Equity Analysis and Share Price Movemnt of a Company Selectedat Hydera

7/28/2019 Equity Analysis and Share Price Movemnt of a Company Selectedat Hydera

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INTRODUCTION

India is a developing country. Nowadays many people are interested to invest in

financial markets especially on equities to get high returns, and to save tax in honest

way. Equities are playing a major role in contribution of capital to the business from

the beginning. Since the introduction of shares concept, large numbers of investors are

showing interest to invest in stock market.

In an industry plagued with skepticism and a stock market increasingly difficult to

predict and contend with, if one looks hard enough there may still be a genuine aid for

the Day Trader and Short Term Investor.

The price of a security represents a consensus. It is the price at which one person

agrees to buy and another agrees to sell. The price at which an investor is willing to

buy or sell depends primarily on his expectations. If he expects the security's price to

rise, he will buy it; if the investor expects the price to fall, he will sell it. These simple

statements are the cause of a major challenge in forecasting security prices, because

they refer to human expectations. As we all know firsthand, humans expectations are

neither easily quantifiable nor predictable. If prices are based on investorexpectations, then knowing what a security should sell for (i.e., fundamental analysis)

becomes less important than knowing what other investors expect it to sell for. That's

not to say that knowing what a security should sell for isn't important--it is. But there

is usually a fairly strong consensus of a stock's future earnings that the average

investor cannot disprove.


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EQUITY ANALYSIS

In financial markets, stock is the capital raised by a corporation through the issuance

and distribution of shares. A person or organization which holds shares of stocks is

called a shareholder. The aggregate value of a corporation's issued shares is its market

capitalization. When one buys a share of a company he becomes a shareholder in that

company. Shares are also known as Equities. Equities have the potential to increase in

value over time. It also provides the portfolio with the growth necessary to reach the

long-term investment goals. Research studies have proved that the equities have

outperformed than most other forms of investments in the long term. Equities are

considered the most challenging and the rewarding, when compared to other

investment options. Research studies have proved that investments in some shares

with a longer tenure of investment have yielded far superior returns than any other

investment.

Fundamental analysis and technical analysis can co-exist in peace and complement

each other. Since all the investors in the stock market want to make the maximum

profits possible, they just cannot afford to ignore either fundamental or technical

analysis.

SHARE PRICE

A share price is the price of a single share of a number of saleable stocks of a

company, derivative or other financial asset.

REASONS FOR THE PRICE MOVEMENT OF SHARES

A specific may have a temporarily high price when for whatever reason, there hasbeen a high demand for it. This demand may have nothing to do with the company it

self but may rather relate to, for example an institute investor trying to diversify out

risk. There are various reasons for the price movement of the shares :-

The market expects the earnings to rise rapidly in the future. For example a

gold mining company which has just begun to mine may not have made money yet

but next quarter it will most likely find the gold and make a lot of money. The same

applies to pharmaceutical companies often a large amount of their revenue comes


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from the best few patented products, so when a promising new product is approved,

investors may buy up the stock.

The company was previously making a lot of money, but in the last year or

quarter it had a special one time expense (called a charge) which lowered the

earnings significantly. Stock holders understanding (possibly incorrectly) that this was

a one time issue, will still buy stock at the same price as before, and only sell at the

least that same price.

Hype for the stock has caused people to buy the stock for a higher price than

they normally would. This is called bubble. One of the most important uses of the P/E

metric is to decide whether a stock is undergoing a bubble or anti-bubble by the

comparing its P/E to similar companies. Historically, bubbles have been followed by

crashes. As such prudent investors try to stay out of them

The P/E ratio (price-to-earnings ratio) of a stock (also called its "earnings

multiple", or simply "multiple", "P/E", or "PE") is a measure of the price paid for a

share relative to the income or profit earned by the firm per share. A higher P/E ratio

means that investors are paying more for each unit of income. It is a valuation ratio

included in other financial ratios. The reciprocal of the P/E ratio is known as the

earnings yield.

The price per share (numerator) is the market price of a single share of the

stock. The earnings per share (denominator) is the net income of the company for the

most recent 12 month period, divided by number of shares outstanding. The EPS used

can also be the "diluted EPS" or the "comprehensive EPS".

For example, if stock A is trading at $24 and the Earnings Per Share for the

most recent 12 month period is $3, then the P/E ratio is 24/3=8. Stock A said to have

a P/E of 8 (or a multiple of 8). Put another way, the purchaser is paying $8 for every

one dollar of earnings.

By relating price and earnings per share for a company, one can analyze the

market's valuation of a company's shares relative to the wealth the company is

actually creating.


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One reason to calculate P/Es is for investors to compare the value of stocks. If

one stock has a P/E twice that of another stock, all things being equal, it is a less

attractive investment. Companies are rarely equal, however, and comparisons between

industries, countries, and time periods may be misleading.

The company has some sort of business advantage which seems to ensure that

it will continue make money for a long time with very little risk. Thus investors are

willing to buy the stock even at a higher price for the piece of mind that they all not

loose their money.

A large amount of money has been inserted into the stock market, out of

proportion of the growth of the companies across the same time period. Since there

are only limited amount of stocks to buy, supply and demand dictate that the price of

the stocks must go up. This factor can make comparing P/E ratios over time difficult.

NEED OF THE STUDY

To start any business capital plays major role. Capital can be acquired in two ways by

issuing shares or by taking debt from financial institutions or borrowing money from

financial institutions. The owners of the company have to pay regular interest and

principal amount at the end.

Stock is ownership in a company, with each share of stock representing a tiny piece of

ownership. The more shares you own, the more of the company you own. The more

shares you own, the more dividends you earn when the company makes a profit. In

the financial world, ownership is called Equity. The role of equity analysis is to

provide information to the market. An efficient market relies on information: a lack of

information creates inefficiencies that result in stocks being misrepresented (over or

under valued). This is valuable because it fills information gaps so that each

individual investor does not need to analyze every stock thereby making the markets

more efficient. Investors wealth is precious. Hence needs to analyze the prevailing

economic conditions of the country and also the shares of the respective companies.


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OBJECTIVES OF THE STUDY

The objective of this project is to deeply analyze the companies selected like ICICI

Bank, HDFC Bank and Axis Bank for investment purpose by monitoring the growth

rate and performance on the basis of historical data.

The main objectives of the Project study are:

1. To know about the equity performance of the banks selected viz. ICICIBank, HDFC Bank and Axis Bank.

2. To study about the price movements of the securities selected.3. To know about the profile of the company selected i.e., Religare securities.4. To identify the correlation between price movement of the equity

corresponding with dividend declaration.

5. To show the beta and volatility calculation for measuring the risk andvariability of different companies share.

6. To help the investor for decision making in equity investment.SCOPE OF THE STUDY

The scope of the study is identified after and during the study is conducted. The

project is based on tools like fundamental analysis and ratio analysis. Further, the

study is based on information of last five years.

METHODOLOGY

Research design or research methodology is the procedure of collecting, analyzing

and interpreting the data to diagnose the problem and react to the opportunity in such

a way where the costs can be minimized and the desired level of accuracy can be

achieved to arrive at a particular conclusion.

The methodology used in the study for the completion of the project and the

fulfillment of the project objectives. The sample of the stocks for the purpose of

collecting secondary data has been selected on the basis of Random Sampling. The

stocks are chosen in an unbiased manner and each stock is chosen independent of the

other stocks chosen.


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The sample size for the number of stocks is taken as 3 for fundamental analysis of

stocks as fundamental analysis is very exhaustive and requires detailed study.

DATA SOURCES:

The proposed study is carried with the help of both primary and secondary sources of

data.

PRIMARY DATA:

Relevant primary data would be collected with the help of the interview method.

SECONDARY DATA:

All the secondary data used for the study would be extracted from the annual reports,

manuals, websites and other published materials of the company.

LIMITATIONS OF STUDY

1. This study has been conducted purely to understand Equity analysis forinvestors.

2. The study is restricted to 3 banks based on Fundamental analysis.3. Detailed study of the topic was not possible due to limited size of the

project.

4. There was a constraint with regard to time allocation for the research studyi.e. for a period of 45 days.

5. Suggestions and conclusions are based on the study conducted.6. The analysis is made by taking into consideration three banks i.e. ICICI

Bank, HDFC Bank and Axis Bank.

7. The scope of the study is limited for a period of five years.


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EQUITY ANALYSIS

Professional investor will make more money & less loss than, who let their

heart rule. Their head eliminate all emotions for decision making. Be ruthless &

calculating, you are out to make money. Decision should be based on actual

movement of share price measured both in money & percentage term & nothing else.

Greed must be avoided patience may be a virtue, but impatience can frequently be

profitable.

In Equity Analysis anticipated growth, calculations are based on considered

FACTS & not on HOPE. Equity analysis is basically a combination of two

independent analyses, namely fundamental analysis & Technical analysis. The

subject of Equity analysis, i.e. the attempt to determine future share price movement

& its reliability by references to historical data is a vast one, covering many aspect

from the calculating various FINANCIAL RATIOS, plotting of CHARTS to

extremely sophisticated indicators.

A general investor can apply the principles by using the simplest of tools:

pocket calculator, pencil, ruler, chart paper & your cautious mind, watchful attention.

It should be pointed out that, this equity analysis does not discuss how to buy & sell

shares, but does discuss a method which enables the investor to arrive at buying &

selling decision. The financial analysts always need yardsticks to evaluate the

efficiency & performances of any business unit at the time of investment.

Fundamental analysis is useful in long term investment decision. In Fundamental

analysis a company s goodwill, its performances, liquidity, leverage, turnover,

profitability & financial health was checked & analysis with the help of ratio analysis

for the purpose of long term successful investment.

Technical analysis refers to the study of market generated data like prices &

volume to determine the future direction of prices movements.

Technical analysis mainly seeks to predict the short term price travels. The

focus of technical analysis is mainly on the internal market data, i.e. prices & volume

data. It appeals mainly to short term traders.


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It is the oldest approach to equity investment dating back to the late 19th

century.

Assumptions for the Equity Analysis

1. Works only in normal share-market conditions with great reliability, it alsoworks in abnormal share-market conditions, but with low reliability.

2. Equity analysis is purely based on the INVESTMENT PHILOSOPHY, so theinvestment object has vital importance associated to return along with risk.

3. Cash management gets the magnitude role, because the scenario of equityanalysis is revolving around the term money

4. Portfolio management, risk management was up to the investor s knowledge.5. Capital market trend is always a friend, whether it is short run or long run.6. You are buying stock & not companies, so don t be curious or panic to do

postmortem of companies performances.

7. History repeats: investors & speculators react the same way to the same typesof events homogeneously.

8. Capital market has a typical market psychology along with other issues like;perceptions, the crowd Vc the individual, tradition s & trust.

9. An individual perceptions about the investment return & associated risk maydiffer from individual to individual.

10.Although the equity analysis is art as well as sciences so, it also has someexceptions.


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SECURITY ANALYSIS

Investment success is pretty much a matter of careful selection and timing of

stock purchases coupled with perfect matching to an individuals risk tolerance. In

order to carry out selection, timing and matching actions an investor must conduct

deep security analysis.

Investors purchase equity shares with two basic objectives;

1. To make capital profits by selling shares at higher prices.2. To earn dividend income.

These two factors are affected by a host of factors. An investor has to carefully

understand and analyze all these factors. There are basically two approaches to study

security prices and valuation i.e. fundamental analysis and technical analysis

The value of common stock is determined in large measure by the

performance of the firm that issued the stock. If the company is healthy and can

demonstrate strength and growth, the value of the stock will increase. When values

increase then prices follow and returns on an investment will increase. However, just

to keep the savvy investor on their toes, the mix is complicated by the risk factors

involved. Fundamental analysis examines all the dimensions of risk exposure and the

probabilities of return, and merges them with broader economic analysis and greater

industry analysis to formulate the valuation of a stock.


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FUNDAMENTAL ANALYSIS

Fundamental analysis is a method of forecasting the future price movements

of a financial instrument based on economic, political, environmental and other

relevant factors and statistics that will affect the basic supply and demand of whatever

underlies the financial instrument. It is the study of economic, industry and company

conditions in an effort to determine the value of a companys stock. Fundamental

analysis typically focuses on key statistics in companys financial statements to

determine if the stock price is correctly valued. The term simply refers to the analysis

of the economic well-being of a financial entity as opposed to only its price

movements.

Fundamental analysis is the cornerstone of investing. The basic philosophy

underlying the fundamental analysis is that if an investor invests Re.1 in buying a

share of a company, how much expected returns from this investment he has.

The fundamental analysis is to appraise the intrinsic value of a security. It insists that

no one should purchase or sell a share on the basis of tips and rumors. The

fundamental approach calls upon the investors to make his buy or sell decision on the

basis of a detailed analysis of the information about the company, about the industry,

and the economy. It is also known as top-down approach. This approach attempts to

study the economic scenario, industry position and the company expectations and is

also known as economic-industry-company approach (EIC approach).

Thus the EIC approach involves three steps:

1. Economic analysis2. Industry analysis3. Company analysis
http://www.investopedia.com/terms/f/fundamentalanalysis.asphttp://www.investopedia.com/terms/f/fundamentalanalysis.asp


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1. ECONOMIC ANALYSIS

The level of economic activity has an impact on investment in many ways. If

the economy grows rapidly, the industry can also be expected to show rapid growth

and vice versa. When the level of economic activity is low, stock prices are low, and

when the level of economic activity is high, stock prices are high reflecting the

prosperous outlook for sales and profits of the firms. The analysis of macro economic

environment is essential to understand the behavior of the stock prices.

The commonly analyzed macro economic factors are as follows:

Gross Domestic Product (GDP): GDP indicates the rate of growth of the economy.

It represents the aggregate value of the goods and services produced in the economy.

It consists of personal consumption expenditure, gross private domestic investment

and government expenditure on goods and services and net exports of goods and

services. The growth rate of economy points out the prospects for the industrial sector

and the return investors can expect from investment in shares. The higher growth rate

is more favorable to the stock market.

Savings and investment: It is obvious that growth requires investment which in turn

requires substantial amount of domestic savings. Stock market is a channel through

which the savings are made available to the corporate bodies. Savings are distributed

over various assets like equity shares, deposits, mutual funds, real estate and bullion.

The savings and investment patterns of the public affectthe stock to a great extent.

Inflation: Along with the growth of GDP, if the inflation rate also increases, then the

real growth would be very little. The effects of inflation on capital markets are

numerous. An increase in the expected rate of inflation is expected to cause a nominal

rise in interest rates. Also, it increases uncertainty of future business and investment

decisions. As inflation increases, it results in extra costs to businesses, thereby

squeezing their profit margins and leading to real declines in profitability.

Interest rates: The interest rate affects the cost of financing to the firms. A decrease

in interest rate implies lower cost of finance for firms and more profitability. More

money is available at a lower interest rate for the brokers who are doing business with


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borrowed money. Availability of cheap funds encourages speculation and rise in the

price of shares.

Tax structure: Every year in March, the business community eagerly awaits the

Governments announcement regarding the tax policy. Concessions and incentives

given to a certain industry encourage investment in that particular industry. Tax

reliefs given to savings encourage savings. The type of tax exemption has impact on

the profitability of the industries.

Infrastructure facilities: Infrastructure facilities are essential for the growth of

industrial and agricultural sector. A wide network of communication system is a must

for the growth of the economy. Regular supply of power without any power cut would

boost the production. Banking and financial sectors also should be sound enough to

provide adequate support to the industry. Good infrastructure facilities affect the stock

market favorably.

2.INDUSTRY ANALYSIS

An industry is a group of firms that have similar technological structure of

production and produce similar products and Industry analysis is a type of business

research that focuses on the status of an industry or an industrial sector (a broad

industry classification, like "manufacturing"). Irrespective of specific economic

situations, some industries might be expected to perform better, and share prices in

these industries may not decline as much as in other industries. This identification of

economic and industry specific factors influencing share prices will help investors to

identify the shares that fit individual expectations

Industry Life Cycle: The industry life cycle theory is generally attributed to Julius

Grodensky. The life cycle of the industry is separated into four well defined stages.

Pioneering stage: The prospective demand for the product is promising in thisstage and the technology of the product is low. The demand for the product

attracts many producers to produce the particular product. There would be severe

competition and only fittest companies survive this stage. The producers try to

develop brand name, differentiate the product and create a product image. In this

situation, it is difficult to select companies for investment because the survival


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rate is unknown.

Rapid growth stage: This stage starts with the appearance of surviving firmsfrom the pioneering stage. The companies that have withstood the competition

grow strongly in market share and financial performance. The technology of

the production would have improved resulting in low cost of production and

good quality products. The companies have stable growth rate in this stage and

they declare dividend to the shareholders. It is advisable to invest in the shares

of these companies.

Maturity and stabilization stage: the growth rate tends to moderate and therate of growth would be more or less equal to the industrial growth rate or thegross domestic product growth rate. Symptoms of obsolescence may appear in

the technology. To keep going, technological innovations in the production

process and products should be introduced. The investors have to closely

monitor the events that take place in the maturity stage of the industry.

Decline stage: demand for the particular product and the earnings of thecompanies in the industry decline. It is better to avoid investing in the shares

of the low growth industry even in the boom period. Investment in the shares

of these types of companies leads to erosion of capital.

Growth of the industry: The historical performance of the industry in terms of

growth and profitability should be analyzed. The past variability in return and growth

in reaction to macro economic factors provide an insight into the future.

Nature of competition: Nature of competition is an essential factor that determines

the demand for the particular product, its profitability and the price of the concerned

company scrips. The companies' ability to withstand the local as well as the

multinational competition counts much. If too many firms are present in the organized

sector, the competition would be severe. The competition would lead to a decline in

the price of the product. The investor before investing in the scrip of a company

should analyze the market share of the particular company's product and should

compare it with the top five companies.


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SWOT analysis: SWOT analysis represents the strength, weakness, opportunity and

threat for an industry. Every investor should carry out a SWOT analysis for the

chosen industry. Take for instance, increase in demand for the industrys product

becomes its strength, presence of numerous players in the market, i.e. competition

becomes the threat to a particular company. The progress in R & D in that industry is

an opportunity and entry of multinationals in the industry is a threat. In this way the

factors are to be arranged and analyzed.

3. COMPANY ANALYSIS

In the company analysis the investor assimilates the several bits of information

related to the company and evaluates the present and future values of the stock. The

risk and return associated with the purchase of the stock is analyzed to take better

investment decisions. The present and future values are affected by a number of

factors.

Competitive edge of the company: Major industries in India are composed of

hundreds of individual companies. Though the number of companies is large, only

few companies control the major market share. The competitiveness of the company

can be studied with the help of the following;

Market share: The market share of the annual sales helps to determine a companys

relative competitive position within the industry. If the market share is high, the

company would be able to meet the competition successfully. The companies in the

market should be compared with like product groups otherwise, the results will be

misleading.

Growth of sales: The rapid growth in sales would keep the shareholder in a better

position than one with stagnant growth rate. Investors generally prefer size and

growth in sales because the larger size companies may be able to withstand the

business cycle rather than the company of smaller size.

Stability of sales: If a firm has stable sales revenue, it will have more stable earnings.

The fall in the market share indicates the declining trend of company, even if the sales

are stable. Hence the stability of sales should be compared with its market share and

the competitors market share.


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Earnings of the company: Sales alone do not increase the earnings but the costs and

expenses of the company also influence the earnings. Further, earnings do not always

increase with increase in sales. The companys sales might have increased but its

earnings per share may decline due to rise in costs. Hence, the investor should not

only depend on the sales, but should analyze the earnings of the company.

Financial analysis: The best source of financial information about a company is its

own financial statements. This is a primary source of information for evaluating the

investment prospects in the particular companys stock. Financial statement analysis

is the study of a companys financial statement from various viewpoints. The

statement gives the historical and current information about the companys

operations. Historical financial statement helps to predict the future and the current

information aids to analyze the present status of the company. The two main

statements used in the analysis are Balance sheet and Profit and Loss Account.

The balance sheet is one of the financial statements that companies prepare

every year for their shareholders. It is like a financial snapshot, the company's

financial situation at a moment in time. It is prepared at the year end, listing the

company's current assets and liabilities. It helps to study the capital structure of the

company. It is better for the investor to avoid a company with excessive debt

component in its capital structure. From the balance sheet, liquidity position of the

company can also be assessed with the information on current assets and current

liabilities.

Ratio analysis: Ratio is a relationship between two figures expressed mathematically.

Financial ratios provide numerical relationship between two relevant financial data.

Financial ratios are calculated from the balance sheet and profit and loss account. Therelationship can be either expressed as a percent or as a quotient. Ratios summarize

the data for easy understanding, comparison and interpretations.

Ratios for investment purposes can be classified into profitability ratios,

turnover ratios, and leverage ratios. Profitability ratios are the most popular ratios

since investors prefer to measure the present profit performance and use this

information to forecast the future strength of the company. The most often used

profitability ratios are return on assets, price earnings multiplier, price to book value,


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price to cash flow, and price to sales, dividend yield, return on equity, present value of

cash flows, and profit margins.

a) Return on Assets (ROA)

ROA is computed as the product of the net profit margin and the total asset turnover

ratios.

ROA = (Net Profit/Total income) x (Total income/Total Assets)

This ratio indicates the firm's strategic success. Companies can have one of

two strategies: cost leadership, or product differentiation. ROA should be rising or

keeping pace with the company's competitors if the company is successfully pursuingeither of these strategies, but how ROA rises will depend on the company's strategy.

ROA should rise with a successful cost leadership strategy because the companys

increasing operating efficiency. An example is an increasing, total asset, turnover

ratio as the company expands into new markets, increasing its market share. The

company may achieve leadership by using its assets more efficiently. With a

successful product differentiation strategy, ROA will rise because of a rising profit

margin.

b) Return on Investment (ROI)

ROI is the return on capital invested in business, i.e., if an investment Rs 1

crore in men, machines, land and material is made to generate Rs. 25 lakhs of net

profit, then the ROI is 25%. The computation of return on investment is as follows:

Return on Investment (ROI) = (Net profit/Equity investments) x 100

As this ratio reveals how well the resources of a firm are being used, higher

the ratio, better are the results. The return on shareholders investment should be

compared with the return of other similar firms in the same industry. The inert-firm

comparison of this ratio determines whether the investments in the firm are attractive

or not as the investors would like to invest only where the return is higher.


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c) Return on Equity

Return on equity measures how much an equity shareholder's investment is

actually earning. The return on equity tells the investor how much the invested rupee

is earning from the company. The higher the number, the better is the performance of

the company and suggests the usefulness of the projects the company has invested in.

The computation of return on equity is as follows:

Return on equity = (Net profit to owners/value of the specific owner's

contribution to the business) x 100

The ratio is more meaningful to the equity shareholders who are invested toknow profits earned by the company and those profits which can be made available to

pay dividend to them.

d) Earnings per Share (EPS)

This ratio determines what the company is earning for every share. For many

investors, earnings are the most important tool. EPS is calculated by dividing the

earnings (net profit) by the total number of equity shares.

The computation of EPS is as follows:

Earnings per share = Net profit/Number of shares outstanding

The EPS is a good measure of profitability and when compared with EPS of

similar other companies, it gives a view of the comparative earnings or earnings

power of a firm. EPS calculated for a number of years indicates whether or not

earning power of the company has increased.

e) Dividend per Share (DPS)

The extent of payment of dividend to the shareholders is measured in the form

of dividend per share. The dividend per share gives the amount of cash flow from the

company to the owners and is calculated as follows:

Dividend per share = Total dividend payment / Number of shares outstanding


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The payment of dividend can have several interpretations to the shareholder.

The distribution of dividend could be thought of as the distribution of excess

profits/abnormal profits by the company. On the other hand, it could also be

negatively interpreted as lack of investment opportunities. In all, dividend payout

gives the extent of inflows to the shareholders from the company.

f) Dividend Payout Ratio

From the profits of each company a cash flow called dividend is distributed

among its shareholders. This is the continuous stream of cash flow to the owners of

shares, apart from the price differentials (capital gains) in the market. The return to

the shareholders, in the form of dividend, out of the company's profit is measured

through the payout ratio. The payout ratio is computed as follows:

Payout Ratio = (Dividend per share / Earnings per share) * 100

The percentage of payout ratio can also be used to compute the percentage of

retained earnings. The profits available for distribution are either paid as dividends or

retained internally for business growth opportunities. Hence, when dividends are not

declared, the entire profit is ploughed back into the business for its future investments.

g) Dividend Yield

Dividend yield is computed by relating the dividend per share to the market

price of the share. The market place provides opportunities for the investor to buy the

company's share at any point of time. The price at which the share has been bought

from the market is the actual cost of the investment to the shareholder. The market

price is to be taken as the cum-dividend price. Dividend yield relates the actual cost to

the cash flows received from the company. The computation of dividend yield is as

follows

Dividend yield = (Dividend per share / Market price per share) * 100

High dividend yield ratios are usually interpreted as undervalued companies in

the market. The market price is a measure of future discounted values, while the

dividend per share is the present return from the investment. Hence, a high dividend

yield implies that the share has been under priced in the market. On the other hand a


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low dividend yield need not be interpreted as overvaluation of shares. A company that

does not pay out dividends will not have a dividend yield and the real measure of the

market price will be in terms of earnings per share and not through the dividend

payments.

h) Price/Earnings Ratio (P/E)

The P/E multiplier or the price earnings ratio relates the current market price

of the share to the earnings per share. This is computed as follows:

Price/earnings ratio = Current market price / Earnings per share

This ratio is calculated to make an estimate of appreciation in the value of ashare of a company and is widely used by investors to decide whether or not to buy

shares in a particular company. Many investors prefer to buy the company's shares at

a low P/E ratio since the general interpretation is that the market is undervaluing the

share and there will be a correction in the market price sooner or later. A very high

P/E ratio on the other hand implies that the company's shares are overvalued and the

investor can benefit by selling the shares at this high market price.

i) Debt-to-Equity Ratio

Debt-Equity ratio is used to measure the claims of outsiders and the owners

against the firms assets.

Debt-to-equity ratio = Outsiders Funds / Shareholders Funds

The debt-equity ratio is calculated to measure the extent to which debt

financing has been used in a business. It indicates the proportionate claims of ownersand the outsiders against the firms assets. The purpose is to get an idea of the cushion

available to outsiders on the liquidation of the firm.

J) Return on long term fund

A unit investment trust's estimated return over the life of the portfolio, calculated

according to formulas proposed by the Securities and Exchange Commission (SEC).

The return is calculated as the annual percentage return based on the yields of all theunderlying securities in the portfolio, but is weighted to account for each security's


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market value and maturity. The return is presented net of estimated fees and the

maximum offering price, but does not account for delays in income distributions from

the fund.

Return on long term funds = (Net profit to owners/long term funds contributed

to the business) x 100

k) Current ratio

The current ratio is a financial ratio that measures whether or not a firm has enough

resources to pay its debts over the next 12 months. It compares a firm's current

assets to its current liabilities. It is expressed as follows:

Current Ratio = Current assets / Current liabilities
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INDIAN BANKING INDUSTRY ANALYSIS

BANK:

A bankis a financial institution and a financial intermediary that accepts deposits and

channels those deposits into lending activities, either directly by loaning or indirectly

through capital markets. A bank connects customers that have capital deficits to

customers with capital surpluses.

Origin of banking in India

The first bank was probably the religious temples of the ancient world wherein gold

was stored in the form of easy-to-carry compressed plates. Their owners justly felt

that temples were the safest places to store their gold as they were constantly

attended, well built and were sacred, thus deterring would-be thieves. There are extent

records of loans from the 18th century BC in Babylon that were made by temple

priests to merchants. Ancient Greece holds further evidence of banking. Greek

temples as well as private and civic entities conducted financial transactions such as

loans, deposits, currency exchange, and validation of coinage. There is evidence too

of credit, whereby in return for a payment from a client, a moneylender in one Greek

port would write a credit note for the client who could cash the note in another city,

saving the client the danger of carting coinage with him on his journey. Ancient Rome

perfected the administrative aspect of banking and saw greater regulation of financial

institutions and financial practices. Charging interest on loans and paying interest on

deposits became more highly developed and competitive. The origin of banking in

India can be traced back to almost the Vedic period.

The transformation from pure money lending to proper banking appears to have taken

place before the times of Manu. Manu, a great Hindu jurist, had devoted a section of

his work explaining the deposits and advances and he even laid down certain rules on

rates of interest. Through out Mauryan period and later on desi bankers played some

role in the economy of the country. However, it was during the Moghul period that

indigenous bankers started playing a vital role in lending money and financing of the

foreign trade and commerce. Banking during british period before independence.
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The banking scenario in India has been changing at fast pace from being just

the borrowers and lenders traditionally, the focus has shifted to more differentiated

and customized product/service provider from regulation to liberalization in the year

1991, from planned economy to market.

Economy, from licensing to integration with Global Economics, the changes

have been swift. All most all the sector operating in the economy was affected and

banking sector is no exception to this. Thus the whole of the banking system in the

country has undergone a radical change. Let us see how banking has evolved in the

past 57 years of independence.

After independence in 1947 and proclamation in 1950 the country set about

drawing its road map for the future public ownership of banks was seen inevitable and

SBI was created in 1955 to spearhead the expansion of banking into rural India and

speed up the process of magnetization.

Political compulsions brought about nationalization of bank in 1969 and

lobbying by bank employees and their unions added to the list of nationalized banks a

few years later.

Slowly the unions grew in strength, while bank management stagnated. The

casualty was to the customer service declined, complaints increased and bank

management was unable to item the rot.

In the meantime, technology was becoming a global phenomenon lacking a

vision of the future and the banks erred badly in opposing the technology up gradation

of banks. They mistakenly believed the technology would lead to retrenchment and

eventually the marginalization of unions.

The problem faced by the banking industry soon surfaced in their balance

sheets. But the prevailing accounting practices unable banks to dodge the issue.

The rules of the game under which banks operated changed in 1993. Norms or

income Recognition, Assets classification and loan loss provisioning were put in place

and capital adequacy ratio become mandatory. The cumulative impact of all these


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changes has been on the concept of state ownership in banks. It is increasingly

becoming clear that the state ownership in bank is no longer sustainable.

The amendment of banking regulation act in 1993 saw the entry of new

private sector banks and foreign banks.

Banking in India

1Central

BankReserve Bank of India

2Nationalised

Banks

State Bank of India, Allahabad Bank, Andhra Bank, Bank of

Baroda, Bank of India, Bank of Maharastra,Canara Bank,Central Bank of India, Corporation Bank, Dena Bank, Indian

Bank, Indian overseas Bank,Oriental Bank of Commerce,

Punjab and Sind Bank, Punjab National Bank, Syndicate

Bank, Union Bank of India, United Bank of India, UCO

Bank,and Vijaya Bank.

3Private

Banks

Bank of Rajastan, Bharath overseas Bank, Catholic Syrian

Bank, Centurion Bank of Punjab, City Union Bank,

Development Credit Bank, Dhanalaxmi Bank, Federal Bank,

Ganesh Bank of Kurundwad, HDFC Bank, ICICI Bank, IDBI,

IndusInd Bank, ING Vysya Bank, Jammu and Kashmir Bank,

Karnataka Bank Limited, Karur Vysya Bank, Kotek Mahindra

Bank, Lakshmivilas Bank, Lord Krishna Bank, Nainitak

Bank, Ratnakar Bank,Sangli Bank, SBI Commercial and

International Bank, South Indian Bank, Tamil Nadu

Merchantile Bank Ltd., United Western Bank, UTI Bank,

YES Bank.


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Present scenario of banking in India

Currently (2010), banking in India is generally fairly mature in terms of supply,

product range and reach-even though reach in rural India still remains a challenge forthe private sector and foreign banks. In terms of quality of assets and capital

adequacy, Indian banks are considered to have clean, strong and transparent balance

sheets relative to other banks in comparable economies in its region. The Reserve

Bank of India is an autonomous body, with minimal pressure from the government.

The stated policy of the Bank on the Indian Rupee is to manage volatility but without

any fixed exchange rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-

especially in its services sector-the demand for banking services, especially retail

banking, mortgages and investment services are expected to be strong. One may also

expect M&As, takeovers, and asset sales.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its

stake in Kotak Mahindra Bank(a private sector bank) to 10%. This is the first time an

investor has been allowed to hold more than 5% in a private sector bank since the RBI

announced norms in 2005 that any stake exceeding 5% in the private sector banks

would need to be vetted by them.

In recent years critics have charged that the non-government owned banks are too

aggressive in their loan recovery efforts in connection with housing, vehicle and

personal loans. There are press reports that the banks' loan recovery efforts have

driven defaulting borrowers to suicide.

Adoption of banking technology

The IT revolution had a great impact in the Indian banking system. The use of

computers had led to introduction of online banking in India. The use of the modern

innovation and computerisation of the banking sector of India has increased many

fold after the economic liberalisation of 1991 as the country's banking sector has been

exposed to the world's market. The Indian banks were finding it difficult to compete
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with the international banks in terms of the customer service without the use of the

information technology and computers.

Apart from the above mentioned innovations the banks have been selling the third

party products like Mutual Funds, insurances to its clients.Total numbers of ATMs

installed in India by various banks as on end March 2005 is 17,642 .[12]The New

Private Sector Banks in India is having the largest numbers of ATMs which is fol off

site ATM is highest for the SBI and its subsidiaries and then it is followed by New

Private Banks, Nationalised banks and Foreign banks. While on site is highest for the

Nationalised banks of India.

TYPES OF BANKS

The focus of banking is varied, the needs diverse and methods different. Thus, we

need distinctive kinds of banks to cater to the above-mentioned complexities. Deposit-

taking institutions take the form of commercial banks, which accept deposits and

make commercial, real estate, and other loans. There are also mutual savings banks,

which accept deposits and make mortgage and other types of loans. Another type is

credit unions, which are cooperative organizations that issue share certificates and

make member (consumer) and other loans.

The banking industry can be divided into following sectors, based on the clientele

served and products and services offered:

1. Retail Banks2. Commercial banks3. Cooperative banks4. Investment Banks5. Specialized banks6. Central banks
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Retail Banks:

Retail banks provide basic banking services to individual consumers. Examples

include savings banks, savings and loan associations, and recurring and fixed

deposits. Products and services include safe deposit boxes, checking and savings

accounting, certificates of deposit (CDs), mortgages, personal, consumer and car

loans.

Commercial Banks:

Banking means accepting deposits of money from the public for the purpose of

lending or investment. Commercial Banks provide financial services to businesses,

including credit and debit cards, bank accounts, deposits and loans, and secured and

unsecured loans. Due to deregulation, commercial banks are also competing more

with investment banks in money market operations, bond underwriting, and financial

advisory work. Commercial banks in modern capitalist societies act as financial

intermediaries, raising funds from depositors and lending the same funds to

borrowers. The depositors claims against the bank, their deposits, are liquid, meaning

banks are expected to redeem deposits on demand, instantly.

Banks claims against their borrowers are much less liquid, giving borrowers a much

longer span of time to repay money owed banks. Because a bank cannot immediately

reclaim money lent to borrowers, it may face bankruptcy if all its depositors show up

on a given day to withdraw all their money.

There are two types of commercial banks, public sector and private sector banks.

Public Sector Banks:

Public sectors banks are those in which the government has a major stake and they

usually need to emphasize on social objectives than on profitability.

Private sector banks:

Private sector banks are owned, managed and controlled by private promoters and

they are free to operate as per market forces.


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Investment Banks:

An investment bank is a financial institution that assists individuals, corporations and

governments in raising capital by underwriting and/or acting as the client's agent in

the issuance of securities. An investment bank may also assist companies involved in

mergers and acquisitions, and provide ancillary services such as market making,

trading of derivatives, fixed income instruments, foreign exchange, commodities, and

equity securities.

Investment banks aid companies in acquiring funds and they provide advice for a

wide range of transactions. These banks also offer financial consulting services to

companies and give advice on mergers and acquisitions and management of publicassets.

Cooperative Banks:

Cooperative Banks are governed by the provisions of State Cooperative Societies Act

and meant essentially for providing cheap credit to their members. It is an important

source of rural credit i.e., agricultural financing in India.

Specialized Banks:

Specialized banks are foreign exchange banks, industrial banks, development banks,

export-import banks catering to specific needs of these unique activities. These banks

provide financial aid to industries, heavy turnkey projects and foreign trade.

Central Banks:

Central banks are bankers banks, and these banks trace their history from the Bank of

England. They guarantee stable monetary and financial policy from country to

country and play an important role in the economy of the country. Typical functions

include implementing monetary policy, managing foreign exchange and gold

reserves, making decisions regarding official interest rates, acting as banker to the

government and other banks, and regulating and supervising the banking industry.


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ICICI BANK

ICICI Bank (BSE: ICICI) (formerly Industrial Credit and Investment

Corporation of India) is India's largest private sectorbankby market capitalisation

and second largest overall in terms of assets. Trotal assets of Rs. 3,562.28 billion

(US$ 77 billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$

648.8 million) for the nine months ended December 31, 2009. The Bank also has a

network of 1,640+ branches (as on February 11, 2010) and about 4,721 ATMs in

India and presence in 18 countries, as well as some 24 million customers (at the end

of July 2007).

ICICI Bank offers a wide range of banking products and financial services to

corporate and retail customers through a variety of delivery channels and specialised

subsidiaries and affiliates in the areas of investment banking, life and non-life

insurance, venture capital and asset management. (These data are dynamic.)

Type Private BSE & NSE:ICICI, NYSE: IBN

Industry Banking, Insurance, Capital Markets and allied industries

Founded 1955 (as Industrial Credit and Investment Corporation of India)

Headquarters ICICI Bank Ltd., ICICI Bank Towers, Bandra Kurla, Mumbai,India

Key people K.V. Kamath,Chairman, Chanda Kochhar, Managing Director &

CEO, Sandeep Bakhshi, Deputy Managing Director, N.S. Kannan,Executive Director & CFO, K. Ramkumar, Executive DirectorSonjoy Chatterjee, Executive Director

Products Loans, Credit Cards, Savings, Investment vehicles, Insurance etc.

Revenue USD 15.06 billion

Total assets USD 120.61 billion (at March 31, 2009.)

Website www.icicibank.com
http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=ICICIhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Market_capitalisationhttp://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Private_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://www.nyse.com/about/listed/ibn.htmlhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Bankinghttp://en.wikipedia.org/wiki/Insurancehttp://en.wikipedia.org/wiki/Capital_Marketshttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/K.V._Kamathhttp://en.wikipedia.org/wiki/Chanda_Kochharhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/sandeepresume.htmhttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&url=http%3A%2F%2Fwww.iciciprulife.com%2Fpublic%2FAbout-us%2FProfileTeam-NSKannan.htm&ei=Hm15Sv_kCob6kAXMhZS7Bg&usg=AFQjCNGrNWm9KBeFK8ECi6w5fJ896TdmpA&sig2=xulVedKfizzwojKQN7-YlAhttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=18&url=http%3A%2F%2Fwww.icicibank.com%2Fpfsuser%2Faboutus%2Fnewsroom%2Fexecutivebio%2Framkumarresume.htm&ei=Xm15SsvHEIHs6APR74GlBQ&usg=AFQjCNF8v8x13iVBwIJflxdj3KFXCQiZmA&sig2=UjBAMVFDRl2e9JqC1kdC8Ahttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&url=http%3A%2F%2Fwww.icicibank.com%2Fpfsuser%2Faboutus%2Fnewsroom%2Fexecutivebio%2FSonjoyChatterjeeresume.htm&ei=7215SouIJI6PkAWa_fi5Bg&usg=AFQjCNFLjYIJlKTZeC_Nfh5SzIKaKReSQA&sig2=PwAnEhYQsj--jud3ytWGCwhttp://en.wikipedia.org/wiki/Product_%28business%29http://en.wikipedia.org/wiki/Product_%28business%29http://en.wikipedia.org/wiki/Credit_Cardhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/Websitehttp://en.wikipedia.org/wiki/Websitehttp://www.icicibank.com/http://en.wikipedia.org/wiki/File:ICICI_Bank_Logo.svghttp://www.icicibank.com/http://en.wikipedia.org/wiki/Websitehttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Credit_Cardhttp://en.wikipedia.org/wiki/Product_%28business%29http://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&url=http%3A%2F%2Fwww.icicibank.com%2Fpfsuser%2Faboutus%2Fnewsroom%2Fexecutivebio%2FSonjoyChatterjeeresume.htm&ei=7215SouIJI6PkAWa_fi5Bg&usg=AFQjCNFLjYIJlKTZeC_Nfh5SzIKaKReSQA&sig2=PwAnEhYQsj--jud3ytWGCwhttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=18&url=http%3A%2F%2Fwww.icicibank.com%2Fpfsuser%2Faboutus%2Fnewsroom%2Fexecutivebio%2Framkumarresume.htm&ei=Xm15SsvHEIHs6APR74GlBQ&usg=AFQjCNF8v8x13iVBwIJflxdj3KFXCQiZmA&sig2=UjBAMVFDRl2e9JqC1kdC8Ahttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&url=http%3A%2F%2Fwww.iciciprulife.com%2Fpublic%2FAbout-us%2FProfileTeam-NSKannan.htm&ei=Hm15Sv_kCob6kAXMhZS7Bg&usg=AFQjCNGrNWm9KBeFK8ECi6w5fJ896TdmpA&sig2=xulVedKfizzwojKQN7-YlAhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/sandeepresume.htmhttp://en.wikipedia.org/wiki/Chanda_Kochharhttp://en.wikipedia.org/wiki/K.V._Kamathhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Capital_Marketshttp://en.wikipedia.org/wiki/Insurancehttp://en.wikipedia.org/wiki/Bankinghttp://en.wikipedia.org/wiki/Industryhttp://www.nyse.com/about/listed/ibn.htmlhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Private_companyhttp://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Market_capitalisationhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Indiahttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=ICICIhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchange


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BOARD MEMBERS

1. Mr. K. V. Kamath, Chairman2. Mr. Sridar Iyengar3. Dr. Swati Piramal4. Mr. Homi R. Khusrokhan5. Mr. Arvind Kumar6. Mr. M.S. Ramachandran7. Dr. Tushaar Shah8. Mr. V. Sridar9. Ms. Chanda Kochhar, Managing Director & CEO10.Mr. N. S. Kannan, Executive Director & CFO11.Mr. K. Ramkumar, Executive Director12.Mr. Rajiv Sabharwal, Executive Director

VISION

To be the leading provider of financial services in India and a major global bank.

MISSION

We will leverage our people, technology, speed and financial capital to: be thebanker of first choice for our customers by delivering high quality, world-class

service.

Expand the frontiers of our business globally. Play a proactive role in the full realisation of Indias potential. Maintain a healthy financial profile and diversify our earnings across

businesses and geographies.

Maintain high standards of governance and ethics. Contribute positively to the various countries and markets in which we

operate.

Create value for our stakeholders.
http://www.icicibank.com/aboutus/board-of-directors-kv-kamath.htmlhttp://www.icicibank.com/aboutus/board-of-directors-sridar-iyengar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-swati-piramal.htmlhttp://www.icicibank.com/aboutus/board-of-directors-homi-khusrokhan.htmlhttp://www.icicibank.com/aboutus/board-of-directors-arvind-kumar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-ms-ramachandran.htmlhttp://www.icicibank.com/aboutus/board-of-directors-tushaar-shah.htmlhttp://www.icicibank.com/aboutus/board-of-directors-v-sridar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-chanda-kochhar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-ns-kannan.htmlhttp://www.icicibank.com/aboutus/board-of-directors-ns-kannan.htmlhttp://www.icicibank.com/aboutus/board-of-directors-k-ramkumar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-k-ramkumar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-rajiv-sabharwal.htmlhttp://www.icicibank.com/aboutus/board-of-directors-rajiv-sabharwal.htmlhttp://www.icicibank.com/aboutus/board-of-directors-rajiv-sabharwal.htmlhttp://www.icicibank.com/aboutus/board-of-directors-k-ramkumar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-ns-kannan.htmlhttp://www.icicibank.com/aboutus/board-of-directors-chanda-kochhar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-v-sridar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-tushaar-shah.htmlhttp://www.icicibank.com/aboutus/board-of-directors-ms-ramachandran.htmlhttp://www.icicibank.com/aboutus/board-of-directors-arvind-kumar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-homi-khusrokhan.htmlhttp://www.icicibank.com/aboutus/board-of-directors-swati-piramal.htmlhttp://www.icicibank.com/aboutus/board-of-directors-sridar-iyengar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-kv-kamath.html


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HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was

amongst the first to receive an in principle' approval from the Reserve Bank of India

(RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the

Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the

name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC

Bank commenced operations as a Scheduled Commercial Bank in January 1995.

HDFC Bank began operations in 1995 with a simple mission: to be a World

Class Indian Bank. We realized that only a single minded focus on product quality

and service excellence would help us get there. Today, we are proud to say that we are

well on our way towards that goal.

SNAPSHOT

Company Background

Industry Finance - Banks - Private Sector.

Business Group HDFC Group

Incorporation Date 31/12/1994

Public Issue Date 31/12/1995

Face Value 10.0000

Company/Business Registration No INE040A01018

Key Officials CEO Aditya Puri


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FOUNDERS

If ever there was a man with a mission it was Hasmukhbhai Parekh, our

Founder and Chairman-Emeritus, who left this earthly abode on November 18,

994.

Deepak Parekh is the Chairman of HDFC, the countrys leading housing

finance company. A pioneer in mortgage finance, he has enabled scores of Indian

middle class people owning their houses or apartments through affordable loans.

MANAGEMENT

Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with

effect from 6th July 2010. Mr. Vasudev has been a Director of the Bank since October

2006. A retired IAS officer, Mr. Vasudev has had an illustrious career in the civil

services and has held several key positions in India and overseas, including Finance

Secretary, Government of India, Executive Director, World Bank and Government

nominee on the Boards of many companies in the financial sector.

The Managing Director, Mr. Aditya Puri, has been a professional banker for

over 25 years, and before joining HDFC Bank in 1994 was heading Citibank's

operations in Malaysia.

The Bank's Board of Directors is composed of eminent individuals with a

wealth of experience in public policy, administration, industry and commercial

banking. Senior executives representing HDFC are also on the Board.

Senior banking professionals with substantial experience in India and abroad

head various businesses and functions and report to the Managing Director. Given the

professional expertise of the management team and the overall focus on recruiting and

retaining the best talent in the industry, the bank believes that its people are a

significant competitive strength.


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MISSION

1. World Class Indian Bank

2.

Benchmarking against international standards.

3. To build sound customer franchises across distinct businesses4. Best practices in terms of product offerings, technology, service levels, risk

management and audit & compliance

VISION STATEMENT OF HDFC BANK

The HDFC Bank is committed to maintain the highest level of ethical

standards, professional integrity and regulatory compliance. HDFC Banks business

philosophy is based on four core values such as:-

1. Operational excellence.2. Customer Focus.3. Product leadership.4. People.


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AXIS BANK

Axis Bank was the first of the new private banks to have begun operations in

1994, after the Government of India allowed new private banks to be established. The

Bank was promoted jointly by the Administrator of the specified undertaking of theUnit Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and General

Insurance Corporation of India (GIC) and other four PSU insurance companies, i.e.

National Insurance Company Ltd., The New India Assurance Company Ltd., The

Oriental Insurance Company Ltd. and United India Insurance Company Ltd.

The Bank as on 30th September, 2012 is capitalized to the extent of Rs.

414.53 crores with the public holding (other than promoters and GDRs) at 53.80%.

The Bank's Registered Office is at Ahmedabad and its Central Office is

located at Mumbai. The Bank has a very wide network of more than 1600 branches

(including 169 Service Branches/CPCs as on 30th June, 2012). The Bank has a

network of over 10000 ATMs (as on 30th June, 2012) providing 24 hrs a day banking

convenience to its customers. This is one of the largest ATM networks in the country.

The Bank has strengths in both retail and corporate banking and is committed

to adopting the best industry practices internationally in order to achieve excellence.

VISION 2015:

To be the preferred financial solutions provider excelling in customer delivery

through insight, empowered employees and smart use of technology

Core Values

Customer Centricity Ethics Transparency Teamwork Ownership


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BOARD OF DIRECTORS

1. Adarsh Kishore, Chairman

2. Shikha Sharma,

MD & CEO

3. Rama Bijapurkar, Director

4. K. N. Prithviraj, Director

5. V. R. Kaundinya, Director

6. S. B. Mathur, Director

7. Prasad Menon, Director

8. Rabindranath Bhattacharyya, Director

9. Prof. Samir K Barua, Director

10. A.K. Dasgupta, Director

11. Som Mittal, Director


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COMPANY ANALYSIS

Table No.1

1.

DIVIDEND PER SHARE

YEARSMar' 12 Mar' 11 Mar' 10 Mar' 09 Mar' 08

BANKS

ICICI Bank 16.50 14.00 12.00 11.00 11.00

HDFC Bank 4.30 16.50 12.00 10.00 8.50

Axis Bank 16.00 14.00 12.00 10.00 6.00

Source: www.moneycontrol.com

FORMULA:

Dividend per share =

DIVIDEND PER SHARE

Graph No. 1

16.5

14

12

11 11

4.3

16.5

12

10

8.5

16

14

12

10

6

0

2

4

6

8

10

12

14

16

18

Mar'12 Mar'11 Mar'10 Mar'09 Mar'08

RATIO

YEARS

DIVIDEND PER SHARE

ICICI Bank

HDFC Bank

Axis Bank


36/66

INTERPRETATION

The above analysis explains the dividend per share of Private sector banks for

the period of 2008-2012. The dividend per share gives the amount of cash flow from

the company to the owners.

The dividend per share of ICICI Bank is in fluctuating trend. Its dividend per

share is 11 in the year 2008. It increased to 16.5 in the year 2011. HDFC Bank paid

8.5 as dividend per share in the year 2008. After many fluctuations, it reached to 4.3

in the current year i.e., 2012. Axis Bank paid the increasing dividend year by year. In

the year 2008, it paid 6 as dividend per share and in the year 2012, the dividend per

share reached to 16.


37/66

Table No. 2

2. RETURN ON LONG TERM FUNDYEARS


BANKS

ICICI Bank 52.09 42.97 44.72 56.72 62.34

HDFC Bank 76.06 59.91 56.08 83.31 62.34

Axis Bank 88.75 72.29 66.34 97.35 71.17


Return on Long Term Fund =

Graph No. 2

52.09

42.97 44.72

56.72

62.34

76.06

59.9156.08

83.31

62.34

88.75

72.2966.34

97.35

71.17

0

20

40

60

80

100

120


RATIO

YEAR

RETURN ON LONG TERM FUND

ICICI

Bank

HDFC

Bank

Axis

Bank


38/66

INTERPRETATION

The above analysis explains the return on long term funds of Private sector

banks for the period of 2008-2012. The return on long term funds is the amount of

cash flow from the long term investments.

The returns of ICICI Bank are in decreasing trend till the year 2011. Its return

is 62.34 in the year 2008. It decreased to 52.09 in the year 2012. HDFC Bank had

62.34 as returns on long term funds in the year 2008. After many fluctuations, it

reached to 76.06 in the current year i.e., 2012. Axis Bank also received fluctuating

returns year by year. In the year 2008, it got the returns of 71.17 and in the year 2012,

the return on long term fund reached to 88.75.


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Table No. 3

3. Return on Net Worth (%)

YEARS


BANKS

ICICI Bank 10.70 9.35 7.79 7.58 8.94

HDFC Bank17.26 15.47 13.70 15.32 13.83

Axis Bank 18.59 17.83 15.67 17.77 12.21


Return on Net worth =

Graph No. 3

10.7

9.35

7.79 7.58

8.94

17.26

15.47

13.7

15.32

13.83

18.5917.83

15.67

17.77

12.21

0

2

4

6

8

10

12

14

16

18

20


RATIO

YEAR

RETURN ON NETWORTH

ICICI

Bank

HDFC

Bank

Axis

Bank


40/66

INTERPRETATION

The above analysis explains the return on net worth of Private sector banks for

the period of 2008-2012.

The returns of ICICI Bank are in fluctuating trend during the study period. Its

return is 8.94 in the year 2008. It increased to 10.7 in the year 2012. HDFC Bank had

13.83 as returns on networth in the year 2008. After many fluctuations, it reached to

17.26 in the current year i.e., 2012. Axis Bank also received fluctuating returns year

by year. In the year 2008, it got the returns of 12.21 and in the year 2012, the return

on long term fund reached to 18.59.


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Table No. 4

4. Return on assets excluding revaluationsYEARS

Mar'12 Mar'11 Mar'10 Mar'09 Mar'08BANKS

ICICI Bank 524.01 478.31 463.01 444.94 417.64

HDFC Bank127.52 545.53 470.19 344.44 324.38

Axis Bank 551.99 462.77 395.99 284.50 245.13


Return on Assets excluding revaluation =

Graph No. 4

524.01

478.31463.01

444.94

417.64

127.52

545.53

470.19

344.44324.38

551.99

462.77

395.99

284.5

245.13

0

100

200

300

400

500

600


RATIO

YEAR

RETURN ON ASSETS

ICICI

Bank

HDFC

Bank

Axis

Bank


42/66

INTERPRETATION

The above analysis explains the return on assets excluding revaluation of

Private sector banks for the period of 2008-2012. Return on assets financial ratio

reveals how asset intensive a business is.

The returns of ICICI Bank are in increasing trend during the study period. Its

return is 417.64 in the year 2008. It increased to 524.01 in the year 2012. HDFC Bank

had 324.78 as returns on assets in the year 2008. After many fluctuations, it reached to

127.52 in the current year i.e., 2012. Axis Bank also received increasing returns year

by year. In the year 2008, it got the returns of 245.13 and in the year 2012, the return

on long term fund reached to 551.99.


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Table No. 5

5. Total Assets Turnover Ratios

YEARSMar'12 Mar'11 Mar'10 Mar'09 Mar'08

BANKS

ICICI Bank0.09 0.08 0.09 0.10 0.11

HDFC Bank 0.11 0.10 0.10 0.13 0.11

Axis Bank 0.10 0.09 0.09 0.11 0.10


Total assets turnover ratio =

Graph No. 5

0.09

0.08

0.09

0.1

0.110.11

0.1 0.1

0.13

0.11

0.1

0.09 0.09

0.11

0.1

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14


RATIO

YEAR

TOTAL ASSETS TURNOVER RATIO

ICICI

Bank

HDFC

Bank

Axis

Bank


44/66

INTERPRETATION

The above analysis explains the assets turnover ratio of Private sector banks

for the period of 2008-2012. The asset turnover ratio calculates the total sales for each

dollar of asset a company owns. It measures a company's efficiency in using its assets.

The assets turnover ratios of ICICI Bank are in fluctuating trend during the

study period. Its ratio is 0.11 in the year 2008. It increased to 0.09 in the year 2012.

HDFC Bank had 0.11 as assets turnover ratio in the year 2008. After many

fluctuations, it reached to 0.11 in the current year i.e., 2012. Axis Bank also had

increasing ratios year by year. In the year 2008, the assets turnover ratio is 0.1 and in

the year 2012, the assets turnover ratio reached to 0.1.


45/66

Table No. 6

6. Total Debt to Owners FundYEARS

Mar'12 Mar'11 Mar'10 Mar'09 Mar'08BANKS

ICICI Bank 4.23 4.10 3.91 4.42 5.27

HDFC Bank8.24 8.22 7.78 9.75 8.76

Axis Bank 9.65 9.96 8.81 11.49 9.99


Total debt to owners fund =

Graph No. 6

4.234.1 3.91

4.42

5.27

8.24 8.227.78

9.75

8.76

9.659.96

8.81

11.49

9.99

0

2

4

6

8

10

12

14


RATIO

YEAR

TOTAL DEBT TO OWNERS FUND

ICICI

Bank

HDFC

Bank

Axis

Bank


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INTERPRETATION

The above analysis explains the total debt to owners fund of Private sector

banks for the period of 2008-2012.

The total debt to owners fund of ICICI Bank is in fluctuating trend during the

study period. Its ratio is 5.27 in the year 2008. It increased to 4.23 in the year 2012.

HDFC Bank had 8.76 as total debt to owners fund in the year 2008. After many

fluctuations, it reached to 8.24 in the current year i.e., 2012. Axis Bank also had

increasing ratios year by year. In the year 2008, the total debt to owners fund is 9.99

and in the year 2012, the assets turnover ratio reached to 9.65.


47/66

Table No. 7

7. Current Ratio

YEARS


BANKS

ICICI Bank 0.13 0.11 0.14 0.13 0.11

HDFC Bank0.08 0.06 0.03 0.04 0.04

Axis Bank 0.03 0.02 0.03 0.03 0.03


Current Ratio =CurrentAssets

Currentiabilities

Graph No. 7

0.13

0.11

0.14

0.13

0.11

0.08

0.06

0.03

0.04 0.04

0.03

0.02

0.03 0.03 0.03

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16


RATIO

YEAR

CURRENT RATIO

ICICI

Bank

HDFC

Bank

Axis

Bank


48/66

INTERPRETATION

The above analysis explains the current ratio of Private sector banks for the

period of 2008-2012. Current ratio explains the liquidity position of the company.

The current ratio of ICICI Bank is in fluctuating trend during the study period.

Its ratio is 0.11 in the year 2008. It increased to 0.13 in the year 2012. HDFC Bank

had 0.04 as current ratio in the year 2008. After many fluctuations, it reached to 0.08

in the current year i.e., 2012. Axis Banks current ratio for all the years is 0.03 except

in the year 2010 0.02.


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Table No. 8

8. Dividend Payout Ratio Net Profit

YEARS


BANKS

ICICI Bank32.82 35.23 37.31 36.60 33.12

HDFC Bank22.69 22.72 21.72 22.16 22.16

Axis Bank18.15 19.78 22.56 23.16 23.49


Dividend payout ratio =

Graph No. 8

32.82

35.23

37.31 36.6

33.12

22.69 22.7221.72 22.16 22.16

18.15

19.78

22.56 23.1623.49

0

5

10

15

20

25

30

35

40


RATIO

YEAR

DIVIDEND PAYOUT RATIO

ICICI

Bank

HDFC

Bank

Axis

Bank


50/66

INTERPRETATION

The above analysis explains the dividend payout ratio of Private sector banks

for the period of 2008-2012. This is the continuous stream of cash flow to the owners

of shares, apart from the price differentials (capital gains) in the market. The return to

the shareholders, in the form of dividend, out of the company's profit is measured

through the payout ratio.

The dividend payout ratio of ICICI Bank is in fluctuating trend during the

study period. Its ratio is 33.12 in the year 2008. It decreased to 32.82 in the year

2012. HDFC Bank had 22.16 as dividend payout ratio in the year 2008. After many

fluctuations, it reached to 22.69 in the current year i.e., 2012. Axis Banks dividend

payout ratio is 23.49 in the year 2008 and it decreased to 18.15.


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Table No. 9

9. Earnings per Share

YEARS

Mar' 12 Mar' 11 Mar' 10 Mar' 09 Mar' 08

BANKS

ICICI Bank 56.09 44.73 36.10 33.76 37.37

HDFC Bank 22.02 84.40 64.42 52.77 44.87

Axis Bank102.67 82.54 62.06 50.57 29.94


Earnings per share =etprofit

o ofsharesoutstanding

Graph No. 9

56.09

44.73

36.133.76

37.37

22.02

84.4

64.42

52.77

44.87

102.67

82.54

62.06

50.57

29.94

0

20

40

60

80

100

120


RATIO

YEAR

EARNINGS PER SHARE

ICICI

Bank

HDFC

Bank

AxisBank


52/66

INTERPRETATION

The above analysis explains the Earning per share of banks for the period of

2008-2012. This ratio determines what the company is earning for every share.

The earning per share of ICICI Bank is in fluctuating trend during the study

period. Its earning per share is 37.37 in the year 2008. It increased to 56.09 in the

year 2012. HDFC Bank had 44.87 as earning per share in the year 2008. After many

fluctuations, it reached to 22.02 in the current year i.e., 2012. Axis Banks earnings

per share is in increasing trend during the study period. The earnings per share is

29.94 in the year 2008 and it increased to 102.67.


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TABLE NO. 10

MOVEMENT OF PRICE AND RETURNS OF BANKING STOCKS FOR THE

PERIOD 1ST

APRIL 2011 TO 30TH

JUNE 2011

DATE ICICI BANK HFDC BANK AXIS BANK NIFTYPRICE RETURNS PRICE RETURNS PRICE RETURNS INDEX RETURNS

1/4/11 1,114.80 - 2,353.00 - 1,410.30 - 5835 -

4/4/11 1,105.25 -0.86 2,340.00 -0.55 1,411.10 0.06 5842 0.12

5/4/11 1,124.75 1.76 2,400.00 2.56 1,448.00 2.61 5923.9 1.401

6/4/11 1,108.80 -1.42 2,391.00 -0.38 1,420.00 -1.93 5908 -0.268

7/4/11 1,100.00 -0.79 2,375.00 -0.67 1,430.00 0.70 5888.6 -0.329

8/4/11 1,104.50 0.41 2,354.00 -0.88 1,446.00 1.12 5886.8 -0.031

11/4/11 1,085.00 -1.77 2,325.20 -1.22 1,437.20 -0.61 5805.4 -1.383

13/04/11 1,093.80 0.81 2,279.45 -1.97 1,395.00 -2.94 5748 -0.989

15/04/11 1,119.95 2.39 2,375.00 4.19 1,426.05 2.23 5898.8 2.62418/04/11 1,102.10 -1.59 2,378.80 0.16 1,430.00 0.28 5824.4 -1.261

19/04/11 1,084.00 -1.64 2,340.00 -1.63 1,384.00 -3.22 5716 -1.86

20/04/11 1,103.70 1.82 2,360.55 0.88 1,422.00 2.75 5786.1 1.226

21/04/11 1,121.70 1.63 2,382.00 0.91 1,449.00 1.90 5882.9 1.673

25/04/11 1,114.50 -0.64 2,423.00 1.72 1,398.00 -3.52 5859.6 -0.395

26/04/11 1,118.50 0.36 2,386.55 -1.50 1,387.80 -0.73 5876.9 0.294

27/04/11 1,127.95 0.84 2,376.00 -0.44 1,371.20 -1.20 5884.2 0.125

28/04/11 1,118.00 -0.88 2,363.15 -0.54 1,354.90 -1.19 5851.4 -0.558

29/04/11 1,116.00 -0.18 2,325.00 -1.61 1,338.00 -1.25 5782.5 -1.177

2/5/11 1,113.80 -0.20 2,306.00 -0.82 1,297.90 -3.00 5766.9 -0.273/5/11 1,096.00 -1.60 2,288.55 -0.76 1,273.70 -1.86 5689.7 -1.339

4/5/11 1,059.75 -3.31 2,244.00 -1.95 1,229.50 -3.47 5567.7 -2.144

5/5/11 1,057.00 -0.26 2,255.85 0.53 1,239.90 0.85 5531.6 -0.648

6/5/11 1,033.00 -2.27 2,225.00 -1.37 1,212.00 -2.25 5477.7 -0.975

9/5/11 1,093.40 5.85 2,302.00 3.46 1,260.10 3.97 5575.2 1.781

10/5/11 1,081.00 -1.13 2,278.00 -1.04 1,239.95 -1.60 5555.6 -0.352

11/5/11 1,078.00 -0.28 2,260.00 -0.79 1,225.00 -1.21 5547.2 -0.15

12/5/11 1,070.00 -0.74 2,250.00 -0.44 1,223.00 -0.16 5537.8 -0.169

13/05/11 1,055.00 -1.40 2,232.00 -0.80 1,210.50 -1.02 5492.4 -0.821

16/05/11 1,063.50 0.81 2,245.00 0.58 1,241.60 2.57 5541.7 0.89917/05/11 1,058.00 -0.52 2,252.00 0.31 1,226.10 -1.25 5496.1 -0.823

18/05/11 1,045.00 -1.23 2,258.10 0.27 1,223.00 -0.25 5448.2 -0.872

1

Equity Analysis and Share Price Movemnt of a Company Selectedat Hydera

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