women to charkha
(spinning wheel) in next 5 years with a view to provide them employment and promote khadi and also,
they inaugurated 60 khadi outlets which were renovated and re-launched during the completion of KVIC
s 60th anniversary and a khadi outlet.
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 The Textiles Ministry will organise 'Hastkala Sahyog Shivirs' in 421 handloom-handicrafts clusters
across the country which will benefit over 1.2 lakh weavers and artisans.
 The Gujarat government's decision to extend its textile policy by a year is set. It is believes to attract Rs
5,000 crore (US$ 50 billion) of more investment in sectors across the value chain. The government
estimates addition till now of a million units of spindle capacity in the spinning sector and setting up of
over 1,000 units in technical textiles.
 The Textile Ministry of India earmarked Rs 690 crore (US$ 106.58 million) for setting up 21 ready
made garment manufacturing units in seven states for development and modernisation of Indian Textile
Sector.
 The Directorate General of Foreign Trade (DGFT) has revised rates for incentives under the
Merchandise Exports from India Scheme (MEIS) for two subsectors of Textiles Industry - Readymade
garments and Made ups - from 2 per cent to 4 per cent.
 The Government of India plans to introduce a mega package for the powerloom sector, which will
include social welfare schemes, insurance cover, cluster development, and upgradation of obsolete
looms, along with tax benefits and marketing support, which is expected to improve the status of power
loom weavers in the country.
Road Ahead:
 The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption
as well as export demand.
 With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in
the past decade with the entry of several international players like Marks & Spencer, Guess and Next
into the Indian market.
 The domestic market for apparel and lifestyle products, currently estimated at US$ 85 billion, is
expected to reach US$ 160 billion by 2025.
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Selected Companies in Textile Sector:
1) ARVIND LTD:
Arvind Limited (formerly Arvind Mills) is a textile manufacturer and the flagship company of the Lalbhai
Group. Its headquarters is in Naroda, Ahmedabad, and Gujarat, India. It has units at Santej (near Kalol). It
manufactures cotton shirting, denim, knits and bottomweight (khaki) fabrics. It has also recently ventured
into technical textiles when it started Advanced Materials Division in 2011. It is India's largest denim
manufacturer apart from being the world’s fourth-largest producer and exporter of denim. It retails its own
brands like Flying Machine, Newport and Excalibur and licensed international brands like Arrow, Tommy
Hilfiger, through its nationwide retail network.
2) BOMBAY DYEING:
Bombay Dyeing (full name: The Bombay Dyeing & Mfg. Co. Ltd., established on 23 August 1879) is
the flagship company of the Wadia Group, engaged primarily in the business of Real Estate, Polyester Staple
Fibre and Retail -Textiles. One Hundred and Thirty Eight years ago, Mr. Nowrosjee Wadia nurtured an
overarching vision. The vision to create an enterprise, which can stand the test of time, scale new frontiers of
excellence and constantly re-invent itself to suit the changing needs of customers. Bombay Dyeing today is
testimony to the strength of that vision. Respected, trusted and one of India's most endeared brands. Bombay
Dyeing is one of the earliest of the Wadia Group Companies to have been listed on the Bombay Stock
Exchange.
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3) GRASIM INDUSTRIES:
Grasim Industries Limited is an Indian manufacturing company based in Mumbai, Maharashtra. It was started
in 1948 as a textile manufacturer. Since then Grasim has diversified into Viscose Staple Fiber (VSF),
cement, sponge iron, chemicals and Diversified Financial Services (NBFC, Asset Management and Life
Insurance).
The company is a subsidiary of Aditya Birla Group, which operates over 40 companies in 12 countries on four
continents. Grasim is the world's largest producer of viscose rayon fiber with about 24% market share. Textile
and related products contributes to 15% of the group turnover.
4) RAYMOND LTD:
Raymond is the largest integrated manufacturer of fabric in the world based in Mumbai, Maharashtra. It has
over 60% market share in suiting in India. It also the India’s biggest woollen fabrics maker. Textile division of
the company has a distribution network of more than 4,000 multi-brand outlets and over 637 exclusive retail
shops in the domestic market itself. Suitings are available in India in over 400 towns through 30,000 retailers
and an exclusive chain is present in over 150 cities across India. Its products exports to over 55 countries
including US, Canada, Europe, Japan and the Middle East.
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5) LAKSHMI MILLS LTD.:
Lakshmi Mills Company is a major textile yarn and cloth manufacturer in Coimbatore, India. The company was
established by G.Kuppuswamy Naidu in 1910.
It has two composite textile units in Coimbatore: Avinashi Road and Palladam and one in Kovilpatti. The
promoters of the mill were also instrumental in starting various textile machinery companies notably LMW and
medical and educational institutions. The unit in Coimbatore in Papanaickenpalayam is also a well known
famous landmark of the city.
6) VARDHMAN TEXTILES LTD.:
Vardhman Textiles, incorporated in 1973, is one of the pioneers in textile industry with operations in the
segments of yarn, sewing thread, steel, and fabric. Formerly known as Mahavir Spinning Mills, it is a part of
Vardhman Group managed by Paul Oswal. Companies like VMT Spinning Company (VMT), Vardhman
Threads (VTL) and Vardhman Yarns & Threads and Vardhman Acrylics are the subsidiaries of Vardhman
Textiles. Vardhman Textiles is promoted by Ludhiana based Vardhman Group, a major textile business house
in India. Vardhman Textiles, exports its products to more than 25 countries and has a strong presence in markets
like the EEC, USA, Canada, China, Japan, Korea, Mexico, Brazil and Mauritius, Middle East.
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7) RELIANCE CHEMOTEX INDUSTRIES LTD.:
Incorporated in 1977 in Maharashtra, Reliance Chemotex Industries (RCIL) manufactures blended

polyester/viscose yarn at Kanpur village (Udaipur), Rajasthan. Commercial production of blended yarn
commenced in 1979. In 1982, it expanded its capacity to 16,320 spindles. The company has implemented a
modernisation-cum-expansion programme to increase its capacity to 17,280 spindles. It entered the capital
market to part-finance this expansion. The company has successfully completed its expansion programme
and the commercial production started from Mar.'96.
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Fundamental Analysis:
Fundamental analysis is a method of evaluating a security in an attempt to assess its intrinsic value, by
examining related economic, financial, and other qualitative and quantitative factors. Fundamental analysts
study anything that can affect the security's value, including macroeconomic factors (e.g. economy and industry
conditions) and microeconomic factors (e.g. financial conditions and company management). The end goal of
fundamental analysis is to produce a quantitative value that an investor can compare with a security's current
price, thus indicating whether the security is undervalued or overvalued.
Fundamental analysis determines the health and performance of an underlying company by looking at key
numbers and economic indicators. The purpose is to identify fundamentally strong companies or industries and
fundamentally weak companies or industries. Investors go long (purchasing with the expectation that the stock
will rise in value) on the companies that are strong, and short (selling shares that you believe will drop in value
with the expectation of repurchasing when at a lower price) the companies that are weak.
For stocks and equity instruments, fundamental analysis uses revenues, earnings, future growth, return on
equity, profit margins, and other data to determine a company's underlying value and potential for future
growth. In terms of stocks, fundamental analysis focuses on the financial statements of the company being
evaluated.
Fundamental analysis is performed on historical and present data, but with the goal of making
financial forecasts. There are several possible objectives:
 To conduct a company stock valuation and predict its probable price evolution.
 To make a projection on its business performance.
 To evaluate its management and make internal business decisions and/or to calculate its credit risk.
 To find out the intrinsic value of the share.
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Fundamental analysis includes:
1. Economic analysis
2. Industry analysis
3. Company analysis
The intrinsic value of the shares is determined based upon these three analyses. It is this value that is considered
the true value of the share. If the intrinsic value is higher than the market price, buying the share is
recommended. If it is equal to market price, it is recommended to hold the share; and if it is less than the market
price, then one should sell the shares.
Investors using fundamental analysis can use either a top-down or bottom-up approach.
 The top-down investor starts their analysis with global economics, including both international and
national economic indicators. These may include GDP growth rates, inflation, interest rates, exchange
rates, productivity, and energy prices. They subsequently narrow their search to regional/ industry analysis
of total sales, price levels, the effects of competing products, foreign competition, and entry or exit from the
industry. Only then do they refine their search to the best business in the area being studied.
 The bottom-up investor starts with specific businesses, regardless of their industry/region, and proceeds in
reverse of the top-down approach.
For the purpose of the project, 9 financial ratios have been chosen to perform Fundamental Analysis of 7
selected companies in the textile sector. The chosen 8 ratios are
1) Debt-to-Equity Ratio
2) Current Ratio
3) Net Profit Margin
4) Return on Equiy
5) Revenue Growth Rate
6) EPS Growth Rate
7) Price-Earning Ratio
8) Price-to-Book Ratio
9) Dividend Payout Ratio
24
Debt to Equity Ratio:
The Debt-to-Equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders'
equity and debt used to finance a company's assets. Closely related to leveraging, the ratio is also known
as risk, gearing or leverage. The two components are often taken from the company's Balance Sheet.
Debt/Equity (D/E) Ratio, calculated by dividing a company’s total liabilities by its stockholders' equity, is a
debt ratio used to measure a company's financial leverage. The D/E ratio indicates how much debt a company is
using to finance its assets relative to the value of shareholders’ equity. The formula for calculating D/E ratios is:
Debt/Equity Ratio = Total Liabilities / Shareholders' Equity
From a pure risk perspective, lower ratios (0.4 or lower) are considered better debt-to-equity ratios. Since the
interest on a debt must be paid regardless of business profitability, too much debt may compromise the entire
operation if cash flow dries up. Companies unable to service their own debt may be forced to sell off assets or
declare bankruptcy.
A higher debt ratio (0.6 or higher) makes it more difficult to borrow money. Because debt is inherently risky,
lenders and investors tend to favor businesses with lower D/E ratios. For lenders, a low ratio means a lower risk
of loan default. For shareholders, it means a decreased probability of bankruptcy in the event of an economic
downturn. If a company is banking more on external funding (i.e. debt) for its expansion purpose, then it raises
concern as higher debt level will lead to additional cost of interest which in turn may result in volatile earnings.
For the purpose of ranking, companies with lower Debt-Equity ratios are considered more favourable than the
ones with higher Debt-Equity ratios.
25
The Debt-equity ratio for the past five years is taken to rank the selected companies, i.e, the data from March
2014 to March 2018. Weighted Average of these ratios is calculated by alloting maximum weightage to the
most recent year ratio (2018) and minimum weightage to the later year (2014).
COMPANIES 2018 2017 2016 2015 2014 Weighted Ranking

Average
Arvind Ltd. 0.77 0.77 0.97 0.97 0.95 0.85 4

Bombay Dyeing Ltd. 4.15 6.44 5.4 2.82 2.27 4.71 7
Grasim Industries 0.06 0.03 0.13 0.08 0.1 0.07 1

Ltd.
Raymond Ltd. 0.88 1.05 0.95 0.93 1.13 0.96 5

Lakshmi Mills 0.14 0.16 1.59 1.48 1.72 0.72 3
Company Ltd.
Vardhman Textiles 0.43 0.45 0.55 0.58 0.97 0.52 2

Ltd.
Reliance Chemotex 1.18 1.49 2.09 2.04 1.67 1.59 6

Industries Ltd.
CALCULATION:
For Arvind Ltd., Weighted Average of the Debt-to-Equity for 5 years is calculated as follows –
Weighted Average = ((0.77*5) + (0.77*4) + (0.97*3) + (0.97*2) + (0.95*1)) ÷ 15
= 12.75 ÷ 15
= 0.85.
26
Current Ratio:
The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term
obligations. To gauge this ability, the current ratio considers the current total assets of a company (both liquid
and illiquid) relative to that company’s current total liabilities. The formula for calculating a company’s current
ratio is:
Current Ratio = Current Assets / Current Liabilities
The current ratio is mainly used to give an idea of a company's ability to pay back its liabilities with its assets.
As such, current ratio can be used to make a rough estimate of a company’s financial health. The current ratio
can give a sense of the efficiency of a company's operating cycle or its ability to turn its product into cash.
A ratio under 1 indicates that a company’s liabilities are greater than its assets and suggests that the company in
question would be unable to pay off its obligations if they came due at that point. While a current ratio below 1
shows that the company is not in good financial health, it does not necessarily mean that it will go bankrupt.
The higher the current ratio, the more capable the company is of paying its obligations, as it has a larger
proportion of asset value relative to the value of its liabilities. However, a high ratio (over 3) does not
necessarily indicate that a company is in a state of financial well-being either. Depending on how the
company’s assets are allocated, a high current ratio may suggest that that company is not using its current
assets efficiently, is not securing financing well, or is not managing its working capital well.
27
For the purpose of ranking, 2 is considered an ideal current ratio. Just like Debt-Equity Ratio, Weighted
Average is used to rank the selected companies on the basis of Current Ratio.

Average
Arvind Ltd. 0.97 1 1.03 1.05 1.12 1.01 5
Bombay Dyeing Ltd. 2.1 0.59 0.87 1.2 0.91 1.25 3
Grasim Industries 1.32 2 1.44 2.29 2.37 1.72 2

Ltd.
Raymond Ltd. 0.94 1 1.46 1.47 1.7 1.18 4
Lakshmi Mills 0.76 0.72 2.03 2.02 2 1.25 3

Company Ltd.

Ltd.

Industries Ltd.
Since Bombay Dyeing Ltd. and Lakshmi Mills Company Ltd. have the same weighted average of 1.25, they are
both ranked equally as third.
CALCULATION:
Weighted Average for Arvind Ltd. = ((0.97*5) + (1*4) + (1.03*3) + (1.05*2) + (1.12*1)) ÷ 15
= 15.15 ÷ 15
= 1.01
Similarly, it’s calculated for other companies as well.
28
Net Profit Margin:
Net profit margin is the percentage of revenue remaining after all operating expenses, interest, taxes and
preferred stock dividends (but not common stock dividends) have been deducted from a company's total
revenue.
The formula for Net Profit Margin is:
(Total Revenue – Total Expenses)/Total Revenue = Net Profit/Total Revenue
By dividing net profit by total revenue, we can see what percentage of revenue made it all the way to the bottom
line, which is good for investors.
Net profit margin is one of the most closely followed numbers in finance. Shareholders look at net profit margin
closely because it shows how good a company is at converting revenue into profits available for shareholders.
Net profit margin is often used to compare companies within the same industry, in a process known as
"margin analysis." Net profit margin is a percentage of sales, not an absolute number, so it can be extremely
useful to compare net profit margins among a group of companies to see which are most effective at converting
sales into profits.
Net profit margin is one of the most important indicators of a business's financial health. By tracking increases
and decreases in its net profit margin, a business can assess whether current practices are working and forecast
profits based on revenues. Because companies express net profit margin as a percentage rather than a rupee
amount, it is possible to compare the profitability of two or more businesses regardless of size.
The higher the Net Profit Margin, the better it is for the shareholders.
29
The same procedure as Debt-Equity and Current Ratio, is applied to rank the selected companies on the basis of
Net Profit Margin. A negative net profit margin means the company has incurred losses in that particular year.

Average
Arvind Ltd. 3.89 0.31 5.89 7.22 7.56 4.02 3

Bombay Dyeing Ltd. 1.29 -7.7 -4.62 1.03 0.91 -2.35 7

Ltd.
Raymond Ltd. 3.25 1.19 2.93 3.78 4.03 2.76 4

Lakshmi Mills 0.6 0.46 0.52 1.93 4.31 0.97 6
Company Ltd.

Ltd.

Industries Ltd.
CALCULATION:
For Arvind Ltd.,

= 60.3 ÷ 15
= 4.02
30
Return on Equity:
The return on equity ratio or ROE is a profitability ratio that measures the ability of a firm to generate profits
from its shareholders investments in the company. In other words, the return on equity ratio shows how much
profit each rupee of common shareholders’ equity generates.
So a ROE of 1 means that every rupee of common shareholders’ equity generates 1 rupee of net income. This is
an important measurement for potential investors because they want to see how efficiently a company will use
their money to generate net income.
ROE is also and indicator of how effective management is at using equity financing to fund operations and
grow the company.
Return on Equity = Net Income / Shareholders’ Equity
Investors want to see a high return on equity ratio because this indicates that the company is using its investors’
funds effectively. Higher ratios are almost always better than lower ratios, but have to be compared to other
companies’ ratios in the industry.
Negative Return on Equity means that the company incurred losses in that particular year. Companies that
report losses are more difficult to value than those that report consistent profits. Any metric that uses net
income is basically nullified as an input when a company reports negative profits. Return on equity (ROE) is
one such metric.
ROE is useful in comparing the profitability of a company to that of other firms in the same industry. It
illustrates how effective the company is at turning the cash put into the business into greater gains and growth
for the company and investors. The higher the return on equity, the more efficient the company's operations are
making use of those funds.
31
Average
Arvind Ltd. 7.91 0.61 11.6 14.64 15.3 8.09 3
Bombay Dyeing Ltd. 5.4 -44.26 -22.56 5.18 5.17 -13.48 7

Ltd.
Raymond Ltd. 7.44 2.76 6.62 8.56 8 6.21 5
Lakshmi Mills 0.28 0.29 2.94 12.14 28.78 4.30 6

Company Ltd.

Ltd.

Industries Ltd.
CALCULATION:
For Arvind Ltd.,

= 121.35 ÷ 15
= 8.09
32
Revenue Growth Rate:
Revenue growth is an increase in a company's sales when compared to a previous year’s revenue performance.
The current year's sales figure can be compared with that of the previous year and the growth can be recorded.
This helps to give analysts, investors and additional stakeholders, an idea of how much a company's sales are
increasing over time.
When looking at a company's annual financials, it is not enough to just look at the revenue for the current
period. When investing in a company, an investor wants to see it growth or improvement over time. Looking at
the financials in comparison to a previous year will give a clear picture of its growth rate.
Revenue Growth Rate = (Revenue of 2018 / Revenue of 2017) * 100

Average
Arvind Ltd. 6.76 10.35 3.00 10.14 25.46 8.66 2

Bombay Dyeing Ltd. 35.93 5.94 -22.55 -9.75 13.50 8.65 3

Ltd.
Raymond Ltd. 6.30 1.38 5.02 21.75 7.10 6.84 4

Lakshmi Mills 3.66 15.33 -10.47 2.43 29.59 5.51 5
Company Ltd.
Vardhman Textiles -4.11 7.53 -0.77 12.69 24.23 3.79 7

Ltd.
Reliance Chemotex -3.00 13.47 3.41 -0.55 21.66 4.64 6

Industries Ltd.
33
EPS Growth Rate:
Along with the growth in revenues, an increase in earnings is also essential to determine the value of a
company. A year-over-year increase in the net profits suggest that the company is growing which implies more
dividends for shareholders. There is a possibility that revenues are growing rapidly but costs to earn that
additional revenues are more than the additional revenue itself.
Therefore, it is essential to calculate the earnings growth and understand the true financial position of a
company.
EPS Growth Rate = EPS of 2018 / EPS of 2017.
Negative EPS Growth means EPS is not growing positively. It has decreased when compared to the previous
year.

Average
Arvind Ltd. 1234.06 -94.17 -15.53 4.43 38.34 389.28 2
Bombay Dyeing 123.26 -73.85 -447.06 0.85 -67.85 -72.43 7

Ltd.
Grasim Industries -12.63 -67.28 77.03 -40.88 -26.97 -13.99 6

Ltd.
Raymond Ltd. 190.02 -58.79 -17.93 13.44 284.34 64.83 3
Lakshmi Mills 33.55 1.66 -75.57- 54.35 -14.94 -11.73 5

Company Ltd.
Vardhman -41.09 50.16 93.19 -44.91 101.36 19.08 4

Textiles Ltd.
Reliance -33.77 1690.32 -106.13 11.96 -27.29 418.04 1

Chemotex
Industries Ltd.
34
Price-Earning Ratio:
The Price-Earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price
relative to its per-share earnings. The price-earnings ratio is also sometimes known as the price multiple or the
earnings multiple.
The P/E ratio can be calculated as: Market Value per Share / Earnings per Share
In essence, the price-earnings ratio indicates the rupee amount an investor can expect to invest in a company in
order to receive one rupee of that company’s earnings. This is why the P/E is sometimes referred to as the price
multiple because it shows how much investors are willing to pay per rupee of earnings. If a company were
currently trading at a multiple (P/E) of 20, the interpretation is that an investor is willing to pay Rs.20 for Rs.1
of current earnings.
If a company has a high P/E, investors are paying a higher price for the stock compared to its earnings.
Investors are willing to drive up the price for the stock because they believe the company has good growth
prospects or that it will make more profit in the future. If a company has a lower P/E, you get more earnings for
your investment. This makes a low-P/E stock a good value.
P/E ratios are calculated by taking the closing market price of the companies as on 24th August 2018. For the
purpose of ranking, Lower P/E ratio is considered more favourable.
Sl.No. Company Name Price-Earning Ratio Ranking

1 Arvind Ltd. 32.90 3
2 Bombay Dyeing Ltd. 152.37 7
3 Grasim Industries Ltd. 33.27 4
4 Raymond Ltd. 53.34 5
5 Lakshmi Mills Company Ltd. 129.45 6
6 Vardhman Textiles Ltd. 11.91 1
7 Reliance Chemotex Industries Ltd. 17.95 2
35
Price-to-Book Ratio:
The price-to-book ratio, or P/B ratio, is a financial ratio used to compare a company's current market price to
its book value. It is also sometimes known as a Market-to-Book ratio. The calculation can be performed in two
ways, but the result should be the same each way. In the first way, the company's market capitalization can be
divided by the company's total book value from its balance sheet. The second way, using per-share values, is to
divide the company's current share price by the book value per share (i.e. its book value divided by the number
of outstanding shares).
The P/B ratio has been favored by value investors for decades and is widely used by market analysts.
Traditionally, any value under 1.0 is considered a good P/B value, indicating a potentially undervalued stock.
However, value investors often consider stocks with a P/B value under 3.0.
P/B ratio examines market capitalization in relation to the book value of a company as shown on its balance
sheet.
The ratio is calculated as: P/B value = Stock Price / Book value of Equity,
"Book value of equity" is defined as the book value of assets minus the book value of liabilities.
To calculate Price-to-Book ratio, closing market price of the companies as on 24th August is taken. For the
purpose of Ranking, a lower P/B ratio is considered favourable.
Sl.No. Company Name Price-to-Book Ratio Ranking

1 Arvind Ltd. 2.55 5
2 Bombay Dyeing Ltd. 8.21 7
3 Grasim Industries Ltd. 1.53 4
4 Raymond Ltd. 3.70 6
5 Lakshmi Mills Company Ltd. 0.46 1
6 Vardhman Textiles Ltd. 1.45 3
7 Reliance Chemotex Industries Ltd. 0.50 2
36
Dividend Payout Ratio:
The dividend payout ratio is the ratio of the total amount of dividends paid out to shareholders relative to the net
income of the company. It is the percentage of earnings paid to shareholders in dividends. The amount that is
not paid to shareholders is retained by the company to pay off debt or to reinvest in core operations.
Dividend Payout Ratio = Dividends paid / Net Income
The payout ratio is also useful for assessing a dividend's sustainability. Companies are extremely reluctant to
cut dividends since it can drive the stock price down and reflect poorly on management's abilities.
A range of 0% to 35% is considered a good payout ratio. A range of 35% to 55% is considered healthy and
appropriate from a dividend investor’s point of view. A company that is likely to distribute roughly half of its
earnings as dividends means that the company is well established and a leader in its industry. It’s also
reinvesting half of its earnings for growth, which is welcome.
Payout Ratios between 55% and 75% are considered high because it indicates less retained earnings. It limits
company’s ability to grow dividends in the future. Any payout ratio above 75% is considered very high and not
favourable at all. . If a company's payout ratio is over 100%, it is returning more money to shareholders than it
is earning, then it will probably be forced to lower the dividend or stop paying it altogether.
37
Average
Arvind Ltd. 333.94 19.43 17.44 16.78 104.65 7

24.81 333.94 19.43 17.44 16.78
Bombay Dyeing Ltd. 42.02 -6.96 -12.11 67.26 67.87 23.22 3

Ltd.
Raymond Ltd. 7.82 54.43 22.43 18.41 13.93 24.99 2
Lakshmi Mills 43.99 58.74 59.72 24.31 11.09 46.25 1

Company Ltd.

Ltd.

Industries Ltd.
Arvind Ltd. has a weighted average dividend payout ratio of 104.65%. It means that the company has paid
dividends more than it has earned profits over a period of 5 years. A dividend payout ratio above 100% is never
a good sign for the investor. Hence, it is ranked last.
Lakshmi Mills has 46.25% dividend payout ratio on an average for 5 years. It’s the best among the seven
selected companies. Hence, it is ranked first.
38
A Summary of all the Company rankings to their respective ratios:
The Company with the lowest total is considered the most favourable company to invest among the selected 7
companies and the company with the highest total is considered the least favourable.
Company Name Debt- Current NP ROE Revenue EPS P/E P/B Dividend TOTAL
Equity Ratio Margin
Arvind Ltd. 4 5 3 3 2 2 3 5 7 34
Bombay Dyeing 7 3 7 7 3 7 7 7 3 51
Ltd.
Grasim Industries 1 2 1 4 1 6 4 4 4 27
Ltd.
Raymond Ltd. 5 4 4 5 4 3 5 6 2 38
Lakshmi Mills 3 3 6 6 5 5 6 1 1 36
Company Ltd.
Vardhman 2 1 2 1 7 4 1 3 5 26
Textiles Ltd.
Reliance 6 6 5 2 6 1 2 2 6 36
Chemotex
Industries Ltd.
39
INTERPRETATION:
Sl.No. Company Name Total Final Ranking

1 Arvind Ltd. 34 3
2 Bombay Dyeing Ltd. 51 6
3 Grasim Industries Ltd. 27 2
4 Raymond Ltd. 38 5
5 Lakshmi Mills Company Ltd. 36 4
6 Vardhman Textiles Ltd. 26 1
7 Reliance Chemotex Industries Ltd. 36 4
The first rank goes to Vardhman Textiles Ltd. who has the least total of 26. It was ranked first in three out of
nine ratios – Current Ratio, Return on Equity Ratio and Price-Earning Ratio, and second in two ratios – Debt-
Equity Ratio and Net Profit Margin Ratio, which enabled the company to secure the first spot. After analysing
the company by examining its financial ratios over a period of 5 years, it’s safe to say that Vardhman Textiles is
the best option for investors to invest for long term, among the selected seven companies.
Grasim Industries Ltd. isn’t far behind Vardhman Textiles Ltd. It secured second rank by scoring a total of 27,
just one less than Vardhman Textiles Ltd. Like the latter, Grasim Industries was also ranked first in three out of
nine ratios – Debt-Equity Ratio, Net Profit Margin and Revenue Growth rate.
Arvind Ltd. is ranked third with a total of 34. It hasn’t been ranked first in any of the nine ratios, but has been
ranked second and third for 5 times. Lakshmi Mills Company Ltd. and Reliance Chemotex Industries Ltd. are
tied at fourth spot with a total of 36, in spite of being ranked first for two ratios and one ratio respectively.
Raymond Ltd. is ranked fifth with a total of 38.
Bombay Dyeing Ltd. is ranked last with a total of 51. The most interesting thing to notice is the gap between
last ranked and second last ranked. There is a difference of 13 which indicates that Bombay Dyeing is far
behind its contemporaries. It was ranked last (seventh) in six out of the nine ratios which is an indicator of the
financial health of the company. Among the seven selected companies, it is the least favourable option to invest
for a long tern as there is a very less scope of growth.
40
Technical Analysis:
Technical analysis is a trading discipline employed to evaluate securities and identify trading opportunities
by analyzing statistics gathered from trading activity, such as price movement and volume. Unlike fundamental
analysts, who attempt to evaluate a security's intrinsic value, technical analysts focus on charts of price
movement and various analytical tools to evaluate a security's strength or weakness.
Technical analysts believe past trading activity and price changes of a security are better indicators of the
security's likely future price movements than the intrinsic value of the security. Technical analysis was formed
out of basic concepts gleaned from Dow Theory, a theory about trading market movements that came from the
early writings of Charles Dow. Two basic assumptions of Dow Theory that underlie all of technical analysis are
1) Market price discounts every factor that may influence a security's price and
2) Market price movements are not purely random but move in identifiable patterns and trends that repeat over
time.
The Underlying Assumptions of Technical Analysis:
The assumption that price discounts everything essentially means the market price of a security at any given
point in time accurately reflects all available information, and therefore represents the true fair value of the
security. This assumption is based on the idea the market price always reflects the sum total knowledge of all
market participants.
The second basic assumption underlying technical analysis, the notion that price changes are not random, leads
to the belief of technical analysts that market trends, both short term and long term, can be identified, enabling
market traders to profit from investing according to the existing trend.
41
Technical analysis attempts to forecast the price movement of virtually any tradable instrument that is generally
subject to forces of supply and demand, including stocks, bonds, futures and currency pairs. In fact, some view
technical analysis as simply the study of supply and demand forces as reflected in the market price movements
of a security. Technical analysis most commonly applies to price changes, but some analysts track numbers
other than just price, such as trading volume or open interest figures.
Over the years, analysts have developed numerous technical indicators to help forecast future price movements.
Some indicators are focused primarily on identifying the current market trend, including support and resistance
areas, while others are focused on determining the strength of a trend and the likelihood of its continuation.
Commonly used technical indicators include trendlines, moving averages and momentum indicators such as the
moving average convergence divergence (MACD) indicator.
Technical analysts apply technical indicators to charts of various timeframes. Short-term traders may use charts
ranging from one-minute timeframes to hourly or four-hour timeframes, while traders analyzing longer-term
price movement scrutinize daily, weekly or monthly charts.
A core principle of technical analysis is that a market's price reflects all relevant information impacting that
market. A technical analyst therefore looks at the history of a security or commodity's trading pattern rather than
external drivers such as economic, fundamental and news events. It is believed that price action tends to repeat
itself due to the collective, patterned behavior of investors. Hence technical analysis focuses on identifiable
price trends and conditions.
Technical analysts believe that investors collectively repeat the behavior of the investors that preceded them. To
a technician, the emotions in the market may be irrational, but they exist. Because investor behavior repeats
itself so often, technicians believe that recognizable (and predictable) price patterns will develop on a chart.
Recognition of these patterns can allow the technician to select trades that have a higher probability of success.
42
Moving Averages:
The moving average (MA) is a simple technical analysis tool that smooths out price data by creating a
constantly updated average price. The average is taken over a specific period of time, like 10 days, 20 minutes,
30 weeks or any time period the trader chooses. There are advantages to using a moving average in your
trading, as well as options on what type of moving average to use. Moving average strategies are also popular
and can be tailored to any time frame, suiting both long-term investors and short-term traders.
A moving average helps cut down the amount of "noise" on a price chart. Look at the direction of the moving
average to get a basic idea of which way the price is moving. If it is angled up, the price is moving up (or was
recently) overall; angled down, and the price is moving down overall; moving sideways, and the price is likely
in a range.
A moving average can also act as support or resistance. In an uptrend, a 50-day, 100-day or 200-day moving
average may act as a support level. This is because the average acts like a floor (support), so the price bounces
up off of it. In a downtrend, a moving average may act as resistance; like a ceiling, the price hits the level and
then starts to drop again.
As a general guideline, if the price is above a moving average, the trend is up. If the price is below a moving
average, the trend is down. However, moving averages can have different lengths, so one MA may indicate an
uptrend while another MA indicates a downtrend.
Types of Moving Averages:

There are 2 types of moving averages.
1) Simple Moving Average (SMA)

2) Exponential Moving Average (EMA)
43
Simple Moving Average:
The simplest form of a moving average, appropriately known as a simple moving average (SMA), is calculated
by taking the arithmetic mean of a given set of values. In other words, a set of numbers, or prices in the case of
financial instruments, are added together and then divided by the number of prices in the set. For example, to
calculate a basic 10-day moving average, you would add up the closing prices from the past 10 days and then
divide the result by 10. Each average is connected to the next, creating the singular flowing line.
SMA for 50 days = Sum of last 50 days Market price of the share / 50
It’s called moving average because, as new values become available, the oldest data points must be dropped
from the set and new data points must come in to replace them. Thus, the data set is constantly "moving" to
account for new data as it becomes available. This method of calculation ensures that only the current
information is being accounted for.
Exponential Moving Average:
Another popular type of moving average is the exponential moving average (EMA). The calculation is more
complex, as it applies more weighting to the most recent prices. If you plot a 50-day SMA and a 50-day EMA
on the same chart, you'll notice that the EMA reacts more quickly to price changes than the SMA does, due to
the additional weighting on recent price data.
EMA = (2/n+1)*(current market price – previous EMA) + previous EMA
When using the formula to calculate the first point of the EMA, you may notice that there is no value available
to use as the previous EMA. This small problem can be solved by starting the calculation with a simple moving
average and continuing on with the above formula from there.
44
One type of MA isn't better than another. An EMA may work better in a stock or financial market for a time,
and at other times, a SMA may work better. The time frame chosen for a moving average will also play a
significant role in how effective it is (regardless of type).
Moving Average Length:
Common moving average lengths are 10, 20, 50, 100 and 200. These lengths can be applied to any chart time
frame (one minute, daily, weekly, etc.), depending on the trader's time horizon.
The time frame or length you choose for a moving average, also called the "look back period," can play a big
role in how effective it is.
An MA with a short time frame will react much quicker to price changes than an MA with a long look back
period. For Example, A 20-day time frame may be of analytical benefit to a shorter-term trader since it follows
the price more closely and therefore produces less "lag" than the longer-term moving average. A 100-day MA
may be more beneficial to a longer-term trader.
Lag is the time it takes for a moving average to signal a potential reversal. As a general guideline, when the
price is above a moving average, the trend is considered up. So when the price drops below that moving
average, it signals a potential reversal based on that MA. A 20-day moving average will provide many more
"reversal" signals than a 100-day moving average.
A moving average can be any length: 15, 28, 89, etc. Adjusting the moving average so it provides more accurate
signals on historical data may help create better future signals.
Below are the line charts of the selected seven companies that show the close prices, Simple Moving Average
(SMA) and Exponential Moving Average (EMA) for 12 days for a period of 100 days starting from April 1st
2018. It can be observed that EMA reacts quicker to price changes than SMA because of giving more weightage
to the recent prices.
45
160
180
200
220
240
260
280
300
320
340
360
370
380
390
400
410
420
430
440
1 1
4 4
7 7
10 10
13 13
16 16
19 19
22 22
25 25
28 28
31 31
34 34
CLOSE
37 37
CLOSE
40 40
43 43
46 46
49 49
52 52
SMA(12)
SMA(12)
55 55
Arvind Ltd.
58 58
61 61
64 64
67
Bombay Dyeing Ltd.

67
70
EMA(12)
70
EMA(12)
73 73
76 76
79 79
82 82
85 85
88 88
91 91
94 94
97
97
100
100
46
Grasim Industries Ltd.
1,160.00
1,110.00
1,060.00
1,010.00
960.00
910.00
860.00
58
73
1
4
7
10
13
16
19
22
25
28
31
34
37
40
43
46
49
52
55
61
64
67
70
76
79
82
85
88
91
94
97
100
CLOSE SMA(12) EMA(12)
Raymond Ltd.
1200
1150
1100
1050
1000
950
900
850
800
750
700
1
4
7
10
13
16
19
22
25
28
31
34
37
40
43
46
49
52
55
58
61
64
67
70
73
76
79
82
85
88
91
94
97
100
47
Lakshmi Mills Company Ltd.
4,300.00
4,100.00
3,900.00
3,700.00
3,500.00
3,300.00
3,100.00
2,900.00
2,700.00
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97
Vardhman Textiles Ltd.

1,320.00
1,270.00
1,220.00
1,170.00
1,120.00
1,070.00
43
58
73
1
4
7
10
13
16
19
22
25
28
31
34
37
40
46
49
52
55
61
64
67
70
76
79
82
85
88
91
94
97
100
48
Reliance Chemotex Ltd.
125
115
105
95
85
75
65
55
7
40
79
1
4
10
13
16
19
22
25
28
31
34
37
43
46
49
52
55
58
61
64
67
70
73
76
82
85
88
91
94
97
100
Trading Strategies – Crossovers:
Crossovers are one of the main moving average strategies. The first type is a price crossover, which is when the
price crosses above or below a moving average to signal a potential change in trend.
Another strategy is to apply two moving averages to a chart: one longer and one shorter. When the shorter-term
MA crosses above the longer-term MA, it's a buy signal, as it indicates that the trend is shifting up. This is
known as a "golden cross."
Meanwhile, when the shorter-term MA crosses below the longer-term MA, it's a sell signal, as it indicates that
the trend is shifting down. This is known as a "dead/death cross."
49
Below are the line charts showing Exponential Moving Average (EMA) for 12 days and 26 days, for a period of
100 days starting from 1st April 2018, to understand the trend shifts.
Arvind Ltd.
425
420
415
410
405
400
395
390
385
5
61
1
9
13
17
21
25
29
33
37
41
45
49
53
57
65
69
73
77
81
85
89
93
97
101
EMA(12) EMA(26)
In the above chart, Short term EMA (12) seems to be crossing above Long term EMA (26). It is a Buy signal.
Bombay Dyeing Ltd.

290
270
250
230
210
190
69
85
1
5
9
13
17
21
25
29
33
37
41
45
49
53
57
61
65
73
77
81
89
93
97
101
EMA(12) EMA(26)
No decision of Buy or Sell can be made at this point. However, EMA(12) being above EMA(26) indicates that
the prices are rising.
50
1120
1070
1020
970
920
49
77
1
5
9
13
17
21
25
29
33
37
41
45
53
57
61
65
69
73
81
85
89
93
97
101
EMA(12) EMA(26)
EMA (12) has just crossed above EMA (26). It does indicate rise in the prices. However, no decision can be
made at this point as it difficult to predict the future movement of the price.
Raymond Ltd.
1130
1080
1030
980
930
880
830
780
730
1
5
9
49
77
13
17
21
25
29
33
37
41
45
53
57
61
65
69
73
81
85
89
93
97
101
EMA(12) EMA(26)
No decision of buy or sell can be made at this point. But the above chart shows that the prices are constantly
decreasing. Therefore, Buy is not a safe option.
51
4000
3800
3600
3400
3200
3000
2800
1 4 7 101316192225283134374043464952555861646770737679828588919497
EMA(12) EMA(26)
The EMA (12) line is crossing below the EMA (26) line. It is a signal to sell the stock as it indicates that the
prices are going to fall in the future.

1270
1250
1230
1210
1190
1170
1150
1130
49
77
1
5
9
13
17
21
25
29
33
37
41
45
53
57
61
65
69
73
81
85
89
93
97
101
EMA(12) EMA(26)
EMA (12) line is falling steeply. It means that the prices are falling. However future movement can’t be
predicted. Hence, no certain decision can be made.
52
Reliance Chemotex Industries Ltd.
100
95
90
85
80
75
70
65
69
85
1
5
9
13
17
21
25
29
33
37
41
45
49
53
57
61
65
73
77
81
89
93
97
101
EMA(12) EMA(26)
No decision can be made at this point.
The Bottom Line:
A moving average simplifies price data by smoothing it out and creating one flowing line. This makes seeing
the trend easier. Exponential moving averages react quicker to price changes than simple moving averages. In
some cases, this may be good, and in others, it may cause false signals. Moving averages with a shorter look
back period (20 days, for example) will also respond quicker to price changes than an average with a longer
look back period (200 days).
Moving average crossovers are a popular strategy for both entries and exits. MAs can also highlight areas of
potential support or resistance. While this may appear predictive, moving averages are always based on
historical data and simply show the average price over a certain time period.
53
Moving Averages Convergence Divergence (MACD):
Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the
relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-
day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the
"Signal line", is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.
MACD = (12-day EMA – 26-day EMA)
Signal Line = 9-day EMA of MACD
BREAKING DOWN 'Moving Average Convergence Divergence – MACD:
Moving average convergence divergence (MACD) indicators can be interpreted using three different methods:
1. Crossovers - When the MACD falls below the signal line, it is a bearish signal, which indicates that it may
be time to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish signal,
which suggests that the price of the asset is likely to experience upward momentum. Many traders wait for a
confirmed cross above the signal line before entering into a position to avoid getting "faked out" or entering into
a position too early.
2. Divergence - When the security price diverges from the MACD, it signals the end of the current trend. For
example, a stock price that is rising and a MACD indicator that is falling could mean that the rally is about to
end. Conversely, if a stock price is falling and the MACD is rising, it could mean that a bullish reversal could
occur in the near-term. Traders often use divergence in conjunction with other technical indicators to find
opportunities.
3. Dramatic Rise - When the MACD rises dramatically - that is, the shorter moving average pulls away from
the longer-term moving average - it is a signal that the security is overbought and will soon return to normal
levels. Traders will often combine this analysis with other technical indicators to verify overbought or oversold
conditions.
54
Traders also watch for a move above or below the zero line because this signals the position of the short-term
average relative to the long-term average. When the MACD is above zero, the short-term average is above the
long-term average, which signals upward momentum. The opposite is true when the MACD is below zero. The
zero line often acts as an area of support and resistance for the indicator.
MACD Histogram:
Developed by Thomas Aspray in 1986, the MACD-Histogram measures the distance between MACD and its
signal line (the 9-day EMA of MACD). Like MACD, the MACD-Histogram is also an oscillator that fluctuates
above and below the zero line. Aspray developed the MACD-Histogram to anticipate signal line crossovers in
MACD. The histogram is positive when MACD is above its 9-day EMA and negative when MACD is below its
9-day EMA.
MACD Histogram = MACD – Signal Line
The MACD-Histogram is an indicator of an indicator. In fact, MACD is also an indicator of an indicator. This
means that the MACD-Histogram is four steps removed from the price of the underlying security. In other
words, it is the fourth derivative of price.
 First derivative: 12-day EMA and 26-day EMA

 Second derivative: MACD (12-day EMA less the 26-day EMA)
 Third derivative: MACD signal line (9-day EMA of MACD)
 Fourth derivative: MACD-Histogram (MACD less MACD signal line)
The base for this indicator is the security's price. It takes four steps to get from the actual price to the MACD-
Histogram. It is an indicator of an indicator. Therefore, it is designed to anticipate signals in MACD, which in
turn is designed to identify changes in the price momentum of the underlying security.
55
Interpretation:
As with MACD, the MACD-Histogram is also designed to identify convergence, divergence and crossovers.
The MACD-Histogram, however, is measuring the distance between MACD and its signal line. The histogram
is positive when MACD is above its signal line. Positive values increase as MACD diverges further from its
signal line (to the upside). Positive values decrease as MACD and its signal line converge. The MACD-
Histogram crosses the zero line as MACD crosses below its signal line. The indicator is negative when MACD
is below its signal line. Negative values increase as MACD diverges further from its signal line (to the
downside). Conversely, negative values decrease as MACD converges on its signal line.
Below are the line charts of the selected 7 companies, showing the MACD line and the Signal Line.
Arvind Ltd.
6.00
4.00
2.00
0.00
29
92
26
32
35
38
41
44
47
50
53
56
59
62
65
68
71
74
77
80
83
86
89
95
98
-2.00
-4.00
-6.00
-8.00
-10.00
MACD(12,26) Signal(9)
MACD Line is crossing above the Signal line. It’s a signal to buy the stock.
56
Bombay Dyeing Ltd.
18.00
13.00
8.00
3.00
-2.00
47
74
101
26
29
32
35
38
41
44
50
53
56
59
62
65
68
71
77
80
83
86
89
92
95
98
-7.00
-12.00
-17.00
MACD(12,26) SIGNAL(9)
MACD line is just below the signal line, but can be seen moving closer to the Signal line. No decision can be
made at this point.
Raymond Ltd.
50
40
30
20
10
0
92
95
98
26
29
32
35
38
41
44
47
50
53
56
59
62
65
68
71
74
77
80
83
86
89
101
-10
-20
-30
-40
-50
MACD line is above the Signal line and is showing an upward trend. It is a sign to Buy.
57
Grasim Industries
20.00
15.00
10.00
5.00
0.00
101.00
47.00
74.00
26.00
29.00
32.00
35.00
38.00
41.00
44.00
50.00
53.00
56.00
59.00
62.00
65.00
68.00
71.00
77.00
80.00
83.00
86.00
89.00
92.00
95.00
98.00
-5.00
-10.00
-15.00
-20.00
-25.00
-30.00
MACD line is above the Signal line and is above the zero line. It shows upward movement. But no certain can
be made at this point. However, it is advised not to sell the stock.

240.00
190.00
140.00
90.00
40.00
-10.00
26 29 32 35 38 41 44 47 50 53 56 59 62 65 68 71 74 77 80 83 86 89 92 95 98
-60.00
-110.00
-160.00
MACD line is moving below the Signal Line towards the negative values. It is a sign to sell the stock.
58
14.00
9.00
4.00
-1.00
47
74
101
26
29
32
35
38
41
44
50
53
56
59
62
65
68
71
77
80
83
86
89
92
95
98
-6.00
-11.00
-16.00
-21.00
-26.00
No decision can be made at this point. But MACD line is falling steeply. It is below the Signal line. It is a sign
to not buy the stock.
Reliance Chemotex Ltd.

6.00
5.00
4.00
3.00
2.00
1.00
0.00
47
80
26
29
32
35
38
41
44
50
53
56
59
62
65
68
71
74
77
83
86
89
92
95
98
101
-1.00
-2.00
-3.00
-4.00
MACD line is crossing below the Signal line. This indicates fall in the prices. It is a sign to sell the stock.
59
BOLLINGER BAND:
A Bollinger Band is a set of lines plotted two standard deviations (positively and negatively) away from a
simple moving average of the security's price. A Bollinger Band, developed by famous technical trader John
Bollinger, is normally plotted two standard deviations away from a simple moving average.
Bollinger Bands are a popular technical indicators used by traders in all markets, including stocks, futures and
currencies. There are a number of uses for Bollinger Bands, including
determining overbought and oversold levels, as a trend following tool, and monitoring for breakouts.
Bollinger bands are composed of three lines. One of the more common calculations of Bollinger Bands uses a
20-day simple moving average (SMA) for the middle band. The upper band is calculated by taking the middle
band and adding twice the daily standard deviation to that amount. The lower band is calculated by taking the
middle band minus two times the daily standard deviation.
Middle Band = Simple moving average for 20 days
Upper Band = Middle Band + (2* Standard Deviation)
Lower Band = Middle Band – (2* Standard Deviation)
The spacing in between the lower, upper, and the middle band is determined by volatility. The middle band
consists of a 20 period moving average, while the upper and lower are two standard deviations below and above
the moving average in the middle. All standard deviation means is that it is a statistical measure that offers a
great reflection of the price volatility.
When you see the band widen that simply means that there is volatility at that time. When the price moves very
little, the band will narrow which means that there is little volatility.
60
Overbought and Oversold Strategy:
A common strategy is using Bollinger Bands to identify overbought or oversold market conditions. When the
price of the asset breaks below the lower band of the Bollinger Bands, a trader may enter a long (buy) position
expecting the price to revert back to the middle band. When the price breaks above the upper band, a trader can
short (sell) the asset betting on a move back to the middle band. This type of strategy relies on the mean
reversion of the price.
Mean reversion assumes that, if the price deviates substantially from the mean, it eventually reverts back to the
mean price. Bollinger Bands identify asset prices that have deviated from the mean.
This technique works well, as prices travel between the two bands like a bouncing ball. However, Bollinger
Bands don't always give accurate buy and sell signals. During a trend, the trader will constantly be placing
trades on the wrong side of the move. To help remedy this, a trader could look at the overall direction of
price and then only take trade signals that align the trader with the trend. For example, if the trend is down, only
take short (sell) positions when the upper band is tagged. The lower band can still be used as an exit, if desired,
but a new long (buy) position is not opened since that would mean going against the trend.
As John Bollinger acknowledged: "tags of the bands are just that, tags, not signals."
A tag (or touch) of the upper Bollinger Band is not in and of itself a sell signal. A tag of the lower Bollinger
Band is not in and of itself a buy signal. Price often can and does "walk the band." In those markets, traders who
continuously try to "sell the top" or "buy the bottom" are faced with an excruciating series of stop-outs, or even
worse, an ever-mounting floating loss as price moves further and further away from the original entry.
When bands are contracting, there are chances of sharp price changes as volatility drops. When price line
surpasses the bands’ range, that a strong signal of continuation of the current trend. If a move originating in one
band tends to replicate on the other band too, it is useful in deciding future price targets.
Bollinger Bands are calculated in Excel, for all the selected seven companies for a period of 100 days starting
from April 1st 2018. Below are the graphical representations of these bands for the seven companies in the form
of line charts.
61
Arvind Ltd.
460
440
420
400
380
360
340
89
1
5
9
13
17
21
25
29
33
37
41
45
49
53
57
61
65
69
73
77
81
85
93
97
101
105
109
MIDDLE LOWER UPPER CLOSE
The market price is close to the middle band. Hence, no decision can be made at this point.
Bombay Dyeing Ltd.

350
310
270
230
190
150
69
85
1
5
9
13
17
21
25
29
33
37
41
45
49
53
57
61
65
73
77
81
89
93
97
101
The upper and lower bands may head towards a contraction. It’s called the ‘Squeeze’. When Bollinger Bands
are far apart, volatility is high, and when they are close together, it is low. The Squeeze relies on the premise
that stocks constantly experience periods of high volatility, followed by low volatility.
62
1150
1100
1050
1000
950
900
850
49
77
1
5
9
13
17
21
25
29
33
37
41
45
53
57
61
65
69
73
81
85
89
93
97
101
MDDLE LOWER UPPER CLOSE
The price is touching the upper band. It’s a sign to sell the stock.
Raymond Ltd.
1200
1100
1000
900
800
700
9
53
1
5
13
17
21
25
29
33
37
41
45
49
57
61
65
69
73
77
81
85
89
93
97
101
No decision can be made at this point. However, the trend of the bands is downwards, but the price shows a
slight increase. It is advised not to buy the share at this stage.
63
4700
4200
3700
3200
2700
1 4 7 101316192225283134374043464952555861646770737679828588919497
No decision can be made at this point as the price line is close to the middle band.
Vardhman Textiles Ltd
1290
1240
1190
1140
1090
49
77
1
5
9
13
17
21
25
29
33
37
41
45
53
57
61
65
69
73
81
85
89
93
97
101
The price line is touching the lower band. It is a sign to buy the stock as the prices are expected to bounce back
towards the middle band.
64
Reliance Chemotex Industries Ltd.
120
110
100
90
80
70
60
50
69
85
1
5
9
13
17
21
25
29
33
37
41
45
49
53
57
61
65
73
77
81
89
93
97
101
No decision can be made at this point as the price line is close to the middle band. But the space between the
upper band and the lower band indicates high volatility.
65
INTERPRETATION:
Company Comparing MACD Bollinger Bands Final Decision

EMA(12) with
EMA(26)
Arvind Ltd. BUY BUY - BUY
Bombay Dyeing - - - -
Ltd.
Grasim Industries - - SELL SELL
Ltd.
Raymond Ltd. - BUY - BUY
Lakshmi Mills SELL SELL - SELL
Company Ltd.
Vardhman - - BUY BUY
Textiles Ltd
Reliance - SELL - SELL
Chemotex
Industries Ltd.
After performing Technical Analysis for 100 days, it is recommended to
‘Buy’ the shares of –

1) Arvind Ltd.
2) Raymond Ltd
3) Vardhman Textiles Ltd.
‘Sell’ the shares of –

1) Grasim Industries Ltd.
2) Lakshmi Mills Company Ltd.
3) Reliance Chemotex Industries Ltd.
No decision can be made on “Bombay Dyeing Ltd.”.
66
FINDINGS:
 Vardhman Textiles Ltd. is the best company to invest for a long term among the selected seven
companies basing on the fundamental ratio analysis performed for a period of five years.
 Rankings:
COMPANY RANKING
Vardhman Textiles Ltd. 1
Grasim Industries Ltd. 2
Arvind Ltd. 3
Lakshmi Mills Company Ltd. 4
Reliance Chemotex Industries Ltd. 4
Raymond Ltd. 5
Bombay Dyeing Ltd. 6
In terms of short term trading of shares on 24th August 2018:
 Arvind, Raymond and Vardhman textiles are recommended stocks to buy.

 Grasim Industries, Lakshmi Mills Company and Reliance Chemotex Industries are recommended stocks
to sell.
 No decision of buy or sell can be made for Bombay Dyeing Ltd.
67
CONCLUSION:
 Fundamental Analysis is best suited when two or more companies from the same sector are compared.
 Performing Ratio Analysis for five years gives a better understanding of the financial health of a
company.
 Better decisions can be made when both fundamental and technical analysis are carried out on a stock.
 In moving averages, a short term moving average reacts quicker to price changes than a long term
moving average.
 If a short term moving average moves above the long term moving average, it’s a BUY signal.
 If a short term moving average falls below the long term moving average, it’s a SELL signal.
 Exponential Moving Average reacts quicker to price changes than Simple Moving Average.
 Moving Averages helps to decide when to ENTER and EXIT a particular stock investment.
 When MACD falls below the Signal Line, it is a signal to SELL as it indicates downward trend.
 When MACD rises above the Signal line, it is a BUY signal as it indicates upward trend in the prices.
 When the price touches the upper bollinger band, it’s a signal to sell, and when it touches the lower
band, it signals to buy.
68
BIBLIOGRAPHY:
 www.wikipedia.com
 www.investopedia.com
 www.moneycontrol.com
 www.investing.com
 www.equitymaster.com
 www.ibef.org
 www.stockcharts.com
 www.economictimes.com
69

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A Summer Internship Project on

“EQUITY RESEARCH ON SELECTED COMPANIES OF INDIAN TEXTILE

Under the Guidance of

SCHOOL OF POST GRADUATE STUDIES

We wish her the very best in her future endeavors.

Mr. Niranjan Pandey

Sl.No Particulars Page No.

HISTORY OF EQUITY RESEARCH:

like BSE and NSE.

In simple words, Equity research is the act of gathering information:

 Information that helps investors to decide where to put in their money.

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

This project helps an investor on two fronts:-

LIMITATIONS OF THE STUDY:

6) VARDHMAN TEXTILES LTD.:

Incorporated in 1977 in Maharashtra, Reliance Chemotex Industries (RCIL) manufactures blended

Debt/Equity Ratio = Total Liabilities / Shareholders' Equity

COMPANIES 2018 2017 2016 2015 2014 Weighted Ranking

Arvind Ltd. 0.77 0.77 0.97 0.97 0.95 0.85 4

Grasim Industries 0.06 0.03 0.13 0.08 0.1 0.07 1

Raymond Ltd. 0.88 1.05 0.95 0.93 1.13 0.96 5

Vardhman Textiles 0.43 0.45 0.55 0.58 0.97 0.52 2

Reliance Chemotex 1.18 1.49 2.09 2.04 1.67 1.59 6

Weighted Average = ((0.77*5) + (0.77*4) + (0.97*3) + (0.97*2) + (0.95*1)) ÷ 15

Current Ratio = Current Assets / Current Liabilities

COMPANIES 2018 2017 2016 2015 2014 Weighted Ranking

Arvind Ltd. 0.97 1 1.03 1.05 1.12 1.01 5

Bombay Dyeing Ltd. 2.1 0.59 0.87 1.2 0.91 1.25 3

Grasim Industries 1.32 2 1.44 2.29 2.37 1.72 2

Raymond Ltd. 0.94 1 1.46 1.47 1.7 1.18 4

Lakshmi Mills 0.76 0.72 2.03 2.02 2 1.25 3

Vardhman Textiles 2.62 1.72 1.59 1.76 1.87 2.01 1

Reliance Chemotex 0.84 0.98 1.04 1.3 1.22 1.00 6

Similarly, it’s calculated for other companies as well.

The formula for Net Profit Margin is:

(Total Revenue – Total Expenses)/Total Revenue = Net Profit/Total Revenue

COMPANIES 2018 2017 2016 2015 2014 Weighted Ranking

Arvind Ltd. 3.89 0.31 5.89 7.22 7.56 4.02 3

Grasim Industries 11.2 15.07 10.61 8.36 15.98 12.05 1

Raymond Ltd. 3.25 1.19 2.93 3.78 4.03 2.76 4

Vardhman Textiles 9.32 17.48 12.04 6.25 12.6 11.85 2

Reliance Chemotex 0.91 2.35 0.98 2.77 2.26 1.65 5

For Arvind Ltd.,

Return on Equity = Net Income / Shareholders’ Equity

Arvind Ltd. 7.91 0.61 11.6 14.64 15.3 8.09 3

Bombay Dyeing Ltd. 5.4 -44.26 -22.56 5.18 5.17 -13.48 7

Grasim Industries 3.94 9.61 7.7 4.73 8.27 6.60 4

Raymond Ltd. 7.44 2.76 6.62 8.56 8 6.21 5

Lakshmi Mills 0.28 0.29 2.94 12.14 28.78 4.30 6

Vardhman Textiles 11.78 25.12 18.33 11.64 22.88 17.37 1

Reliance Chemotex 3.69 17.15 7.11 18.02 17.37 10.79 2

For Arvind Ltd.,

Revenue Growth Rate = (Revenue of 2018 / Revenue of 2017) * 100

COMPANIES 2018 2017 2016 2015 2014 Weighted Ranking

Arvind Ltd. 6.76 10.35 3.00 10.14 25.46 8.66 2

Grasim Industries 50.19 16.82 38.63 11.56 5.25 30.83 1

Raymond Ltd. 6.30 1.38 5.02 21.75 7.10 6.84 4

Vardhman Textiles -4.11 7.53 -0.77 12.69 24.23 3.79 7

Reliance Chemotex -3.00 13.47 3.41 -0.55 21.66 4.64 6

EPS Growth Rate = EPS of 2018 / EPS of 2017.

COMPANIES 2018 2017 2016 2015 2014 Weighted Ranking

Arvind Ltd. 1234.06 -94.17 -15.53 4.43 38.34 389.28 2

Bombay Dyeing 123.26 -73.85 -447.06 0.85 -67.85 -72.43 7

Weighted Average = ((0.775) + (0.774) + (0.973) + (0.972) + (0.95*1)) ÷ 15