COMPANY OVERVIEW

ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's operations are
spread throughout the country with 16 modern cement factories, more than 40 Ready mix concrete plants,
20 sales offices, and several zonal offices. It has a workforce of about 9,000 persons and a countrywide
distribution network of over 9,000 dealers.

ACC has rich experience in mining, being the largest user of limestone. As the largest cement producer in
India, it is one of the biggest customers of the domestic coal industry, of Indian Railways, and a
considerable user of the country’s road transport network services for inward and outward movement of
materials and products.

ACC’s brand name is synonymous with cement and enjoys a high level of equity in the Indian market. It
is the only cement company that figures in the list of Consumer SuperBrands of India.

ACC LTD. PRICE QUOTES

Industry: Cement – Major Chairman / Chair Person: N S Sekhsaria
ISIN No INE012A01025 52Week High 1020 Book Value 320.11 Face Value 10.00
BSE Code 500410 52Week Low 681 EPS 85.49 P/E 10.55
16957.8
NSE Code ACC P/BV 2.82 Div Yield 2.55 Market Cap.
3

Price Quotes BSE NSE

Last Traded Price  902.50   902.30
Last Traded Date  06 Sep 2010   06 Sep 2010
Last Traded Time  4:02:00 PM   2:44:38 PM
Change (Rs.) 8.60 5.65
% Change  0.96%    0.63% 
Day's Open  899.45  893.00
Previous Close  893.90   896.65
Day's High  909.70  905.00
Day's Low  897.00  893.00
Bid Price  0.00  902.50
Bid Quantity  0  22
Offer Price  902.50  902.95
Offer Quantity  5  2
Total Traded Value 
 851.38   4,435.79
(Rs. In Lakhs)
Total Traded Quantity  38,636   207,291
Number Of Trades  2,842   13,095
FUNDAMENTAL ANALYSIS
EIC Approach (Economic, Industry and Company Analysis Approach) is used to analyze the
fundamentals of the company.

Economic Analysis

Industry Analysis

Company Analysis

ECONOMIC ANALYSIS

India is developing into an open-market economy, yet traces of its past autarkic policies remain.
Economic liberalization, including reduced controls on foreign trade and investment, began in the early
1990s and has served to accelerate the country's growth, which has averaged more than 7% per year since
1997.

Structure of Indian Economy

Starting with agriculture’s dominance post the independence era, presently, the Services sector has
acquired the centre stage by contributing over 50% towards the country’s GDP. The following chart
indicates the growing contribution of the Services sector in the economy, with decreasing dependence on
agricultural produce, the large reliance of which on the monsoon makes it uncertain.

Moreover, the Services sector, unlike the agricultural sector which employs around 50% of the
population, employs just 33% of the population.

Sectoral Contribution to GDP

Services Industry Agriculture

28 18 15
57 39
26 28
24
21
14 56 57
40 48
29

1950-51 1983-83 1997-98 2008-09 2009-10

Source: TradingEconomics.com, India Central Statistical Organization

India’s GDP growth released for the last quarter of 2009-10 turned out to be robust; it showed a record
growth of 8.6 percent as compared to the growth of 5.8 percent in the same quarter of previous year. For
the fiscal 2009-10 India's economy grew by 7.4 percent which is an upward revision from earlier
estimates of 7.2 percent due to higher-than-anticipated growth in agriculture, mining and manufacturing
sectors. Given the impressive IIP numbers, and the good monsoons, the GDP is expected to grow a
healthy rate of 8.6% in the next fiscal. Inflation is a concern that is placing a cap on the GDP growth rate,
which could have otherwise grown at 9,2% (McKinsey Report). Thus it is now the prerogative of the RBI
to tame the inflation by raising its key rates of its monetary policy. It has already done it for four times in
the current fiscal, and is expected to do the same when it meets on Sept. 16 th 2010 for its monetary policy
review.

India GDP per capita (Constant Prices Since 2000)

India GDP Per Capita stands at 718 US dollars, according to the World Bank. The GDP per capita is
obtained by dividing the country’s gross domestic product, adjusted by inflation, by the total population.
India Gross Domestic Product is worth 1296 billion dollars or 2.09% of the world economy, according to
the World Bank. India Gross Domestic Product (GDP) expanded at an annual rate of 8.60 percent over
the last quarter. India's diverse economy encompasses traditional village farming, modern agriculture,
handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source
of economic growth, accounting for more than half of India's output with less than one third of its labor
force. The economy has posted an average growth rate of more than 7% in the decade since 1997,
reducing poverty by about 10 percentage points. 
Inflation trend

India’s annual inflation slipped just below double digits to 9.97 percent in July, compared to 10.55
percent the previous month, official data released Monday showed.
The annual inflation figure, based on wholesale prices, is a more broad-based barometer of the price
change in items. May’s wholesale price index (WPI) was revised upwards to 11.14 percent from 10.16
percent. Data released by the commerce ministry showed that prices of food articles spiked slightly at
14.94 percent last month, against 14.6 percent in June, while those for fuels increased 14.29 percent in the
last month. Fuel prices were up 14.32 percent in June. Prices of primary articles went up by 14.94 percent
in July, climbing slightly faster from the 14.6 percent-level in June. Manufactured products became
expensive by 6.15 percent during the last month.

As graph shows that inflation rate is rising year by year but it has started showing a declining trend
starting with the start of 2010 Inflation in economy is not good from investor’s point of view. When
inflation rate raises it become the reason of extra costs to business, thereby squeezing their profit margin
and leading to real decline in profitability and thereby reducing the dividends on variable income
securities, but this situation is bound to change with government making every possible effort of taming
the same.

Industrial growth

India's industrial output grew at its fastest year-on-year pace in almost two decades at 16.8% in
December, signaling a strong recovery. The manufacturing sector constituting around 80% of industrial
output, expanded by 18.5% to set the pace for growth. As a pointer to rising domestic consumption
strengthening future growth, consumer durables industries such as automobiles surged 46% and capital
goods output rose by 38.8%. 

The latest numbers are much higher than a revised annual rise of 11.8% in November as well as forecasts
of around 12%. It is the highest year-on-year growth registered in the index of industrial production (IIP)
since April 1995, when the new series, which uses 1993-94 as base year, started. Even in the old series of
the IIP, with base year 1980-81, March 1990 was the only month that had ever registered a higher growth
rate, 23.8%. Besides manufacturing, mining output grew by 9.5% in December against 2.2% a year ago,
while electricity generation rose by 5.4% against 1.6% in the previous corresponding period.

Last quarter facts

 Snapping an eight-month trend of double-digit rise, industrial growth slid to 7.1 per cent in June
from 8.3 per cent a month ago.
 Growth in manufacturing, which constitutes around 80 per cent of the Index of Industrial
Production (IIP) to measure factory output, fell to 7.3 per cent from 8 a year ago, according to
government data released on Thursday.
 Mining expanded the fastest at 9.5 per cent, but was still lower than 14.2 per cent registered a
year ago. Consumer durable was the only industry to show a somewhat good growth. It expanded
by 27.4 per cent against 16.2 a year ago.
 As many as 13 out of 17 industries posted a positive growth in June.
 However, despite a single digit growth in the month, factory output expanded by 11.6 per cent in
the first quarter from 3.9 per cent a year ago.

Stock market trend

The prevailing economic conditions, both domestic and global, suggest the Indian stock market is poised
to continue to rally in 2010 even though US and European Markets have yet to recover from recession
effect. Key factor remains the impact of Q4 results and strong GDP growth of around 8%. However point
of caution needs to be the phase wise withdrawal of financial support given by Indian government to the
market. So far, the recovery in India has been driven by domestic consumption and government
expenditure. However, corporate investment is expected to surge in 2010 due to the strong GDP growth
which will increase capacity utilization.
Interest Rate Trends

India benchmark interest rate stands at 4.50 percent. In India, interest rate decisions are taken by the
Reserve Bank of India's Central Board of Directors. The official interest rate is the benchmark repurchase
rate

Data in graph shows that in 2009 and 2010 interest rate are far less than previous year. Means government
is helping the businessmen so that the can continue their business without any difficulty in economic
crisis type of condition by reducing the interest rate. Low interest rate is good from investor’s point of
view.

Although the interest rates have hiked a bit from where they started in the year 2010, still they are far
below the rates prevailing in previous years, so it’s not a point to worry about.
FDI Trend

India has been ranked at the third place in global foreign direct investments in 2009 and will continue to
remain among the top five attractive destinations for international investors during 2010-11, according to
United Nations Conference on Trade and Development (UNCTAD) in a report on world investment
prospects titled, 'World Investment Prospects Survey 2009-2011' released in July 2009.

The 2009 survey of the Japan Bank for International Cooperation released in November 2009, conducted
among Japanese investors continues to rank India as the second most promising country for overseas
business operations, after China.

A report released in February 2010 by Leeds University Business School, commissioned by UK Trade &
Investment (UKTI), ranks India among the top three countries where British companies can do better
business during 2012-14.

FII_Net
4000
3000
2000
FII_Net
1000 Linear (FII_Net)
0
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ug ug Ju Ju Ju un un ay ay pr pr pr ar ar eb eb an an
-A 0-A 28- 15- 02- 1-J 8-J 6-M 3-M 0-A 9-A 5-A 8-M 5-M 9-F 6-F 5-J 2-J
-2000
3
2 1 2 0 2 1 3 1 0 1 0 1 0 2 1
-3000
-4000

According to Ernst and Young's 2010 European Attractiveness Survey, India is ranked as the 4th most
attractive foreign direct investment (FDI) destination in 2010. However, it is ranked the 2nd most
attractive destination following China in the next three years.

Moreover, according to the Asian Investment Intentions survey released by the Asia Pacific Foundation in
Canada, more and more Canadian firms are now focusing on India as an investment destination. From 8
per cent in 2005, the percentage of Canadian companies showing interest in India has gone up to 13.4 per
cent in 2010.

India attracted FDI equity inflows of US$ 2,214 million in April 2010. The cumulative amount of FDI
equity inflows from August 1991 to April 2010 stood at US$ 134,642 million, according to the data
released by the Department of Industrial Policy and Promotion (DIPP). The linear trend line shows a
positive outlook of FIIs towards their investment in India. The linear trend line is evident from the black
curve in the graph.
Performance during the Financial Slowdown

An industrial slowdown early in 2008, followed by the global financial crisis, led annual GDP growth to
slow to 6.5% in 2009, still the second highest growth in the world among major economies. India escaped
the brunt of the global financial crisis because of cautious banking policies and a relatively low
dependence on exports for growth. Domestic demand, driven by purchases of consumer durables and
automobiles, has re-emerged as a key driver of growth, as exports have fallen since the global crisis
started.

India's fiscal deficit increased substantially in 2008 due to fuel and fertilizer subsidies, a debt waiver
program for farmers, a job guarantee program for rural workers, and stimulus expenditures. The
government abandoned its deficit target and allowed the deficit to reach 6.8% of GDP in FY10.
Nevertheless, as shares of GDP, both government spending and taxation are among the lowest in the
world. The government has expressed a commitment to fiscal stimulus in FY10, and to deficit reduction
the following two years.

Moreover, the government has increased the pace of privatization of government-owned companies,
partly to offset the deficit. India's long term challenges include widespread poverty, inadequate physical
and social infrastructure, limited employment opportunities, and insufficient access to basic and higher
education.

Fiscal Management

After having seen the fiscal deficit rising to over 6.5% during the past couple of years, owing to granting
the industry with stimulus, the government aims at fiscal consolidation.

Source: Controller General of Accounts

The above table indicates the level of revenues and expenditures of the government, thereby indicating
the estimated fiscal deficit for FY 2010-11.

There has been a decline by 0.3 percent in the fiscal deficit in the opening month of the current financial
year 2010-11 as the deficit has stepped down from Rs 54158 crore in April 2009 to Rs 53993 crores in
April 2010. The growth in gross tax revenue was observed to enter the positive quadrant during the month
of April 2010. This is mainly on account of strong revival in the collection of indirect taxes and partly on
account of collection in direct taxes.

The Contemporary Scenario

After having emerged strongly from the Financial Crisis, the government and the RBI are, presently,
confronted by numerous challenges. Though there are many issues to tackle, few of the major ones are
listed as follows:

 Rising Inflation: Inflation, especially food inflation hovering around 10%, has been a cause of
concern for the Indian economy for quite sometime now, which is aggravated by uneven and
uncertain monsoon on which the agricultural productivity largely depends. But, now since the
Inflation rates have come down over the past 2 months, there is a respite both for the RBI and the
government

 Rollback of Fiscal Stimulus: With the industrial production gaining momentum, the government
is still not sure of when to rollback the stimulus as most of the industrial growth is still dependent
on the stimulus. Moreover, rising inflation, partly, has its roots in the supply side constraints
thereby concerning the government with the performance of the industries post the rollback. Also,
the extended stimulus has put pressure on the government’s fiscal deficit policy as the deficit had
risen to over 6.5% in 2009-10

 Exports: Since their dismal performance financial crisis, the exports have not yet recovered yet
partly owing to shortage of demand in the global economy and partly because of the exchange
rate fluctuations, which make exports unprofitable

 Interest Rates: Driving on very low policy rates since 2008, compared with the figures in 2007,
the RBI and government have their concerns of being behind the curve causing excess money
being supplied in the system. But, now with the rollback of the fiscal stimulus, the interest rates
have started to inch up.
INDUSTRY ANALYSIS

The year 2009 was an important year for the Indian cement industry. When the year began, the Indian
economy was in a recession amidst the global slowdown that was still prevailing. The cement industry
then faced the prospects of a substantial cement capacity addition with no sign that demand would grow
significantly.

However, the forecasts were wrong - demand was robust, capacity creation was delayed, cement
plants achieved higher capacity utilization and market prices were favorable. With commodity
prices including fuel remaining subdued, most cement manufacturers were able to record good financial
performances in 2009. The cement industry posted a steady growth of about 10.3% during the year under
review.

Overall cement despatches in 2009 were approximately 195 million tonnes, up from 177 million tonnes in
2008. Growth was registered across all regions, led by rapid developments in infrastructure and a stable
housing sector. The demand-supply scenario was generally at balance with high levels of capacity
utilization in most of the regions. In 2009, capacity additions of the order of 26.88 million tonnes went on
stream. There was some delay in the materialization of fresh capacity addition which helped ease the
pressure on selling prices. The industry’s cost profile improved on account of lower procurement
prices of coal and other commodities.

Sector structure/Market size

India is the world's second largest producer of cement with total capacity of 224 million tonnes (MT) as
on April 30, 2010, according to the Cement Manufactuer's Association. During May 2010, the cement
production touched 14.50 MT as compared to 13.28 MT in May 2009. The cement despaches quantity
was 14.21 MT in May 2010 over 13.06 MT in the corresponding month in May 2009.

Moreover, the government's continued thrust on infrastructure will help the key building material to
maintain an annual growth of 9-10 per cent in 2010, according to India's largest cement company, ACC.
In January 2010, rating agency Fitch predicted that the country will add about 50 million tonne cement
capacity in 2010, taking the total to around 300 million tonne.

The Indian cement industry has witnessed a phenomenal capacity addition to the tune of about 52 mn
tonnes in the last two financial years which accounted for about 24% of the industry’s capacity of 218 mn
tonnes at the end of FY09. In the last two financial years, the cement industry has registered a double-
digit growth in capacity addition compared to moderate growth of 3-7% registered during period FY 03-
07. As a result, industry’s capacity utilisation rate which showed a rising trend upto FY07, has dropped to
a level of 83% in FY09.

In FY09, the GDP growth slowed down to 6.7% compared to the 9% growth reported in FY08. However,
cement consumption growth in FY09 at 8.4% has been able to maintain its multiplier factor with GDP
growth at 1.25 times. In FY09, all the regions except the Western and the Northern region have
outperformed the industry in consumption growth. The Eastern region continued its buoyant performance
and registered the highest cement consumption growth of 11.3% on yoy basis. The Southern and Central
regions also reported impressive double-digit growth of 10.4% in cement consumption. But, the Northern
region has registered the lowest growth in the cement demand on yoy basis. Comparatively, poor demand
growth registered by the Western region was on account of high base of the last year and also slightly
subdued demand.

With focus on capacity addition, many small/medium players have been able to capture more market
share and consolidate their position in the industry in the last two years. Market share of top five
individual companies taken together show a decline to a level of 44.3% in FY09 from 46.3% in FY08.

Even though the utilization rate dropped, average cement prices in FY09 rose by about 5% on yoy basis.
But, the growth in cement prices remained slightly subdued compared to 21% and 14%, registered in
FY07 and FY08, respectively. On the regional front, prices in the Southern region were firm and ruling
consistently at the highest level amongst all the regions in FY09. However, due to slowdown in the
cement offtake and relatively low operating rate, prices in the Northern region remained at the lowest
levels compared to other regions.

In FY09, the cement industry witnessed a fall in profitability. Even though, average realization for the
industry increased by about 4% on yoy basis, cost of production has increased by 18.5% on yoy basis.
Power and fuel cost for many cement companies increased in FY09 mainly on account of substantial
increase in coal prices. As a result, the operating profit margin of the industry dropped by about 8-9% in
FY09. Also, higher interest rates and depreciation provided on expanded capacities took its toll on the net
profit margin of the industry which witnessed a decline by about 5% in FY09.

Going forward, cement companies would be benefited by their focus on captive power generation which
would help them to reduce power & fuel cost. With reduction in coal prices, CARE Research has
estimated that per tonne power & fuel cost of the industry will decline by about 12% in FY10 on yoy
basis.

CARE Research has estimated that break-even cushion (defined as the ratio of overall capacity utilisation
rate of the industry to the utilisation rate at the breakeven point in a particular year) of the industry has
notably increased to 2.4 times in FY09 compared to an average level of 1.1 times in the period FY 02-05.
With comfortable break-even cushion value, the cement industry is in better position to operate at lower
utilisation rate and avoid substantial price cuts. CARE Research does not foresee a notable drop in
average realisation of the industry in FY10.

CARE Research has estimated the domestic cement demand to grow at a CAGR of about 8.8% in the next
two years. Cement demand in the next year would largely be driven by low-cost housing segment in rural
& semi-urban regions and government’s focus on infrastructure development in the country.

The level of consolidation in the cement industry had slowed down in the last couple of years. However,
one analysis suggests that the Net Present Value (NPV) of a Greenfield plant is still higher than the NPV
of an acquired unit, leading us to the conclusion that further consolidation in the industry is still away.

New Investments

 Cement and gypsum products have received cumulative foreign direct investment (FDI) of
US$ 1708.69 million between April 2000 and March 2010, according to the Department of
Industrial Policy and Promotion.

 Madras Cements Ltd is planning to invest US$ 178.4 million to increase the manufacturing
capacity of its Ariyalur plant in Tamil Nadu to 4.5 MT from 2 MT by April 2011.
  Surya Group plans to invest US$ 873.3 million in a new 5 million MT cement plan to be set
up in Gujarat.

 My Home Industries Limited (MHI), a 50:50 joint venture (JV) between the Hyderabad-
based My Home Group and Ireland's building material major CRH Plc, plans to scale up its
cement production capacity from the existing 5 million tonne per annum (mtpa) to 15 mtpa
by 2016. The company would undertake this capacity expansion at a cost of US$ 1 billion.

 Shree Cement, plans to invest US$ 97.13 million this year to set up a 1.5 million MT clinker
and grinding unit in Rajasthan. Moreover, in June 2010, Shree Cement signed a
memorandum of understanding (MoU) with the Karnataka government to invest US$ 423.6
million for setting up a cement unit and a power plant. US$ 317.7 million will be used to set
up a cement manufacturing unit with an annual capacity of 3 mtpa while the balance will be
for the 100 mega watt power plant.

 Jaiprakash Associates plans to invest US$ 640 million to increase its cement capacity.

 Swiss cement company Holcim plans to invest US$ 1 billion in setting up 2-3 greenfield
manufacturing plants in the country in the next five years to serve the rising domestic
demand. Holcim is present in the country through ACC and Ambuja Cements and holds
around 46 per cent stake in each company. While ACC operates 16 cement plants, Ambuja
Cements controls five plants in India. The Aditya Birla group is the largest cement-making
group by capacity in the country and controls Grasim Industries and Ultratech Cement.

Mergers and Acquistion (M&A), PE deals

 KKR- Dalmia Cement signed a deal worth US$ 159.57 million in May 2010.

 French cement company Vicat acquired a 51 per cent stake in Bharathi Cement Company Ltd,
promoted by Y S Jagan Mohan Reddy, Member of Parliament, to tap the southern markets, which
represent 40 per cent of the total Indian cement market.

Government Initiatives

The cement industry is pushing for increased use of cement in highway and road construction. The
Ministry of Road Transport and Highways has planned to invest US$ 354 billion in road infrastructure by
2012. Housing, infrastructure projects and the nascent trend of concrete roads would continue to
accelerate the consumption of cement.

 Increased infrastructure spending has been a key focus area. In the Union Budget 2010-11, US$
37.4 billion has been provided for infrastructure development.

 The government has also increased budgetary allocation for roads by 13 per cent to US$ 4.3
billion.
COMPANY ANALYSIS

 Total consolidated income for the year 2009 was Rs. 8,725 crore, an increase of 9% as
compared to Rs. 7,974 crore in 2008.

 Consolidated profit before exceptional items and tax for the year 2009 was Rs. 2,251 crore
against Rs. 1,582 crore in the 2008, an increase of 42%. Consolidated profit after tax for the year
2009 was Rs. 1,564 crore as against Rs. 1,100 crore in 2008, an increase of 42%.

 The expansion project of the Bargarh Plant was substantially completed during the year.

 The satellite grinding units which were set up as a part of Wadi expansion programme at
Thondebhavi in Chikballapur District and Kudithini in Bellary District in Karnataka were also
partly commissioned during the last quarter of 2009.

 There was substantial progress during the year under review in the company’s on-going projects
at Wadi and Chanda, which are slated for completion in the first half of 2010.

 Work was started on a project to set up a 2.5 MW wind energy farm in Maharashtra.

Financial Highlights
 The EPS has grown to a figure of Rs. 85.59 in FY 2009 from Rs. 29.49 in FY 2005.

 The P/E ratio stands at an impressive Rs. 9.87

 The Net Profit Margin has not been growing from the past 3-4 years, although the Operating
Profit Margin has increased. The reason being the extremely low Debt/Equity ratio of 0.09

 The Inventory Turnover Ratio has doubled to 25.22 from 12.29 in a span of five years. This
shows that the production process has become more efficient as time has progressed.

 The Fixed Assets Turnover ratio has become > 1 which shows sound capability and effectiveness
of company to generate sales from fixed assets.

 The Current Ratio has decreased to 0.66 which gives a sense of negativity about the operating
cycle of the company. The reason for this seems to be that the company is facing trouble in
getting paid for receivables (as Quick Ratio has decreased as well).

 The Financial Charges Coverage Ratio (before tax), has increased to an excellent figure of 32.02
which shows superior capability of the firm to satisfy financial expenses, but the company has
reduced the level of debt/equity even though sales are increasing.
 Dec ' Dec ' Dec ' Dec ' Dec '
 
09 08 07 06 05
Reported EPS
(Rs) 85.58 64.62 76.67 65.78 29.49
Dividend per
share 23 20 20 15 8
Net profit
margin (%) 19.69 16.29 20.44 21.16 16.85
Total
debt/equity 0.09 0.09 0.07 0.24 0.5

Current ratio 0.66 0.89 0.86 0.94 0.81

Year Movement ACC

Sales and Operational Profitability

Net Profits
 Returns on Net Worth

Valuation of ACC Share

The Required Return (Cost of Equity) through CAPM is 4.485%.

We see that the intrinsic share price comes out to be Rs. 1632.15, but, the market value is 863.09. This
shows that the share is undervalued and hence it is recommended to buy the share.
 TECHNICAL ANALYSIS
Technical Analysis is the forecasting of future financial price movements based on an
examination of past price movements. Like weather forecasting, technical analysis does not
result in absolute predictions about the future. Instead, technical analysis can help investors
anticipate what is "likely" to happen to prices over time. Technical analysis uses a wide variety
of charts that show price over time.

Technical analysis is applicable to stocks, indices, commodities, futures or any tradable

instrument where the price is influenced by the forces of supply and demand. Price refers to any
combination of the open, high, low, or close for a given security over a specific time frame. The
time frame can be based on intraday (1-minute, 5-minutes, 10-minutes, 15-minutes, 30-minutes
or hourly), daily, weekly or monthly price data and last a few hours or many years. In addition,
some technical analysts include volume or open interest figures with their study of price action.

There are a number of tools that are available for the technical analysis of a stock. We shall take
into consideration, the following tools for technical analysis:

 Candlestick Charts
 Trading Range
 Trend Line
 Return on Company vs Return on Market
 Relative Strength & Relative Strength Index
 Simple Moving Average Crossover
 Moving Average Convergence Divergence
 Signal Line Crossover
 Bollinger Bands
 William’s R
 Valuation of Equity Shares
 Candle Stick Chart Analysis

After a marginal low on the 30th of August and a spinning top on the following day, signifying confusion
between buyers and sellers, on the 1st of September the share opened very low but gained significantly.
But the following two days were followed by spinning tops where in there is indecision and confusion
again, although the share opened and closed above previous day’s close. So there might be a bearish
reversal and the share price may decrease. So, the recommendation for the stock would be is to sell.

Bollinger Band Analysis

Through Bollinger Bands, we see that the stock is hovering around the upper limit of the band (Moving
Average + 2 Standard Deviation), and also throughout the year the stock has mostly traded below the
moving average. So it seems that the stock is overbought and recommendation would be is to sell it.
 SMA vs. EMA

By comparing SMA and EMA drawn over a 12 day average, we see that the EMA is moving over the
SMA, which shows a bullish trend in the short run.

The 26 day EMA crossed the SMA in the month of august showing a bullish trend in the month.
We see that the EMA (9 day), which was moving over the MACD throughout the month of august, has
just gone below that. There has been a sharp rise in the MACD (gap between 12 and 26 day EMA is
widening) and a bullish crossover has taken place wherein MACD has crossed EMA.

RSI

The RSI has touched 70 which shows that the stock is overbought and hence it is imperative to sell the
stock.

SMA (12) vs. SMA (26)

880
870
860
850
840
830
SMA 12
820
SMA 26
810
800
790
780

The Simple Moving Average of 12 days is above the SMA (26) which shows that the market has turned
bullish recently.

SMA (26) vs. EMA (26)

 880
870
860
850
840
830 SMA 26
820 EMA 26
810
800

The EMA (26) is travelling over SMA (26), which shows the share is more bullish.

MACD vs. Signal Line

15
10
5
0
-5 MACD
-10 Signal Line
-15
-20
-25
-30

MACD is travelling over Signal Line which shows a bullish trend and also, MACD is above zero which
again shows bullishness.

RoC (20) vs RoM (20)

15
10
5 ROC (20)
0 ROM (20)
1 7 13 1 9 2 5 31 37 4 3 4 9 55 61 6 7
-5
-10

The returns on the security (20) has exceeded market returns which indicates more bullishness in the
share.

Final Recommendation
Through fundamental analysis we see that the P/E ratio of the firm is lower than the industry average of
7.06. But, the share is highly undervalued if compared to the intrinsic price. So it’s prudent to buy the
share in the long run for the period after December 2009.

Technical Analysis shows that there is a bullish trend in the share through the MACD, comparison
between EMA and SMA. But, simultaneously looking at the Bollinger bands and RSI, the share seems to
be overbought and also Candlestick chart suggests that recently due to spinning tops, the market seems to
be confused. This may be arrival of a bearish reversal. So the recommendation would be to sell the share
in the short run for the period after 2nd September 2009.