Fundamental Analysis of Select Companies in Cement Industry using Various Models

Abstract

The study focuses on suggesting the investors to invest in a particular company in cement industry by analyzing the underneath facts affecting it. The investors often find it difficult to select a company which has capital growth in long run. Even though they have invested by analyzing the market, they end up losing money. Thus the study has developed four interrelated models to give investors a clear idea of how to analyze and in which companies should we invest.

Initially, top five companies based on market are chosen and the study is carried on those companies (Ultratech Cements, Shree Cements, Ambuja Cements, ACC cements, Dalmia Bharat). The study starts with developing a relative valuation model for the companies based on the current data. But for investment to be done, it is necessary to analyze the past performance of the data. Each company has different values for the ratios and there is sudden and lowering of the values. This was due to the external market conditions affecting the company. So to study the effect of these factors i.e., Earnings Per Share, Dividend Per Share, Gross Domestic Factor, Inflation, on the companies, multiple regression model was used with stock price being the dependent variable and all else independent. There are some companies which show stable performance despite of the external forces. Though these companies are stable, not all ratios correspond well. Analyzing the performance of select companies in cement industries using fundamental tools to suggest the investors to invest in appropriate companies to make profit.