I don't understand to which coding "PCM input is '1 0 1 0'" refers. I also don't see 4-bit coded PCM involved in audio systems.
In digital audio, we have binary coded data, e.g. 16-bit in standard CD format, 24 or 32 bit in other standards. These data stream can be transmitted parallel or serial, most audio DACs get their input serially. But the 16 data bit form a frame, each bit has a different weight. So they are surely not simply copied to an output bitstream. Instead they are send to an interpolation filter which increases the sampling rate to the intended output rate. Then sent to the SD modulator that (in the simplest case of a 1-bit DAC) forms the one-bit output bitstream.
My personal literature suggestion in this regard Delta-Sigma Data Converters - Theory, Design and Simulation by Norsworthy, Schreier, Temes.