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Abstract
A study based on fundamental analysis of five companies in the IT sector in India has brought in deep knowledge about the performance of the company moreover this study helped to acquire more knowledge and conception of financial aspects of the companies. The study focuses on suggesting the investors to invest in a particular company in IT 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 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 (TCS, Infosys, Wipro, Tech Mahindra, HCL Technologies). 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. Thus Fundamental analysis is performed considering basic ratios viz., Current ratio, Earnings Per Share, Return On Equity, Price Earnings Ratio, Debt Equity Ratio for five years to calculate Intrinsic value. Each company has different values for the ratios and there is sudden and lowering of the values. The Intrinsic value determines whether the company is Undervalued or Overvalued. If the company has a higher market value than its intrinsic value, then it is overvalued, so it is preferable to sell the stocks as the current market value would have a tendency to fall to its intrinsic value. If the company has a Lower market value than its intrinsic value, then it is undervalued, so it is preferable to buy the stocks as the current market value would have a tendency to rise to its intrinsic value.