FIN4634: Analysis of Multinational Corporations and Foreign Stocks

This project analyzes the performance of a stock portfolio consisting of two U.S.-based multinational corporations (MNCs) and two foreign stocks. The analysis includes Apple Inc., Alphabet Inc., Infosys, and ICICI Bank Limited. The student examined the stock prices, percentage changes, and primary reasons for stock growth over a one-year period, comparing returns with market indices like the S&P and Sensex. The project further explores the companies' business operations, geographic segments, and currency exposures, particularly the impact of the Euro/USD and INR/USD exchange rates on stock performance. The conclusion indicates that stock price movements are not heavily dependent on exchange rate fluctuations. The assignment provides a comprehensive analysis of the chosen stocks, including their market performance and the influence of various factors, such as revenue growth, investor confidence, and currency exchange rates.

Introduction to Assignment
Introduction
The assignment relates to analysis of two domestic incorporate company having business in multiple
countries. The stock chosen should be listed on exchange to obtain data of pricing of stocks along
with annual report. Accordingly, the stock chosen for analysis include Alphabet Inc and Apple. Both
of the entities are Multinational enterprises having presence in various countries.
Further, two foreign companies whose stock has been listed on New York Stock Exchange in the form
of ADR includes Infosys and ICICI Bank Limited. Both these companies are incorporated in India
and their ADR trade in US Stock Exchange.
Analysis
Based on the data available in the public domain, the information obtained about the companies is
presented as under:
US Based MNC
Name of Firm Ticker Symbol Amount of Your Investment
Price per Share at
which you purchased
the stock
Apple Inc. AAPL 10000 161.51
Alphabet Inc. GOOG 10000 1016.53
(yahoo.com, 2019)
(yahoofinance.com, 2019)
Foreign Stock (ADRs)
Name of Firm Ticker Symbol Amount of Your Investment
Price per Share at
which you purchased
the stock
Infosys INFY 10000 9.60
ICICI Bank Ltd. IBN 10000 9.30
https://in.finance.yahoo.com/quote/INFY/history?p=INFY&.tsrc=fin-srch
https://in.finance.yahoo.com/quote/IBN/history?p=IBN&.tsrc=fin-srch
1.
The prices of the stock presents the price of the stock as on 18-12-2019 on the stock exchange.
Answer 1
For the purpose of analysis, data has been obtained for past one year from yahoo and based on the
same return has been computed for the concerned stocks on the exchange for the past 1 year. The data
collected has been enclosed in the excel. Based on the data, the following return has been computed
for each stock over the period of 1 year:
Name of Firm
Percentage Change in Stock
Price Primary Reason
Apple Inc. 73.61%
Increase in Revenue and EPS coupled with investor
confidence
Alphabet Inc. 33.31% Expectation of solid earnings growth to continue
Infosys 10.63% Solid Revenue growth coupled with cost optimisation

ICICI Bank Ltd. 55% High Profit coupled with positive ratings
Portfolio
Average 43.11%
The primary reason for the growth of each stock has been mainly strong growth potential as depicted
by revenue growth and profitability of the company. Further, the investor confidence on this stock has
also been very high. This two factors have resulted in growth of these stocks.
The computation of growth over the period has been computed by using the price at 1 year before and
price today. The formulas used for computation is presented as under:
(Price at the end of year 1- Price at the beginning of year 1)/ price at the beginning of year 1
Answer 2
On comparing the return of two domestic stock with the market index S& P it has been given to
understand that the change in price of stock far exceed the change in price of S& P index. Thus, it can
be said that the change in stock prices far exceed the index. However, it can be seen that changes in
both index and stock prices have been positive which shows that there exists a positive correlation in
stock and the market index.
Answer 3
On comparing the return of two foreign stock with the market index Sensex, it has been given to
understand that the change in price of stock far exceed the change in price of Sensex. Thus, it can be
said that the change in stock prices far exceed the index. However, it can be seen that changes in both
index and stock prices have been positive which shows that there exists a positive correlation in stock
and the market index.
Answer 4
The US based MNC which I have chosen from my end are Apple Inc and Alphabet Inc.
Apple Inc headquarters are located in Cupertino, California. The company is involved in the
manufacturing, designing and markets mobile devices, personal computers and sells various related
software, accessories and third-party digital content and applications. The principal product of
company and services include iphone,ipad,Mac,Apple Watch,AirPods,Apple TV,Home Pod ,ios,Mac
OS,watchOS,iCloud and other related variety of other accessory .The company is also engaged in
delivering various applications through iTunes Store,App Store,Mac App Store ,TV App Store Book
Store and Apple Music.
The Company Apple Inc manages its business on a geographic basis. The Company’s segment consist
of Americas,Europe,Greater China, Japan and Rest of Asia Pacific, North America and South
America .The continent Europe includes European countries, as well as India .The Greater Chine
consist of China, Hong Kong and Taiwan .The other parts of Asia Pacific includes Australia and other
Asian countries which does not form part of the Company’s reportable Segment.
The stock price of the company has experienced most volatility in the past and also in the cooing
future years. The company has tremendously experienced an extreme stock price and volume
fluctuations that have affected the stock price of the company in many ways.
Alphabet Inc operates its business in multiple operating segment. The principal reportable segment
is only Google. The other segment of the company does not meet the thresholds to qualify as the
reportable segments, this is the main reason that the other segment is combined:

 Google: This consist of only principal products such as Ads, Android, Chrome, Commerce,
Google Maps, Cloud, Play and You tube. The revenue of google is generally dependant on
advertising, sales of apps, licensing fees, digital content products, service fees etc.
 Other Bets: It is a combination of other several multiple segment that are not material
individually. It consists of business such as Access, Calico, CapitalG and others.
The stock price of the company has experienced most volatility in the past and also in the cooing
future years. The company has tremendously experienced an extreme stock price and volume
fluctuations that have affected the stock price of the company in many ways.
Based on above, it can be seen that major currency exposure for both the stock has been Euro.
Accordingly, an analysis of impact of EURO/ USD exchange rate has been conducted in excel and
the conclusion has been presented as under:
APPLE INC.
Since major exposure apple is in Euro, I have seen the trend of movement of Euro to US Dollar
over the period and it has been understood that the movement has been very topsy turby.
Further, there has been appreciation in EURO over the period. However, the growth in stock is
much stronger compared to Exchange rate.
ALPHABET INC.
Since major exposure alphabet Inc is in Euro, I have seen the trend of movement of Euro to US
Dollar over the period and it has been understood that the movement has been very topsy
turby. Further, there has been appreciation in Euro over the period. However, the growth in
stock is much stronger compared to Exchange rate
Answer 5
The currency of local firm is INR. Accordingly an analysis of fluctuation is presented as under:
For Infosys
Since major exposure Infosys is in USD, I have seen the trend of movement of INR to US Dollar over
the period and it has been understood that the movement has been very topsy turby. Further, there has
been appreciation in USD over the period and INR has weakened. However, the growth in stock is
much stronger compared to Exchange rate. Thus, we can say that movement in stock price is not
much dependent on exchange rate.
For ICICI Bank Limited
Since major exposure ICICI is in USD, I have seen the trend of movement of INR to US Dollar over
the period and it has been understood that the movement has been very topsy turby. Further, there has
been appreciation in USD over the period and INR has weakened. However, the growth in stock is
much stronger compared to Exchange rate. Thus, we can say that movement in stock price is not
much dependent on exchange rate (Historical Exchange rates, 2019)
References
Historical Exchange rates. (2019, December). Retrieved from www1.oanda.com:
https://www1.oanda.com/fx-for-business/historical-rates

yahoo.com. (2019, December 18). Apple Inc. (AAPL). Retrieved from /n.finance.yahoo.com:
https://in.finance.yahoo.com/quote/AAPL?p=AAPL&.tsrc=fin-srch
yahoofinance.com. (2019, December 18). Alphabet Inc. . Retrieved from in.finance.yahoo.com:
https://in.finance.yahoo.com/quote/GOOG/history?p=GOOG&.tsrc=fin-srch