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A

PROJECT REPORT

ON

EQUITY VALUATIO OF BANKING SECTORS AND ITS

COMPARISION WITH MARKET PERFORMANCE

SUBMITTED IN

PARTIAL FULFILMENT FOR

THE DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION

(BBA)

SUBMITTED BY

SHAH BHAVYA B.

PROJECT GUIDE

MRS. BENAIFER D. DUMASIYA

THE SURAT PEOPLES CO.OP.BANK COLLEGE OF BUSINESS

ADMINISTRATION, UDHNA,

SURAT

(2010-11)


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DECLARATION

I, SHAH BHAVYA B. the undersigned, here by, declare that this dissertation

titled EQUITY VALUATION OF BANKING SECTOR AND ITS

COMPARISION WITH MARKET PERFORMANCE is an original and

bonafide work carried out under the guidance of MRS. BENAIFER

DUMASIYA, Lecturer, The Surat Peoples Co-Op. Bank College of Business

Administration, Udhna, Surat.

The empirical findings in this report are based on the data collected and have not

been taken from any other report.

This dissertation does not form any basis for other degree or diploma programme.

SHAH BHAVYA B. (F-59)

Date : _________________

Place : _________________


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ACKNOWLEDGEMENT

The satisfaction and euphoria that accompany the successful completion of any

task would be incomplete without the mention of the leaders, whose constant

guidance and encouragement crown all the efforts with success.

I am highly obliged to the Veer Narmad South Gujarat University for arranging

the programme of practical training in Bachelor of Business Administration in

such a manner.

I would like to extend my gratitude to all the staff and especially to MISS.

JIGISHA RELIAWALA of JAINAM SHARE CONSULTANTS PVT.

LTD. , who provided me useful information and data regarding the subject withtheir cent percent participation and supported in making this project report a

successful task. It was a memorable experience to work with them and complete

my winter training.

It is my privilege to express my deep sense of gratitude to MRS. BENAIFER D.

DUMASIYA for her efforts, guidance, valuable comments and suggestions for

making this project report. She helped me to complete my report on the practical

study and gave contribution to improve and expand my practical knowledge.

Finally, I express my intense gratitude to my parents whose blessings has helped

me to translate my efforts into fruitful achieve ment.


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Fax No. : (0261) 2277739 E-Mail : [email protected] 0261-2270825, 2277739, 2273542

The Surat Peoples Co.op.Bank College of Business Administration(SELF FINANCED)

(Managed by Udhna Academy Education Trust)214, Ranchhod Nagar, Opp. Swaminarayan Temple, Surat-Navsari Road, Udhna ,Surat-394210

CERTIFICATE

This is to certify that Mr. SHAH BHAVYA B. has prepared the Project

Report entitled EQUITY VALUATION OF BANKING SECTOR AND ITS

COMPARISION WITH MARKET PERFORMANCE under my guidance

& supervision.

This project embodies the result of his work & is of the standard

expected of a candidate for the successful completion of Bachelor of

Business Administration Degree.

Date : _________________

Place : _________________

_____________________ ________

(Faculty Guide) (Vice Principal)

Mrs. Benaifer d. dumasiya Mrs. Daisy Sheby Thekkanal


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EXECUTIVE SUMMARY

Banks are among the main participants of the financial system in India.

Banking offers several facilities & opportunities. This section provides

comprehensive and updated information, guidance and assistance on all areas of

banking in India. The Main Purpose of the project is to select the four banks from

the banking sector for the investment through the ratio analysis & common sized

statement.

I have chosen four banks from banking sector for my project work because

presently it is the one of the fastest growing sector and having vast future scope in

India. I have chosen project study in financial subject because this field is very

challenging and it posses full of creativity and art. And, banking sectors is one of

the best places to invest.

For my project work I have selected BANKING SECTORSdue to few reasons:

BANKING SECTORS posses a very reputable brand image in India and

abroad and is made of very good standing management team. For sharpening my

knowledge and skills, it is the best place to shape my theoretical knowledge in to

practice.

The reason for choosing Banks from banking sector is that The Investors

having well and widens scope for investment.

For the purpose of my study I have gathered data regarding the Banking

Industry and research work by referred websites, annual report of the banks etc.

At Last I have shown the conclusion and suggestion for the investor. The

conclusion part indicates to the investors in which bank sectorhe/she should invest

to get maximum return out of it.


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I have tried my best to cover all the practical and theoretical aspects related

to this topic to fulfill my objective which to provide guidelines to investors. If this

report can provide suitable guidance to investor this would be the best reward for

me.


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INDEX

SR NO. TOPIC PAGE NO.

I DECLARATION I

II ACKNOWLEDGEMENT Ii

III CERTIFICATE-I iii

IV CERTIFICATE-II iv

V EXECUTIVE SUMMARY v

VI INDEX vii

1 Industry Profile

2 Company profile

3 Introduction to Project

4 Theoretical Concept

5 Research Methodology

6 Analysis and Interpretation of the Data

7 Findings & Conclusions

8 Recommendation

Bibliography

Annexure


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INDUSTRY PROFILE

The word Bank is derived from the Italian word Banco the Latin word

Bancus and the French word Banque which means a Bench and also from the

German word Banck which means a Joint Stock Fund or a Common Fund (i.e.

heap money) rose from a large number of members on the public.

The Banking company in India has been defined in the Banking Companies

Act 1949 as which transacts the business of Banking which means accepting for

the purpose of lending or investments of deposits of money from the public

repayable on demand or otherwise withdraw able by cheque, drafts, orders or

otherwise.

In England, banking had its origin with the London goldsmiths, who in the

17th

century began to accept deposits from merchants and others for safe keeping

of money and other valuables. As public enterprise, banking made its first

appearance in Italy in 1157 when the Bank of Venice was founded.

MODERN BANKING :-The Merchant-In this word of Crowther to this day the title merchant

bank is reserved to the usage of more exclusive private banking firms, nearly

everyone of which can trace its ancestry back to a trade or commodities more

tangible (though hardly more profitable) than money.

1. THE GOLDSMITH:-

Goldsmith deal with precious metals, they necessarily provided secure

safe to protect them. In a period when money consisted of gold and silver, people

largely because of the danger of theft, started leaving their precious bullion and


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coins in the custody of goldsmiths. As the practice of safeguarding others, money

become widespread the goldsmiths began imposing charges for the safekeeping

service.

2. THE MONEY LENDERS:-

The last stage in the development of modern banking was when the

goldsmiths became moneylenders. The goldsmiths realized that it was not

necessary to hold hundred percent of the coins deposited with them and average

daily collections were enough to meet the average daily withdrawals and only a

contingency reserve was required for the periods when the withdrawal exceeds its

reserve loaned out of the remaining deposits on interest, thus the goldsmiths have

become moneylenders. In this way, the system of reserve banking was born. Thus

a goldsmith became a banker, started performing the two major functions of bank

i.e. receiving deposits and advancing loans.

THE CONCEPT OF DEVELOPMENT BANKING:-In the field of industrial finance, the concept of development bank is of

recent origin. In a country like India, the emergence of development banking is a

post-independence phenomenon. In the western countries, however, development

banking had a long period of evolution. The origin of development banking may be

traced to the establishment of Socio General Pour favouriser Industrial National in

Belgium in 1822. But the notable institution was the Credit Mobilize of France,

established in 1852, which acted as industrial financier.In 1920, Japan established the Industrial Bank of Japan to cater to the

financial needs for industrial development. In the post-war, the Industrial

Development Bank of Canada(1944), the Finance Corporation for industry

Ltd(FCI) and the industrial and Commercial Finance Corporation Ltd (ICFC) of


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England (1945) etc., were established as modern development banks to provide

term loans to industry. In 1966, the UK Government set up the Industrial

Reorganization Corporation (IRC)

HISTORY OF BANKING IN INDIAThe first Bank in India was established in 1786. From 1786 till today the

journey of Indian Banking system can be segregated into three distinct stages.

They are as mentioned below:

Early stage from 1786 to 1969 of Indian Banks. Nationalization of Indian Banks up to 1991 prior to Indian Banking

sector reforms.

New stage of Indian Banking system with the advert of IndianFinancial and Banking sector reforms after 1991.

STAGE I:-During the first phase the growth was very slow and Banks also

experienced periodic failures between 1913 and 1948. And then Reserve Bank

of India came in 1935, under the Act of reserve Bank of India, 1934.

STAGE II:-Government took major steps in Indian Banking sector reforms after

independence. In 1955, it nationalized Imperial Bank of India; the General Bank

of India was set up in the year 1786. Next came, Bank of Hindustan and Bengal

Bank. The East India Company established Bank of Bengal (1809), Bank of

Bombay (1840) and Bank of Madras (1843) as independent units and called it

as Presidency Banks. These three Banks were amalgamated in 1920 and Imperial


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Bank of India was established which started as private with extensive Banking

facilities on a large scale especially in rural and semi-urban areas.

Seven Banks forming subsidiary of State Bank of India was nationalized

in 1960. On 19th

July, 1969 major process of nationalization was carried out and

14 major commercial Banks in the country was nationalized (Central Bank of

India, Indian Overseas Bank, Bank of Baroda,Bank of Maharashtra, Dena Bank,

Union Bank, Punjab National, Allahabad Bank, Syndicate Bank, United Bank of

India, Canara Bank, UCO Bank, Indian Bank, Bank of India.)

Second phase of nationalization was carried out in 1980 with six more

Banks (Andhra Bank, Punjab and Sindh Bank, Vijaya Bank, Corporation Bank,

New Bank of India, Oriental Bank of Commerce)

STAGE III:-This stage has introduced many more products and facilities in the

Banking sector with its reforms measure in 1991, under the chairmanship of M.

Narasimham. A committee was set up in his name, which worked for the

liberalization of banking practices.

The country is now flooded with foreign Banks and their ATM stations

with Phone Banking and Net Banking. The entire system became more convenient

and swift.

Banks are among the main participants of the financial system in India.

Banking offers several facilities & opportunities. This section provides

comprehensive and updated information, guidance and assistance on all areas of

banking in India.

The Indian banking can be broadly categorized into:


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1) Public Sector Banks

2) Private Sector Banks

Public Sector Banks are also known as nationalized banks that are owned by

the government. State Bank of India, Allahabad Bank, Andhra Bank, Bank of

Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Indian Bank, Indian

Overseas Bank, Oriental Bank of Commerce, Punjab & Sind Bank, Industrial

Development Bank of India Ltd., Punjab National Bank, Syndicate Bank, UCo

Bank, Union Bank of India, Vijaya Bank are public sector banks.

ICICI Bank, HDFC Bank, UTI Bank, IDBI Bank, ING Vysya Bank,

Jammu and Kashmir Bank, Kodak Bank is Private Sector Banks.

The Reserve Bank of India acts a centralized body monitoring any

discrepancies and shortcomings in the system. Since the nationalization of banks in

1969, the public sector banks or the nationalized banks have acquired a place of

prominence and has since then seen tremendous process. The need to become

highly customer focused has forced the slow- moving public sector banks to adopt

a fast track approach.

The nationalized banks (i.e. government owned banks) continue to

dominate the Indian banking area. Industry estimates indicates that out of 274

commercial banks operating in India, 223 banks are in the public sector and 51 are

in the private sector. The private sector bank grid also includes 24 foreign banks

that have started their operation here.

The Software Packages for Banking Applications in India had their

beginnings in the middle of 80s, when the Banks spurred on by RBI and the

Rangarajan Committee Report, started computerizing the branches in a limited

manner.


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BANKING SYSTEM

RESERVE BANK OF INDIA

(Central Bank and Supreme Monetary authority)

SCHEDULED BANK

Commercial Banks Co-operatives

(Foreign Banks) (Regional Rural Banks) (Urban Co-operatives) (State Co-operatives)

196 165240

Public

Sector

Banks(27)

Private

Sector

Banks(27)

Other

Nationalized

Banks

SBI &

Associated

Banks (8)


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History:

Jainam Share Consultants Pvt. Ltd. was incorporated on 10th November 2003 and it is

mainly carrying on the broking business in the equity market. The company has acquired

memberships of the two major stock exchanges of India;

National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Ltd. (BSE).The company is also registered as a Depository Participant (DP) with Central

Depository Services Ltd. (CDSL).

Jainam Share Consultants Pvt. Ltd.:-

The company commenced its BSE operations from 4th October 2004 and its NSE

operations from 17th March 2005. Since incorporation the company has been consistently

growing with the present client base of around 11000+ clients. The company has

approximately 80 outlets to cater to the needs of the investors for their equity trading in the

stock exchanges.

The companys registered office is situated at,

M-5/6, Malhar Complex,

Dumas Road, Ichchanath,

Surat 395007.

Board of Directors:-

1 Dr. Jitendra Shah

2 Mr. Chirag Shah

3 Mr. Milan Parikh

4 Mr. Nipun Shah

5 Mrs. Purna Shah


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Mission:-

TO PROVIDE WORLD CLASS SERVICES AND CREATE WEALTH FOR

EVERY ONE

Vision 2015:-

TO BE THE MOST PREFERRED ORGANIZATION PROVIDING ALL

FINANCIAL SERVICES ACROSS THE COUNTRY

Products and services of the company:

1.

Equity2. Derivatives3. Depositary4. Commodities5. Systematic trading6. Internet trading7. IPO -Initial Public Offerings8. Mutual fund9. Insurance

Jainam Share Consultants Pvt. Ltd.:

y Member: Bombay Stock Exchange of India Ltd. (BSE)Trading Member ID: 2001

SEBI Registration No.: INB011211639 (CM Segment)


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y Member: National Stock Exchange of India Ltd. (NSE)Trading Member ID: 12169

SEBI Registration No.: INB231216939 (CM Segment)

SEBI Registration No.: INF231216939 (Derivatives Segment)

y Member: Central Depository Services (I) Ltd. (CDSL)DP ID: 41500

SEBI Registration No.: IN-DP-CDSL-322-200

Milestone of company:

2005 15th December

Acquired Membership of

Central Depository

service(India)Ltd.

2004 23rd

December


National Stock Exchange

of India Ltd. (Cash Seg.)

2004 17th

December


National Stock Exchange

of India Ltd. (F & O Seg.)

2004 30th

December


Bombay Stock Exchange

Ltd. (Cash Seg.)

2003 10th

November Company Registered


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DEPARTMENTS:-

Human Resources Department Marketing & Sales Department Finance Department IT & Software Department KYC (Know Your Client) Department DP Department Customer Care DepartmentResearch Department

JAINAM ORGANIZATION HIERARCHY:

Board of Directors:

HRM

Ms. Shital Mehta &

Ms.Trupti

Operation

Mr. Nipun

Shah

Finance

Hemal Zaveri

Marketing

Ms. Chetna

Bhandari

Research

Mr. Rohan

Mehta

System/

technical

Irfan Shaikh

Commodity

Mr.Devesh

Shah

Customer

care

Mr. Dhawal

Panchal

Demat a/c

Mr. Kartik

Balsar

Security &

KYC

Ms. Hetal

Shah

Account

Opening

Ms. Nisha

Dudhwala

RMS (Risk

management

system)

Mr. Nilesh Modi

General Account &

Banking

Mutual Fund

Mr. Abhishek

Shah

Software

Mr. Nikhil

Tandel

Compliance

Mr. Saurabh

Shah

Business

Development

Mr. DilipMorakhi a

Source: HR department


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PROFILE OF THE SELECTED BANKS

STATE BANK OF INDIA

Type : - Public (BSE & NSE: SBI)

Founded : - Calcutta, 1806 (as Bank of Calcutta)

Location : - Corporate Centre, Madame Cama Road, Mumbai.

Industry : - Banking Insurance

Product : - Loans, Credit Cards, Savings, Life Insurance.

Website : - www.statebankofindia.com

GROWTH :-State Bank of India has often acted as guarantor to the Indian

Government, most notably during Chandra shekhars tenure as prime minister of

india.With more than 9400 branches and a further 4000+ associate banks branches, the

SBI has an extensive coverage. State Bank of India has electronically networked most of

its branches. The bank has one of the largest ATM network in the region. State Bank of

India has steady growth over its history, through it was marred by the Harshad Mehta

scam in 1992.In the recent years, and the bank has sought to expand its overseas

operations by buying foreign banks. It is the only Indian bank to feature in the top 100

world banks list in fortune 500 global rating and various other rankings.


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BANK OF BARODA

Head Office : - Suraj Plaza 1, Sayaji Ganj, Baroda 390005

Ph: (0265) 2361852(10lines)

Fax: (0265) 2362395, 2361824, 2361806.

Corporate Centre : - Bank Of Baroda, Baroda Corporate Centre,

Plot No. C-26, Block G, Bandra Kurla Complex,

Bandra (East), Mumbai 400051

Ph: (022) 6698 5000-04 (PBX), Fax: (022) 2652 1955.

Branches :-

Website : - http:www.bankofbaroda.com

BSE Code : - 532134

NSE Code : - BANKBARODAEQ

Area No. of Branches

Metro 716

Urban 616

Semi-Urban 798

Rural 1167

Total (Indian) 3297

Foreign (Overseas) 84

Total (Global) 3381


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HISTORY:-It all started with a visionary Maharaja's foresight into the future of trade and

enterprising in his country. On 20th July 1908, under the Companies Act of 1897,

and with a paid up capital of Rs 10 Lacs started the legend that has now translated

into a strong, trustworthy financial body, THE BANK OF BARODA.

It has been a wisely growth, involving corporate wisdom, social pride and the

vision of helping others grow, and growing itself.

The founder, Maharaja Sayajirao Gaekwad, with his insight into the

future, saw "a bank of this nature will prove a beneficial agency for lending,

transmission, and deposit of money and will be a powerful factor in the

development of art, industries and commerce of the State and adjoining territories."

VISSION:-

It has been a long and eventful journey of almost a century across 26

countries. Starting in 1908 from a small building in Baroda to its new hi-rise

and hi-tech Baroda Corporate Centre in Mumbai is a saga of vision,

enterprise and corporate governance.

It is a story scripted in corporate wisdom and social pride. It is a

story of ordinary bankers and their extraordinary contribution in the ascent

of Bank of Baroda to the formidable heights of corporate glory. It is a story

that needs to be shared with all those millions of people - customers,

stakeholders, employees & the public at large - who in ample measure, have

contributed to the making of an institution.


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MISSION:-To be a top ranking National Bank of International Standards committed to

augmenting stake holders' value through concern, care and competence.

BOARD OF DIRECTORS:-(Chairman & Managing

Profit & Loss A/c Ratio

Balance Sheet Ratio

Inter-Statement Ratio

1. Gross Profit Ratio

2. Net Profit Ratio

3. Operating Ratio

1. Current Ratio

2. Liquid Ratio

3. Debt Equity Ratio

1. Return on Investment Ratio

2. Return on Propritory Fund

Ratio

3. Net Profit to Total Assets Ratio

Shri. M. D.Mallya

EXECUTIVE DIRECTOR

DIRECTOR

DIRECTOR

1. Shri Rajiv KumarBakshi

2. Shri N S Srinath

1. Shri Alok Nigam2. Shri R. Gandhi3. Shri Ajay Mathur

1. Dr. Masarrat Shahid2. Shri Satya Dev Tripathi3. Dr. Dharmendra Bhandari


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GROWTH:-It all started with a visionary Maharaja's uncanny foresight into

the future of trade and enterprising in his country. On 20th July 1908, under

the Companies Act of 1897, and with a paid up capital of Rs 10 Lacs started

the legend that has now translated into a strong, trustworthy financial body,

THE BANK OF BARODA.

It has been a wisely orchestrated growth, involving corporate

wisdom, social pride and the vision of helping others grow, and growing

itself in turn. The founder, Maharaja Sayajirao Gaekwad, with his insight

into the future, saw "a bank of this nature will prove a beneficial agency for

lending, transmission, and deposit of money and will be a powerful factor in

the development of art, industries and commerce of the State and adjoining

territories."

Between 1913 and 1917, as many as 87 banks failed in India.

Bank of Baroda survived the crisis, mainly due to its honest and prudent

leadership. This financial integrity, business prudence, caution and an

abiding care and concern for the hard earned savings of hard working

people, were to become the central philosophy around which business

decisions would be effected. This cardinal philosophy was over the 94 years

of its existence, to become its biggest asset. It ensured that the Bank

survived the Great War years. It ensured survival during the Great

Depression. Even while big names were dragged into the Stock Market scam

and the Capital Market scam, the Bank of Baroda continued its triumphant

march along the best ethical practices.


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No history is complete without mention of its heroes, mostlyordinary people, who turn in extra-ordinary performances and contribute to

building an institution. Over the years, there have been thousands of such people.

The Bank salutes these "unknown soldiers" who passionately helped to create

the legend of Bank of Baroda.

There were also the leaders, both corporate and royal, who provided the vision and

guided the Bank through trail blazing years, and departing, left behind footprints

on the sands of time. This Roll of Honor will be incomplete without mention of

men, of the stature of Maharaja Sayajirao Gaekwad, Sampatrao Gaekwad,

Ralph Whitenack, Vithaldas Thakersey, Tulsidas Kilachand and NM

Chokshi. Bank of Baroda salutes these leaders whose vision helped to create an

institution.


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ICICI BANK

Type : - Public (BSE & NSE: ICICI)

Founded : - Calcutta, 1806 (as Bank of Calcutta)

Location : - Corporate Centre, Madame Cama Road, Mumbai.

Industry : - Banking Insurance, Capital Markets.

Product : - Loans, Credit Cards, Savings, Life Insurance.

Website : - www.icicibank.com

Representative offices : - United States, China, United Arab Emirates,

Bangladesh and South Africa.

ICICI Bank Head Office :- ICICI Bank 9th Floor, South Towers

ICICI TowersBandra Kurla Complex

Bandra (E)Mumbai

Phone : +91-22-2653 1414E-Mail: [email protected] ; [email protected]

GROWTH :-

ICICI Limited was established in 1955 by the World Bank, the Government

of India and the Indian Industry, for the promotion of industrial development in India by

giving project and corporate finance to the industries in India.

ICICI Bank (Industrial Credit and Investment Corporation of India) is Indias

largest private bank and also the largest bank in the country. ICICI Bank has wide range of

banking products and financial services to corporate and retail customers through a variety of

delivery channels and through its specialized subsidiaries and affiliates in the areas of investmentbanking, life and non life insurance, venture capital and asset management. ICICI banks equity

shares are listed in India on stock exchanges at Kolkata and vadodara, the stock exchange,

Mumbai and the national stock exchange of India Ltd and its ADRs are listed on the New York

Stock Exchange (NYSE).


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ICICI Bank has grown from a development bank to a financial conglomerate and has

become one of the largest public financial institutions in India. ICICI Bank has financed all the

major sectors of the economy, covering 6,848 companies and 16,851 projects. As of March 31,

2000, ICICI had disbursed a total of Rs. 1, 13,070 crores, since inception.

ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial

institution, in 1994. Four years later, when the company offered ICICI Bank's shares to the

public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank offered made an

equity offering in the form of ADRs on the New York Stock Exchange (NYSE), thereby

becoming the first Indian company and the first bank or financial institution from non-Japan Asia

to be listed on the NYSE. In the next year, it acquired the Bank of Madura Limited in an all-

stock amalgamation. Later in the year and the next fiscal year, the bank made secondary market

sales to institutional investors.

With a change in the corporate structure and the budding competition in the Indian Banking

industry, the management of both ICICI and ICICI Bank were of the opinion that a merger

between the two entities would prove to be an essential step. It was in 2001 that the Boards of

Directors of ICICI and ICICI Bank sanctioned the amalgamation of ICICI and two of its wholly-

owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital

Services Limited, with ICICI Bank. In the following year, the merger was approved by its

shareholders, the High Court of Gujarat at Ahmedabad as well as the High Court of Judicature at

Mumbai and the Reserve Bank of India.

PRESENT SCENARIO :-ICICI Bank has its equity shares listed in India on Bombay Stock Exchange and the

National Stock Exchange of India Limited. Overseas, its American Depositary Receipts

(ADRs) are listed on the New York Stock Exchange (NYSE). As of December 31, 2008,

ICICI is India's second-largest bank, boasting an asset value of Rs. 3,744.10 billion and

profit after tax Rs. 30.14 billion, for the nine months, that ended on December 31, 2008.


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HDFC BANK LTD

Registered office : - HDFC Bank House Senapati Bapat Marg,

Lower Parel, Mumbai (Maharashtra)-400013

Headquarter of HDFC : - 'Trade Star', 2nd floor, 'A' Wing,

Junction of Kondivita and M.V. Road,

Andheri-Kurla Road,

Andheri (East), Mumbai - 400 059.

Tel: (Board) 2822 0055 / 55516666

(Fax): 2822 9998 / 2822 2414

BSE Code : - 513599

Network : - More than 468 branches over 212 cities across the

Country.

ATMs : - The ATMs of HDFC India can be accessed by all

Domestic and international Visa/Master Card, Visa

Electron/Maestro, Plus/Cirrus and American Express

Credit/Charge cardholders.

Product : - Home Loan, Standard Life Insurance, Mutual Fund,

Securities, Credit Cards, Etc.

Website : - www.hdfcbank.com

Listing : - HDFC India has been listed on the Stock

Exchange, Mumbai and the National Stock

Exchange. The bank's American Depository Shares

Are listed on the New York Stock Exchange

(NYSE) under the symbol "HDB".


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GROWTH:-HDFC Bank 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 from Housing Development

Finance Corporation Limited (HDFC), in 1994 during the period of liberalization of the banking

sector in India. HDFC India was incorporated in August 1994 in the name of 'HDFC Bank

Limited'. HDFC India commenced operations as a Scheduled Commercial Bank in January 1995.

HDFC has branch offices in all major cities in India like Calcutta, Chennai, Delhi, Bangalore,

and Hyderabad.

HDFC is India's premier housing finance company and enjoys an impeccable

track record in India as well as in international markets. Since its inception in 1977, the

Corporation has maintained a consistent and healthy growth in its operations to remain the

market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling

units. HDFC has developed significant expertise in retail mortgage loans to different market

segments and also has a large corporate client base for its housing related credit facilities. With

its experience in the financial markets, strong market reputation, large shareholder base and

unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian

environment.

HDFC Bank's mission is to be a World Class Indian Bank. The objective is to

build sound customer franchises across distinct businesses so as to be the preferred provider of

banking services for target retail and wholesale customer segments, and to achieve healthy

growth in profitability, consistent with the bank's risk appetite. The bank is committed to

maintain the highest level of ethical standards, professional integrity, corporate governance and

regulatory compliance. HDFC Bank's business philosophy is based on four core values:

Operational Excellence, Customer Focus, Product Leadership and People.

DITRIBUTION NETWORK :-HDFC Bank is headquartered in Mumbai. As on December 31, 2009, the Bank has a

network of 1725 branches in 771 cities across India. All branches are linked on an online

real-time basis. Customers in over 500 locations are also serviced through Telephone

Banking. The Bank's expansion plans take into account the need to have a presence in all


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major industrial and commercial centres, where its corporate customers are located, as

well as the need to build a strong retail customer base for both deposits and loan

products. Being a clearing / settlement bank to various leading stock exchanges, the Bank

has branches in centres where the NSE / BSE have a strong and active member base.

The Bank also has a network of 3898 ATMs across India. HDFC Bank's ATM network

can be accessed by all domestic and international Visa / MasterCard, Visa Electron /

Maestro, Plus / Cirrus and American Express Credit / Charge cardholders.

MANAGEMENT :-Mr. Jagdish Capoor took over as the Bank's Chairman (non-executive) in July

2001. Prior to this, Mr. Capoor was a Deputy Governor of the Reserve Bank of India.

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

Over 25 years. Before joining HDFC Bank in 1994, he 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.

AWARDS AND ACCOLADES :-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 qualityAnd service excellence would help us get there. Today, we are proud to say that we are

Well on our way towards that goal. Over the years, the Bank has received recognition

and awards from several leading organizations and publications, both domestic and

International.


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SOME IMPORTANT AWARDS THAT THE BANK WON:-

Euro money Private Banking and Wealth Management

Poll 2010

Best Local Bank in India (second

year in a row) & Best PrivateBanking Services overall (moved up

from No. 2 last year)

Financial Insights Innovation Awards 2010 Innovation in Branch Operations -

Server Consolidation Project

Global Finance Award Best Trade Finance Provider in Indiafor 2010

IBA Banking Technology Awards 2009 Best Risk Management Initiative &Best Use of Business Intelligence

SPJIMR Marketing Impact Awards (SMIA) 2010 2nd Prize

Business Today Best Employer Survey Listed in top 10 Best Employers inthe country

Business World Most Tech-friendly Bank

Outlook Money NDTV Profit Awards 2009 Best Bank

Forbes Asia Fab 50 Companies in Asia Pacific

UTI MF-CNBC TV18 Financial Advisor Awards 2009 Best Performing Bank

FE Best Bank Awards 2009 Best in Strength and Soundness

Award and 2nd Best private Bank inIndia award

Euro money Awards 2009 Best Bank in India

Economic Times Brand Equity & Nielsen Research

Annual survey 2009

Most Trusted Brand - Runner Up

Asia Money 2009 Awards Best Domestic Bank in India

IBA Banking Technology Awards 2009 Best IT Governance Award - Runnerup

Global Finance Award Best Trade Finance Bank in India for

2009

IDRBT Banking Technology Excellence Award 2008 Best IT Governance and ValueDelivery

Asian Banker Excellence in Retail Financial Services Asian Banker Best Retail Bank inIndia Award 2009


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INTRODUCTION TO PROJECT

Banking Regulation act of India, 1949 defines banking as accepting for

the purpose of lending or investment of deposits of money from the public,

repayable on demand or otherwise and withdrawals by cheques, draft, order.

The arrival of foreign and private banks with their superior state of the

art technology based services pushed Indian banks also to follow suit by going in

for the latest technologies so as to meet the threat of competition and retain

customer base. The evolution of IT services outsourcing in the Indian banks has

presently moved on to the level of facilities management (FM).Banks now looking

at business process management (BPM) to increase returns on investment, improve

customer relationship management (CRM) and employee productivity. For, these

entities sustaining long term CRM have become a challenge with almost everyone

in the market with similar products.

Banking Business and Technology:-

Internet, wireless technology and global straight through processing have

created a paradigm shift in the banking industry from brick and mortar banks to

banking virtually across time zones, geographical locations, acess points and

delivery channels. Keeping in tune with this various services are offered through

companies to the banking industry in realizing operational solutions.

E-Banking and E-Commerce.Application software design, development, implementation, training and

support in the areas of retail banking, wholesale banking, and treasury.

Integration with a variety of electronic delivery channels like ATM, telebanking, internet, mobile banking and call center operations.


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Facilities management, outsourcing and system integration services.Performance measurement, review and tunning services.Real time gross settlements, payment gateways.

Overall banking in India is considered as fairly mature in terms of

supply, product range and reaches even though reach in rural India still

remains a challenge for the private sector and foreign banks. Even in terms

of quality of assets and capital adequacy, Indian banks are considered to

have clean, strong and transparent balance sheets as compared to other banks

in comparable economies in its region. The reserve bank of India is anautonomous body, with minimum pressure form the government. The stated

policy of the bank on the Indian rupee is to manage volatility without stated

exchange rate and this mostly been true.

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

some time especially in its services sector, the demand for banking service

especially retail banking, mortgages and investment services are expected to

be strong.


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RECENTTRENDSINBANKS:-

Entry of new generation banks, Change in the process, methods and

techniques, New products and services (product innovation and branding),

Improvement in service quality, Increasing focus on retail banking, Shift towards

branches banking, Increasing non interest and fee based income, Bank assurance-

collaboration between banking and insurance companies, Outsourcing of resources

(Human and Non Human),Mergers and consolidations ,Corporate governance and

business transformation, Steady reduction in interest, New delivery channels.

MAJOR PLAYERS IN THE BANKING BUSINESS ECO SYSTEM:

Regulatory authorities Government, Management Shareholders Employees Depositors Borrowers and Competitors

FUNCTION OF BANKS:-

Although the basic type of services offered by a bank depends upon the

type of bank and the country, services provided usually include:

Taking deposits from their customers and issuing checking and savingsaccounts to individuals and businesses.

Extending loans to individuals and businesses. Cashing cheques. Issuing credit cards, ATM cards, and debit cards.


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Storing valuables, particularly in a safe deposit box. Consumer & commercial financial advisory services. Pension & retirement planning.

TYPES OF BANKS:Banks' activities can be divided into

Retail banking, dealing directly with individuals and small businesses. Business banking, providing services to mid-market business, Corporate

banking, directed at large business entities, and Investment banking, relating

to activities on the financial markets.

Most banks are profit-making, private enterprises. However, some are owned by

government, or are non-profits.

Central banks are non-commercial bodies or government agencies often

charged with controlling interest rates and money supply across the whole

economy. They generally provide liquidity to the banking system and act as Lender

of last resort in event of a crisis.


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THEORETICAL CONCEPT

INTRODUCTION TO FINANCIAL STATEMENTSFinancial Statements are prepared for the purpose of presenting a periodical

review or report on the progress by the management and deal with (a) the status of

investments in the business and (b) the results achieved during a period under

review. The statement disclosing status of investments is known as Balance sheet

and the statement showing the result is known as profit & loss Account. The

Balance sheet shows the financial position or condition of the firm at a given point

of time. It provides a snapshot and may be regarded as a static picture. The income

statement or profit & loss Account reflects the performance of the firm over period

of time.

A firm communicates financial information to the users through financial

statements and reports. The financial statements contain summarized information

of the firms financial affaiers, organized systematically. They are means to present

the firms financial situation to users. The preparation of the financial statements is

the responsibility of top management. The two basic financial statements prepared

for the purpose are the two statements i.e. Balance sheet and Profit and loss

Account. As these statements are used by investors and financial analysts to

examine the firms performance in order to make investment decisions, they

should be prepared very carefully and contain as much information as possible.

Recently a number of schedules are also being used to supplement the data and

information contained in the above statements. Thus, schedule of fixed assets,

schedule of debtors, schedule of creditors, schedule of Reserves etc. are some of

the schedules which are generally attached to the statements. The schedules are


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considered as part of the statements for the purpose of analysis and in fact they

constitute the first step towards the analysis of certain data in financial statements.

The Financial statements are prepared from the accounting records maintained by

the firm. The generally accepted accounting principles and procedures are followed

to prepare these statements. It seems quite desirable to discuss the nature of each of

the financial statements.

PERSONS INTERESTED IN FINANCIAL STATEMENTThe following are the groups who like to make use of financial

statements.

1] Owners

2] Management

3] Creditors

4] Employees

5] Investors

6] Government

7] Consumers

8] Stock Exchange

LIMITATION OF FINANCIAL STATEMENTS1] The financial position of a business concern is affected by several factors

like economic, social and financial but only financial factors are being

recorded in these financial statements. Economic and social factors are left

out. Thus the financial position disclosed by these statements is not correct

and accurate.

2] The profit revealed by the profit and loss account and the financial

position disclosed by the balanced sheet cannot be exact. Exact position can


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be known when the business is liquidated i.e. after it has put down its

shutters.

3] Many items are left to the personal judgments of the accountant. For

instance, provision of depreciation, stock valuation, bad debts provision

etc.depend on the personal judgments of accountant.

4] The income statement may not disclose true income of the business since

probable losses are considered while probable incomes are ignored.

5] Information conveyed by these statements may not be comparable on

account of difference between dates of preparation of these statements.

Different methods of accounting followed by different concerns or

difference in the nature of business of different concerns etc.The financial

statements of two concerns impossible or difficult for the purpose of

comparison.

ESSENTIALS OF GOOD FINANCIAL STATEMENTS

1] Financial statements should be readily and easily available from the

Books Of accounts of the concern.

2] The form should not be complex in nature.

3] It must facilitate easy comparison.

4] Design attractive form of financial statements.

5] Collected information should be true and correct.

TOOLS OF FINANCIAL ANALYSIS (METHODS)A financial analyst can adopt the following tools for analysis of the

financial statements:

1] Comparative Financial Statements

2] Common Size Statements

3] Trend Ratios or Trend Analysis


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4] Statement of changes in working capital

5] Fund Flow and Cash Flow Analysis

6] Ratio Analysis.

From, above tools of financial analysis I have choose, RATIO

ANALYSIS & COMMON SIZE STATEMENT

3.1INTRODUCTION OF RATIO ANALYSIS:-

The relationship of these two figure expressed mathematically is called a

ratio. The ratio refers to the numerical or quantities relationship between two

variables or times. A ratio is calculated by dividing one item of the relationship

with the other. The ratio analysis is one of the most useful and common methods of

analyzing financial statement. Ratio enables the mass of data to be summarized and

simplified. Ratio analysis is an instrument for diagnosis of the financial health of

an enterprise.

The ratio analysis is the most powerful tool of financial statement analysis. Ratio

simply means one number expressed in terms of another. A ratio is a statistical

yardstick by means of which relationship between two or various figures can be

compared or measured. Ratios can be found out by dividing one number by

another number. Ratios show how one number is related to another.

3.2MEANING OF RATIO:-

A ratio is only a comparison of the numerator with the denominator. The

tern ratio reefers to the numerical or quantitative relationship between two figures

and obtained by dividing the former by the latter.


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Ratio analysis is an important and age old technique of financial analysis.

The data given in financial statements ratio are relative form of financial data and

very useful techniques to cheek upon the efficiency of a firm. Some ratio indicates

the trend or progress or downfall of the firm.

3.3IMPORTANCE OF RATIO:-

Ratio analysis of firms financial statement is of interest to a number of

parties mainly. Shareholders, creditor, financial executives etc. shareholders are

interested with earning capacity of the firm: creditors are interested in knowing the

ability of firm to meet financial obligation and financial executives are concerned

with evolving analytical tools that will measures and compare costs, efficiency

liquidity and profitability with a view to making intelligent decisions.

1]Aid to measure general efficiency

- Ratios enable the mass of accounting data to be summarized and

simplified

2] Aid to measure financial solvency

-They point out firms liquidity position to meet its short-term

obligation and long-term solvency.

3] Aid in forecasting and planning

-Ratio helps to prepare the future plan of action etc.

4] Facilitate decision-making

-It throws light on the degree of efficiency of the management and

utilization of the assets that is why it is called surveyor of efficiency.

5] Aid in corrective action

-The highlight the factors associated with successful and

unsuccessful firms.


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6] Aids in intrude firm comparison

-Inter firm comparison are facilities. It is an instrument for

diagnosis of financial health of enterprise.

7] Evaluation of efficiency

-Ratio analysis is an effective instrument which, when properly

used is useful to assess important characteristics of business liquidity, solvency,

profitability etc.

3.4LIMITATION OF RATIO ANALYSIS:-

Ratio analysis is as already mentioned, a widely used tool of financial

analysis. It is because ratios are simple and easy to understand. But they must be

used very carefully. They suffer from various limitations.

Some of the limitations of ratio analysis are given below:

1] Difference in definition

-comparisons are made difficult due to difference in definitions ofvarious financial terms.

2] Limitations of according records ratio

-Ratio analysis is based on financial statements, which are

themselves subject to limitations.

3] Lack of proper standards

-It is very difficult to ascertain the standard ratio in order to make

proper comparison. Because it differs from firm to firm, industry to industry.

4] Changes in accounting procedure

-It different firms for their valuation follow methods then

comparison will practically be of no use.


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5] Limited use of single ratio

-A single ratio would not be able to convey anything. It too many

ratios are calculated they are likely to confuse instead of revealing meaningful

conclusions

6] Personal bias

- Ratios have to be interpreted and different people may interpret

the same ratio in efferent ways. The analyst has to carry further investigation and

exercise. His judgment in arriving at a correct diagnosis.

3.5 CLASSIFICATION OF RATIO ANALYSIS:-

BY STATEMENTS

Profit & Loss A/c Ratio

Balance Sheet Ratio

Inter-Statement Ratio

1. Gross Profit Ratio

2. Net Profit Ratio

3. Operating Ratio

4. Stock Turnover Ratio

1. Current Ratio

2. Liquid Ratio

3. Debt Equity Ratio

4. Propritory Ratio

5. Capital Gearing Ratio

1. Return on Investment Ratio

2. Return on Propritory Fund

Ratio

3. Net Profit to Total Assets Ratio

4. Creditors Turn Over Ratio

5. Debtor Turnover Ratio


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BY USERS

Ratio for Management

Ratio for Creditors

Ratio for Shareholders

1.Operating Ratio

2. Debtors Turnover

3. Stock Turnover

4.Solvency Ratio

1.Current Ratio

2. Solvency Ratio

3. Fixed Asset Ratio

4.Creditors Turnover

1.Yield Rate

2. Proprietry Ratio

3. Dividend Rate

4. Capital Gearing Ratio

5. Return on Capital Fund


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BY IMPORTANCE

Primary Ratios

1. Asset Turnover

2. Profit Ratio

3. Operating Profit Ratio

4. Return on Capital Fund

Secondary Ratios

1. Working Capital

Turnover

2. Stocks to Current

Assets

3. Stocks to Fixed Assets

4. Expense Ratio


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3.10RESEARCH METHODOLOGY:-

OBJECTIVE:-1) The main objective of the project is to know which bank is fundamentally

strong among the judgmentally selected four banks from banking sectors.

2) To know the profitability & financial position of selected banks.

3) To know which Particular bank among the four banks is beneficial for

investment to the investors.

4) To compare the market performance with that of stock selected.

5) To know whether the equities are under-priced or over-priced and to

suggest which to buy or to sell.

LIMITATION:-1) Comparison of different bank is based on ration analysis & common size

statement is derived from the balance sheet and profit & loss account which

is difficult and time consuming.

2) The data are in lacks or corers, so the calculation is done on round off in

context of original figures.

3) In the project mainly secondary data is used and so there can be a fault in

financial analysis or can be problem in derived results from the secondary

data.

BENEFITS:-The Practical work of project will helpful to get the actual idea for

banking sectors and how it will be useful for investors to invest. This will

also proved beneficial in any company while go to seek for management

related post in the company.


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RESEARCH PROCESS

I. Problem Statement:-

Equity valuation of the bank and their money value to the investors.

II. Research design:-

The researcher uses the descriptive research design for analysis.

III. Sampling method:-

The researcher uses judgmental sampling method for deciding the sample.

IV. Data collection method:-

Secondary Data:The main source of information is taken from annual reports of the

companies and through related websites which has enabled in analyzing

the equities.

y Internet sourcesy Annual Reportsy Text Books

Primary Data:The primary sources of information collection were through discussion

with the faculties and the advisors in the company.

V. Sample Size:-

The researcher has selected 4 banks for analysis on the basis of total

market capital.


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1] INTEREST EXPENSE AS A PERCENTAGE OF TOTAL WORKING FUNDS:-

This ratio gives the weighted cost of funds. Interest expense is the interest is paid to

their customers like interest on fixed deposit. Lower the ratio, better for the banks.

HOW TO CALCULATE:-

Interest Expense

Total Working Funds

2006 2007 2008 2009 2010

SBI 4.23% 4.42% 4.96% 5.09% 4.69%

BOB 3.73% 4.23% 4.90% 4.90% 4.25%

ICICI 4.58% 5.49% 6.31% 5.83% 4.74%

HDFC 2.81% 3.09% 3.86% 4.36% 5.63%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2006 2007 2008 2009 2010

HDFC

ICICI

BOB

SBI


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2] INTEREST INCOME AS A PERCENTAGE OF TOTAL WORKING FUNDS:-

This ratio gives weighted yield on working funds. Interest income include the

bank earning from the different loans. As the ratio is higher, the banks can properly utilize their

funds. It shows that the funds are not remaining utilized.

HOW TO CALCULATE:-

Interest Income

Total Working Funds

2006 2007 2008 2009 2010

SBI 7.94% 8.27% 8.82% 8.88% 8.52%

BOB 7.01% 7.44% 8.14% 8.16% 7.56%

ICICI 8.36% 9.55% 10.60% 9.82% 8.82%

HDFC 7.95% 8.91% 10.08% 11.01% 12.50%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

2006 2007 2008 2009 2010

HDFC

ICICI

BOB

SBI


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3] NET INTEREST INCOME AS A PERCENTAGE OF TOTAL WORKING FUNDS:-

This net interest income as a % of total working funds shows the difference

between the interest income and interest expense ratio.

2006 2007 2008 2009 2010

SBI 3.71% 3.85% 3.87% 3.79% 3.82%

BOB 3.29% 3.21% 3.24% 3.26% 3.30%

ICICI 3.78% 4.06% 4.29% 3.99% 4.08%

HDFC 5.14% 5.82% 6.22% 6.66% 6.86%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

2006 2007 2008 2009 2010

HDFC

ICICI

BOB

SBI


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RATINGS:-SR NO NAME OF BANK RANK

1] STATE BANK OF INDIA 2

2] BANK OF BARODA 3

3] ICICI BANK 4

4] HDFC BANK 1

ANALYSIS & INTERPRETATION:-

Here, the ratio is increasing for the HDFC BANK than others. So bank is utilizing itfunds appropriately.

The ratio is increasing for the STATE BANK OF INDIA and the in the last it is slightlydeclining. But it is maintaining its level and utilize fund appropriately. Its funds are not

remaining idle.

The interest income and interest expense ratio both are declining stage for BANK OFBARODA and then slightly increasing.

That is a huge fluctuation for the ICICI BANK. It shows that the bank cannotmaintaining their funds properly and the funds are remaining idle.


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4] NON INTEREST INCOME AS A PERCENTAGE OF TOTAL WORKING FUNDS:-

Non-interest income include commission, charges etc. Higher the ratio it is

good for the banks.

HOW TO CALCULATE:-

Non Interest Income

Total Working Funds

2006 2007 2008 2009 2010

SBI 0.30% 0.19% 0.14% 0.11% 0.10%

BOB 0.37% 0.38% 0.43% 0.35% 0.30%

ICICI 0.22% 0.10% 0.02% 0.08% 0.08%

HDFC 0.04% 0.05% 0.13% 0.04% 0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010

HDFC

ICICI

BOB

SBI


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2] BANK OF BARODA 1

3] ICICI BANK 4

4] HDFC BANK 2


The graph shows that BANK OF BARODA is maintaining the level. It meansthat the bank can utilize their funds properly.

The ratio is increase for the first three years of HDFC BANK. Then, it isdeclining but it maintains it level and utilizes their funds properly.

The ratio is increase in first year than after it is at declining stage for STATEBANK OF INDIA. So bank has no proper control on utilize fund.

There is huge fluctuation forICICI BANKand not properly utilize their funds.


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5] EARNING PER SHARE (IN RS.):-

The portion of a companys profit allocated to each outstanding share of

common stock. The EPS is helpful in comparing one company to another, assuming they are in

the same industry, but it doesnt tell whether its a good stock to buy or what the market

thinks of it.

HOW TO CALCULATE:-

Total Earnings

Number of Equity Shares

2006 2007 2008 2009 2010

SBI 88.73 86.29 106.56 143.67 144.37

BOB 28.83 28.18 39.41 61.14 83.96

ICICI 28.55 34.59 37.37 33.76 36.10

HDFC 35.64 43.29 44.87 52.77 64.42

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010

HDFC

ICICI

BOB

SBI


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2] BANK OF BARODA 2

3] ICICI BANK 4

4] HDFC BANK 3


Here, the above graph shows constantly increase in the earning per share forSTATE BANK OF INDIA gives maximum earning per share than other banks to

their share holders.

Where the earning per share of BANK OF BARODA and HDFC BANK iscontinuously increase. But EPS ofBANK OF BARODA is higher than HDFC

BANK.

The earnings per share ofICICI BANKis increase for the first three years than itagain decreases and increases because of less profitability of the bank.


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6] RETURN ON NET WORTH:-

A performance measure based on retailers net profit, net sales, total assets,

and net worth. Net worth is funds that the shareholders own-their equity. It represents the

capital contributed by the shareholders and the accumulated net profits after paying out

dividends (retained earnings). This is what belongs to the shareholders and is reinvested into

the business. Dividends are excluded from capital because they entail a cash outflow for the

company, and this amount is not reinvested into business.

HOW TO CALCULATE:- NPAT- Preference Dividend 100

Ordinary Shareholders Equity or Net worth

Net Worth= Ordinary Share Capital + Share Premium + Reserves and Surplus-Accumulated

Losses

2006 2007 2008 2009 2010

SBI 15.94% 14.50% 13.72% 15.74% 13.89%

BOB 10.54% 11.86% 12.99% 17.35% 20.24%

ICICI 14.33% 13.17% 8.94% 7.58% 7.79%

HDFC 23.67% 22.73% 23.57% 13.83% 15.32%


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2] BANK OF BARODA 1

3] ICICI BANK 3

4] HDFC BANK 4

ANALYSIS & INTERPRETATION:- The return on net worth ofBANK OF BARODA is increasing year by year. This shows

that the bank can give proper return to their equity shareholders. Because they bear all the

risk.

The STATE BANK OF INDIA maintains the level. But it shows the downwardmovement for the first three years. But it maintains the level and gives proper return to

their equity share holders.

This ratio ofICICI BANK is decreases for first four years but it slightly increase in theyear 2010 because less profit earned by the bank and their DPS and EPS also declines.

But it maintains the level.

There is high fluctuation for the HDFC BANK. It cannot properly utilize their profit andthus there is high fluctuation.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010

HDFC

ICICI

BOB

SBI


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7]DIVINED PAY-OUT RATIO:-The DPR measures what a company pays out to investors in the form of dividends.

Growing companies will typically retains more profits to fund growth and pay lower or no

dividends. Companies that pay higher dividends may be in mature industries where there is

little room for growth and paying higher dividends is the best use of profits.

HOW TO CALCULATE:-

Dividend per share 100

Earnings per share

2006 2007 2008 2009 2010

SBI 16.35% 16.75% 20.56% 21.13% 21.20%

BOB 22.13% 20.68% 20.44% 15.60% 19.43%

ICICI 27.36% 28.84% 29.08% 31.00% 32.33%

HDFC 16.00% 15.17% 16.32% 18.93% 19.10%

0%

10%20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010

HDFC

ICICI

BOB

SBI


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2] BANK OF BARODA 4

3] ICICI BANK 1

4] HDFC BANK 3


The D/P ratio ofICICI BANK is increasing year by year than any other banks.Bank pays dividend at good rate.

The STATE BANK OF INDIA is also maintaining the level and paid dividend toits share holders at a good rate.

The D/P ratio of the HDFC BANKis increase and decrease but it is maintainingthe level. It has enough reserves to pay dividend to its share holders.

The ratio shows high fluctuation for the BANK OF BARODA. It pays dividendat good rate. But it is not maintaining the level.


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COMMON SIZED STATEMENT OF STATE BANK OF INDIA

Common sized Statement- Profit and Loss (Figure in %)

INCOME (2006) (2007) (2008) (2009) (2010)

Interest Earned 82.89% 84.13% 83.89% 83.39% 82.59%

Other Income 17.11% 15.87% 16.11% 16.59% 17.41%

TOTAL INCOME 100% 100% 100% 100% 100%

EXPENDITURE (2006) (2007) (2008) (2009) (2010)

Interest Expended 46.68% 49.93% 54.72% 56.11% 55.05%

Employee Cost 18.81% 16.90% 13.34% 12.74% 14.84%Selling & Admin Exp 4.29% 6.93% 7.14% 6.70% 9.19%

Depreciation 1.69% 1.28% 1.17% 1% 1.08%

Mis.Expneses 18.32% 15.28% 12.09% 11.52% 9.18%

TOTAL EXPENSES 89.80% 90.32% 88.47% 88.07% 89.34%

Net Profit 10.20% 9.68% 11.53% 11.93% 10.67%

ANALYSIS & INTERPRETATION:-In the common sized statement I have assumed Total Income as100%.Then I have

derived the increase or decrease in Total Income & Total Expenditure.

Here for the STATE BANK OF INDIA, Total Income is assumed as 100%. Here, theTotal Expenses is 89.80% in year 2006 which is increase 0.52% in year 2007 than

continuously decrease in last three years which is good for the bank.

Net profit forSTATE BANK OF INDIA in year 2006 is 10.20% which is decrease0.52% in year 2007 than continuously increases in years 2008, 2009, 2010 which

indicate good fortune for banks.


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COMMON SIZED STATEMENT OF STATE BANK OF INDIA

Common sized Statement- Balance Sheet (Figure in %)

CAPITAL &

LIABILITIES

(2006) (2007) (2008) (2009) (2010)

Net Worth 5.60% 5.52% 6.8% 6.01% 6.26%

1) Share Capital 0.11% 0.09% 0.09% 0.07% 0.06%2) Reserves 5.49% 5.43% 6.71% 5.94% 6.20%

Total Debt 83.15% 83.87% 81.65% 82.54% 86.11%

1) Deposits 76.95% 76.87% 74.48% 76.94% 76.33%2) Borrowings 6.20% 7% 7.17% 5.60% 9.78%

Other Liabilities &

Provisions

11.25% 10.60% 11.55% 11.48% 7.63%

TOTAL LIABILITIES 100% 100% 100% 100% 100%

ASSETS (2006) (2007) (2008) (2009) (2010)

Cash & Balance With RBI 4.38% 5.13% 7.14% 5.76% 5.82%

Balance With Banks 4.64% 4.04% 2.21% 5.07% 3.31%

Advances 52.98% 59.54% 57.76% 56.25% 59.99%

Investments 32.91% 26.33% 26.26% 28.61% 27.13%

Net Block 0.54% 0.47% 0.50% 0.71% 0.39%

Capital Work In Progress 0.02% 0.02% 0.03% 0.03% 0.03%

Other Assets 4.53% 4.46% 6.16% 3.91% 3.33%

TOTAL ASSETS 100% 100% 100% 100% 100%


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ANALYSIS & INTERPRETATION:-In the common sized statement of the balance sheet ofSTATE BANK OF INDIA I

have assumed Total Asset and Total Liabilities as 100%.

The Net worth of bank is 5.60% in year2006 which decrease 0.08% in year2007 thanincreases in last three years. It means that Bank has enough share capital & reserve for

the further expansion.

Total debt of the bank is 83.15% in year 2006 which is increase & decrease in years2007,2008,2009 and in year 2010 it is 86.11% i.e. increases by 2.96% which is higher

than 2006.

Other Liability & provision of the bank is 11.25% in year2006 which is decrease by0.65% in year 2007 & increases in 2008 & 2009.But in year 2010 it is decrease by

3.62% which is good for the bank.

Cash and balances with RBI is increasing in the first three years than it is slightlydecrease in 2009 than increase by 0.06% in year2010.

Balance with bankis decreases in first three years than increase in 2009 after that againdecrease by 1.33% in year2010

The advances also increase to 52.98% to 59.99%.There is increment of7.01% which isgood sign for the bank. Investment of the bank is continuously decreased which indicate

that funds of bank are remaining idle.


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COMMON SIZED STATEMENT OF BANK OF BARODA


INCOME (2006) (2007) (2008) (2009) (2010)

Interest Earned 85.63% 86.96% 85.21% 84.55% 85.61%

Other Income 14.37% 13.04% 14.79% 15.45% 14.39%

TOTAL INCOME 100% 100% 100% 100% 100%

EXPENDITURE (2006) (2007) (2008) (2009) (2010)


Employee Cost 18.38% 15.52% 13% 13.16% 12.05%Selling & Admin Exp 8.62% 6.09% 6.69% 4.96% 8.34%

Depreciation 1.34% 1.83% 1.67% 1.29% 1.18%

Mis.Expneses 12.26% 15.64% 11.28% 12.27% 7.58%

TOTAL EXPENSES 87.34% 90.31% 89.65% 87.52% 84.32%

Net Profit 12.66% 9.69% 10.35% 12.48% 15.68%

ANALYSIS & INTERPRETATION:-In the common sized statement I have assumed Total Income as 100%.Then I have

derived the increase or decrease in the Total Income & Total Expenditure.

Here for the BANK OF BARODA, Total Income is assumed as 100%. Here, the TotalExpenses is 87.34% in year2006 which is increase 2.97%in year2007 than continuously

decrease in last three years which is good for the bank.

Net profit forBANK OF BARODA in year2006 is 12.66% which is decrease 2.97% inyear 2007 than continuously increases in years 2008, 2009, 2010 which indicate good

future scope for banks.


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COMMON SIZED STATEMENT OF BANK OF BARODA


CAPITAL &

LIABILITIES

(2006) (2007) (2008) (2009) (2010)

Net Worth 6.92% 6.05% 6.15% 5.64% 5.43%

1) Share Capital 0.32% 0.26% 0.20% 0.16% 0.13%

2) Reserves 6.60% 5.79% 5.95% 5.48% 5.30%

Total Debt 86.84% 88.06% 87.14% 87.08% 91.41%

1) Deposits 82.60% 87.26% 84.65% 84.60% 86.61%

2) Borrowings 4.24% 0.80% 2.19% 2.48% 4.80%

Other Liabilities &

Provisions

6.25% 5.89% 7.01% 7.27% 3.17%


ASSETS (2006) (2007) (2008) (2009) (2010)



Advances 52.84% 58.42% 59.41% 63.32% 62.89%

Investments 30.97% 24.41% 24.43% 23.06% 21.98%

Net Block 0.81% 0.76% 1.35% 1.02% 0.82%

Capital Work In Progress ---- ---- ---- ---- ----

Other Assets 3.52% 3.64% 2.40% 2.01% 1.56%

TOTAL ASSETS 100% 100% 100% 100% 100%


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ANALYSIS & INTERPRETATION:-In the common sized statement of the balance sheet of BANKOF BARODA I have assumed

Total Asset and Total Liabilities as 100%.

The Net worth of bank is 6.92% in year 2006 which decreases in last four years. Itmeans that Bank has no enough share capital & reserve for the further expansion.

Total debt of the bank is 86.84% in year 2006 which is increase & decrease in years2007,2008,2009 and in year 2010 it is 91.41% i.e. increases by 4.57% which is higher

than 2006.

Other Liability & provision of the bank is 6.25% in year2006 which is decrease by0.36% in year 2007 & increases in 2008 & 2009.But in year 2010 it is decrease by

3.08% which is good for the bank.

Cash and balances with RBI is increasing in the first three years than it is slightlydecrease in 2009&2010.

Balance with bankis decreases in first four years than increase by 1.95% in 2010 The advances also increase to 52.84% to 62.89%.There is increment of10.05% which

is good sign for the bank. Investment of the bank is increase & decrease which indicates

that bank is not utilizing its funds properly.


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COMMON SIZED STATEMENT OF ICICI


INCOME (2006) (2007) (2008) (2009) (2010)

Interest Earned 73.24% 76.76% 77.62% 79.30% 77.90%

Other Income 26.76% 23.24% 22.38% 20.70% 22.09%

TOTAL INCOME 100% 100% 100% 100% 100%

EXPENDITURE (2006) (2007) (2008) (2009) (2010)


Employee Cost 5.75% 5.40% 5.24% 5.03% 5.84%Selling & Admin Exp 12.54% 16.36% 14.71% 15.25% 18.35%

Depreciation 3.31% 1.82% 1.46% 1.73% 1.88%

Mis.Expneses 13.90% 11.44% 8.91% 10.45% 8.42%

TOTAL EXPENSES 86.50% 89.62% 89.52% 90.42% 87.80%

Net Profit 13.50% 10.38% 10.48% 9.58% 12.20%



Here for the ICICI, Total Income is assumed as 100%. Here, the Total Expenses is86.50% in year 2006 which is increase 3.12% in year 2007 than increase in last three

years which is not good for the bank.

Net profit forICICI

is highly fluctuated.


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COMMON SIZED STATEMENT OF ICICI


CAPITAL &

LIABILITIES

(2006) (2007) (2008) (2009) (2010)

Net Worth 8.97% 7.15% 11.72% 13.16% 14.21%

1) Share Capital 0.49% 0.36% 0.37% 0.39% 0.31%

2) Reserves 8.48% 6.79% 11.35% 12.77% 13.90%

Total Debt 80.99% 81.55% 77.56% 75.32% 81.53%

1) Deposits 65.67% 66.68% 61.14% 57.57% 55.59%

2) Borrowings 15.32% 14.87% 16.42% 17.75% 25.94%

Other Liabilities &

Provisions

10.04% 11.09% 10.73% 11.53% 4.27%


ASSETS (2006) (2007) (2008) (2009) (2010)



Advances 58.14% 56.83% 56.43% 57.56% 49.86%

Investments 28.46% 26.48% 27.88% 27.17% 33.27%

Net Block 1.58% 1.14% 1.03% 1.02% 0.88%

Capital Work In Progress 0.06% 0.06% ---- ---- ----

Other Assets 4.98% 4.73% 5.15% 6.47% 5.29%

TOTAL ASSETS 100% 100% 100% 100% 100%


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ANALYSIS & INTERPRETATION:-In the common sized statement of the balance sheet of ICICI I have assumed Total

Asset and Total Liabilities as 100%.



Total debt of the bank is 80.99% in year2006 which is increase by 0.56% in years 2007and last three years it again decreases. It means that banks deposits is less & borrowings

is increase year by year which is not good for bank.

Other Liability & provision of the bank is 10.04% in year2006 which is increase &decrease for three years by in 2010 it is decrease by 5.77% which is also good for the

bank.

Cash and balances with RBI is increasing in the first three years than it is slightlydecrease in 2009 than increase by 2.95% in year2010.

Balance with bankis highly increase and decreases forICICI The advances also decrease for beginning three years than slightly increase in 2009 than

After it also decrease in last year. Investment of the bank is continuously increased

Which indicate that funds of bank are remaining not idle.


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COMMON SIZED STATEMENT OF HDFC


INCOME (2006) (2007) (2008) (2009) (2010)

Interest Earned 78.67% 82.02% 82.09% 82.47% 80.93%

Other Income 21.33% 17.98% 17.90% 17.53% 19.07%

TOTAL INCOME 100% 100% 100% 100% 100%

EXPENDITURE (2006) (2007) (2008) (2009) (2010)

Interest Expended 33.92% 37.85% 39.67% 45% 38.96%

Employee Cost 8.56% 9.25% 10.56% 11.30% 11.46%Selling & Admin Exp 16.58% 8.66% 7.91% 14.40% 17%

Depreciation 3.14% 2.61% 2.21% 1.82% 1.97%

Mis.Expneses 18.19% 25.16% 26.75% 16.15% 15.86%

TOTAL EXPENSES 80.38% 83.54% 87.09% 88.66% 85.24%

Net Profit 19.62% 16.46% 12.91% 11.34% 14.76%



Here for the HDFC, Total Income is assumed as 100%. Here, the Total Expenses is80.38% in year2006 which is increase by 8.28% in year2009 than decrease in last year

which is not good for the bank.

Net profit forHDFC is high in year 2006 which is 19.62% but decreases by 8.28% inyear 2009 which indicate less profitability of the bank.


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COMMON SIZED STATEMENT OF HDFC


CAPITAL &

LIABILITIES

(2006) (2007) (2008) (2009) (2010)

Net Worth 7.21% 7.05% 8.64% 8% 9.68%

1) Share Capital 0.43% 0.35% 0.27% 0.23% 0.21%

2) Reserves 6.78% 6.70% 8.37% 7.76% 9.47%

Total Debt 82.11% 77.95% 79.13% 79.39% 81.06%

1) Deposits 75.91% 74.86% 75.77% 77.92% 75.25%

2) Borrowings 6.20% 3.09% 3.36% 1.47% 5.81%

Other Liabilities &

Provisions

10.68% 15% 12.34% 12.40% 9.27%


ASSETS (2006) (2007) (2008) (2009) (2010)



Advances 47.70% 51.45% 47.63% 53.95% 56.56%

Investments 38.63% 33.50% 37.09% 32.09% 26.35%

Net Block 1.16% 1.06% 0.88% 0.93% 0.95%

Capital Work In Progress ---- ---- ---- ---- ----

Other Assets 3.10% 3.95% 3.31% 3.47% 2.68%

TOTAL ASSETS 100% 100% 100% 100% 100%


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ANALYSIS & INTERPRETATION:-In the common sized statement of the balance sheet ofHDFC I have assumed Total Asset and

Total Liabilities as 100%.



Total debt of the bank is 82.11% in year 2006 which is decrease by 4.16% in years2007 and last three years it again increases. It means that a banks deposit is high & a

borrowing is decrease year by year which is good for bank.

Other Liability & provision of the bank is 15% in year 2007 but in year2010 it is9.27%

Cash and balances with RBI is 4.50% in year 2006 and in year 2008 it is high by9.43%

Balance with bankis 1.67% in year2008 but in year2010 it is increase by 6.50% The advance of bank is 47.63% & year2010 it is increase by 8.93%.Investment of the

bank is 38.63% but decreases by 12.28% in year2010 which indicate that funds of bank

are remaining idle.


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MARKET DATA OF STAT BANK OF INDIA

Market cap - 165798.01

EPS 159.22

P/E 16.40

Book value 1038.57

Face value 10.00

Div. yield (%) 1.15


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MARKET DATA OF BANK OF BARODA

Market cap 32932.43

EPS 105.43

P/E 08.55

Book value 413.27

Face value 10.00

Div. yield (%) 1.66


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MARKET DATA OF ICICI BANK

Market cap 115763.99

EPS 40.86

P/E 24.61

Book value 448.62

Face value 10.00

Div. yield (%) 1.19


78/81

MARKET DATA OF HDFC BANK

Market cap 100713.17

EPS 78.57

P/E 27.61

Book value 463.66

Face value 10.00

Div. yield (%) 0.55


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FINDINGS & CONCLUSION:-

From the analysis researcher found that from banking sectors BANK OFBARODA is better. Because its financial position and capital structure is

stronger and higher than other three banks.

Non- interest income is increase forBANK OF BARODA where as rest ofthree banks non-interest income is increase & decrease.

EPS ratio is also increase forBANK OF BARODA i.e. Rs.28, 39, 61, 83. Return on net worth ofBANK OF BARODA is also higher in compared to

three banks.

From Ratio Analysis & Common sized statement researcher also found thatICICI BANKratio are highly fluctuated and its Income proportion is very

less in compared to expenses proportion.

The D/P ratio of the ICICI bank shows that, the bank gives high moneyvalue to the investors in respect to other three banks.

Return on net worth of HDFC bank is very low compare to other threebanks.

CONCLUSION:-

After undergoing a detailed study of financial analysis of banking sectorsbased on ration analysis & common sized statement researcher would like to

conclude that this project will indicate the banks overall operating efficiency

and performance that will help the investors to make the most efficient

investment decision.


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The financial investment decision is given through the ratio analysis andcommon sized statement. Thus, the ratios are selected which highly affect

the investment decision for the investors to make a profitable decision and

the decision is also based on the financial condition of the companies.

-:RECOMMENDATIONS:-

Investors are differing from the speculators in terms of time period.

Investors usually do long term investment and earn more profit than speculators, asthere are high risk factors.

There are some recommendations for the investors & banks which are as

follows:

The common sized statement also shows the good fortune of the bank. So itis beneficial for the investor by investing in BANK OF BARODA for long

term and will get higher return in each year.

The STATE BANK OF INDIA& HDFC BANKis better for investment.Because the performance of both the bank are good and to the satisfactory

level.

The analysis shows that ICICI BANK is fundamentally not strong andlooking as seek in comparisons of other three banks. So the researcher

shah bhavya

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